United States District Court, N.D. Illinois, Eastern Division
Jeffrey Cole Magistrate Judge.
MEMORANDUM OPINION AND ORDER
history of this case is summarized in Alliance for Water
Efficiency v. Fryer, 808 F.3d 1153 (7th Cir.
2015)[Dkt. #89], which reversed this court's decision in
Alliance for Water Efficiency v. Fryer, 2015 WL
102166 (N.D.Ill. 2015)[Dkt. #50]. It is further discussed
below and in the companion Memorandum Opinion and Order
dealing with Mr. Fryer's motion for attorneys' fees.
See Alliance for Water Efficiency v. Fryer, WL
(N.D.Ill. 2017). [Dkt. #115].
Final Judgment of the Court of Appeals was issued the same
day as the Seventh Circuit's Opinion and was docketed as
the Mandate on January 13, 2016. [Dkt. #88]. See
also Rule 41(a), Federal Rules of Appellate Procedure.
The Mandate provided that the Judgment of the District Court
was reversed, “with costs [which were specified in the
Mandate], in accordance with the decision of [the Seventh
Circuit]....” [Dkt. #88]. See also Dkt. #87.
PROCEDURAL HISTORY OF THE CASE
Fryer has filed a “Motion For Restitution Following
Reversal On Appeal.” [Dkt. #96]. The motion claims that
upon reversal of a judgment “the right to restitution
is well established.” [Dkt. 96 at 3, ¶11]. Indeed,
it insists that under established Supreme Court precedent,
“restitution may be obtained in the main action itself
without filing a new lawsuit.” Id. at
¶11. It goes on to say that because of the Seventh
Circuit's having vacated this court's injunction -
“because it contains terms on which the parties ha[d]
not agreed, ” 808 F.3d at 1157 - the Alliance has been
“unjustly enriched” in the amount computed by Mr.
Fryer of $133, 817.30. [Dkt. #96 at 4, ¶12].
amount is made up of (1) $26, 855.03 which Mr. Fryer says is
the claimed value of the so called Santa Rosa data. Mr. Fryer
claims he was required to turn over that data to the Alliance
- even though the Seventh Circuit made clear that “no
such requirement appears in the injunction [that satisfies
F.R.C.P. 65(d)(1)] or in any judgment satisfying Fed.R.Civ.P.
58.” Alliance for Water Efficiency, 808 F.3d
1157; (2) $105, 807.50 as recompense for the benefit the
Alliance supposedly received - according to Mr. Fryer's
estimate - by publishing its report first, even though the
settlement agreement did not prescribe the order of
publication; (3) $1, 154.77 in claimed interest for the
Alliance's supposed delay in paying Mr. Fryer the
settlement amount for his past efforts on the project, and;
(4) an injunction ordering the Alliance to destroy all
digital and hard copies of its separate report - which Mr.
Fryer agreed in the settlement agreement the Alliance could
prepare and publish - and to cease any use of any report
containing the Santa Rosa data.
Alliance asserts that Mr. Fryer is attempting to “undo
the terms of the settlement agreement, ” and that under
the “guise of restitution after reversal on appeal,
[he] is now seeking additional compensation because the
Alliance did precisely what Fryer agreed to do in the
settlement agreement, namely the publication by the Alliance
of its own report and the right to use in that report the
data that had been already been collected.” The
Alliance concludes that because “Fryer did not confer
any benefit on [the Alliance] or have his property taken as a
result of the judgment reversed on appeal he has no legal
basis for restitution damages.” [Dkt. #101 at 1].
Supreme Court stressed in US Airways, Inc. v.
McCutchen, U.S., 133 S.Ct. 1537, 1546-47 (2013), quoting
the Restatement (Third) of Restitution and Unjust Enrichment
(2011): “‘A valid contract defines the
obligations of the parties as to matters within its scope,
displacing to that extent any inquiry into unjust
enrichment.'” In those circumstances, hewing to the
parties' exchange yields “appropriate” as
well as “equitable” relief. That observation
applies here with singular force.
case law concerning claims for restitution following a
reversal on appeal is perhaps less than clear despite the
long period in which restitution has been an accepted remedy.
See Restatement (Third) of Restitution and Unjust
Enrichment (2011); Dan B. Dobbs, Remedies, 222 - et
seq. (West Publishing Co. 1973)(“restoration is a
simple word but a difficult subject”). It is a long
established principle “that a party against whom an
erroneous judgment or decree has been carried into effect is
entitled, in the event of a reversal, to be restored by his
adversary to that which he has lost thereby.”
Arkadelphia Milling Co. v. St. Louis Sw. Ry. Co.,
249 U.S. 134, 145 (1919); Reed v. Allen, 286 U.S.
191, 203 (1932); Wyatt v. Syrian Arab Republic, 800
F.3d 331, 340 (7th Cir. 2015); Gould v. Hiram Walker
& Sons, Inc., 266 F.2d 249, 253 (7th Cir. 1959).
generally conceded that a restitution claim is not aimed at
compensating the plaintiff so much as forcing the defendant
to give up benefits that it would be unjust for him to keep.
Indeed, “[i]t is now universally recognized that the
principle central to all restitution awards is the principle
against unjust enrichment....” Dobbs, supra at
229. The American Law Institute notes in Restatement Third,
Restitution and Unjust Enrichment § 1(b) (2011):
“[u]njust enrichment” is a term of art. The
substantive part of the law of restitution is concerned with
identifying those forms of enrichment that the law treats as
‘unjust' for the purposes of imposing liability
.... Unjust enrichment is enrichment that lacks an adequate
legal basis. Unjust enrichment is a necessary element or
precondition of the larger claim of restitution. The
restitutionary claim affirmatively seeks the return of the
benefit for which it would be unconscionable for the
defendant to retain.” Roy L. Brooks, Postconflict
Justice in the Aftermath of Modern Slavery, 46 Geo.
Wash. Int'l L. Rev. 243 (2014). And as used in the
Restatement, the terms restitution and unjust enrichment will
often be treated as synonymous. Any more particular meaning
that the words may carry should be clear from the
the proper procedure in restitution cases is, perhaps, not so
well established. In Reed, the Supreme Court held
that restitution was a remedy and listed more than one
possible avenue for a litigant seeking relief to follow:
Two remedies exist, the one by summary motion addressed
to the appellate court, the other by a plenary suit. The
books show that it has long been the practice to embody in
the mandate of reversal a direction that the plaintiff in
error ‘be restored to all things which he hath lost by
occasion of the said judgment. What this was might be
ascertained through an order to show cause known as a
scire facias quare restitutionem habere non debet.
Inquiry was then made whether anything had been taken
‘by colour of the judgment, ' with an appropriate
mandate for the return of anything discovered. On the
other hand, the litigant who has prevailed on the appeal is
not confined to a motion for summary relief. He may
elect to maintain an action, or the court in its discretion
may remit him to that remedy. One form of remedy or the
other, however, is granted as of right. The remedy in its
essence like the one for money had and received is for the
recovery of benefits that in good conscience may no longer be
retained. ‘It is one of the equitable powers, inherent
in every court of justice so long as it retains control
of the subject-matter and of the parties, to correct
that which has been wrongfully done by virtue of its
286 U.S. at 203-04. (Emphasis supplied). See also Mathis
v. DCR Mortg. Ill. Sub, I, LLC, 952 F.Supp.2d 828, 834
(W.D.Tex. 2013); United States v. Fleet National
Bank, 288 B.R. 167 (D.Mass. 2002).
Fryer did not directly ask the Seventh Circuit for a
restitution order. He asked it to instruct the district court
to award him interest due to what he characterizes as the
Alliance's late payment of $25, 000 under the March
13th settlement agreement for past work on the
project. The Court of Appeals did not grant that request; it
simply vacated the injunction and reversed without remand. In
the absence of a remand from the Court of Appeals, there is a
question whether a district court retains the authority to
grant restitution in the same case. In Arkadelphia
Milling, the Supreme Court conditioned the power of the
district court upon “retain[ing] control of the
subject-matter and of the parties . . . .” 249 U.S. at
146; see also Northwestern Fuel Co. v. Brock, 139
U.S. 216, 219 (1891)(“the power is inherent in every
court, while the subject of controversy is in its custody,
and the parties are before it, to undo what
it had no authority to do originally, and in which it,
therefore, acted erroneously, and to restore, so far as
possible, the parties to their former position. Jurisdiction
to correct what had been wrongfully done must remain with the
court so long as the parties and the case are properly
before it, either in the first instance or when
remanded to it by an appellate
tribunal.”)(emphasis supplied); Wyatt, 800
F.3d at 331(noting that some case law suggested that the
proper avenue for a claim for restitution was a new suit in
the proper court).
course, once Mr. Fryer appealed, the district court was
divested of jurisdiction at least for most purposes. See
Griggs v. Provident Consumer Discount Co., 459 U.S. 56,
58 (1982)(“The filing of a notice of appeal is an event
of jurisdictional significance - it confers jurisdiction on
the court of appeals and divests the district court of its
control over those aspects of the case involved in the
appeal.”); Wyatt, 800 F.3d at 341. Mr. Fryer
does not address the question of whether, after the reversal
without a remand, a lower court can grant restitution. But
there is authority that a district court has such power.
See United States v. Kellington, 217 F.3d 1084, 1094
n. 11 (9th Cir. 2000)(collecting cases); Caldwell v.
Puget Sound Elec. Apprenticeship & Training Trust,
824 F.2d 765, 766-68 (9th Cir. 1987). And see the
discussion in Educ. Media Co. at Virginia Tech v.
Insley,, 2014 WL 3812359, at *1 (E.D. Va. 2014);
Glaberson v. Comcast Corp., 295 F.R.D. 95, 102 (E.D.
Pa. 2013). The rule of mandate would not appear to bar
consideration of these issues (with the exception of that
discussed infra at 24).
remedies are a special blend of what is necessary, what is
fair, and what is workable. . . .” Lemon v.
Kurtzman, 411 U.S. 182, 200 (1973). Restitution is often
called an equitable remedy and calls for a court to exercise
discretion in determining whether restitution is proper and,
if so, how much should be awarded. Porter v. Warner
Holding Co., 328 U.S. 395, 400 (1946). An order of
restitution will be upset only if the district court used
inappropriate factors or did not exercise discretion at all.
United States v. Frith, 461 F.3d 914, 919
(7th Cir.2006). Discretion, it must be remembered,
denotes the absence of a hard and fast rule. Langnes v.
Green, 282 U.S. 531, 541 (1931); United States v.
Davis, 202 F.2d 621, 624-25 (7th Cir.1953).
And while it may not be exercised arbitrarily, it allows for
two decision makers to reach opposite conclusions on
virtually identical sets of facts. See Mejia v. Cook
County, Ill., 650 F.3d 631, 635 (7th Cir. 2011);
United States v. Banks, 546 F.3d 507, 508
(7th Cir. 2008). See also McCleskey v. Kemp, 753
F.2d 877, 891 (5th Cir. 1985)(“‘The
very exercise of discretion means that persons exercising
discretion may reach different results from exact
duplicates.”), aff'd., McCleskey v. Kemp,
481 U.S. 279, 289-290 (1987). These principles, when applied
to the facts of this case, counsel that the motion for
restitution be denied.
Santa Rosa Data
first prong of Mr. Fryer's restitution claim addresses
the so-called Santa Rosa data. He contends the Alliance has
no right to data pertaining to water usage by the City's
residents and should pay him a little over $26, 000 for it,
destroy all its reports that refer to it, and never make use
of the data again. In other words, he wants a good deal more
than what he previously agreed to in the March
13th settlement. And what he wants would or could
make the Alliance's future efforts in this area futile.
According to Mr. Fryer, the Alliance obtained the data as a
result of a court order the Seventh Circuit found invalid on
appeal. But Mr. Fryer loses sight of the fact that the
Seventh Circuit did not find the March 13th
settlement agreement invalid. To the contrary, it held that
the parties were bound by that to which they had agreed. It
was this court (and the Alliance) which gave the settlement
agreement a greater reach than it should have had.
the Court of Appeals noted that some of the “language
[in a memorandum opinion] suggests that [I] wanted Fryer to
turn additional data over to the Alliance or a
consultant.” But it held that since “no such
requirement appears in the injunction or in any judgment
satisfying Fed.R.Civ.P. 58, Fryer [was] therefore under no
obligation beyond those undertaken in the settlement
agreement.” Alliance, supra, 808 F.3d at 1157.
Mr. Fryer's current contention that he was required to
turn over the Santa Rosa data to the Alliance [Dkt. #39] is,
at bottom, an objection to the holding of the Court of
Appeals. But he cannot relitigate or quarrel with the
record of the settlement conference of March 13th,
which everyone agrees defined the parties' obligations,
reads in pertinent part:
MR. WIX [counsel for the Alliance]: With respect to point 2
and the turnover of data, Mr. Fryer will turn over all
utility data. Subject to that data requiring a
release of AWE getting those releases from the case study
utilities. Mr. Fryer will provide AWE shortly with a
list of who those are.
MS. CASEY [counsel for Mr. Fryer]: Yes.
MR. WIX: So by March 14th close of business Mr. Fryer will
provide us with the list of case study utilities who have
confidentiality agreements. AWE will get the releases
from those case study utilities. At which point Mr.
Fryer will turn over all utility data within two weeks. That
was not part of the description (inaudible).
MS. CASEY: Certainly. Michelle Casey for James Fryer. That
data will be conveyed to plaintiff in some sort of hard copy
format, whether it is via CD or via flash drive.
MR. WIX: The data that is being turned over will not include
Mr. Fryer's interviews, notes that he's taken during
the course of this case -- or the project. Sorry. With
respect to point No. 4, AWE will pay Mr. Fryer the sum of
$25, 000. We didn't talk about this specifically, but we