Steven Thorogood v. Sears, Roebuck & Company ( 2010 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 09-3005
S TEVEN J. T HOROGOOD ,
Plaintiff-Appellant,
v.
S EARS, R OEBUCK AND C OMPANY,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 06 cv 1999—Harry D. Leinenweber, Judge.
S UBMITTED JANUARY 6, 2010—D ECIDED F EBRUARY 12, 2010
Before P OSNER, K ANNE, and E VANS, Circuit Judges.
P OSNER, Circuit Judge. This appeal is a sequel to an
earlier appeal by the plaintiff that we decided against
him. See 547 F.3d 742 (7th Cir. 2008). The plaintiff, a
Tennessean, had bought a Kenmore-brand clothes dryer
from Sears Roebuck (Kenmore is a Sears brand name). The
words “stainless steel” were imprinted on the dryer, but
part of the dryer’s drum was made of another material.
He filed a class action suit in an Illinois state court on
2 No. 09-3005
behalf of himself and the other purchasers, scattered
across 28 states plus the District of Columbia, of the half
million or so Kenmore dryers represented in the
labeling and advertising of the dryers as containing
stainless steel drums. The suit claimed that the repre-
sentation that the dryer contained a stainless steel drum
violated the Tennessee Consumer Protection Act, Tenn.
Code. §§ 47-18-101 et seq., and similarly worded state
consumer protection statutes in the states of the other
members of the class. The suit was removed to federal
district court under the Class Action Fairness Act, 28
U.S.C. §§ 1332(d), 1453, 1711-1715, and the district judge
certified the class. We accepted the defendant’s appeal
from the order of class certification, Fed. R. Civ. P. 23(f),
and reversed, ordering the class decertified.
We called the suit “a notably weak candidate for class
treatment. Apart from the usual negatives, there are no
positives: not only do common issues of law or fact not
predominate over the issues particular to each purchase
and purchaser of a ‘stainless steel’ Kenmore dryer, as
Rule 23(b)(3) of the Federal Rules of Civil Procedure
requires, but there are no common issues of law or fact, so
there would be no economies from class action treat-
ment.” 547 F.3d at 746-47 (emphasis in original). Because
there is no “reason to believe that there is a single under-
standing of the significance of labeling or advertising
clothes dryers as containing a ‘stainless steel drum,’ ” id.
at 748, evaluation of the class members’ claims would
require individual hearings; each class member would
have to testify to what he understood by such a label or
advertisement. We also expressed great skepticism of
the merits of the plaintiff’s individual claim.
No. 09-3005 3
With the case on remand reduced to that claim, and the
parties in agreement that the maximum damages that the
plaintiff could recover under Tennessee law were $3,000,
the defendant made an offer of judgment under Rule 68
of $20,000 inclusive of attorneys’ fees. The district judge,
believing that the plaintiff should receive no attorneys’
fees (the Tennessee Consumer Protection Act makes an
award of attorneys’ fees in a suit under the Act discre-
tionary, Tenn. Code § 47-18-109(e)(1); see also Tenn. Sup.
Ct. R. 8; Killingsworth v. Ted Russell Ford, Inc., 104 S.W.3d
530, 533-37 (Tenn. App. 2002)), dismissed the suit for
want of subject-matter jurisdiction. The offer exceeded
the amount in controversy and so the case was moot.
Greisz v. Household Bank (Illinois), N.A., 176 F.3d 1012, 1014-
15 (7th Cir. 1999); Rand v. Monsanto Co., 926 F.2d 596, 597-
98 (7th Cir. 1991); O’Brien v. Ed Donnelly Enterprises, Inc.,
575 F.3d 567, 576 (6th Cir. 2009).
The plaintiff argues that the district court lost jurisdic-
tion under the Class Action Fairness Act when we decerti-
fied the class, and so the case should have been
remanded to the state court in which it began, as in any
other case that is improperly removed. That contention
was rejected in Cunningham Charter Corp. v. Learjet, Inc.,
No. 09-8042, 2010 WL 199627 (7th Cir. Jan. 22, 2010),
which did recognize an exception for cases in which the
claim that the suit can be maintained as a class action
is frivolous—but the claim in this case was not (quite)
frivolous.
The plaintiff argues in the alternative that the district
court was wrong to think him entitled to no award of
4 No. 09-3005
attorneys’ fees. (Notice that if the judge was right, the
offer of judgment gave the plaintiff a $17,000 windfall.)
The plaintiff incurred attorneys’ fees of $246,000 and even
though they exceeded the value of the relief he received
by a factor of 82, he contends that the fees were a worth-
while investment and the defendant should be required
to reimburse him for them. The defendant offered him
a sum equal to the maximum damages (and more) that
he could have obtained for his individual claim after
the district court rejected the defendant’s motion for
summary judgment based on the statute of limitations
and on other grounds, and he argues that his theory of
liability was therefore vindicated and its vindication
will help other purchasers of “stainless steel” Kenmores
should they file individual suits.
The award of attorneys’ fee in excess—even far in
excess—of the relief a plaintiff obtained can be rea-
sonable if the suit conferred value above and beyond that
relief. City of Riverside v. Rivera, 477 U.S. 561, 574-80 (1986)
(plurality opinion); Molnar v. Booth, 229 F.3d 593, 605
(7th Cir. 2000); Hyde v. Small, 123 F.3d 583, 585-86 (7th Cir.
1997); Lowry ex rel. Crow v. Watson Chapel School District,
540 F.3d 752, 764-65 (8th Cir. 2008). That is the federal
rule and the rule in Tennessee as well. E.g., Keith v.
Howerton, 165 S.W.3d 248, 251-53 (Tenn. App. 2004);
Killingsworth v. Ted Russell Ford, Inc., supra, 104 S.W.3d
at 534-37. But ordinarily it must be relief ordered by a
court rather than relief provided by a settlement. That is
the usual federal rule, Buckhannon Board & Care Home, Inc.
v. West Virginia Dept. of Health & Human Resources, 532
U.S. 598, 604-05 and n. 7 (2001); Bingham v. New Berlin
No. 09-3005 5
School District, 550 F.3d 601, 602-03 (7th Cir. 2008) (for an
exception, however, see Cornucopia Institute v. U.S. Dept. of
Agriculture, 560 F.3d 673, 677 (7th Cir. 2009)), and again
it is the Tennessee rule as well; the Tennessee Con-
sumer Protection Act expressly requires “a finding that
a provision of [the Act] has been violated” for attoneys’
fees to be awarded. Tenn. Code § 47-18-109(e)(1).
The relief that the plaintiff received was not ordered
by a court. The district judge ruled that as a matter of
law the plaintiff could not recover damages in excess of
$3,000 and that he was not entitled to any award of attor-
neys’ fees. The defendant’s offer was thus far in excess
of the plaintiff’s maximum entitlement. It is true that a
defendant cannot defeat a valid claim of attorneys’ fees
by making an offer of judgment that covers merely the
plaintiff’s damages and arguing that therefore the case
is moot. In order to moot the case, the offer must include
a reasonable attorney’s fee, Marek v. Chesny, 473 U.S. 1, 5-
7, 9 (1985); O’Brien v. Ed Donnelly Enterprises, Inc., supra,
575 F.3d at 575-76; see Thompson v. Southern Farm Bureau
Casualty Ins. Co., 520 F.3d 902, 904 (8th Cir. 2008) (per
curiam) (although it need not do so explicitly, Marek
v. Chesny, supra, 473 U.S. at 5-7), if as in this case the
entitlement to such a fee is a part of the plaintiff’s claim.
But the district judge was within his discretion in
deciding that no fee should be awarded. The plaintiff’s
individual claim, as we indicated in our previous
opinion, was notably weak, his understanding of Sears’s
“stainless steel” representation being almost certainly
unreasonable. 547 F.3d at 747. The defendant’s offer of
$20,000 was intended to get rid of a nuisance claim. The
6 No. 09-3005
making of the offer was not a vindication of the plain-
tiff’s theory of liability, an acknowledgment that it had
some potential merit.
Furthermore, the $246,000 in fees that the plaintiff seeks
to be reimbursed for were incurred in attempting to
maintain the suit as a class action; no sane person
incurs fees in that amount to prosecute a claim worth
at most $3,000. The plaintiff’s effort to exalt his meager
claim into a sprawling nationwide class action was a
flop. Sears should not have to bear the entire cost of the
flop. See O’Brien v. Ed Donnelly Enterprises, Inc., supra,
575 F.3d at 576; Barfield v. New York City Health &
Hospitals Corp., 537 F.3d 132, 152-53 (2d Cir. 2008).
The plaintiff could not be permitted to litigate a claim
for $3,000 tops (no attorneys’ fee) when the defendant
was offering him $20,000. He didn’t have to accept the
offer, but he couldn’t turn it down and continue litigating,
except that he could (and did) appeal.
In the remote event that, no offer of judgment being
made, the plaintiff would have gone on to win $3,000
at trial, the district court might have awarded him some-
thing more than $17,000 in attorneys’ fees. “One purpose
of allowing an award of attorneys’ fees to a prevailing
plaintiff is to disable defendants from inflicting with
impunity small losses on the people whom they wrong.”
Orth v. Wisconsin State Employees Union Counsel 24, 546
F.3d 868, 875 (7th Cir. 2008); see also Fletcher v. City of
Fort Wayne, 162 F.3d 975, 976 (7th Cir. 1998) (citation
omitted) (“a plaintiff with a small claim who achieves a
complete recovery is entitled to fees, because civil rights
No. 09-3005 7
laws entitle victims of petty violations to relief.
The cumulative effect of minor transgressions is con-
siderable, yet they would not be deterred if fees were
unavailable”). Maybe no competent lawyer would
handle a suit worth at most $3,000 for as little as $17,000,
especially since, given the weakness of the claim, its
expected value was much less. But the defendant’s offer
of $20,000 cannot be taken as an acknowledgment that
the plaintiff was entitled to any award of attorneys’ fees,
let alone an acknowledgement of the merits of the plain-
tiff’s claim; the offer as we said was intended to terminate
a nuisance suit costly to defend against.
Anyway the plaintiff doesn’t argue that his “success” in
obtaining relief on his individual claim justified an attor-
ney’s fee of more than $17,000. He stakes his all on the
proposition that his efforts conferred a benefit on the
class worth at least $246,000. The district judge did not
abuse his discretion in assessing the benefit to the class
that we resoundingly ordered be decertified at $0.
A FFIRMED.
2-12-10