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Thomas v. Law Firm of Simpson & Cybak

July 17, 2006


The opinion of the court was delivered by: Honorable David H. Coar


Plaintiff Frank Thomas ("Plaintiff") is suing the Law Firm of Simpson & Cybak and Kathleen M. Haggerty (collectively "Defendants"), for violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. ("FDCPA"). Before this Court is Defendants' motion to dismiss for lack of subject matter jurisdiction. For the reasons set forth below, Defendants' motion is DENIED without prejudice.


In March of 2000, General Motors Acceptance Corporation ("GMAC") sued Plaintiff in state court to recover a vehicle for which payment was past due. GMAC sued through its attorneys, the Law Firm of Simpson & Cybak ("Simpson"). Plaintiff then filed suit against GMAC and Simpson under the FDCPA, alleging that neither party sent him a debt validation notice advising him of his rights as a debtor. See 15 U.S.C. § 1692g(a).

On December 20, 2004, the Seventh Circuit affirmed this Court's dismissal of GMAC and its employees, Kay A. Candiano, Donald J. Houck, and John D. Fleury, as defendants in this action. See Thomas v. Law Firm of Simpson & Cybak, 392 F.3d 914 (7th Cir. 2004), aff'g in part, No. 00 C 8211, 2001 WL 1516746 (N.D. Ill. Nov 16, 2001). Simpson and Kathleen Haggerty ("Haggerty"), the Simpson lawyer who signed the original complaint against Plaintiff, remain as defendants.

On June 30, 2005, Simpson and Haggerty sent Plaintiff an Offer of Judgment pursuant to Federal Rule of Procedure 68. They offered Plaintiff $5,000 plus litigation costs. Plaintiff did not accept the Offer of Judgment, which is deemed withdrawn if not accepted within ten days. See Fed. R. Civ. P. 68.


When reviewing a motion to dismiss for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1), the court must accept as true all well-pleaded factual allegations and draw all reasonable inferences in favor of the plaintiff. See Long v. Shorebank Development Corp., 182 F.3d 548, 554 (7th Cir. 1999). The court may look beyond the pleadings and "view whatever evidence has been submitted on the issue to determine whether in fact subject matter jurisdiction exists." Id. (internal citations omitted).

The party invoking federal jurisdiction bears the burden of establishing the elements of jurisdiction. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992). If the court or the opposing party challenges jurisdiction as a factual matter the party invoking the jurisdiction must support its jurisdictional allegations by "competent proof." McNutt v. General Motors Acceptance Corp. of Indiana, 298 U.S. 178, 189 (1936); Rexford Rand Corp. v. Ancel, 58 F.3d 1215, 1218 (7th Cir. 1995). Competent proof means "proof to a reasonable probability that jurisdiction exists." Target Market Publishing, Inc. v. ADVO, Inc., 136 F.3d 1139, 1142 (7th Cir. 1998) (internal citations omitted).


Defendants move to dismiss because they offered Plaintiff, by their estimate, "five times more than Plaintiff could possibly recover at trial," yet Plaintiff refused the offer. See Mem. in Supp. of Def.'s Mot. to Dismiss at 2. Plaintiff's refusal, according to Defendants, renders his claims moot and deprives this Court of subject matter jurisdiction.

Under Article III of the United States Constitution, federal courts have jurisdiction over live cases and controversies. A case becomes moot, however, "when the dispute between the parties no longer rages, or when one of the parties loses his personal interest in the outcome of the suit." Holstein v. City of Chicago, 29 F.3d 1145, 1147 (7th Cir. 1994). Offers of Judgment pursuant to Rule 68 sometimes invoke these very circumstances: "Once 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, 926 F.2d 596, 598 (7th Cir. 1991). Moreover, when a defendant puts forward an "offer of judgment [that] exceed[s] the maximum amount of money that the plaintiff could conceivably [obtain] by going to trial," a case or controversy no longer exists. Greisz v. Household Bank (Illinois), N.A., 176 F.3d 1012, 1014 (7th Cir. 1999). As the Greisz court admonished, "You cannot persist in suing after you've won." Id. at 1015.

There is no question that Defendants have not offered to satisfy Plaintiff's entire demand. Plaintiff's Amended Complaint seeks $50,000 in compensatory damages, $3,000 in statutory damages ($1,000 for each of three alleged violations of the FDCPA), and $250,000 in punitive damages. Defendants' offer of a mere $5,000 falls woefully short of Plaintiff's entire demand. See e.g., Parker v. Risk Management Alternative, Inc., 204 F.R.D. 113, 115 (N.D. Ill. 2001) (holding that when plaintiff allowed to expire an offer that did not cover the full amount of relief sought, plaintiff's FDCPA claim was not moot). See also Wilhelm v. Credico, Inc., 426 F. Supp. 2d 1030, 1034 (D.N.D. 2006) (holding that a Rule 68 offer providing only the maximum amount of statutory damages, attorney fees, and costs available to plaintiff, but not including the amount of actual damages sought, did not offer plaintiff all the relief available to him and thus did not render plaintiff's case moot); Wilner v. OSI Collection Services, Inc., 201 F.R.D. 321 (S.D.N.Y. 2001) (holding that Rule 68 offer omitting attorney's fees and costs "did not constitute more than [the plaintiff] could have received under the statute" and thus did not render plaintiff's claim moot).

Defendants maintain, however, that they have offered Plaintiff the maximum he could recover at trial. Under the FDCPA, a debt collector who violates the statute is liable for (1) the actual damages sustained by the debtor, see 15 U.S.C. § 1692k(a)(1); (2) additional or statutory damages not exceeding $1,000, see 15 U.S.C. § 1692k(a)(2)(A); and (3) litigation costs and attorney's fees, see 15 U.S.C. § 1692k(a)(3). Defendants argue that Plaintiff cannot demonstrate actual damages, therefore he can only receive at trial $1,000-the maximum amount of ...

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