Antitrust Law Daily Wrap Up, PRIVACY—7th Cir.: Denial of class certification upheld; mootness of individual claim remanded, (Aug 11, 2015)

By Michael Menzhuber, J.D., LL.M.

The denial of an individual’s request to represent a class of persons against a sourcing manufacturer for sending unsolicited commercial faxes in violation of the Telephone Consumer Protection Act (TCPA) was affirmed by the U.S. Court of Appeals in Chicago. The appeals court vacated and remanded the decision to dismiss the individual’s own claim as moot (Chapman v. First Index, Inc., August 6, 2015, Easterbrook, F.).

Background. Arnold Chapman filed a putative class action suit against First Index, Inc., alleging that the marketer violated the TCPA by sending unsolicited commercial faxes. While the motion for class certification was pending, First Index made an offer to settle Chapman’s personal claim. Because Chapman could not accept this offer while his motion for class certification was pending, the offer was held open for 14 days after the judge made a ruling on the motion.

The judge denied Chapman’s motion for class certification on the basis that it would be too difficult to determine who may have provided oral consent to receive the commercial faxes from First Index. Chapman did not accept the offer from First Index to personally settle his claim and filed a motion to amend his complaint to propose a new class that included all persons who received faxes from First Index that either lacked an opt-out notice or contained a specific notice that Chapman believed violated the FCC’s regulations. First Index filed a motion to dismiss Chapman’s personal claim as moot because he never replied to the settlement offer and that the offer had lapsed.

The district court declined to certify the new class proposed by Chapman and granted the motion by First Index to dismiss Chapman’s personal claim as moot. Chapman appealed.

Class certification. The district court declined to certify the new class proposed by Chapman because: (1) the proposal came 18 months after discovery had closed; (2) Chapman had known about the potential notice issue from the outset of the litigation but had made a strategic decision not to pursue it; and (3) changing the focus of the litigation more than four years into the case was impermissible. In affirming the decision, the appeals court noted that, although the parties and the judge had proceeded as if Chapman’s proposal to certify a new class required an amendment to the complaint, class definitions are not on the list of things required in a complaint and the obligation to define a class falls to the judge. However, it determined that, no matter how the subject was approached, the district judge had discretion to reject an attempt to remake a suit more than four years after it began.

Personal claim. By its terms, First Index’s offer to Chapman was structured as both a settlement offer and Rule 68 offer of judgment, and the offer remained open for 14 days after the court ruled on Chapman’s class certification motion. As such, the settlement offer had the same effect as a Rule 68 offer of judgment as long as it provided Chapman with complete relief. The district court determined that the offer provided Chapman with complete relief and, because only his individual claims were pending at the time the offer was open, it operated to moot Chapman’s individual claims

The appeals court, however, vacated the district court’s finding and remanded it for decision on the merits of Chapman’s claim. It noted that a district court could not enter judgment in a moot case. All it could do was dismiss for lack of a case or controversy. If First Index’s offer to Chapman made the case moot, the court could not have ordered First Index to pay it. Likewise, it could not have provided an injunctive relief because the suit would be dismissed.

The case is No. 14-2773 and 14-2775.

Attorneys: Phillip A. Bock, Tod A. Lewis; Robert M. Hatch; and James Michael Smith (Bock & Hatch); and Brian J. Wanca (Anderson & Wanca) for Arnold Chapman. Molly Arranz; Albert Bower; Michael L. Reiss; and Eric Samore (SmithAmundsen, LLC) for First Index, Inc.

Companies: First Index, Inc.; All American Painting, Inc.

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