UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

PRACTICE MANAGEMENT SUPPORT SERVICES, INC., an Illinois corporation, individually and as the representative of a class of similarly-situated persons, Plaintiff, v. CIRQUE DU SOLEIL INC., CIRQUE DU SOLEIL (US), INC. and JOHN DOES 1-10, Defendants.

) ) ) ) ) ) ) ) ) ) ) )

No. 1:14-CV-02032 Judge Thomas M. Durkin Magistrate Judge Young B. Kim

PLAINTIFF’S RESPONSE MEMORANDUM IN OPPOSITION TO DEFENDANTS’

MOTION FOR SUMMARY JUDGMENT

Brian J. Wanca Max G. Margulis Ryan M. Kelly MARGULIS LAW GROUP ANDERSON + WANCA 28 Old Belle Monte Rd. 3701 Algonquin Road, Suite 760 Chesterfield, MO 63017 Rolling Meadows, IL 60008 Telephone: (636) 536-7022 Telephone: (847) 368-1500 Facsimile: (636) 536-6652 Facsimile: (847) 368-1501

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TABLE OF CONTENTS

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FACTUAL AND PROCEDURAL BACKGROUND.................................................................... 1 LEGAL STANDARD ..................................................................................................................... 3 ARGUMENT .................................................................................................................................. 3

I. Defendants’ motion is barred by Campbell-Ewald because it seeks to deny Plaintiff a “fair opportunity” to obtain a decision on its pending motion for class certification .................................................................................................... 3

II. Defendants’ motion for summary judgment is procedurally defective .................. 4 A. Under Rule 56(a), a movant cannot seek summary judgment on

behalf of a non-movant. .............................................................................. 4 B. The “early practicable time” requirement prohibits summary

judgment two years into a case where class certification has been pending for three months. ........................................................................... 5

C. The Seventh Circuit prohibits summary judgment based on a lack of subject-matter jurisdiction .......................................................................... 6

III. Plaintiff’s claim is not “moot,” and the Court retains subject-matter jurisdiction. ............................................................................................................. 7 A. Defendants did not render Plaintiff’s claim for injunctive relief

“moot” by offering to agree to a “follow-the-law” injunction. ................... 8 B. Defendants did not render Plaintiff’s claim for statutory damages

“moot” by sending Plaintiff two checks. .................................................. 10 C. Defendants did not render Plaintiff’s claim for statutory damages

“moot” by moving for leave to deposit funds under Rule 67 ................... 12 D. Even if the Court allows the deposit, Plaintiff’s claim for statutory

damages is not moot because Defendants’ strategy depends on the Court granting further effectual relief by disbursing the funds ................ 12

IV. The Court cannot force an unwanted individual judgment on Plaintiff................ 14 V. Even if Plaintiff’s individual claim becomes “moot,” Plaintiff may pursue

class certification under Damasco because its motion for class certification is pending .............................................................................................................. 15

CONCLUSION ............................................................................................................................. 18

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TABLE OF AUTHORITIES

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Cases Alstom Caribe, Inc. v. George P. Reintjes Co., 484 F.3d 106 (1st Cir. 2007) .............................. 13 Amgen Inc. v. Conn. Ret. Plans & Trust Funds, 133 S. Ct. 1184 (2013) ....................................... 6 Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) ................................................................... 3 Bais Yaakov of Spring Valley v. Varitronics, LLC, 2016 WL 806703 (D. Minn. Mar. 1, 2016) ................................................................................................................ 12 Brady v. Basic Research, LLC, --- F.R.D. ---, 2016 WL 462916 (E.D.N.Y. Feb. 3, 2016) ......... 12 Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (2016) ......................................................... passim Chapman v. First Index, Inc., 796 F.3d 783 (7th Cir. Aug. 6, 2015) .................................... passim Cowen v. Bank United of Tex., FSB, 70 F.3d 937 (7th Cir. 1995). ................................................. 6 Damasco v. Clearwire Corp., 662 F.3d 891 (7th Cir. 2011) ........................................ 1, 15, 16, 17 Deposit Guaranty Nat’l Bank v. Roper, 445 U.S. 326 (1980) ................................................ 14, 17 Dillenback v. The Rossend Castle, 30 F. 462 (S.D.N.Y. 1887) .................................................... 13 Espenscheid v. DirectSat USA, LLC, 688 F.3d 872 (7th Cir. 2012) ............................................. 18 Franco v. Allied Interstate LLC, 2015 WL 7758534 (S.D.N.Y. Nov. 30, 2015) ......................... 11 Gaerte v. Great Lakes Terminal & Transp. Corp., 2007 WL 2349611 (N.D. Ind. Aug. 14, 2007) ........................................................................................................... 4, 5 Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523 (2013) ...................................................... 8 Gilday v. Dubois, 124 F.3d 277 (1st Cir. 1997) .............................................................................. 9 Hernandez v. PeopleScout, Inc., 2012 WL 3069495 (N.D. Ill. July 24, 2012) ............................ 11 Katz v. Carte Blanche Corp., 496 F.2d 747 (3d Cir. 1974) ............................................................ 5 Maher Eng’g Co. v. Screwmatics of S.C., Inc., 2014 WL 4979167 (N.D. Ill. Oct. 6, 2014)........ 12 Martelack, v. Toys ‘R’ Us, Inc., 2016 WL 762656 (D.N.J. Feb. 25, 2016) .................................. 10 Murphy v. Global Response Corp., 2015 WL 3574346 (S.D. Fla. June 5, 2015) ........................ 11 Murray v. Conseco, Inc., 467 F.3d 602 (7th Cir. 2006).................................................................. 7 Oglesby v. Rotche, 1994 WL 142867 (N.D. Ill. Apr. 18, 1994) ..................................................... 5 Original Great Am. Chocolate Chip Cookie Co. v. River Valley Cookies, Ltd., 970 F.2d 273 (7th Cir. 1992) .......................................................................................................................... 9 People Organized for Welfare & Employment Rights (P.O.W.E.R.) v. Thompson, 727 F.2d 167 (7th Cir. 1984) .......................................................................................................................... 7 Peritz v. Liberty Loan Corp., 523 F.2d 349 (7th Cir. 1975) ........................................................... 5

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Primax Recoveries, Inc. v. Sevilla, 324 F.3d 544 (7th Cir. 2003) .......................................... 16, 17 Schmidt v. Lessard, 414 U.S. 473 (1974) ....................................................................................... 9 Selective Way Ins. Co. v. RHJ Med. Ctr., Inc., 2008 WL 5156078 (W.D. Pa. Dec. 8, 2008) ........ 4 Sprint Commc’ns Co. v. APCC Servs., Inc., 554 U.S. 269 (2008) ............................................... 15 Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83 (1998)........................................................... 7 Susman v. Lincoln Am. Corp., 587 F.2d 866 (7th Cir. 1978) ................................................. 10, 11 Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., Div. of Ace Young Inc., 109 F.3d 105 (2d Cir. 1997)............................................................................................................ 7 U.S. Parole Comm’n v. Geraghty, 445 U.S. 388 (1980) .............................................................. 17 United States v. Tully, 288 F.3d 982 (7th Cir. 2002) .................................................................... 12 United States v. Windsor, 133 S. Ct. 2675 (2013) ........................................................................ 14 Whittaker v. Morgan State Univ., 2011 WL 1099266 (D. Md. Mar. 21, 2011) ............................. 4 Winslow v. Walters, 815 F.2d 1114 (7th Cir. 1987) ............................................................. 6, 7, 12 Zinni v. ER Sols., Inc., 692 F.3d 1162 (11th Cir. 2012)................................................................ 10

Statutes 28 U.S.C. §§ 2041 ......................................................................................................................... 13 28 U.S.C. § 2042 .......................................................................................................................... 13 47 U.S.C. § 227 (the “TCPA”) ....................................................................................................... 1 47 U.S.C. § 227(b)(3) ................................................................................................................. 1, 8

Rules Fed. R. Civ. P. 8(c)(1) ................................................................................................................... 11 Fed. R. Civ. P. 12(h)(3)................................................................................................................... 7 Fed. R. Civ. P. 23(c)(1)(A) ............................................................................................................. 5 Fed. R. Civ. P. 23(c) ................................................................................................................... 1, 6 Fed. R. Civ. P. 23(c)(1) ................................................................................................................... 6 Fed. R. Civ. P. 41(a)(2) ................................................................................................................... 5 Fed. R. Civ. P. 56(a) ............................................................................................................... 3, 4, 5 Fed. R. Civ. P. 65(d) ....................................................................................................................... 9 Fed. R. Civ. P. 67 ................................................................................................................... passim Fed. R. Civ. P. 67(b) ..................................................................................................................... 13

Other Linda S. Mullenix, Dropping the Spear: The Case for Enhanced Summary Judgment Prior to Class Certification, 43 Akron L. Rev. 1197, 1213 (2010) ......................................................... 5

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28 Williston on Contracts § 72:32 (4th ed.) .................................................................................. 10 Wright & Miller, Fed. Prac. & Proc. § 2955 & n.25 (3d ed.) ......................................................... 9

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Plaintiff Practice Management Support Services, Inc. responds as follows to Defendants’

Motion for Summary Judgment. (Doc. 91). The Court should deny the motion because (1) it

violates Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663, 672 (2016), which holds a putative class

plaintiff “must be accorded a fair opportunity” to obtain certification; (2) the motion is

procedurally defective, where it seeks summary judgment for a non-movant, violates Rule

23(c)’s “early practicable time” requirement, and improperly seeks summary judgment based on

lack of jurisdiction; (3) Defendants did not render Plaintiff’s claim “moot” by offering to agree

to an injunction, by sending Plaintiff two checks, or by moving to deposit funds because none of

those things make it “impossible” for the Court to grant relief; (4) the Court may not force an

unwanted individual judgment on Plaintiff where it seeks classwide relief; and (5) even if

Plaintiff’s claim were rendered “moot,” Plaintiff may obtain a decision on its pending motion for

class certification under Damasco v. Clearwire Corp., 662 F.3d 891, 895–96 (7th Cir. 2011).

Factual and Procedural Background

On March 21, 2014, Plaintiff filed this putative class action alleging Defendants sent fax

advertisements to Plaintiff and a class of others without “prior express invitation or permission”

in violation of the Telephone Consumer Protection Act of 1991 (“TCPA”). (Compl., Doc. 1).

The Complaint seeks relief authorized by the TCPA, 47 U.S.C. § 227(b)(3), consisting of

injunctive relief and statutory damages of $500 to $1,500 per violation. (Id. ¶¶ 5, 21(i), 25 & 9).

The same day, Plaintiff filed a “placeholder” motion for class certification to prevent Defendants

from “picking-off” Plaintiff’s claim under Damasco v. Clearwire Corp., 662 F.3d 891, 895–96

(7th Cir. 2011), which held an offer of complete individual relief “moots” a plaintiff’s claim, but

the plaintiff may pursue certification if a motion for class certification is pending. (Doc. 2).

On August 17, 2015, Defendants filed a motion for summary judgment based on statute

of limitations. (Doc. 48). On September 3, 2015, the Court denied Plaintiff’s placeholder motion

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“without prejudice to refiling,” finding it unnecessary in light of Chapman v. First Index, Inc.,

796 F.3d 783, 787 (7th Cir. Aug. 6, 2015), which held “a defendant’s offer of full compensation

does not moot the litigation or otherwise end the Article III case or controversy.” (Doc. 53).

On November 12, 2015, the Court denied Defendants’ first motion for summary

judgment and ordered Plaintiff to file its motion for class certification within 26 days. (Doc. 63).

On December 4, 2015, defense counsel sent Plaintiff’s counsel an email offering to settle

individually for $1,510, Plaintiff’s costs, and a stipulated injunction. (Doc. 69-1). On December

10, 2015, Defendants sent Plaintiff a check for $1,510. (Pl.’s Resp. Defs.’ Stmt. Facts ¶ 13).

On December 8, 2015, Plaintiff timely filed its Motion for Class Certification. (Docs. 64-

2, 68-1). Plaintiff argued discovery shows Defendants sent 46,097 faxes advertising Cirque du

Soleil performances across the country using a “fax broadcaster” to target lists of fax numbers

purchased from third parties. (Id. at 3–11).

On December 11, 2015, Defendants moved to stay the case pending a Supreme Court

decision in Campbell-Ewald v. Gomez, which involved an attempt to “pick off” a plaintiff in a

putative TCPA class action. (Doc. 69). The Court “entered and continued” Plaintiff’s motion for

class certification. (Doc. 73). On January 18, 2016, Defendants sent Plaintiff another check for

$1,510, bringing the total amount sent to Plaintiff to $3,020. (Pl.’s Resp. Defs.’ Stmt. Facts ¶ 15).

On January 20, 2016, the Supreme Court decided Campbell-Ewald, holding “an

unaccepted settlement offer or offer of judgment does not moot a plaintiff’s case,” and “a would-

be class representative with a live claim of her own must be accorded a fair opportunity to show

that certification is warranted.” 136 S. Ct. at 672. On January 25, 2016, this Court denied

Defendants’ motion to stay as moot and directed Defendants to either “file a motion based on the

ruling in Campbell-Ewald” or respond to Plaintiff’s motion for class certification. (Doc. 78).

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On February 16, 2016, Defendants filed a Motion to Deposit (Doc. 82) and a Motion for

Summary Judgment (Doc. 91). The Motion to Deposit seeks leave pursuant to Rule 67 to deposit

$15,000 “for the purpose of tendering full and complete relief for Plaintiff’s alleged claims.”

(Defs.’ Mot. Deposit ¶ 9). The Motion for Summary Judgment argues that since Defendants have

“tendered—and not just offered—to Plaintiff complete recovery for its individual claims,

Plaintiff’s individual claims are moot,” this Court lacks subject-matter jurisdiction, and the Court

should therefore enter summary judgment for Plaintiff. (Defs.’ Mem. Supp. Summ. J. at 1–2).

Plaintiff now responds to Defendant’s motion for summary judgment. Plaintiff will

respond separately to Defendant’s motion to deposit funds pursuant to Rule 67.

Legal Standard

Summary judgment is permitted only “if the movant shows that there is no genuine issue

as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.

56(a). Even if a movant makes the required showing, a district court is never required to enter

judgment for the movant and may deny the motion if it believes “that the better course would be

to proceed to a full trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).

Argument

I. Defendants’ motion is barred by Campbell-Ewald because it seeks to deny Plaintiff a “fair opportunity” to obtain a decision on its pending motion for class certification.

In Campbell-Ewald v. Gomez, 136 S. Ct. 663, 672 (2016), the Supreme Court held in a

putative TCPA class action that a plaintiff “must be accorded a fair opportunity to show that

certification is warranted,” and refused to “place the defendant in the driver’s seat” by allowing it

to pay a nominal sum to the named plaintiff “to avoid a potential adverse decision, one that could

expose it to damages a thousand-fold larger than the bid [the plaintiff] declined to accept.”

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In this case, putting aside the procedural and substantive defects in Defendants’ motion

discussed below, at its core this is just a dressed up “pick-off” attempt designed to deny Plaintiff

a “fair opportunity” to obtain a decision on its motion for class certification, filed December 8,

2015. Campbell-Ewald makes clear that Defendants are not “in the driver’s seat” on whether this

case will be certified as a class action, and they cannot buy their way out of a “potential adverse

decision” that could expose them “to damages a thousand-fold larger” than the $3,020 they are

willing to pay.1 On this basis alone, the Court should deny Defendants’ motion for summary

judgment and order Defendants to respond to Plaintiff’s motion for class certification.

II. Defendants’ motion for summary judgment is procedurally defective.

A. Under Rule 56(a), a movant cannot seek summary judgment on behalf of a non-movant.

A movant may obtain summary judgment only “if the movant shows that there is no

genuine issue as to any material fact and the movant is entitled to judgment as a matter of law.”

Fed. R. Civ. P. 56(a) (emphasis added). Thus, Rule 56 “contemplates a party moving for

summary judgment for itself, not on behalf of another party.” Gaerte v. Great Lakes Terminal &

Transp. Corp., 2007 WL 2349611, at *3 (N.D. Ind. Aug. 14, 2007); Selective Way Ins. Co. v.

RHJ Med. Ctr., Inc., 2008 WL 5156078, at *7 (W.D. Pa. Dec. 8, 2008) (movant lacked standing

to seek summary judgment on another party’s claim against third party); see also Whittaker v.

Morgan State Univ., 2011 WL 1099266, at *1 (D. Md. Mar. 21, 2011) (party lacked standing to

seek dismissal of a claim by another party against third party).

In Gaerte, for example, the plaintiff moved for summary judgment on behalf of one of

the defendants. 2007 WL 2349611, at *3. The district court denied this “odd” and “irregular”

1 With 46,097 transmissions, Defendants’ potential exposure is closer to ten-thousand-fold greater, from $23,048,500 at $500 per violation to $69,145,500 if the Court finds the violations “willful or knowing.”

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motion under Rule 56(a) but held that, by making that motion, “plaintiff has essentially waived

his claims against” the defendant. Id. Given the plaintiff’s waiver of its claims, the district court

held it would “treat plaintiff’s motion for summary judgment on behalf of [defendant] as a

motion for voluntary dismissal,” which it granted under Rule 41(a)(2).

In this case, the Court should deny Defendants’ motion for summary judgment on its

face, since it seeks summary judgment in favor of a non-moving party in violation of Rule 56(a).

In addition, although Plaintiff was unable to find a case where a defendant made such an odd

motion (as opposed to the plaintiff in Gaerte), the Court could follow Gaerte by analogy and

hold that by moving for judgment in favor of the opposing party Defendants have “essentially

waived” their defenses to Plaintiff’s TCPA claim and proceed to decide class certification.2

In sum, the Court should deny Defendants’ motion for summary judgment in favor of a

non-movant as procedurally defective. The Court could also hold that by moving for summary

judgment in favor of the opposing party, Defendants have effectively abandoned any defense to

Plaintiff’s claims on the merits. Either way, the Court should deny Defendants’ motion and order

Defendants to respond to Plaintiff’s motion for class certification.

B. The “early practicable time” requirement prohibits summary judgment two years into a case where class certification has been pending for three months.

Rule 23(c)(1)(A) requires class certification be decided at an “early practicable time.”

The Supreme Court recently enforced this provision, refusing to require securities plaintiffs to

2 Defendants’ sole remaining affirmative defense is “Failure to State a Claim.” (Doc. 11 at 12). Ordinarily, finding a defense waived prior to class certification could implicate concerns over “one-way intervention,” but Defendants forfeited that objection by seeking summary judgment prior to class certification. See Peritz v. Liberty Loan Corp., 523 F.2d 349, 354 n.4 (7th Cir. 1975); Katz v. Carte Blanche Corp., 496 F.2d 747, 762 (3d Cir. 1974) (defendant seeking pre-certification merits decision “declines the protection against one-way intervention”); Oglesby v. Rotche, 1994 WL 142867, at *4 (N.D. Ill. Apr. 18, 1994) (protection waived against expanded class following discovery). Defendants made that “strategic decision,” and assumed the risk. Linda S. Mullenix, Dropping the Spear: The Case for Enhanced Summary Judgment Prior to Class Certification, 43 Akron L. Rev. 1197, 1213 (2010).

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prove materiality prior to class certification because it would undermine Rule 23(c) and the

“policy at the very core” of Rule 23, to aggregate “small recoveries” thus incentivizing law

enforcement. Amgen Inc. v. Conn. Ret. Plans & Trust Funds, 133 S. Ct. 1184, 1202 (2013).

This case was filed March 21, 2014. Defendants have since filed their first motion for

summary judgment, a motion to stay pending Campbell-Ewald, and now a second motion for

summary judgment. Plaintiff has timely responded to every motion and complied with all

deadlines, including filing its motion for class certification as ordered on December 8, 2015. The

Seventh Circuit has held there is sometimes enough “wiggle room” in Rule 23(c)(1) for a pre-

certification motion for summary judgment, Cowen v. Bank United of Tex., FSB, 70 F.3d 937,

941 (7th Cir. 1995), but Defendants exhausted that flexibility with their first motion for summary

judgment. They are not entitled to another pre-class-certification stab at summary judgment.

Defendants’ second motion for summary judgment should be denied on the basis that it

violates the “early practicable time” requirement. This Court invoked that requirement in setting

an aggressive briefing schedule for class certification in denying Defendants’ first motion for

summary judgment. (Doc. 63 at 14). Plaintiff complied with its deadline, and the Court should

deny Defendants’ second motion for summary judgment and reinstate the briefing schedule.

C. The Seventh Circuit prohibits summary judgment based on a lack of subject-matter jurisdiction.

The Seventh Circuit prohibits defendants from “[s]eeking summary judgment on a

jurisdictional issue” because it is “the equivalent of asking a court to hold that because it has no

jurisdiction the plaintiff has lost on the merits. This is a nonsequitur.” Winslow v. Walters, 815

F.2d 1114, 1116 (7th Cir. 1987). Here, Defendants argue that “[b]ecause Defendants have

tendered complete relief to Plaintiff for its individual claims,” there is “no longer a live

controversy under Article III,” and therefore, the Court should enter summary judgment for

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Plaintiff. (Defs.’ Mem. at 8–9 & 13). Unlike the defendant in Winslow, Defendants are asking the

Court to hold that because it lacks jurisdiction Plaintiff wins, rather than loses. But the argument

is still a non-sequitur because the Court cannot enter judgment for anyone if it lacks jurisdiction.

Once a district court finds it lacks jurisdiction, “the only function remaining to the court

is that of announcing the fact and dismissing the cause.” Steel Co. v. Citizens for a Better Env’t,

523 U.S. 83, 94 (1998); Chapman v. First Index, Inc., 796 F.3d 783, 786 (7th Cir. 2015) (“[A]

district court cannot enter judgment in a moot case. All it can do is dismiss for lack of a case or

controversy.”); Fed. R. Civ. P. 12(h)(3). The court cannot enter summary judgment, Winslow,

815 F.2d at 1116, or default judgment, Transatlantic Marine Claims Agency, Inc. v. Ace

Shipping Corp., Div. of Ace Young Inc., 109 F.3d 105, 108 (2d Cir. 1997), or judgment on an

accepted offer of judgment, Chapman, 796 F.3d at 786, or shift attorney fees, People Organized

for Welfare & Employment Rights (P.O.W.E.R.) v. Thompson, 727 F.2d 167, 173 (7th Cir. 1984),

or do any of the other things courts do. That is why dismissal for lack of jurisdiction must be

“without prejudice.” Murray v. Conseco, Inc., 467 F.3d 602, 605 (7th Cir. 2006).

Thus, Defendants’ motion for summary judgment is built on the fallacy that a district

court may enter judgment for a party because it lacks jurisdiction. That is a non-sequitur, and the

motion must be denied. However, because Defendants have argued the case is “moot” and the

Court has a duty to ensure it retains jurisdiction, Plaintiff explains below why Plaintiff’s claim is

not “moot” and why the Court has not lost jurisdiction.

III. Plaintiff’s claim is not “moot,” and the Court retains subject-matter jurisdiction.

Defendants argue Plaintiff’s individual claim has been rendered “moot,” divesting the

Court of subject-matter jurisdiction, because “Defendants have tendered in excess of the

maximum statutory damages Plaintiff could recover for its individual claims, plus Plaintiff’s

allowable costs (excluding attorneys’ fees) and entry of an injunction.” (Defs.’ Mem. at 9). This

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argument fails because nothing Defendants have done makes it “impossible” for the Court to

grant Plaintiff effectual relief, so Plaintiff’s individual claim cannot be “moot.”

A. Defendants did not render Plaintiff’s claim for injunctive relief “moot” by offering to agree to a “follow-the-law” injunction.

Campbell-Ewald held a case is moot “only when it is impossible for a court to grant any

effectual relief whatever to the prevailing party.” 136 S. Ct. at 669. An unaccepted offer of

judgment, the Court held, does not remove “the court’s ability to grant [the plaintiff] relief” and

therefore cannot render the plaintiff’s claim “moot.” Id. at 670 (quoting and adopting Genesis

Healthcare Corp. v. Symczyk, 133 S. Ct. 1523, 1533 (2013) (Kagan, J., dissenting)).

The Seventh Circuit reached the same conclusion in Chapman v. First Index, Inc., 796

F.3d 783, 786 (7th Cir. 2015), where the defendant offered a TCPA plaintiff individual statutory

damages and costs and agreed to entry of an injunction. Id. The Seventh Circuit held

“Chapman’s case is not moot” because it was not “impossible” for the court to grant effectual

relief, since it could still “award damages and enter an injunction.” Id. Particularly with respect

to the defendant’s “offer to have the district court enter an injunction,” the Seventh Circuit held

that if the offer truly rendered the case “moot,” then “[a]s soon as the offer was made, the case

would have gone up in smoke, and the court would have lost the power to enter the decree. Yet

no one thinks (or should think) that a defendant’s offer to have the court enter a consent decree

renders the litigation moot and thus prevents the injunction’s entry.” Id. at 786–87.

In this case, Defendants claim “[i]t is now impossible for the court to grant any effectual

relief” on Plaintiff’s claim for injunctive relief because they have “tender[ed] . . . entry of an

injunction” to Plaintiff, citing Chapman, 796 F.3d at 786. (Defs.’ Mem. at 12–13). But only a

court can enter an injunction.3 It is not something one party can “tender” to another. A defendant

3 The TCPA states the “appropriate court” may enter an injunction. 47 U.S.C. § 227(b)(3).

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can agree to entry of an injunction, but that agreement does not “moot” the plaintiff’s claim

because if it did, then the court could not enter the injunction, even if the plaintiff accepted the

offer. That was the Seventh Circuit’s holding in Chapman, 796 F.3d at 786–87. Defendants’

citation to Chapman for the opposite proposition is inexplicable. (Defs.’ Mem. at 12–13).

Defendants’ motion does not ask the Court to enter an injunction or specify what terms

Defendants would agree to. (Defs.’ Mem. at 1–16). Defendants previously offered to agree to an

injunction “prohibiting each of them from engaging in the statutory violations at issue in this

action and from sending unsolicited faxed advertisements to persons in the United States.” (Pl.’s

Resp. Defs.’ Stmt. Facts ¶ 12). Such an injunction would not provide full relief because an

injunction prohibiting “nothing beyond what was already forbidden by the law” is “illusory.”

Gilday v. Dubois, 124 F.3d 277, 287 (1st Cir. 1997). A “follow-the-law” injunction is also

meaningless because Defendants deny the faxes they already sent violated the TCPA, and they

would be free to continue that denial if Plaintiff sought to enforce the injunction in the future.

That is why Rule 65(d) requires an injunction provide “reasonable detail” of the acts restrained.

Schmidt v. Lessard, 414 U.S. 473, 476 (1974) (injunction “not to enforce ‘the present Wisconsin

scheme’” falls “far short” of Rule 65); Original Great Am. Chocolate Chip Cookie Co. v. River

Valley Cookies, Ltd., 970 F.2d 273, 276 (7th Cir. 1992) (noting the injunction in Schmidt was a

“scandalously inadequate form of injunction”); Wright & Miller, Fed. Prac. & Proc. § 2955 &

n.25 (3d ed.) (stating “orders simply requiring defendants to ‘obey the law’ are found uniformly

to violate the specificity requirement” of Rule 65(d)).

In short, Plaintiff’s claim for injunctive relief is not “moot,” and there is nothing

Defendants can do to make it moot. The Court has not been divested of subject-matter

jurisdiction, and Defendants’ motion based on that misconception must be denied.

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B. Defendants did not render Plaintiff’s claim for statutory damages “moot” by sending Plaintiff two checks.

Contrary to their claim, Defendants have never effectively “tendered” any money to

Plaintiff. They sent Plaintiff two personal checks for $1,510, each drawn on defense counsel’s

personal account at Associated Bank. (Doc. 86-14). An “uncertified personal check, however, is

no more than conditional payment, subject to collection upon presentment of the check to the

bank upon which it was drawn.” 28 Williston on Contracts § 72:32 (4th ed.). It is not equivalent

to “a certified check, or other cash equivalent,” which demonstrates “a present ability to pay and

an intent to effectuate it by presentation, and therefore constitutes a valid tender.” Id.

Even if Defendants “tender” all money Plaintiff could recover in an individual case, that

would not render Plaintiff’s claim moot. That is what happened in Susman v. Lincoln Am. Corp.,

587 F.2d 866, 870 (7th Cir. 1978), where the defendant “tendered” full damages to the plaintiffs

while their motion for class certification was pending and the Seventh Circuit held, “a case does

not become moot merely because of the tender to the named plaintiffs of their individual money

damages” and “[t]he district court has jurisdiction to consider the motion for class certification

and should hear and decide that motion prior to deciding whether or not the case is mooted by

the tender.” The first court to address this issue post-Campbell-Ewald agreed, holding

“Defendant’s tender of a check and offer of reinstatement therefore do not moot Plaintiff's claims

for unpaid wages.” Martelack, v. Toys ‘R’ Us, Inc., 2016 WL 762656, at *3 (D.N.J. Feb. 25,

2016); see also Zinni v. ER Sols., Inc., 692 F.3d 1162, 1164 (11th Cir. 2012) (holding settlement

offer did not moot claim and “even if the check had been tendered, that fact would not change

our ultimate conclusion”).

In Chapman, the Seventh Circuit went even further to hold that “even a defendant’s proof

that the plaintiff has accepted full compensation (‘accord and satisfaction’ in the language of

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Rule 8(c)(1)) is an affirmative defense rather than a jurisdictional bar” and does not “moot” a

claim. 796 F.3d at 787. Here, Plaintiff rejected Defendants’ checks and sent them back. (Pl.’s

Resp. Defs.’ Stmt. Facts ¶ 18). These checks cannot act as “a jurisdictional bar” under Chapman

or Susman.

Defendants authorities are not to the contrary. Hernandez v. PeopleScout, Inc., 2012 WL

3069495, *2 (N.D. Ill. July 24, 2012), was decided before Chapman and relies on the now

overruled proposition that a case is moot if “the defendant offers to satisfy the plaintiff’s entire

demand.” Moreover, the defendant was the plaintiff’s employer, and it made “a direct deposit” to

the plaintiff’s bank account for the full amount he sought. Id. Defendants in this case have no

way to make such a deposit, since Plaintiff had no prior relationship with Defendants and was

just one of their many victims. That is why Defendants are seeking leave to deposit funds with

the Court under Rule 67, which should be denied, as discussed in Section III.C, below.

Defendants argue Franco v. Allied Interstate LLC, 2015 WL 7758534, *3 (S.D.N.Y. Nov.

30, 2015), held “the plaintiff’s individual claims were rendered moot by the defendant’s motion

for entry of judgment in an amount that offered complete relief to the plaintiff.” (Defs.’ Mem. at

12). But Franco did not hold the claim was mooted by the defendant’s motion; it entered

judgment for the plaintiff and then held “the entry of judgment” rendered the plaintiff’s claim

moot. 2015 WL 7758534, at *3.4 Defendants in this case do not make that argument. Defendants

argue the Court lacks jurisdiction already, insisting Plaintiff’s claims “have been rendered moot

by Defendants’ tender” of the two checks. (Defs.’ Mem. at 12).

Defendants are correct that in Murphy v. Global Response Corp., 2015 WL 3574346, *4

(S.D. Fla. June 5, 2015), the district court “granted summary judgment in the defendant’s favor

on the plaintiff’s individual claims,” after holding the defendant tendered complete individual 4 Franco is back up on appeal to the Second Circuit for the second time in No. 15-4003.

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relief in an action under the Fair Labor Standards Act. (Defs.’ Mem. at 11–12). A summary

judgment for the defendant based on lack of jurisdiction would be barred in the Seventh Circuit.

Winslow v. Walters, 815 F.2d 1114, 1116 (7th Cir. 1987). But Defendants in this case do not

seek summary judgment in their favor. They seek summary judgment in Plaintiff’s favor on the

basis that the Court lacked jurisdiction at the time the motion was filed. Defendants cite no case

where a district court adopted this contorted reasoning, and the motion must be denied.

C. Defendants did not render Plaintiff’s claim for statutory damages “moot” by moving for leave to deposit funds under Rule 67.

Defendants argue that by moving to deposit funds under Rule 67, they have “tendered”

Plaintiff’s individual statutory damages. (Defs.’ Mem. at 1). Defendants are assuming their

motion to deposit will be granted. As Plaintiff argues in greater detail in its response to that

motion, however, leave to deposit must be denied because Rule 67 merely “provides a place of

safekeeping for disputed funds” and “cannot be used as a means of altering the contractual

relationships and legal duties [or rights] of the parties.” United States v. Tully, 288 F.3d 982, 987

(7th Cir. 2002); Maher Eng’g Co. v. Screwmatics of S.C., Inc., 2014 WL 4979167, at *1–2 (N.D.

Ill. Oct. 6, 2014) (denying leave to deposit for the purpose of limiting defendant’s exposure).

Three post-Campbell-Ewald district courts have so far rejected this tactic as an improper

use of Rule 67 and a violation of the “fair opportunity” requirement in Campbell-Ewald. See

Brady v. Basic Research, LLC, --- F.R.D. ---, 2016 WL 462916, at *1–2 (E.D.N.Y. Feb. 3,

2016); Bais Yaakov of Spring Valley v. Varitronics, LLC, 2016 WL 806703, at *1 (D. Minn.

Mar. 1, 2016); Bais Yaakov v. Graduation Source, LLC, No. 7:14-3232 (S.D.N.Y. 2016) (Order,

Doc. 67, Mar. 7, 2016) (attached as Ex. A to Pl.’s Resp. Mot. Deposit). These cases are

persuasive, and this Court should adopt them. If the Court denies Defendants’ proposed deposit,

it need not consider whether the deposit would render Plaintiff’s claim for damages “moot.”

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D. Even if the Court allows the deposit, Plaintiff’s claim for statutory damages is not moot because Defendants’ strategy depends on the Court granting further effectual relief by disbursing the funds.

Even if the Court allows Defendants to deposit funds, paying money into court does not

make it “impossible for a court to grant any effectual relief” any more than merely offering to do

so. Campbell-Ewald, 136 S. Ct. at 669. Defendants concede deposited funds may be “distributed

only upon order of this Court.” (Defs.’ Mem. at 4); Fed. R. Civ. P. 67(b) (“Money paid into court

under this rule must be deposited and withdrawn in accordance with 28 U.S.C. §§ 2041,

2042 and any like statute.”); 28 U.S.C. § 2042 (“No money deposited in court under section 2041

of this title shall be withdrawn except by order of the court.”). Since Defendants’ new strategy

depends on the Court granting further “effectual relief,” they admit the case is not moot. See Bais

Yaakov v. Graduation Source, LLC, No. 7:14-3232 (S.D.N.Y. 2016) (Order, Doc. 67, Mar. 7,

2016) (attached as Ex. A to Pl.’s Resp. Mot. Deposit).

Moreover, “[a] district court does not have carte blanche to dispose of deposited funds as

it sees fit. Funds deposited pursuant to Rule 67 are not at the disposal of the Judge but, rather,

are held in trust for their rightful owner.” Alstom Caribe, Inc. v. George P. Reintjes Co., 484 F.3d

106, 114 (1st Cir. 2007).5 Here, Plaintiff maintains that any money deposited into court by

Defendants would have to be held for the benefit of the class after this Court rules on Plaintiff’s

motion for class certification. Accordingly, this Court may not simply order that money be paid

out to Plaintiff upon deposit into Court, but must first decide Plaintiff’s class certification motion

in order to determine the “rightful owner” of the deposited funds.

Accordingly, far from preventing the Court from granting effectual relief, Defendants’

strategy entails the Court granting further relief. That means Plaintiff’s individual claim for

5 Courts have long held that “[a] tender and payment into court . . . is a continuing offer,” Dillenback v. The Rossend Castle, 30 F. 462, 464 (S.D.N.Y. 1887).

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statutory damages is not moot. Campbell-Ewald, 136 S. Ct. at 669; see also United States v.

Windsor, 133 S. Ct. 2675, 2686 (2013) (holding parties have a concrete stake in a dispute where

defendant will “not disburse [payment] but for the court’s order”).

IV. The Court cannot force an unwanted individual judgment on Plaintiff.

Defendants ask the Court to “enter judgment for Plaintiff in the amount of $3,020” plus

costs (with no mention of an injunction). (Defs.’ Mem. at 13). Plaintiff objects to such a

judgment, as it made clear in rejecting Defendants’ offer of judgment and timely filing its motion

for class certification, and Campbell-Ewald forbids a district court from entering individual

judgment over a putative class plaintiff’s objections, given that the only apparent purpose would

be to deny the plaintiff a “fair opportunity” to seek class certification.

In reaching the “fair opportunity” standard in Campbell-Ewald, the Supreme Court

“adopt[ed] Justice Kagan’s analysis” in the four-justice dissent in Genesis Healthcare. 136 S. Ct.

at 670. Justice Kagan’s analysis states that, although an offer cannot moot a claim, a district

court need not allow a suit to proceed where the defendant unconditionally surrenders but the

plaintiff refuses to accept victory out of sheer “obstinacy or madness.” 133 S. Ct. at 1536

(Kagan, J., dissenting). Under those circumstances, a district court has “inherent authority” to

“halt” the action by entering judgment for the plaintiff. Id. Notably, when a district court

terminates a suit in this manner, it does not do so because it lacks jurisdiction, but because it has

jurisdiction to decide that continued litigation would be futile. Id.

But a court “may not take that tack” in a putative class action, Justice Kagan reasoned,

because an individual judgment does not give the plaintiff “all the law authorizes and she has

sought,” since there is no “relief for the class.” Id. (quoting Deposit Guaranty Nat’l Bank v.

Roper, 445 U.S. 326, 341 (1980) (Rehnquist, J., concurring)). This is not a question of the

court’s subject-matter jurisdiction or the plaintiff’s Article III standing to represent other

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persons—the individual plaintiff’s claim remains live no matter what the defendant does—but a

question of the court’s “inherent authority” to manage its docket. Id.

In this case, the Court should follow Justice Kagan’s analysis, as adopted in Campbell-

Ewald, and deny Defendants’ request that it force an unwanted individual judgment on Plaintiff.

Now that Campbell-Ewald has made clear Defendants cannot “moot” Plaintiff’s claim on their

own, Defendants are asking this Court to do it for them. The Court should refuse to participate in

this proposed end-run around Campbell-Ewald.

Even if this Court were to enter the unwanted individual judgment (with a meaningful

injunction, which Defendants do not request), Plaintiff’s individual claim would still not be

“moot.” The parties would remain “adverse” because Defendants continue to deny liability.

Campbell-Ewald, 136 S. Ct. at 666, 670; id. at 675 (Thomas, J., concurring) (at common law,

“defendant who tried to deny liability could not effectuate a tender”); see also Sprint Commc’ns

Co. v. APCC Servs., Inc., 554 U.S. 269, 274 (2008) (“[H]istory and tradition offer a meaningful

guide to the types of cases that Article III empowers federal courts to consider.”).

In sum, Plaintiff’s individual claim is not “moot” because nothing Defendants have done

makes it “impossible” for the Court to grant effectual relief. Defendants’ new strategy actually

depends on the Court granting further relief. The Court retains subject-matter jurisdiction, and

Defendants’ motion for summary judgment must be denied.

V. Even if Plaintiff’s individual claim becomes “moot,” Plaintiff may pursue class certification under Damasco because its motion for class certification is pending.

Defendants argue that after allowing their proposed deposit, forcing an individual

judgment on Plaintiff, and disbursing payment to Plaintiff, the Court should dismiss the class

claims without prejudice. (Defs.’ Mem. at 14). That is prohibited by Damasco v. Clearwire

Corp., where the Seventh Circuit held that (1) following an offer of complete individual relief

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“the sole plaintiff no longer maintains a personal stake,” but (2) if a motion for class certification

is on file, “the pendency of that motion protects a putative class from attempts to buy off the

named plaintiffs.” 662 F.3d 891, 895–96 (7th Cir. 2011) (citing Primax Recoveries, Inc. v.

Sevilla, 324 F.3d 544, 546–47 (7th Cir. 2003) (holding “the mooting of the named plaintiff’s

claim in a class action by the defendant’s satisfying the claim does not moot the action” if “a

motion for class certification has been made and not ruled on”)).

In Chapman, 796 F.3d at 786–87, the Seventh Circuit overruled Damasco and similar

decisions “to the extent they hold that a defendant’s offer of full compensation moots the

litigation or otherwise ends the Article III case or controversy,” agreeing with the Genesis

Healthcare dissent that “an expired (and unaccepted) offer of a judgment does not satisfy the

Court’s definition of mootness, because relief remains possible.” But Chapman did not overrule

(or even mention) the second prong of Damasco: that a “pending” motion for class certification

“protects a putative class from attempts to buy off the named plaintiffs.” Id.

Plaintiff’s Motion for Class Certification has been pending since December 8, 2015.

(Doc. 64-2). This is not a “placeholder” motion filed at the outset of the case, but a proper

motion filed after completion of discovery supported by record evidence and expert testimony

detailing a nationwide fax-blasting operation targeting tens of thousands of recipients. This is

precisely the activity the TCPA prohibits, and under the second prong of Damasco, which

remains good law, even if Plaintiff’s claims became “moot” after filing that motion, the putative

class is protected against any attempt to “buy off” Plaintiff’s claim. Damasco, 662 F.3d at 896.

Defendants argue Damasco does not apply because it involved “an offer of complete

relief, and not a tender of complete relief.” (Defs.’ Mem. at 15 (bold italics in original)). That is

irrelevant. What matters under Damasco is not how the defendant moots the plaintiff’s claim, but

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when, specifically whether mootness occurs “[b]efore [the plaintiff] moved to certify” or “after a

plaintiff moves to certify a class,” in which case the plaintiff may proceed because “‘[o]therwise

the defendant could delay the action indefinitely by paying off each class representative in

succession.’” Damasco, 662 F.3d at 895 (quoting Primax, 324 F.3d at 546–47).

Thus, in this case, even if Defendants prevail in every other aspect of their pick-off

attempt and the Court (1) grants them leave to deposit funds under Rule 67, (2) enters individual

judgment for Plaintiff for all the money Plaintiff could recover in an individual action and a

meaningful injunction (which Defendants do not even request), (3) enters an order disbursing full

statutory damages to Plaintiff, and (4) holds this set of circumstances renders Plaintiff’s

individual claim “moot,” those circumstances will have arisen long after Plaintiff filed its Motion

for Class Certification on December 8, 2015. Even under this best-case scenario for Defendants,

Plaintiff may pursue class certification under Damasco, and the Court cannot dismiss the class

claims without prejudice, as Defendants request, but must proceed to decide class certification.

Notably, this aspect of Damasco is consistent with longstanding Supreme Court

jurisprudence that “an action brought on behalf of a class does not become moot upon expiration

of the named plaintiff’s substantive claim,” and “[t]he proposed representative retains a ‘personal

stake’ in obtaining class certification sufficient to assure that Art. III values are not undermined,”

U.S. Parole Comm’n v. Geraghty, 445 U.S. 388, 402–04 (1980), and that a named plaintiff has a

personal stake in “shift[ing] part of the costs of litigation” to other class members. Roper, 445

U.S. at 336 (holding interest created personal stake, even after tender of full individual relief to

court and entry of judgment for plaintiffs); id. at 341 (Rehnquist, J., concurring) (holding

“[a]cceptance need not be mandated under our precedents since the defendant has not offered all

that has been requested in the complaint (i.e., relief for the class)”). The Seventh Circuit also

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holds a plaintiff has a concrete interest in obtaining an incentive award for his service to the

class. See Espenscheid v. DirectSat USA, LLC, 688 F.3d 872, 874–76 (7th Cir. 2012).

Conclusion

For the foregoing reasons, the Court should deny Defendants’ Motion for Summary

Judgement in Plaintiff’s favor and order Defendants to respond to Plaintiff’s pending Motion for

Class Certification.

Respectfully submitted:

PRACTICE MANAGEMENT SUPPORT SERVICES, INC., individually and as the representative of class of similarly-situated persons

s/ Glenn L. Hara

Glenn L. Hara Brian J. Wanca Ryan M. Kelly ANDERSON + WANCA 3701 Algonquin Road, Suite 760 Rolling Meadows, IL 60008 Telephone: (847) 368-1500

Facsimile: (847) 368-1501 And Max G. Margulis

MARGULIS LAW GROUP 28 Old Belle Monte Rd. Chesterfield, MO 63017

Telephone: (636) 536-7022 Facsimile: (636) 536-6652

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CERTIFICATE OF SERVICE

I hereby certify that on March 10, 2016, I electronically filed the foregoing with the Clerk of the Court using the CM/ECF system which will send notification of such filing to all attorneys of record. s/Glenn L. Hara