United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
Honorable Edmond E. Chang United States District Judge.
Dental, LLC filed a class action complaint, alleging that
Bisco, Inc. sent it unsolicited fax advertisements in
violation of the Telephone Consumer Protection
Fulton Dental seeks statutory, injunctive, and declaratory
relief for both itself and for members of the proposed class.
After Fulton Dental rejected a settlement offer, Bisco filed
this motion to deposit $3, 600 with the Court under Federal
Rule of Civil Procedure 67. Bisco also asked the Court to
enter judgment against it in the amount of $3, 005 plus any
accrued costs, and to enjoin Bisco from sending Fulton Dental
any future unsolicited faxes. Bisco's unconditional
surrender to Fulton Dental has a purpose: Bisco is trying to
moot the case so that the class claims cannot proceed. As
this Opinion explains, Fulton Dental could have thwarted
Bisco's gambit by filing an early motion for class
certification. But it did not. So, for the reasons explained
below, Bisco's motion to deposit funds is granted. As a
result, Fulton Dental's individual and class claims are
both moot, and the case is dismissed for lack of jurisdiction
under Fed.R.Civ.P. 12(b)(1).
Dental is a private dental practice in Birmingham, Alabama.
R. 1, Compl. ¶¶ 1-2. It alleges that on July 9, 2015,
it received an unwanted fax advertisement from Bisco, an
Illinois corporation. Id. ¶¶ 3, 13, 24.
The fax promoted Bisco's dental products and services,
encouraging recipients to “[b]uy a product never before
purchased, [and] receive 10% OFF your TOTAL ORDER!”
Id. ¶¶ 15, 17. It also included contact
information for Steve Wolf, a Bisco sales territory manager.
Id. ¶¶ 18-20. The fax, which was a form
document that was not addressed to anyone in particular, did
not include an opt-out notice allowing the recipient to
request the sender to stop sending faxes. Id.
¶¶ 16, 23, 25. Bisco's actions allegedly
invaded Fulton Dental's privacy rights and jammed its fax
lines so that it could not receive other legitimate faxes.
Id. ¶ 21. Fulton Dental also claims that it
suffered damages in the form of paper and toner costs.
Id. ¶ 22.
behalf of itself and members of a proposed class, Fulton
Dental alleges that Bisco violated the Telephone Consumer
Protection Act (TCPA) in two ways: (1) by sending unwanted
junk faxes; and (2) by failing to include an opt-out notice
in those faxes. Id. ¶¶ 39-44. In that
vein, Fulton Dental seeks to represent two classes: an
“unsolicited advertisement class” of plaintiffs
who received unsolicited faxes from December 8, 2011 (four
years before the complaint was filed) to the date of class
certification, and an “opt out notice class” of
all plaintiffs who received, during the same time period,
unsolicited faxes that did not contain an opt-out notice.
Id. ¶ 31. Fulton Dental seeks injunctive relief
to prevent Bisco from sending future unsolicited faxes,
id. ¶¶ 45-46, and from “altering,
deleting or destroying any documents or records that could be
used to identify the class members, ” id. at
8, ¶¶ 2, 5. Fulton Dental also seeks a declaration
that the fax it received violated the TCPA, and statutory
damages of up to $500 for each negligent violation or $1, 500
for each willful violation of the statute. Id.
¶ 4; id. at 8, ¶¶ 1, 4; see
also 47 U.S.C. § 227(b)(3). Although Fulton
Dental's “prayer for relief” also seeks class
certification, id. at 8 ¶ 3, it has not yet
filed a motion for class certification-a failure that turns
out to be fatal, as discussed later in the Opinion.
January 18, 2016, a little over a month after Fulton Dental
filed its complaint, Bisco made a settlement offer of $3, 005
plus costs, which Fulton Dental rejected on January 24. R.
21, Def's Mot. to Deposit Funds ¶ 2. The next day,
Bisco moved to deposit $3, 600 with this Court under Federal
Rule of Civil Procedure 67. See generally Id.
Bisco's position is that this amount exceeds what Fulton
Dental could ever hope to recover in this action, because it
assumes maximum liability: $3, 005 for two willful violations
of the TCPA-one for sending an unwanted junk fax, and one for
failing to include an opt-out notice (remember, the TCPA
imposes $1, 500 per willful violation)-and $595 to cover
costs. Id. ¶ 2. Bisco also asks the Court to
enter judgment in Fulton Dental's favor for $3, 005, to
enjoin Bisco from further activity that violates the TCPA,
and to direct Futon to file a bill of costs. Id.
¶ 9; R. 24, Def.'s Br. at 6. After Bisco's
motion, the Court requested briefing from both parties on the
applicability of Rule 67 to this case, and on why depositing
the funds with the Court should result in the entry of
judgment. R. 23, 1/26/16 Minute Entry. In its brief, Bisco
argued that this deposit, if allowed, would moot the entire
case. Def.'s Br. at 5.
provides that “[i]f any part of the relief sought is a
money judgment or the disposition of a sum of money or some
other deliverable thing, a party-on notice to every other
party and by leave of court-may deposit with the court all or
part of the money or thing, whether or not that party claims
any of it.” Fed.R.Civ.P. 67(a). Once a court grants a
Rule 67 motion, those funds “must be deposited in an
interest-bearing account or invested in a court-approved,
interest bearing document.” Fed.R.Civ.P. 67(b).
Generally, “[t]he purpose of Rule 67 is to relieve the
depositor of responsibility for a disputed fund while the
parties litigate its ownership.” Engineered Med.
Sys., Inc. v. Despotis, 2006 WL 1005024, at *2 (S.D.
Ind. Apr. 14, 2006) (allowing plaintiff to deposit royalty
payments with the court during dispute about a patent
licensing agreement); 12 Charles Alan Wright & Arthur R.
Miller, § 2991 (2d ed. 1997) (“The purpose of the
deposit is to relieve the depositor of responsibility for a
fund in dispute.”). For example, Rule 67 can be used in
interpleader actions, most commonly when an insurance company
deposits an insurance payout with the court, leaving the
claimants to argue about who is entitled to the funds.
E.g., The Sportsman's Guide, Inc. v. Havana
Nat. Bank, 2009 WL 4923092, at *3 (C.D. Ill.Dec. 7,
2009) (in interpleader actions, “the holder of the fund
may put the money … in dispute into court, withdraw
from the proceeding, and leave the claimants to litigate
between themselves the ownership of the fund in court”
(citation and quotations omitted)); Am. Skandia Life
Assur. Corp. v. McCarty, 2007 WL 3232496, at *1 (C.D.
Ill. Nov. 1, 2007) (permitting insurance company to deposit
annuity payment under Rule 67, as claimants disputed
ownership of the death benefits). Overall, the Court has
broad discretion in determining whether to grant a Rule 67
motion. See Maher Eng'g Co. v. Screwmatics of S.
Carolina, Inc., 2014 WL 4979167, at *1 (N.D. Ill. Oct.
6, 2014); Engineered Med. Sys., Inc., 2006 WL
1005024, at *2.
has not explicitly invoked Federal Rule of Civil Procedure
12(b)(1), but it argues that if it is allowed to deposit $3,
600 under Rule 67, then Fulton Dental's individual and
class claims would both be moot, leaving the Court with no
live case or controversy. Def.'s Br. at 5. A moot case,
in turn, would require a Rule 12(b)(1) dismissal for lack of
subject matter jurisdiction.
evaluating a dismissal for lack of jurisdiction under Rule
12(b)(1), a court initially must accept all well-pled
allegations as true and draw reasonable inferences in the
plaintiff's favor. Ezekiel v Michel, 66 F.3d
894, 897 (7th. Cir. 1995) (citation omitted). But the court
may “look beyond the jurisdictional allegations of the
complaint and view whatever evidence has been submitted on
the issue.” Id. (quotations omitted) (quoting
Capital Leasing Co. v. Fed. Deposit Ins. Corp., 999
F.2d 188, 191 (7th Cir. 1993)). Mootness is evaluated under
Rule 12(b)(1) because it involves constitutional limits on
the jurisdiction of federal courts. U.S. Const. art. III,
§ 2. Article III authorizes jurisdiction only over a
live case or controversy, and demands that the parties
maintain a personal stake in the case “through all
stages of federal judicial proceedings, trial and
appellate.” Spencer v. Kemna, 523 U.S. 1, 7
(1998) (citations and quotations omitted). A case becomes
moot, then, when the plaintiff no longer “suffer[s], or
[is no longer] threatened with, an actual injury traceable to
the defendant and likely to be redressed by a favorable
judicial decision.” Id. (citation and
quotations omitted). And when there is nothing left to
litigate, a dismissal is appropriate under Rule 12(b)(1)
because the plaintiff “has no remaining stake” in
the case. Holstein v. City of Chicago, 29 F.3d 1145,
1147 (7th Cir. 1994) (citation and quotations omitted).
case presents several tough questions. First, does Rule 67
permit Bisco to deposit the proposed $3, 600 with the Court?
If so, do these funds afford full relief to Fulton Dental
such that it no longer has a personal stake in the
litigation, rendering its individual TCPA claims moot? And if
Fulton Dental's individual claims are moot, are the class
action claims moot as well? The Court addresses each question
below and answers each with a “yes.”
seeks permission to deposit $3, 600 with this Court under
Rule 67. According to Bisco, this sum represents the maximum
amount of damages and fees that Fulton Dental could possibly
recover for its TCPA claims. Bisco's motivation is no
secret: it wants to moot Fulton Dental's individual and
class claims. See generally Def.'s Br.
is very little Seventh Circuit authority on the infrequently
litigated Rule 67. In general, it is used “to relieve
the depositor of responsibility for a disputed fund while the
parties litigate its ownership.” Engineered Med.
Sys., Inc., 2006 WL 1005024, at *2. As mentioned above,
Rule 67 is commonly used in interpleader actions, when
“the holder of the fund may put the money … in
dispute into court, withdraw from the proceeding, and leave
the claimants to litigate between themselves the ownership of
the fund in court.” The Sportsman's Guide,
Inc., 2009 WL 4923092, at *3 (citation and quotations
omitted). For example, an insurance company can deposit an
insurance payout with the court, leaving the claimants to
litigate over the priority and ownership of those benefits.
See McCarty, 2007 WL 3232496, at *1 (permitting
insurance company to deposit annuity payments under Rule 67
until dispute over entitlement to funds was resolved). Few
standards govern the court's discretion to grant Rule 67
deposits, but courts generally agree that the deposited funds
must truly be in dispute. See United States v. Jupiter
Aluminum Corp., 2010 WL 1881453, at *2 (N.D. Ind. May
10, 2010) (defendant could not deposit penalties with the
court, rather than directly pay the plaintiff, because the
district court had already determined the amount and validity
of the penalties on two prior occasions); Suraleb, Inc.
v. Prod. Ass'n “Minsk Tractor Works, ”
Republic of Belarus, 2007 WL 551568, at *2-3 (N.D. Ill.
Feb. 20, 2007) (Rule 67 did not allow a party to deposit
funds ordered by an arbitration award, because there was no
real dispute over the funds, as the arbitrator had already
entered judgment and determined the funds' legal
ownership). This requirement seems to restrain courts from
unnecessary intervention when there is no actual dispute
between the parties. See Surelab, 2007 WL 551568, at
*2 (N.D. Ill. Feb. 20, 2007) (court should not
“supervise the transfer of … assets” when
there is no dispute about their ownership).
can also be “useful in cases of … tender of an
undisputed sum.” 12 Charles Alan Wright & Arthur R.
Miller, § 2991. (“Undisputed” in this sense
refers not to the funds' legal status, but to their
amount.) Courts have used Rule 67 in cases like this one,
where a defendant wished to hand over money to satisfy the
plaintiff's claim. For example, in Brause, an
early case interpreting Rule 67, an insurance company
tendered $5, 000 to the plaintiffs, who sued for that amount
in building losses under an insurance policy. Brause v.
Travelers Fire Ins Co, 19 F.R.D. 231, 233 (S.D.N.Y.
1956). Even though the plaintiffs refused this tender, the
court permitted the deposit, concluding that “[t]here
does not appear to be any reason why this motion should not
be granted.” Id. at 235. Rule 67 permits
tenders and deposits even when the defendant does not admit
liability or disclaim all of its interests in the money; the
rule was modified in 1983 to allow for “situations in
which a litigant may wish to be relieved of responsibility
for a sum or thing, but continue[s] to claim an interest in
all or part of it.” Fed.R.Civ.P. 67 advisory
committee's notes to 1983 amendment. The amendments
responded to earlier cases that misconstrued Rule 67 by
“permit[ting] deposit only when the party making it
claims no interest in the fund or thing deposited.”
Id. In one of these earlier cases, the defendant was
not permitted to deposit disputed rents in an action about
the validity of a sublease, because the defendant
“still clings to its affirmative defenses which are
directly relevant to the issue of whether there is in fact an
obligation to pay.” Blasin-Stern v. Beech-Nut Life
Savers Corp., 429 F.Supp. 533, 535 (D. P.R. 1975). In
another, the court did not allow the defendant to deposit
money allegedly owed in a contract dispute with plaintiff,
when “[d]efendant is not seeking to rid itself of
responsibility for a sum of money which it concededly owes to
someone. Defendant's difficulty stems from its reluctance
to commit itself as to whether it owes the money at
all.” Dinkins v. General Aniline & Film
Corp., 214 F.Supp. 281 (S.D.N.Y. 1963). The 1983
amendments clarified that Rule 67 deposits should be allowed
in situations like Blasin-Stern and
Dinkins, where a defendant wishes to tender money to
satisfy a plaintiff's claim despite maintaining that she
does not legally owe the sum.
“[u]nder the plain language of Rule 67, the
circumstances in which a party might be allowed to deposit
money with the court are quite broad.” Engineered
Med. Sys., Inc., 2006 WL 1005024, at *3; see also
Kansas City S. Ry. Co. v. Borrowman, 2009 WL 3188305, at
*4 (C.D. Ill. Sept. 30, 2009) (“Whether to grant leave
for such a deposit is solely within the Court's
discretion.” (citations omitted)). In deciding a Rule
67 motion, courts may also consider “whether the amount
sought to be deposited was definite; whether the funds could
be deposited all at once or whether there would be repeated
deposits that would impose an undue burden on the clerk of
court; and whether the party seeking leave to deposit the
funds had demonstrated a likelihood of success on the
merits.” Borrowman, 2009 WL 3188305, at *4
(citations omitted). For example, deposits that “could
involve a substantial sum of money and could entail an
ongoing series of deposits” may be rejected because
they would “impose an unnecessary burden upon the clerk
of the court.” Design Ben. Plans, Inc. v.
Enright, 940 F.Supp. 200, 207 (N.D. Ill. 1996).
case, Bisco seeks to deposit $3, 600 with the Court: $3, 005
to cover the maximum amount of damages allowed by the TCPA,
and $595 for potential costs. The Court holds that Rule 67
permits this deposit. First, the deposit fits within the
plain language of the rule, which allows deposits of
“all or part of the money or thing” if “any
part of the relief sought is a money judgment or the
disposition of a sum of money.” Fed.R.Civ.P. 67(a). And
in this TCPA action, part of Fulton Dental's desired
relief is money in the form of statutory damages. Compl.
¶¶ 39-44. In addition, Bisco's tender is
consistent with Brause and Rule 67's 1983
amendments, which allow for “situations in which a
litigant may wish to be relieved of responsibility for a sum
or thing, but continue[s] to claim an interest in all or part
of it.” Fed.R.Civ.P. 67 advisory committee's notes
to 1983 amendment. As the amendments show, a deposit is
permissible even though Bisco has not admitted liability
under the TCPA or conceded that Fulton Dental is legally
entitled to these funds. Id.; see also
Engineered Med. Sys., Inc., 2006 WL 1005024, at
*3 (allowing a Rule 67 deposit “as long as the money is
truly in dispute”).
discretionary factors in this case also point towards
permitting the deposit. For one, “the amount sought to
be deposited [is] definite”-$3, 600.
Borrowman, 2009 WL 3188305, at *4. And there is no
dispute that this sum, which includes $3, 005 for statutory
damages and $595 for costs, provides more than Fulton
Dental's maximum statutory recovery for its individual
claims. Individuals who sue under the TCPA, which regulates
solicitations by telephones and other automated equipment,
can obtain (1) an injunction; (2) the amount of actual loss
or $500 in statutory damages, whichever is greater; or (3)
both. 47 U.S.C. § 227(b)(3). The actual loss, or $500,
whichever is greater, can be tripled if there is a willful
violation of the statute. Id. Fulton Dental alleges
receiving only one unsolicited fax. Compl. ¶¶
13-25. It also alleges that Bisco violated the TCPA twice, at
the most- once for sending this unsolicited fax, and another
time for failing to include opt-out information in this fax.
Id. Because Fulton Dental does not allege that it
lost more than $500 in paper and toner costs for receiving
one junk fax, and instead pursues statutory damages,
it would recover $500 for each negligent violation (instead
of actual damages). 47 U.S.C. § 227(b)(3)(B). And even
assuming that Bisco acted willfully, the most Fulton Dental
could actually recover is $1, 500 for each violation, for a
maximum total of $3, 000. Id. § 227(b)(3)(C).
So the amount sought to be deposited-$3, 600-is not only
definite, but undisputedly covers all of Fulton Dental's
statutory damages. Finally, as to the other discretionary
factors, this is not a case where there would be repeated
deposits that would unduly burden the clerk's office.
C.f., Design Ben. Plans, Inc., 940 F.Supp.
at 207 (denying plaintiff's motion to deposit disputed
funds because the amount and number of deposits was unclear,
and could exceed over four million dollars).
Dental's primary objection to this deposit is that Rule
67 is a “procedural device” that cannot be used
to transform the parties' substantive rights. R. 25,
Pl.'s Resp. at 4-6 (citing Maher Eng'g, 2014
WL 4979167, at *1 (“[I]t is well-settled that Rule 67
… shall not abridge, enlarge or modify any substantive
right[.]” (quoting LTV Corp. v. Gulf States Steel,
Inc. of Ala., 969 F.2d 1050, 1063 (D.C. Cir. 1992))
(quotations omitted)). Although the parties' briefs leave
much to be desired on this issue (and most others as well),
the crux of this argument seems to be that a deposit should
not be permitted if it results in substantive
consequences-such as mootness-on the plaintiff. The limited
authority on Rule 67, however, shows the opposite: a deposit
is permissible even if it results in substantive effects on
the parties. For example, courts have held that a Rule 67
deposit can stop the running of prejudgment interest (or some
other form of interest on a principal-liability amount).
E.g. Lich v. Cornhusker Cas. Co., 774 F.Supp. 1216,
1223 n.5 (D. Neb. 1991) (defendant's deposit stopped the
running of prejudgment interest where the defendant had
conceded liability on a bond and deposited the face value of
the bond into the court's registry); see also Maher
Eng'g, 2014 WL 4979167, at *2 (noting that
“[i]t is true that a few courts have allowed Rule 67
deposits to stop the running of interest under certain
circumstances” (citing cases)); 12 Charles Alan Wright &
Arthur R. Miller, § 2991 (“Under some
circumstances it may suffice to stop the running of
interest.” (citing cases)). In fact, the 1983
amendments to Rule 67 were made in direct response to earlier
cases like Blasin-Stern, which held that
“[n]othing in [Rule 67] provides for the stopping of
interest accrual upon deposit in court.” 429 F.Supp. at
534; Fed.R.Civ.P. 67 advisory committee's notes to 1983
amendment. The amendments thus clarified that the stopping of
interest accrual- an action that has a substantive effect on
the parties' claims and defenses-was a permissible use of
in other cases, a Rule 67 deposit was deemed to satisfy a
litigant's legal obligations. For example, in
Borrowman, the district court for the Central
District of Illinois held that the plaintiffs' deposit of
disputed tax payments put them in compliance with their tax
obligations so that the plaintiffs “will have fulfilled
their respective obligations to the [state tax commissioners]
until this matter is resolved.” Borrowman.
2009 WL 3188305, at *6. The court cited to Gulf States
Utilities, a Fifth Circuit case where the plaintiff
challenged its electricity contract but was permitted to
avoid breach by depositing payments under Rule 67.
Id. at *4 (citing Gulf States Util. Co. v.
Alabama Power Co., 824 F.2d 1465, 1475 (5th Cir.),
amended on other grounds, 831 F.2d 557 (5th Cir.
1987)). The appellate court held that there was “no
reason to force [the plaintiff]” to withhold money and
be in breach during the pendency of the lawsuit. Gulf
States Util. Co., 824 F.2d at 1475; but see
Engineered Med. Sys., Inc. v. Despotis, 2007 WL 1021866,
at *7 (S.D. Ind. Mar. 30, 2007) (plaintiff was in breach
because it did not pay royalties to defendant, even when it
deposited royalties with the court during the pendency of
litigation). The approach taken by Borrowman and
Gulf States is consistent with the 1983 amendments,
which allow the depositing party to “be relieved of
responsibility for a sum or thing, [while] continu[ing] to
claim an interest in all or part of it.” Fed.R.Civ.P.
67 advisory committee's notes to 1983 amendment. As noted
earlier, these amendments were enacted in response to cases
like Dinkins, which previously suggested that Rule
67 was limited to interpleader actions. Dinkins, 214
F.Supp. at 283. In Dinkins, the plaintiff sued for
tortious interference of contract, and the defendant
counterclaimed for breach of contract. Id. at 282.
The court held that the defendant could not deposit the money
it allegedly owed to the plaintiff under the contract,
because Rule 67 could not be used “to preserve all [of]
[defendant's] rights under the contract and to avoid the
risk of a breach of contract on its part if its position
should turn out to be wrong.” Id. at 283. In
response, the 1983 amendments clarified that this
interpretation was too limited; Rule 67 is not restricted to
interpleader actions, and it can be used even when legal
consequences may flow from the deposit-like avoiding breach
of contract during litigation. Thus, the Court must reject
Fulton Dental's argument that, simply because the deposit
may have mootness consequences, Rule 67 categorically
prohibits Bisco's deposit.
similar vein, Fulton Dental argues that allowing the deposit
would affect its substantive right to litigate this case as a
class action. Pl.'s Resp. at 5. In other words, if the
deposit is allowed, and the case becomes moot, then Fulton
Dental would be denied the opportunity to pursue class
certification and obtain class-wide relief. Id.
Fulton Dental bases its argument on one Supreme Court
statement in Campbell-Ewald that “a would-be
class representative with a live claim of her own must be
accorded a fair opportunity to show that certification is
warranted.” Campbell-Ewald Co. v. Gomez, 136
S.Ct. 663, 672 (2016); Pl.'s Resp. at 2. To evaluate the
impact of this statement (or lack of it) on the issue at
hand, it is necessary to understand Campbell-Ewald.
In that case, the Supreme Court held that an unaccepted or
lapsed settlement offer under Rule 68 cannot moot a named
plaintiff's individual claims, and thus the rejected
offer did not prevent him from pursuing either his individual
or class claims. Id. The Court relied on the plain
language of Rule 68, which states that after fourteen days,
“[a]n unaccepted offer is considered withdrawn, ”
Fed.R.Civ.P. 68(b), leaving the parties back in their
original positions, Campbell-Ewald, 136 S.Ct. at
660. Similarly, “basic principles of contract
law” instructed that a “Rule 68 offer of