This- class-action suit, before us for the second time, had been filed in an Illinois state court and accused Pushpin Holdings, ■a debt collector (along with owners and. affiliates of Pushpin-unnecessary to discuss separately — for simplicity we’ll pretend that Pushpin is' the only defendant), of having violated the- Illinois Consumer Ffaud and Deceptive Business Practices Act, and committed related torts, all in the course of- attempting to collect debts in Illinois. Pushpin removed the case to federal district court under the provision of the Class Action Fairness Act of 2005 that authorizes such removal if (among other requirements; the only other one relevant to this case is discussed-in the next paragraph) the amount-in controversy exceeds $5- million.- - .28 ■ U.S.C. §§ 1453(b), -1332(d)(2), (6). The district judge remanded the case to the state court on the ground-that the plaintiffs (who were resisting removal) had established that the amount in controversy fell below the removal threshold because it would be im
■ We reversed the district judge’s order and remanded the case, holding not that the defendants had shown that the amount in controversy exceeded the $5 million threshold but that the issue required further consideration. Johnson v. Pushpin Holdings, LLC,
Before taking up'the merits,, we need to consider-another possible hurdle to federal jurisdiction besides amount in controversy — namely that federal courts must decline to take jurisdiction;of a class action if more than two-thirds--of the: members, of the class “are citizens of the State in which the -action was originally filed,” 28 U.S.C. § 1332(d)(4)(A)(i)(I), which of course is Illinois. There are- more than 3000 class members — the exact number is unknown— and their citizenship is not in, the record. But. the parties agree that far fewer than 2000, hence far fewer than two-thirds of 3000, are citizens of Illinois. Indeed the class argues that Pushpin’s debt-collection actions in- Illinois are focused on persons who do not reside in Illinois, to discourage them ■ from defending against Pushpin’s debt claims because they would have to travel to,; Illinois from their home state to defend against Pushpin. Pushpin,itself admits that fewer than 100 class members are Illinois citizens. So there is jurisdiction. . . i
Coming at last to the' merits, we need first to fill in a bit of background. In the early 2000s CIT, a large finance company, leased credit-card processing machines to both firms' and individuals. The leases describe themselves as business rather than consumer contracts and contain a forum-selection clause that requires any disputes over the contracts to be litigated in Cook County, Illinois and governed by Illinois law. Each lease also (requires the execution of a personal guaranty, whether by the lessee, an agent of the lessee, or someone else, of the payments required by the. lease.
CIT assigned most of the leases to a company that in turn assigned them to Pushpin, which between 2010 and 2014 filed, in reliance on the forum-selection clause, suits in small-claims courts in Cook County against more than 3000 of the guarantors of leases that the lessees had defaulted on. Those 3000 are the members of the class.
The class argues that in invoking the forum-selection clause Pushpin was hoping to induce default judgments' by members of the class, the vast majority of whom live outside of Illinois and.so would find it inconvenient to defend given the low stakes, most being below $5000 and many below $3000 — for remember that Pushpin sued in small-claims courts. Indeed the class argues plausibly that the cost of defending against a suit by Pushpin would usually exceed the amount of the claim. But the legality- of the forum-selection clauses is not challenged. Nor is there or should- there be a rule that forbids bringing a.suit just because-the cost of defending against it is likely to exceed the claim. For then just by committing themselves to spend heavily on the legal defense to any small-claims, suit brought against them, po-' tential defendants could insulate themselves from liability for small claims.
Alternatively the 'class argues that Pushpin violated the Illinois consumer fraud statute by suing for the $3000 or so owed on each lease even though the credit-card processing machines that were leased were worth only $250 apiece. .But if the leases were overpriced, Pushpin was not responsible. It had not leased the machines to anyone or determined any lease payments. It was merely a sub-assignee of CIT and as such the enforcer of contracts between CIT and the lessees and guarantors.
Invoking both the Illinois statute of limitations for enforcing a lease contract and the doctrine of laches, the class argues that Pushpin waited too long to sue the guarantors. But the Illinois statute of limitations applicable to written guaranties is 10 years, 735. ILCS 5/13-206, even though the statute of limitations for suits to collect the underlying .debt (the debt that the guarantor promises to repay if the debtor doesn’t) is shorter; in this case it was 4 years. See 810 ILCS 5/2-725; Armbrister v. Pushpin Holdings, LLC,
As for laches — an equitable doctrine invoked by the class though its usual role is as a defense to equitable suits, see, e.g., Nature Conservancy v. Wilder Corp. of Delaware,
There' is no basis for the further argument of the class that, a guaranty is unenforceable' if the guarantor is the same person as the lessee. Or for its argumént (its arguments are inexhaustible) that since many of the lessees of the credit-card processing. machines were corporations that had been dissolved before Pushpin filed its suits, there were few proper defendants, Usually the guarantor of debts of a corporation is excused from having to make good on the guaranty if the corporation has been dissolved and its survival period (the period after dissolution in which a claim against a dissolved corporation can still be brought) has expired before the filing of a suit to enforce the guaranty. Riley Acquisitions, Inc. v. Drexler,
The class alleges that the guarantors’ signatures were forged on several of the-guaranties and that the signatures of the lessees were forged on the' corresponding leases. Forgery is a form of fraud, however, and fraud alleged in a suit in a federal court must be-pleaded with particularity, Fed.R.Civ.P. 9(b), which the plaintiffs haven’t done. Furthermore, what the class calls “forgeries” may have been authentic signatures by the lessees’ officers or other employees.
The plaintiffs have still other claims, such as abuse of process and malicious prosecution. Those claims have no merit either, for reasons well explained by Judge Kocoras and unnecessary for us to repeat.
So the plaintiffs must lose. ,But we want to remark in closing two features of the case that we find troubling, though there is nothing we can do .about them. The first is the enforceability of forum-selection clauses against unsophisticated signers of the clauses, which may describe many of the sole proprietors and other small businesses that leased credit-card processing machines from CIT. In Carnival Cruise Lines, Inc. v. Shute,
Our other'concern is with the relation of debtor to'guarantor. 'Pushpin sued the guarantors rathér than the debtors. Suppose it had said to a debtor, “we’ll not sue you if you pay us á modest fraction of the debt you owe us,” and the- debtor had agreed and Pushpin had then sued the guarantor' for the entire amount of the debt, as that would be the amount of the guaranty. If as is often the case debtor and guarantor- are one and the same person, Pushpin would be unlikely to obtain repayment of even a small part of the debt plus the full amount of the guaranty, as the sum would exceed the debt. But the debtor and guarantor might be:different— the debtor might be a firm and the guarantor an officer of the firm, or an insurance company. Then there would be a risk of an excess recovery by Pushpin if it sued- both. We don’t know whether this was a feature of any of the 3000 claims that Pushpin filed against the guarantors, but it is a possibility that debtors and their guarantors should be on the lookout for in
The judgment of the district court dismissing the complaint with prejudice is
AFFIRMED.