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Wendell H. Stone Company, Inc. v. M Partners Rebar, LLC

United States District Court, N.D. Illinois, Eastern Division

December 5, 2016

WENDELL H. STONE COMPANY, INC. d/b/a Stone & Company, individually and on behalf of all others similarly situated, Plaintiff,
v.
M PARTNERS REBAR, LLC, M Partners International, Defendant.

          MEMORANDUM OPINION AND ORDER

          MATTHEW F. KENNELLY United States District Judge.

         Wendell H. Stone Company, Inc. (Stone) filed a class action complaint, alleging that M Partners Rebar, LLC (M Partners) sent unsolicited fax advertisements in violation of the Junk Fax Prevention Act (JFPA). Before Stone filed for class certification, M Partners moved to deposit funds with the Court that it claimed would fully satisfy Stone's individual claims. M Partners requested that the Court enter judgment in favor of Stone in the amount of the deposit, and it argued that this would render moot both the individual and class claims.

         For the reasons stated below, the Court holds that a defendant's deposit of funds cannot render moot a plaintiff's individual or class claims. The Court grants M Partners' motion to deposit funds but denies its request to enter judgment and concludes that Stone's individual and class claims are not moot.

         Background

         Stone is a corporation whose principal place of business is Connellsville, Pennsylvania. M Partners is a small steel corporation headquartered in Illinois and run by Frank Bergren. Stone alleges that M Partners sent unsolicited fax advertisements to Stone and many others. Specifically, Stone alleges that it received at least one fax promoting M Partners' services and steel products. Stone asserts that it had no prior relationship with M Partners and that it never gave M Partners permission to send these faxes. Stone also alleges that any faxes omitted the proper opt-out notice required by 47 C.F.R. § 64.1200. Stone further alleges that M Partners sent the same fax to more than forty other recipients. Stone filed its complaint on behalf of itself and all others similarly situated. Stone seeks statutory damages, to be trebled if the facts show that M Partners acted willfully; injunctive and declaratory relief; pre-judgment interest; and attorneys' fees and costs.

         On September 16, 2016, M Partners filed a motion to deposit with the Court funds in the amount of $30, 500. M Partners further requests-if the Court permits the deposit-an entry of judgment in favor of Stone for the same amount or a briefing schedule for parties to argue the consequences of the deposit. Def.'s Mot. to Deposit Funds at 4. In its motion, M Partners alleges that on that same date, it also made an offer of judgment to Stone under Federal Rule of Civil Procedure 68 in the amount of $30, 500 plus accrued costs. M Partners describes this as "more than Stone could hope to recover in this action since it reflects the maximum statutory damages of $1, 500 for each violation and assumes that [ ] a single fax could constitute multiple violations of the TCPA." Def.'s Mot. to Deposit Funds at 1.

         On September 23, Stone filed what it called a "placeholder" motion for class certification. In its motion, Stone asks the Court to enter and continue the motion for class certification until after discovery, at which time Stone will submit a more detailed memorandum. The Court has not yet ruled on this motion.

         Discussion

         The primary question before the Court is essentially whether M Partners' deposit of funds would render moot both Stone's individual claims and its attempt to pursue a class action. This stems from the heavily-litigated question of whether a defendant's offer of full relief under Rule 68 moots a plaintiff's individual or class claims. In 2015, the Seventh Circuit ruled that an offer on its own does not render a plaintiff's claims moot. See Chapman v. First Index, Inc. 796 F.3d 783, 786 (7th Cir. 2015). In January 2016, the Supreme Court confirmed this holding in Campbell-Ewald v. Gomez, 136 S.Ct. 663 (2016). See id. at 670. In doing so, however, the Court expressly declined to address whether its ruling would be different had the defendant deposited the full amount owed to the plaintiff and the lower court entered judgment for the plaintiff. Id. at 672. The Seventh Circuit has not yet addressed this question, though other appellate and district courts have. This Court now holds that M Partners cannot render moot either Stone's individual or class claims by its motion to deposit funds.

         I. Rule 67

         Under Federal Rule of Civil Procedure 67, a party-by leave of court-may deposit with the court all or part of a monetary judgment sought as relief. Fed.R.Civ.P. 67(a). There is little Seventh Circuit case law regarding this rule. Other circuits have indicated that the purpose of Rule 67 is to relieve a party who holds a contested fund from responsibility for disbursement of that fund. See, e.g., Alstom Caribe, Inc. v. George P. Reintjes Co., 484 F.3d 106, 113 (1st Cir. 2007). District courts have discretion in determining whether to employ Rule 67. See id. at 114; Zelaya/Capital Int'l Judgment, LLC v. Zelaya, 769 F.3d 1296, 1300 (11th Cir. 2014); LTV Corp. v. Gulf States Steel, Inc. of Ala., 969 F.2d 1050, 1063 (D.C. Cir. 1992); Cajun Elec. Power Coop., Inc. v. Riley Stoker Corp., 901 F.2d 441, 445 (5th Cir. 1990).

         M Partners' requested deposit is permissible under Rule 67. Stone has requested statutory damages as part of its relief, and M Partners seeks to deposit "all or part of the money." See Fed. R. Civ. P. 67(a). Stone argues that the Court should refuse the deposit because permitting it would be contrary to the purposes of Rule 67 and would threaten to overburden the Clerk of the Court. First, Stone suggests that a Rule 67 deposit can be used only to relieve M Partners of the burden of administering an asset. Pl.'s Resp. at 7. This is unpersuasive. Nothing in the language of the rule indicates that it is limited in this way, and M Partners' request falls within the language of the rule. Stone's argument that permitting this deposit will overburden the Clerk of Court is likewise unconvincing. As Stone agrees, this motion requires a single deposit of a specific amount, hardly a burden to the Clerk. Pl.'s Resp. at 6. Stone's unsupported suggestion that allowing the deposit would "lead to similar deposits in nearly every consumer class action, " Pl.'s Resp. at 6-7, is not grounds for denying a deposit otherwise appropriate under Rule 67. The Court therefore grants permission for M Partners to deposit $30, 500 with the Court, to be distributed to Stone if the Court grants judgment in its favor. For the reasons discussed below, however, this deposit will not render moot either Stone's individual claims or those of the putative class.

         II. Mootness

         Article III of the Constitution limits the jurisdiction of federal courts to cases and controversies. U.S. Const., Art. III, § 2. This limitation requires that "[i]f an intervening circumstance deprives the plaintiff of a personal stake in the outcome of the lawsuit, at any point during litigation, the action can no longer proceed and must be dismissed as moot." Campbell-Ewald, 136 S.Ct. at 669 (internal quotation marks omitted). The case is not moot, however, "[a]s long as the parties have a concrete interest, however small, in the outcome of the litigation." Id; see also Holstein v. City of Chicago, 29 F.3d 1145, 1147 (7th Cir. 1994) ("A ...


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