G.M. Sign, Inc. v. Swiderski Electronics, Inc.
Docket No. 2-13-0711
Appellate Court of Illinois, Second District
August 12, 2014
2014 IL App (2d) 130711
Illinois Official Reports
Aрpellate Court Caption: G.M. SIGN, INC., Individually and as the Representative of a Class of Similarly Situated Persons, Plaintiff-Appellant, v. SWIDERSKI ELECTRONICS, INC., JOSEPH SWIDERSKI III, and DAVID M. SCHWARTZ, Defendants-Appellees.
Held: In a putative class action alleging that defendants violated the Telephone Consumer Protection Act by sending unsolicited facsimile advertisements in violation of the Act, the trial court erred in dismissing the action with prejudice on the ground that defendants’ settlement offer, which plaintiff did not accept within the 12-day time limit, rendered the claim moot, since the 12-day time limit made the offer conditional, the law requires a tender to be unconditional to moot plaintiff‘s claim, and, in the instant case, the time limit had expired and was no longer effective at the time the trial court ruled on defendants’ motion to dismiss; therefore, the dismissal of plaintiff‘s claim was reversed and the cause was remanded.
(Note: This syllabus constitutes no part of the opinion of the court but has been prepared by the Reporter of Decisions for the convenience of the reader.)
Decision Under Review: Appeal from the Circuit Court of McHenry County, No. 03-CH-454; the Hon. Thomas A. Meyer, Judge, presiding.
Judgment: Reversed in part and vacated in part; cause remanded.
Counsel on Appeal:
Eric L. Samore and Michael Resis, both of SmithAmundsen LLC, of Chicago, for appellees.
Panel: JUSTICE JORGENSEN delivered the judgment of the court, with opinion. Presiding Justice Burke and Justice McLaren concurred in the judgment and opinion.
OPINION
¶ 1 In this putative class action, plaintiff, G.M. Sign, Inc., alleges that defendants, Swiderski Electronics, Inc., Joseph Swiderski III, and David M. Schwartz (collectively Swiderski), sent unsolicited facsimile advertisements in violation of the Telephone Consumer Protection Act of 1991 (TCPA) (
¶ 2 Swiderski offered to fully settle G.M. Sign‘s individual claims, conditioned on its acceptance within 12 days. On the twelfth day, G.M. Sign moved to reconsider the denial of class certification. The trial court reopened discovery for Swiderski to depose six declarants who had sworn that they had no EBR with it. Rather than conduct discovery, Swiderski moved to dismiss the case as moot based on the tender of its settlement offer, which was made after certification had been denied and while no motion for reconsideration was pending. The trial court granted Swiderski‘s motion and dismissed the case with prejudice. It also denied G.M. Sign‘s oral motion requesting 30 days to find a new class representative to replace it and for a 30-day injunction precluding Swiderski from making tender offers to the six declarants. The court did not rule on the specific claims in G.M. Sign‘s motion to reconsider the denial of class certification, but denied the motion as moot given its dismissal of the case.
¶ 3 G.M. Sign appeals, challenging the trial court‘s denial of the motion for class certification and its dismissal of the сase. We reverse the dismissal of G.M. Sign‘s claims, vacate the denial of its motion to reconsider the certification denial, and remand for a ruling on the motion to reconsider. Because the motion to reconsider remains pending, we do not address the certification denial. We also vacate as premature the court‘s ruling on G.M. Sign‘s request for time to seek a substitute class representative and its related request for an injunction.
I. BACKGROUND
¶ 4 “This is a junk fax case, and like most such cases, the facts are not especially juicy.” CE Design, Ltd. v. Prism Business Media, Inc., 606 F.3d 443, 444 (7th Cir. 2010). On June 19, 2003, Ernie Rizzo, d/b/a Illinois Special Investigations, filed a class-action complaint against Swiderski Electronics. On February 21, 2008, G.M. Sign, a wholesale sign manufacturer, replaced
¶ 5 Swiderski denied the allegations and raised several affirmative defenses, including an EBR. Swiderski claimed that it did not send any advertising or marketing materials to any individual or entity that had not previously contacted it for information relating to its goods and services or purchased goods or services from it.
¶ 6 In a second amended motion filed on December 30, 2011, G.M. Sign moved the trial court to certify (
“All persons who were successfully sent a facsimile between August 11, 2003[,] and August 14, 2003[,] from Swiderski Electronics Inc. including the language ‘Your Source Swiderski Electronics’ monthly update.‘”
¶ 7 G.M. Sign argued that the case was idеal for class certification because the claims of the individual class members were too modest (i.e., $500 for nonwillful transmissions (
¶ 8 G.M. Sign attached to its motion for certification Swiderski‘s response to its request for admissions, wherein Richard Swiderski, Swiderski‘s marketing vice president, stated that the company did not contact G.M. Sign to receive its explicit consent before sending it a fax advertisement, but that: (1) G.M. Sign had previously contacted Swiderski for information about its products аnd services; (2) thus, the parties had an EBR; and (3) G.M. Sign was included in Swiderski‘s customer database and was deemed to have invited or permitted Swiderski to send its fax advertisement to it.
¶ 9 Swiderski argued in response that certification should be denied because G.M. Sign failed to show that common issues predominated over individual questions raised by the EBR defense. Swiderski asserted that the question whether each fax recipient had an EBR with it could not be resolved on a class-wide basis. It also argued that the evidence of Swiderski‘s EBRs with G.M. Sign and other putative class members was overwhelming and undisputed. Specifically, Swiderski noted that it never purchased or used any commercially produced contact lists or company information; instead, it obtained contact information directly from putative class members at different points through more than 55 years of business relationships, product inquiries, sales, and trade show attendance. Thus, there was a genuinе issue as to whether it had an EBR with each putative class member (a complete defense to each member‘s claim) and, therefore, the EBR issue must be resolved individually for each of the 2,584 putative class members. Resolving the issue collectively, it urged, would require testimony from hundreds of witnesses and from each Swiderski employee who had any contact with any putative class member.
¶ 10 On August 17, 2012, the trial court denied G.M. Sign‘s motion for class certification. Although it found that thе numerosity requirement was met, it determined that commonality was not. The trial court found that there was no evidence that Swiderski had obtained its list of intended fax recipients other than through EBRs. “There is no evidence the lists were procured or obtained inappropriately.” It found that Swiderski‘s claims concerning its methods of obtaining contact information were “unrebutted,” but clarified that it was not finding that each putative class member had an EBR. The trial court stated that G.M. Sign failed to establish that there were no class-wide EBRs: “You‘ve established [the lack of an EBR] with respect to your client, but now you‘re arguing that because your client didn‘t have an [EBR], therefore, nobody else did. ***
¶ 11 On September 7, 2012, Swiderski offered, via email, to settle G.M. Sign‘s individual claim for $1,500 and injunctive relief and costs, conditioned on G.M. Sign‘s acceptance of the offer within 12 days. The communication stated: “This offer will remain open until Friday, September 19, 2012.”
¶ 12 On the day the offer expired, September 19, 2012, G.M. Sign moved the trial court to reconsider its denial of G.M. Sign‘s motion for class certification. It argued that the trial court erroneously shifted to it and other class members the burden of disprоving the EBR defense. It noted that Swiderski produced only 17 specific examples of EBRs for the relevant period. G.M. Sign maintained that the EBR issue was a common question that predominated in the case. Alternatively, G.M. Sign sought leave to amend the class definition to exclude those persons with respect to whom Swiderski could not provide evidence of EBRs.
¶ 13 At the December 11, 2012, hearing on G.M. Sign‘s motion to reconsider, the court began by explaining that it did not shift the burden of proof in denying certification. It noted that it found that G.M. Sign did not establish that there were common questions such that certification was appropriate; it further found that Swiderski‘s EBR defense called into question G.M. Sign‘s position that there were common questions of law or fact. At this point in the hearing, G.M. Sign requested time to reopen discovery for the limited purpose of “resolv[ing] this common question.” The trial court granted it leave to file a motion explaining the discovery it was proposing. It did not rule on G.M. Sign‘s motion to reconsider.
¶ 14 On January 9, 2013, G.M. Sign moved to reopen limited discovery. It asserted that, to date, only 36 of the 2,584 faxes were sent pursuant to EBRs.3 This number was similar to Swiderski‘s representation of 45 EBRs during discovery. G.M. Sign argued that, if the full subset of EBRs was in the 36-to-45 range, then the class should be certified, excluding those fax recipients who had EBRs (if the court found that the EBR defense could be raised) with Swiderski. To test the foregoing reasoning, G.M. Sign proposed limited discovery tо gather evidence, including contacting certain members of the putative class to obtain declarations or depositions of whether they had EBRs with Swiderski.
¶ 15 On January 29, 2013, the trial court allowed limited discovery for the depositions of the putative class members who had declared or were willing to declare that they did not have EBRs with Swiderski by the date of the court‘s order and were previously contacted by G.M. Sign. It granted G.M. Sign until February 1, 2013, to identify any such declarants.
¶ 16 G.M. Sign apparently produced declarations of six class members who swore that they, in addition to G.M. Sign, had no EBRs with Swiderski. (The relevant documents are not contained in the appellate record.)
¶ 17 Instead of deposing any putative class members, on February 21, 2013,
¶ 18 G.M. Sign responded that dismissal was not warranted, because there was a pending motion for reconsideration and the additional motion for limited discovery (which resulted in the identification of six additional putative class members relevant to the motion to reconsider), as well as the fact that the settlement offer was: (1) incomplete (because it did not cover count II of its complaint-spoliation of evidence); and (2) conditional in that it was open for only a limited time. Thus, it argued, its claims were not moot.
¶ 19 Also, on April 1, 2013, Swiderski filed an unopposed motion to stay discovery pending resolution of its motion to dismiss. It noted that G.M. Sign had disclosed six declarations from putative class members, who were located in central Illinois. Obtaining their depositions, it urged, would require significant costs and travel time. Staying discovery until the motion to dismiss was resolved would save resources. The trial court, on April 5, 2013, granted the motion.
¶ 20 On June 12, 2013, the trial court granted Swiderski‘s motion to dismiss, dismissing all of G.M. Sign‘s claims with prejudice. Relying on Akinyemi v. JP Morgan Chase Bank, N.A., 391 Ill. App. 3d 334, 339 (2009) (noting general rule that, where “the defendant tenders to the named plaintiff the relief requested before the class is certified, the underlying cause of action must be dismissed as moot as there is no longer an actual controversy pending“), the court found that the settlement offer, which was made while no motion for class certification was pending, rendered the claims moot. “So that tells me my hands are tied.” The court noted that Akinyemi did not prohibit the use of a time limit in a settlement offer. The court also noted that the spoliation claim was derivative of the TCPA claim: “[T]he Defendant‘s offer tendered all the relief requested that was available under both counts.” Thus, the court dismissed the case with prejudice “as Plaintiff‘s claim is moot. That would then obviously remove-make moot-the motion to recоnsider.”
¶ 21 The trial court next denied G.M. Sign‘s oral motion for 30 days to find a new class representative (out of the six known declarants) to replace it and for a 30-day injunction precluding Swiderski from making tender offers to the known declarants. G.M. Sign appeals.
II. ANALYSIS
A. TCPA
¶ 22 Section 227 of the TCPA prohibits the use of “any telephone facsimile machine, computer, or other device to send, to a telephone facsimile machine, an unsolicited advertisement.”
¶ 23 The TCPA is a remedial statute and prescribes methods of enforcement, including that an individual may bring a private
B. Granting of Swiderski‘s Motion to Dismiss
¶ 24 G.M. Sign argues that Swiderski‘s tender was not unconditional, because it contained a 12-day time limitation. Thus, G.M. Sign concludes, the tender did not render moot G.M. Sign‘s individual claims and the trial court erred in dismissing the case. We review de novo the dismissal of a complaint. Barber v. American Airlines, Inc., 241 Ill. 2d 450, 455 (2011). For the following reasons, we agree that the trial court erred in dismissing the case.
¶ 25 A tender “is аn unconditional offer of payment consisting of the actual production of a sum not less than the amount due on a particular obligation.” Brown & Kerr, Inc. v. American Stores Properties, Inc., 306 Ill. App. 3d 1023, 1032 (1999). It “must be without conditions to which the creditor can have a valid objection or which will be prejudicial to his [or her] rights.” Id. For example, the “[t]ender of an amount less than the creditor claims is due is ineffective when acceptance is conditioned on an admission that no greater amount is due.” Id.
¶ 26 Here, Swiderski tendered settlement on September 7, 2012, conditioned on G.M. Sign‘s acceptance of the offer within 12 days (“This offer will remain open until Friday, September 19, 2012.“). On the twelfth day, G.M. Sign filed its motion to reconsider the court‘s denial of G.M. Sign‘s class certification motion. Over five months later, on February 21, 2013, Swiderski moved to dismiss G.M. Sign‘s claims on the ground that its settlement offer, which had expired at this point but had been made after class certification had been denied, rendered moot G.M. Sign‘s claims. The cоurt granted the motion on June 12, 2013.
¶ 27 G.M. Sign cites to cases wherein, it notes, the offer contained no time limit. See Barber, 241 Ill. 2d at 453, 459-60 (the defendant tendered a $40 baggage fee to the plaintiff and refunded that amount to her credit card; the plaintiff never filed a motion for class certification; the court held that the individual action was rendered moot by the defendant‘s tender of the requested relief prior to any motion for certification); Gatreaux v. DKW Enterprises, LLC, 2011 IL App (1st) 103482, ¶ 5 (the defendants’ letter to the plаintiffs contained no time limit); Akinyemi, 391 Ill. App. 3d at 340 (the defendant credited the plaintiff‘s account with disputed amount before the plaintiff served the defendant with the complaint and before the plaintiff moved for class certification); see also Hillenbrand v. Meyer Medical Group, S.C., 308 Ill. App. 3d 381, 389 (1999) (in rejecting the plaintiffs’ argument that a tender did not moot their claim, because they did not accept it, the court noted that the defendant‘s “offer has never been withdrawn“).
¶ 28 G.M. Sign concedes that the foregoing cases do not directly address the issue here and further suggests that this is an issue of first impression. It urges us to hold that a limited-time offer is not sufficient to render moot a named plaintiff‘s
¶ 29 Swiderski responds in a conclusory fashion that its offer was not conditional or incomplete and that G.M. Sign had a reasonable time to consider it. It then notes that G.M. Sign never requested additional time to consider the offer or argued that the 12-day period was inadequate. Swiderski urges that the period was sufficient for G.M. Sign to consider and refuse the full offer of relief. Further, Swiderski suggests that G.M. Sign‘s refusal of the offer appears to have been driven by its counsel‘s desire to maintain the case in the hope that the class would ultimately be certified. See, e.g., Hillenbrand, 308 Ill. App. 3d at 389 (a plaintiff “cannot perpetuate the controversy by merely refusing [the defendant‘s] tender“).
¶ 30 We conclude that the 12-day time limit in Swiderski‘s settlement offer rendered its tender a conditional offer. As G.M. Sign notes, Swiderski moved to dismiss G.M. Sign‘s claims оver five months after its offer expired, on the ground that its settlement offer rendered moot G.M. Sign‘s claims. When Swiderski moved to dismiss G.M. Sign‘s claims (and through the date that the trial court ruled on the motion), no offer existed. Specifically, Swiderski‘s offer specified that tender was conditioned on G.M. Sign‘s acceptance within 12 days. Thus, under the offer‘s terms, once the 12-day period expired, tender could not be (and was not) effected. The 12-day period for acceptanсe, which had expired when the trial court ruled on Swiderski‘s motion to dismiss, was a material condition of Swiderski‘s offer because it had the effect of revoking/terminating the offer before the trial court ruled on the motion to dismiss. Swiderski does not dispute that the law requires that a tender be unconditional to moot a plaintiff‘s claim. Brown & Kerr, 306 Ill. App. 3d at 1032. That was not the case here. The trial court erred in dismissing G.M. Sign‘s complaint.
¶ 31 Because we hold that the trial court erred in dismissing G.M. Sign‘s claims, we also vacate the denial of its motion to reconsider the certification denial. We also vacate (as premature) the trial court‘s denial of G.M. Sign‘s oral requests to seek a substitute class representative and for a 30-day injunction (precluding Swiderski from making tender offers to the declarants). We remand the cause for the trial court to address the pending motion to reconsider and for further proceedings consistent with this opinion.
III. CONCLUSION
¶ 32 For the reasons stаted, the judgment of the circuit court of McHenry
Reversed in part and vacated in part; cause remanded.
JUSTICE JORGENSEN