YOUNG B. KIM, United States Magistrate Judge.
Radha Geismann, M.D., P.C. ("Geismann") alleges that Allscripts Healthcare Solutions, Inc. ("Allscripts") sent it and a class of similarly situated persons unsolicited advertisements via facsimile, in violation of the Telephone Consumer Protection Act, 47 U.S.C. § 227 ("TCPA") and Illinois law. After Geismann refused Allscripts's offer of judgment under Federal Rule of Civil Procedure 68, Allscripts filed the current motion to dismiss pursuant to Rule 12(b)(1), arguing that the case is now moot. For the following reasons, Allscripts's motion to dismiss is denied:
On July 17, 2009, Geismann filed its class action complaint in the Circuit Court of Cook County, Illinois. (R. 1, Ex. A.) Along with its complaint, Geismann submitted a motion for class certification, seeking to certify a class of persons who, within three distinct time periods (presumably to account for different statutes of limitations):
(R. 72-1, Ex. A at 1-2.) The motion also states that Geismann "will file a supporting
On August 20, 2009, Allscripts removed this case to federal court. (R. 1.) The assigned district judge dismissed the complaint without prejudice to the filing of an amended federal complaint, which Geismann filed in October 2009. (R. 13-14.) Shortly thereafter, in November 2009, the parties consented to the jurisdiction of Magistrate Judge Schenkier. See 28 U.S.C. § 636(c). After the parties began limited discovery on the numerosity question with an eye toward settlement, on May 7, 2010, the case was transferred to this court. (R. 56.) The parties were ordered to exchange settlement offers and to report on "whether they need additional time to negotiate a settlement or whether they need to proceed with class certification." (R. 64.) After the parties reported that their settlement discussions had been unsuccessful, on July 26, 2010, the court ordered the parties to move forward with discovery beyond the issue of numerosity. (R. 66.)
On September 15, 2010, counsel for Allscripts sent counsel for Geismann an offer of judgment pursuant to Rule 68. The offer included an agreement to the entry of judgment in the amount of $1,500 for each unsolicited fax advertisement Allscripts sent Geismann, reasonable attorneys' fees and costs, and an agreement to the entry of the injunction requested in the amended class action complaint. (R. 78-1, Ex. A.) On September 28, 2010, the day before Allscripts's offer was set to expire under Rule 68, Geismann filed a "Motion to Strike Defendants' Offer of Judgment or, in the Alternative, Amended Motion for Class Certification." (R. 72.) At a hearing on the motion, counsel for Allscripts asked for time to consider filing a motion to dismiss on mootness grounds. (R. 79-1, Ex. A at 9-10.) The court denied Geismann's motion to strike—no Rule 68 Offer had been filed with the court so there was nothing for the court to strike—but stated that the motion for class certification would remain pending until the anticipated motion to dismiss was resolved. (Id. Ex. A at 3, 10-11.) On October 29, 2010, Allscripts filed the current motion to dismiss pursuant to Rule 12(b)(1).
In analyzing a motion to dismiss under Rule 12(b)(1), this court accepts that the allegations in the amended complaint are true, but may weigh evidence submitted by the parties to determine whether jurisdiction exists. See United Phosphorus, Ltd. v. Angus Chem. Co., 322 F.3d 942, 946 (7th Cir.2003). In the current motion, Allscripts argues that this lawsuit is moot because it offered Geismann everything it seeks to gain in this lawsuit, and Geismann refused. Under Article III of the United States Constitution, federal courts only have subject-matter jurisdiction over actual cases or controversies. Lewis v. Continental Bank Corp., 494 U.S. 472, 477, 110 S.Ct. 1249, 108 L.Ed.2d 400 (1990). A federal court loses jurisdiction when the controversy becomes moot, which occurs "when the dispute between the parties no longer rages, or when one of the parties loses his personal stake in the outcome of the suit." Holstein v. City of Chicago, 29 F.3d 1145, 1147 (7th Cir.1994). In support of its motion to dismiss, Allscripts invokes the rule that "[o]nce the defendant offers to satisfy the plaintiff's entire demand, there is no dispute over which to litigate, and a plaintiff who refuses to acknowledge this loses outright, under Fed.R.Civ.P. 12(b)(1), because he has no remaining stake." Rand v. Monsanto Co., 926 F.2d 596, 598 (7th Cir.1991) (internal citation omitted). But as both parties acknowledge, in the class action context the impact of the offer turns on its timing. See White v. Humana Health Plan, Inc., No. 06 CV 5546, 2007 WL
Recognizing that the mootness question presented here turns on the timing of the class-certification motions, the parties take widely divergent views of the impact of the class-certification motion Geismann filed in state court and the "Amended Motion for Class Certification" it filed in this court.
Because a complete offer of judgment moots a class action only before the filing of a motion for class certification, see Greisz, 176 F.3d at 1015, Allscripts's mootness argument hinges on its assertion that the class-certification motion Geismann filed on July 17, 2009, in the Circuit Court of Cook County is a "legal nullity."
Allscripts has not shown that the cited procedural defects—failure to notice or properly serve the motion—deprive the state-court motion of legal effect. In response to Allscripts's assertion that the motion was not properly served, Geismann submitted uncontradicted evidence that the Cook County Sheriff's Department properly served the motion and filed proof of service in the Circuit Court, as required
Similarly unconvincing is Allscripts's argument that the motion's substantive deficiencies render it void. Allscripts argues that because the motion does not present a developed argument for class certification and because Geismann never filed a memorandum in support of the motion, the motion should be deemed abandoned. Although it is true that an undeveloped argument can be considered waived, see Trentadue v. Redmon, 619 F.3d 648, 654 (7th Cir.2010), Allscripts never argued waiver or raised the defects it now cites until the motion became an obstacle to its Rule 68 strategy. Allscripts has not cited any case suggesting that the substantive quality of a motion for class certification, rather than its timing, has an impact on the mootness analysis. Moreover, the fact that Geismann did not file a memorandum in support of the motion after the case was removed to federal court is attributable to the way this litigation has unfolded. Shortly after the parties consented to the jurisdiction of the magistrate judge, on December 1, 2009, Judge Schenkier scheduled the close of discovery with respect to numerosity of the class for February 2, 2010. (R. 27.) After Geismann served Allscripts with discovery requests on issues beyond numerosity, at Allscripts's request Judge Schenkier entered a protective order stating that discovery would be limited to numerosity until the parties had a chance to discuss settlement. (R. 35.) His order states that "[a]ny dates for other discovery on Rule 23 issues or the merits will take place on a schedule to be set at a later time." (Id.) Litigating class actions is expensive, and these orders reveal the parties' intention to conserve costs by trying to reach a settlement before briefing the class-certification issue. This court does not view Geismann's compliance with the discovery schedule as evidence that it abandoned its motion.
Finally, Allscripts argues that this court already rejected the notion that the state court motion is pending. In support, Allscripts attributes great weight to this court's statement in a minute order, entered after the hearing on Geismann's motion to strike, that the alternative class-certification portion of that motion "will remain pending as a motion for class certification, filed on September 28, 2010." (R.
Because Geismann filed its original motion for class certification long before Allscripts tendered its Rule 68 offer, and because Allscripts has not shown that the original motion has been abandoned or is otherwise a "legal nullity," its offer was "not an offer of the entire relief sought by the suit." Greisz, 176 F.3d at 1015 (emphasis in original). Accordingly, there remains a live controversy between the parties, and Allscripts's motion to dismiss under Rule 12(b)(1) must be denied.
In the interest of completeness, assuming arguendo that the motion filed in state court has no legal effect, this court will address the parties' dispute regarding whether the motion for class certification Geismann filed during the pendency of Allscripts's Rule 68 offer prevents the controversy at stake here from evaporating. Both parties acknowledge that there is uncertainty surrounding whether a class action survives where a motion for class certification is filed after a Rule 68 offer of judgment is extended, but before the 14-day period for acceptance expires. Although the Seventh Circuit recently noted that "it has been questioned whether Rule 68 offers should be permitted in class action cases," Wrightsell v. Cook County, Ill., 599 F.3d 781, 783 (7th Cir.2010), it has not expressly adopted that view nor squarely addressed the issue presented here. Nor have the cases in this district followed a consistent course. Although the bulk of the cases to address the issue have held that a class action is not moot as long as the plaintiff moves for class certification before the Rule 68 offer expires, see Giblin v. Revenue Prod. Mgmt., Inc., No. 07 CV 3432, 2008 WL 780627, at *4 (N.D.Ill. Mar. 24, 2008); Western Ry. Devices Corp. v. Lusida Rubber Prods., Inc., No. 06 CV 0052, 2006 WL 1697119, at *2 (N.D.Ill. June 13, 2006); Wilson v. Collecto, Inc., No. 03 CV 4673, 2003 WL 22299022, at *2 (N.D.Ill. Oct. 6, 2003); Parker v. Risk Mgmt. Alternative, Inc., 204 F.R.D. 113, 114-15 (N.D.Ill.2001); Kremnitzer v. Cabrera & Rephen, P.C., 202 F.R.D. 239, 243-44 (N.D.Ill.2001); Asch v. Teller, Levit & Silvertrust, P.C., 200 F.R.D. 399, 400-01 (N.D.Ill.2000); Janikowski v. Lynch Ford, Inc., No. 98 CV 8111, 1999 WL 608714, at *2 (N.D.Ill. Aug. 5, 1999), a few cases have held that a purported class action is moot any time an offer precedes the certification motion, see Damasco v. Clearwire Corp., No. 10 CV 3063, 2010 WL 3522950, at *9 (N.D.Ill. Sept. 2, 2010); White, 2007 WL 1297130, at *6-*7; Martin v. PPP, Inc., 719 F.Supp.2d 967, No. 10 CV 140, 2010 WL 2572524, at *4-*5 (N.D.Ill. June 25, 2010).
Allscripts urges this court to adopt the latter position, arguing that the Seventh Circuit's decisions in Greisz and Holstein best support a rule that an offer of judgment moots a putative class action as long
Neither case provides a clear answer to the question presented here. The plaintiff in Greisz rejected an offer that was extended after class certification had been denied, and therefore the putative class members' stakes had been removed from the table. And as subsequent cases have explained, the plaintiff in Holstein sought class certification nearly 30 days after the offer was extended, well outside the Rule 68 period at issue here. See Damasco, 2010 WL 3522950, at *4 n. 6. Allscripts relies heavily on this court's statement in Damasco that after Holstein, "[t]he rule in the Seventh Circuit is clear-a complete offer of settlement made prior to filing for class certification moots the plaintiff's claim." Id. at *4. But the Damasco court also recognized a "lack of certainty" surrounding the rule when the class-certification motion is extended during the 14-day window of a Rule 68 offer. Id. at *6. It noted that there are "persuasive" reasons to hold that a motion filed during a Rule 68 offer's pendency avoids mootness. Id. It further recognized that in Wrightsell, the Seventh Circuit may have indicated "an evolution" of the court's view on mootness because it "seems to suggest that involuntary settlement . . . does not necessarily bar the named plaintiff with no personal stake in the outcome to continue to litigate the class action." Id. at *9. The Damasco court expressly recognized that the distinction between a settlement offer subject to negotiation and a Rule 68 offer of judgment "may be one reason why" some cases in this district—including those relied on by Allscripts—"declined to deviate from Holstein" where a class-certification motion is filed just days after an offer is extended. Id. Because the offer in Damasco was not made pursuant to Rule 68, the court found that applying the 14-day window applicable to Rule 68 offers would be "arbitrary." Id.
This court agrees with the Damasco case's assessment that persuasive reasoning supports the cases that have held that a class-certification motion filed during the pendency of a Rule 68 offer avoids mootness. An offer extended under Rule 68 is a game-changer in any lawsuit because the offeree "must pay the costs incurred after the offer was made" if the offeree rejects the offer but then obtains a judgment that is less favorable than the offer he rejected. Fed.R.Civ.P. 68(d). The rule thus mandates a fourteen-day period for the offeree to consider the offer and decide whether to accept or reject it. The cases from this district holding that a
A rule that a motion to certify filed during the pendency of a Rule 68 offer avoids mootness makes sense for several reasons. As this court has recognized, the application of Rule 68 in the class-action context is problematic, because "an offeree's rejection would burden a named representative-offeree with the risk of exposure to heavy liability for costs and expenses that could not be recouped from unnamed class members." Giblin, 2008 WL 780627, at *2 (quoting Marek v. Chesny, 473 U.S. 1, 5, 105 S.Ct. 3012, 87 L.Ed.2d 1 (1985) (Brennan, J., dissenting)). Allowing the named plaintiff to avoid that burden by moving for class certification during the 14-day period "adds an appropriate degree of symmetry to the oft-observed asymmetrical bite of Rule 68." Asch, 200 F.R.D. at 401. What's more, it takes "away the incentive for a defendant to make a Rule 68 offer before either party has had a reasonable opportunity to evaluate the case." Id. It also avoids the concern repeatedly highlighted by the Seventh Circuit that allowing a defendant to pick off named plaintiffs before a ruling on class certification can be obtained frustrates the purpose of class actions-the aggregation of small claims in a single action-and invites the waste of judicial resources. See Wrightsell, 599 F.3d at 783; Primax, 324 F.3d at 547; Susman, 587 F.2d at 870. As the Third Circuit has recognized, allowing a named plaintiff to avoid mootness by filing a class-certification motion before a Rule 68 offer expires allows "the class action process. . . to `play out' according to the directives of Rule 23 and . . . permit[s] due deliberation by the parties and the court on the class certification issues." Weiss v. Regal Collections, 385 F.3d 337, 348 (3d Cir.2004).
Allscripts argues that this particular case does not warrant an exception to the general rule that an offer extended before the filing of a class-certification motion moots a lawsuit. It points out that Weiss, Asch, and several other cases to have applied the exception arose in the context of the Federal Debt Collection Practices Act, 15 U.S.C. § 1692 ("FDCPA"). This is significant, says Allscripts, because unlike the TCPA, the FDCPA includes a statutory provision for class damages. As the Weiss court noted, allowing defendants to pick off putative class representatives in the FDCPA context would thwart Congress's intent that the FDCPA will be enforced by "private attorney generals" pursuing class actions. 385 F.3d at 345. Allscripts argues that there is no "unassailable right" to bring class actions under the TCPA, and therefore, the rationale supporting the mootness exception does not apply in this context. But even though the TCPA does not expressly provide for class damages, this court has allowed plaintiffs to pursue junk-fax claims on a class-wide basis. See, e.g., G.M. Sign, Inc. v. Group C. Commc'ns, Inc., No. 08 CV 4524, 2011 WL 98825, at *1 (Jan. 10, 2011); CE Design, Ltd. v. King Architectural Metals, Inc., 271 F.R.D. 595, 09 CV 2057, 2010 WL 5146641, at *1 (N.D.Ill. Dec. 13, 2010); Garrett v. Ragle Dental Lab., Inc., No. 10 CV 1315, 2010 WL 4074379, at *1 (N.D.Ill.
Allscripts also argues that Geismann cannot avoid mootness because it has been dilatory in pursuing class certification and because, according to it, Geismann rejected the offer as an attempt to drive up attorneys' fees. But again, even if the class-certification motion filed in state court is ignored, Geismann has prosecuted this case according to the discovery orders issued by this court. When Geismann attempted to obtain discovery regarding class-certification issues beyond numerosity, Allscripts successfully sought a protective order to block that discovery. Without broad class discovery, Geismann's only option would have been to file the kind of boiler plate class-action motion that Allscripts here characterizes as legally insufficient. Allscripts does not assert that it was in the dark about Geismann's intention to proceed as a class action. Indeed, the settlement discussions that preceded Allscripts's Rule 68 offer focused on options for class-wide relief. Allscripts has not cited any evidence that Geismann rejected the offer in an attempt to run up attorneys' fees rather than to preserve the claims of the potential class members. For all of these reasons, assuming arguendo that the state-court motion alone does not preserve the controversy between the parties, this court agrees with the majority of the cases from this district holding that a motion for class certification filed during the pendency of a Rule 68 offer of judgment avoids mootness.
For the foregoing reasons, Allscripts's Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(1) is denied.