Etta Scott v. Westlake Services LLC , 740 F.3d 1124 ( 2014 )


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  •                                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.