The Seventh Circuit recently held that a federal court does not lose jurisdiction where the defendant offers the individual plaintiff in an FDCPA class action more than she could hope to recover in her individual claim. In Smith v. Greystone Alliance, LLC, No. 14-1758 (7th Cir. Nov. 13, 2014) the plaintiff sought statutory damages and compensatory damages for emotional distress under the FDPCA. Defendant tried to pick off the plaintiff to avoid class certification by offering her $10 the maximum amount of statutory damages, and $500 in compensatory damages, plus fees and costs. The district court dismissed the case as moot because the plaintiff could not hope to recover even $500 as actual damages. The Seventh Circuit reversed characterizing the issue as not one of mootness, but of whether a controversy exists within the scope of Article III. A controversy exists when the plaintiff wants more, or different relief, than the defendant is willing to provide. In the Seventh Circuit’s view, the district court improperly decided the merits of the case for establishing the maximum amount of compensatory damages resolves part of the merits. It can only decide the merits if it has jurisdiction, but what the district court did was whittle down the amount in dispute and determined it had no jurisdiction where the defendant’s offer was greater than that amount. A jurisdictional dismissal is only proper where defendant offers more than the plaintiff’s demand: If the plaintiff asks for the moon, only offering the moon extinguishes the controversy.
Download Related DocumentSolomon has nearly two decades of experience representing financial institutions, real estate investors and privately owned business entities. Solomon concentrates his practice in the areas of banking, consumer financial services, real estate, business law and related litigation and appellate practice.
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