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Chapman v. Wagener Equities, Inc.

United States Court of Appeals, Seventh Circuit

March 31, 2014

ARNOLD CHAPMAN and PALDO SIGN & DISPLAY COMPANY, individually and as representatives of a class of similarly situated persons, Plaintiffs-Respondents,

Submitted March 19, 2014

Petition for Leave to Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 09 C 7299 -- John J. Tharp, Jr., Judge.

For WAGENER EQUITIES, INCORPORATED, DANIEL WAGENER, Petitioners: Robert Connor Heist, Attorney, R. CONNOR & ASSOCIATES, P.C., Chicago, IL.

For ARNOLD CHAPMAN, individually and as the representive of a class of similarly-situated persons, PALDO SIGN AND DISPLAY COMPANY, Respondents: Phillip A. Bock, Attorney, BOCK & HATCH, Chicago, IL.

Before POSNER, KANNE, and ROVNER, Circuit Judges.


Page 490

Posner, Circuit Judge 

The defendants in this class action suit under the Telephone Consumer Protection Act, 47 U.S.C. § 227, seek our leave to

Page 491

appeal from the district court's order certifying the class. Fed.R.Civ.P. 23(f). The defendants are a business that manages commercial real estate properties for the properties' owners, and the owner of the business. The suit charges the defendants with having paid a " fax blaster" called Business to Business Solutions to send unsolicited fax advertisements, in violation of the Act's " junk fax" prohibition, 47 U.S.C. § 227(b)(1)(C), to 10,145 persons. They are the members of the class. Class counsel is seeking statutory damages, as they would surely eclipse any actual damages if the entire class is determined to have been victimized by the defendants' fax campaign. For then the aggregate statutory damages will be either a little more than $5 million or, if the violation is determined to be willful or knowing, as much as three times greater. § 227(b)(3).

If the expected damages are so great in relation to the defendants' assets that if the class certification order stands, the defendants may well be forced--even if they have a strong case on the merits--to settle, in order to avoid the risk of a catastrophic judgment, we would give careful consideration to the request for leave to appeal the order. Kohen v. Pacific Investment Management Co., 571 F.3d 672, 677-78 (7th Cir. 2009); Blair v. Equifax Check Services, Inc., 181 F.3d 832, 834-35 (7th Cir. 1999). But the defendants haven't told us what their assets are--just that the corporate defendant is " a small family owned business." It is no doubt small in relation to such family-owned businesses as Koch Industries and Walmart, but maybe not so small that a contingent liability of $15 million would force it to settle; it hasn't settled yet, and this suit will be celebrating its fifth birthday later this year.

Even if the defendants could prove that they'll be forced to settle unless we reverse the class certification order, they would have to demonstrate a significant probability that the order was erroneous. " However dramatic the effect of the grant or denial of class status in ... inducing the defendant to capitulate, if the ruling is impervious to revision there's no point to an interlocutory appeal." Id. at 835.

The defendants' principal argument is that only owners of fax machines have standing to sue under the Telephone Consumer Protection Act. The plaintiffs have not presented evidence concerning the ownership of the fax machines of the class members. But what the Act prohibits is faxing unsolicited fax advertisements " to a telephone facsimile machine." § 227(b)(1)(C). There is no mention of ownership.

The defendants cite a district court decision that read an ownership requirement into the Act on the ground that Congress's concern was with the " cost of the paper and ink incurred by the owner of the fax machine and the fax machine owner's loss of the use of the machine." Compressor Engineering Corp. v. Manufacturers Financial Corp., 292 F.R.D. 433, 448 (E.D. Mich. 2013). The decision is erroneous on its own terms, because the lessee of a fax machine pays for the paper and often for the ink. And if he doesn't, no matter. For contrary to Compressor Engineering, our decision in Holtzman v. Turza, 728 F.3d 682, 684 (7th Cir. 2013), holds that no monetary loss need be shown to entitle the junk-fax recipient to statutory damages. Whether or not the user of the fax machine is an owner, he may be annoyed, distracted, or otherwise inconvenienced if his use of the machine is ...

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