Etta Scott v. Westlake Services LLC

In the
United States Court of Appeals
For the Seventh Circuit
No. 13-2699
ETTA SCOTT, on behalf of herself and
others similarly situated,
Plaintiff-Appellant,
v.
WESTLAKE SERVICES LLC, doing busi-
ness as WESTLAKE FINANCIAL SER-
VICES,
Defendant-Appellee.
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 12 C 9289 — Rubén Castillo, Chief Judge.
ARGUED DECEMBER 10, 2013 — DECIDED JANUARY 23, 2014
Before MANION, ROVNER, and HAMILTON, Circuit Judges.
HAMILTON, Circuit Judge. Etta Scott filed suit on behalf of
herself and a putative class alleging that defendant Westlake
Services LLC repeatedly called her in violation of the Tele-
phone Consumer Protection Act, 47 U.S.C. § 227 (“TCPA”).
Before Scott moved to certify a plaintiff class, Westlake offered
2 No. 13-2699
to pay Scott the full statutory damages for any calls that
violated the TCPA. Scott did not accept the offer. The district
court then held that the offer rendered Scott’s case moot and
entered final judgment, but retained jurisdiction over post-
judgment discovery in the case. Scott appeals, and we reverse.
I. Factual and Procedural Background
Scott filed her first amended complaint (the operative
complaint in the case) on January 17, 2013. The complaint
alleged that Westlake repeatedly called her cell phone using an
automated dialer in violation of the TCPA. Scott sought for
herself and a putative class: (1) statutory damages of $500 for
each negligent violation of the Act and $1500 for each inten-
tional violation of the Act, (2) injunctive relief, and (3) attorney
fees. She did not immediately move for class certification.
On February 5, 2013, Westlake sent Scott’s attorney an
email with a settlement offer. Westlake offered to pay Scott
$1500 (the statutory maximum) “for each and every dialer-
generated telephone call made to plaintiff.” The email went on
to say that while Scott had identified twenty dialer-generated
calls made to her phone, Westlake believed there were only six,
and suggested further discussion to “resolve the discrepancy.”
Westlake also agreed to pay Scott all costs that she would
recover if she prevailed in her lawsuit, and agreed to the entry
of an injunction prohibiting Westlake from calling her again
without her express permission. The email concluded by
warning Scott that, in Westlake’s view, its offer rendered her
case moot. The next day, Scott moved for class certification and
declined the settlement offer. She explained that there was “a
significant controversy” concerning how many dialer-gener-
No. 13-2699 3
ated calls Westlake had placed to her phone, so the offer was
inadequate and did not render her case moot.
Westlake then moved to dismiss Scott’s suit as moot. The
district court granted the motion, finding that Westlake had
offered Scott everything she sought in her complaint thus
depriving the court of subject matter jurisdiction. The court
recognized, however, that there was sufficient uncertainty
about the actual terms of the settlement offer that it would
need to retain jurisdiction to enforce compliance with the offer.
The court directed the parties to conduct discovery to deter-
mine just how many dialer-generated calls Scott had actually
received from Westlake so that the amount of Westlake’s check
to Scott could be calculated. In the court’s view, Kokkonen v.
Guardian Life Ins. Co. of America, 511 U.S. 375 (1994), authorized
this procedure as long as the judgment incorporated the
settlement offer. Scott appeals the dismissal and the district
court’s retention of jurisdiction under Kokkonen.
II. Analysis
Before turning to the substance of Scott’s claims, we must
first determine the basis of our jurisdiction over this appeal.
Post-judgment discovery is ongoing in the district court, and
that court may issue further rulings to decide discovery
disputes and enforce the settlement offer. Despite these
continued proceedings, the district court entered on June 6,
2013 a final judgment that resolved all claims. Upon entry of
that final judgment, Scott could not risk waiting for further
action. We conclude that we have jurisdiction over the appeal
from the final judgment pursuant to 28 U.S.C. § 1291. On to the
merits.
4 No. 13-2699
Under this circuit’s case law, an unaccepted settlement offer
can render the plaintiff’s case moot if it gives the plaintiff
everything she requested. Damasco v. Clearwire Corp., 662 F.3d
891, 895 (7th Cir. 2011); Gates v. City of Chicago, 623 F.3d 389,
413 (2010). These cases reason that once “the defendant offers
to satisfy the plaintiff’s entire demand, there is no dispute over
which to litigate” and thus no controversy to resolve. Rand v.
Monsanto Co., 926 F.3d 596, 597–98 (7th Cir. 1991). In other
words, “You cannot persist in suing after you’ve won.”
Greisz v. Household Bank (Ill.), N.A., 176 F.3d 1012, 1015 (7th Cir.
1999).1
On the other hand, if the defendant offers to pay only what
it thinks might be due, the offer does not render the plaintiff’s
case moot. Gates v. Towery, 430 F.3d 429, 431–32 (7th Cir. 2005).
In that situation, the plaintiff still has a stake in the action
because she may obtain additional relief if she prevails. The
plaintiff’s stake is negated only if no additional relief is
1
Since most plaintiffs are happy to have defendants surrender, this tactic
is most controversial as a means to short-circuit a looming class action or as
a means to avoid paying attorney fees and costs in light of Buckhannon Bd.
and Care Home, Inc. v. West Virginia Dept. of Health and Human Resources, 532
U.S. 598 (2001). The circuits are split on whether an unaccepted settlement
offer can render a case moot. Compare, e.g., Diaz v. First Am. Home Buyers
Protection Corp., 732 F.3d 948, 950 (9th Cir. 2013) (no), with Warren v. Sessoms
& Rogers, P.A., 676 F.3d 365, 370 (4th Cir. 2012) (yes). The Supreme Court
granted certiorari in Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523(2013), to resolve this split but ultimately decided that case on narrower
grounds. The circuit split remains, but there are reasons to question our
approach to the problem. See id. at 1533–34 (Kagan, J., dissenting). Scott
does not challenge our circuit’s view, so we will continue to await a
resolution of the split.
No. 13-2699 5
possible. Id. To hold otherwise would imply that any reason-
able settlement offer moots the plaintiff’s case or that long-shot
claims are moot rather than unlikely to succeed. Id. at 432.
“That’s not the way things work: A bad theory (whether of
liability or of damages) does not undermine federal jurisdic-
tion.” Id.
Westlake did not offer to satisfy Scott’s entire demand.
Westlake offered to pay only for dialer-generated calls and
acknowledged only six such calls, significantly fewer than the
twenty or more calls Scott identified in her complaint, translat-
ing to a difference of at least $21,000 in damages due. That is
not an unconditional offer to pay the plaintiff the entirety of
her demand. Whether a call is “dialer-generated” within the
meaning of the TCPA is a hotly contested issue on the merits.
See, e.g., Satterfield v. Simon & Schuster, Inc., 569 F.3d 946, 950
(9th Cir. 2009) (reversing grant of summary judgment because
of factual dispute on whether defendants had used automated
dialer in violation of TCPA). Westlake’s offer amounted to
telling Scott it was willing to pay for all calls that in its estima-
tion (or perhaps that of a court) violated the TCPA. Under the
sound reasoning of Gates v. Towery, such an offer could not
render Scott’s case moot.
Westlake argues, however, that Damasco v. Clearwire Corp.,
662 F.3d 891 (7th Cir. 2011), requires affirmance. We disagree.
In Damasco, the defendant offered to pay the plaintiff maxi-
mum statutory damages “for each text message received from
Clearwire.” Id. at 893. That offer gave the plaintiff everything
he requested because it offered to pay the plaintiff for every
message he had received from the defendant. All that re-
mained to be done was to count the number of calls and write
6 No. 13-2699
the plaintiff a check. Here, by contrast, Westlake offered to pay
for each dialer-generated call Scott received, and disputed the
number of qualifying calls. The fact that Westlake was willing
to pay for “each and every” such message does not change the
fact that Westlake was offering to pay only the amount it felt
might be due. That was not enough to moot Scott’s case.
Our conclusion is bolstered by the district court’s order to
conduct post-judgment discovery to determine how many
qualifying calls Scott received. Post-judgment discovery is
unusual to begin with. The idea of post-judgment discovery
into a disputed issue on the merits of the case to figure out how
to apply an unaccepted settlement offer that supposedly
rendered the case moot is difficult to grasp. Where further
discovery relevant to the merits and possibly even future
rulings are needed to determine how much the defendant
actually offered to pay, a live controversy still exists between
the parties.
The district court concluded, and Westlake argues, that
Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375 (1994),
authorized the court to retain jurisdiction over the post-
judgment discovery proceedings. Because we conclude that
Scott’s case is not moot, we need not decide whether Kokkonen
authorized this procedure. We note, however, that Kokkonen
involved a settlement agreement rather than an unaccepted
settlement offer, and that the parties’ post-judgment dispute
did not involve the merits of the underlying case. Kokkonen,
511 U.S. at 376–77. Supervising post-judgment discovery into
the merits of the underlying case is quite different from
determining, as in Kokkonen, whether one party must return a
file to the other. Id. at 377. The difference between the disagree-
No. 13-2699 7
ment in Kokkonen and the disagreement in this case is a further
indication that Scott’s case is not moot.
One somewhat sticky puzzle remains to be resolved: how
should the district court proceed on remand, given that
discovery is already taking place as part of the post-judgment
proceedings? We conclude that the district court should simply
revive the original case and convert the post-judgment
discovery into discovery on the merits of the underlying case,
including full discovery if appropriate. Scott is also free to
renew her motion for class certification, which was denied
when her case was declared moot.
We REVERSE the judgment dismissing the case as moot
and REMAND to the district court for proceedings consistent
with this opinion.