In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 14‐8004
ARNOLD CHAPMAN and PALDO SIGN & DISPLAY COMPANY,
individually and as representatives of a class of similarly
situated persons,
Plaintiffs‐Respondents,
v.
WAGENER EQUITIES, INC. and DANIEL WAGENER,
Defendants‐Petitioners.
____________________
Petition for Leave to Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 09 C 7299 — John J. Tharp, Jr., Judge.
____________________
SUBMITTED MARCH 19, 2014 — DECIDED MARCH 31, 2014
____________________
Before POSNER, KANNE, and ROVNER, Circuit Judges.
POSNER, Circuit Judge. The defendants in this class action
suit under the Telephone Consumer Protection Act, 47
U.S.C. § 227, seek our leave to appeal from the district
court’s order certifying the class. Fed. R. Civ. P. 23(f). The
defendants are a business that manages commercial real es‐
tate properties for the properties’ owners, and the owner of
2 No. 14‐8004
the business. The suit charges the defendants with having
paid a “fax blaster” called Business to Business Solutions to
send unsolicited fax advertisements, in violation of the Act’s
“junk fax” prohibition, 47 U.S.C. § 227(b)(1)(C), to 10,145
persons. They are the members of the class. Class counsel is
seeking statutory damages, as they would surely eclipse any
actual damages if the entire class is determined to have been
victimized by the defendants’ fax campaign. For then the
aggregate statutory damages will be either a little more than
$5 million or, if the violation is determined to be willful or
knowing, as much as three times greater. § 227(b)(3).
If the expected damages are so great in relation to the de‐
fendants’ assets that if the class certification order stands, the
defendants may well be forced—even if they have a strong
case on the merits—to settle, in order to avoid the risk of a
catastrophic judgment, we would give careful consideration
to the request for leave to appeal the order. Kohen v. Pacific
Investment Management Co., 571 F.3d 672, 677–78 (7th Cir.
2009); Blair v. Equifax Check Services, Inc., 181 F.3d 832, 834–35
(7th Cir. 1999). But the defendants haven’t told us what their
assets are—just that the corporate defendant is “a small fam‐
ily owned business.” It is no doubt small in relation to such
family‐owned businesses as Koch Industries and Walmart,
but maybe not so small that a contingent liability of $15 mil‐
lion would force it to settle; it hasn’t settled yet, and this suit
will be celebrating its fifth birthday later this year.
Even if the defendants could prove that they’ll be forced
to settle unless we reverse the class certification order, they
would have to demonstrate a significant probability that the
order was erroneous. “However dramatic the effect of the
grant or denial of class status in … inducing the defendant to
No. 14‐8004 3
capitulate, if the ruling is impervious to revision there’s no
point to an interlocutory appeal.” Id. at 835.
The defendants’ principal argument is that only owners
of fax machines have standing to sue under the Telephone
Consumer Protection Act. The plaintiffs have not presented
evidence concerning the ownership of the fax machines of
the class members. But what the Act prohibits is faxing un‐
solicited fax advertisements “to a telephone facsimile ma‐
chine.” § 227(b)(1)(C). There is no mention of ownership.
The defendants cite a district court decision that read an
ownership requirement into the Act on the ground that
Congress’s concern was with the “cost of the paper and ink
incurred by the owner of the fax machine and the fax ma‐
chine owner’s loss of the use of the machine.” Compressor
Engineering Corp. v. Manufacturers Financial Corp., 292 F.R.D.
433, 448 (E.D. Mich. 2013). The decision is erroneous on its
own terms, because the lessee of a fax machine pays for the
paper and often for the ink. And if he doesn’t, no matter. For
contrary to Compressor Engineering, our decision in Holtzman
v. Turza, 728 F.3d 682, 684 (7th Cir. 2013), holds that no mon‐
etary loss need be shown to entitle the junk‐fax recipient to
statutory damages. Whether or not the user of the fax ma‐
chine is an owner, he may be annoyed, distracted, or other‐
wise inconvenienced if his use of the machine is interrupted
by unsolicited faxes to it, or if the machine wears out prema‐
turely because of overuse attributable to junk faxes. Nor
does entitlement to statutory damages require any showing
of injury of any sort, for such damages not only serve to
compensate for injuries difficult to estimate in dollar terms,
but also, like statutory compensation for whistleblowers, op‐
erate as bounties, increasing the incentives for private en‐
4 No. 14‐8004
forcement of law. Anyway it would be arbitrary to limit re‐
lief under the junk‐fax provision of the Telephone Consumer
Protect Act to owners of fax machines, and there is no sug‐
gestion of such a limitation in the statute.
At most the defendants’ argument would support adding
to the class the owners, if different from the users, of the fax
machines that received the unauthorized fax advertisements.
There is no doubt that many of the current class members do
own their fax machines. The defendants don’t deny that one
of the named plaintiffs, Paldo Sign & Display Company,
does; but the other, Chapman, appears to as well. It’s true
that he was a federal prisoner when the defendants’ fax was
transmitted to the fax machine in his home, but that should
make no difference, on the defendants’ own theory, to his
eligibility to be a member of the class, and indeed to be a
class representative (though, embarrassed by Chapman’s
situation, class counsel has dropped him as a class repre‐
sentative; but he remains a member of the class). It’s irrele‐
vant that, being in prison, he couldn’t use the machine. (His
wife received the defendants’ faxes while he was impris‐
oned.)
Anyway a class can be certified without determination of
its size, so long as it’s reasonable to believe it large enough to
make joinder impracticable and thus justify a class action
suit. Kohen v. Pacific Investment Management Co., supra, 571
F.3d at 677–78. “How many (if any) of the class members
have a valid claim is the issue to be determined after the class
is certified.” Parko v. Shell Oil Co., 739 F.3d 1083, 1085 (7th
Cir. 2014) (emphasis in original). Recipients of faxes who
don’t have rights under the Telephone Consumer Protection
No. 14‐8004 5
Act just wouldn’t be entitled to share in the damages award‐
ed to the class by a judgment or settlement.
Which goes to show that the defendants’ argument about
ownership is not really addressed to the appropriateness of
class certification, and so doesn’t belong in this appeal. The
argument is not that a class should not have been certified
but that some persons or firms have been mistakenly includ‐
ed in it. If the argument had merit (it doesn’t), it would
merely encourage the district judge to create subclasses, one
of which (the owner subclass) could win while the lessee
subclass lost.
The defendants make an unrelated argument involving
plaintiff Paldo—that our decision in CE Design Ltd. v. King
Architectural Metals, Inc., 637 F.3d 721 (7th Cir. 2011), makes
Paldo an inadequate class representative. As we pointed out
in that case, there is no violation of the Telephone Consumer
Protection Act if the recipient of the fax advertisement had
given the defendant “prior express invitation or permission,
in writing or otherwise,” to receive such advertisements
from the defendant. 47 U.S.C. § 227(a)(5). The plaintiff, CE, a
small civil engineering firm, had posted its fax number on its
website and next to it the phrase “Contact Us.” It had also
signed a form that both authorized the publication of its fax
number in the Blue Book of Building and Construction—a direc‐
tory similar to the Yellow Pages but aimed at firms in the
building industry—and authorized the other subscribers to
the Blue Book, such as defendant King, to “communicate”
with it, including via fax. The Blue Book states that “by sup‐
plying The Blue Book with your fax and e‐mail address, you
agree to have The Blue Book and users of The Blue Book ser‐
vices communicate with you via fax or e‐mail.” Given this
6 No. 14‐8004
and other evidence discussed in our opinion, we concluded
that King might have a good defense under the Act. 637 F.3d
at 725–28. This case is different. Paldo’s fax number was
published in the Blue Book without its consent. Employees of
the directory found the number and “free listed” it—that is,
published it in the Blue Book without Paldo’s authorizing or
paying for the listing.
So Paldo’s adequacy as a class representative has not
been impugned. We need not speculate on whether the de‐
fendants might seek contribution from the Blue Book compa‐
ny to the damages they may be forced to pay to the class, on
the ground that the company misled the defendants into
thinking that Paldo had consented to receive fax advertise‐
ments. Nor is there any suggestion that other members of
the class consented to receive fax advertisements from the
defendants.
The defendants argue that class counsel should be dis‐
qualified from representing the plaintiffs and the class for
having acted unethically by sending the defendants a class‐
action notice. See Creative Montessori Learning Centers v. Ash‐
ford Gear, LLC, 662 F.3d 913, 916–18 (7th Cir. 2011). This
would have been unethical conduct if the purpose of the no‐
tice had been to enlist the defendants in a class action suit as
members of the plaintiff class. For that would put them on both
sides of the case—thus suing themselves! But actually the
notice was of another junk‐fax suit, not this one, so there was
no ethical violation—and for the further reason that a court
order required the sending of that notice to all possible class
members, which happened to include the defendants in the
present case.
No. 14‐8004 7
It remains only to note the age of this case. It is in its fifth
year, and still at the certification stage, with trial not sched‐
uled to begin until January 12, 2015. It’s not a complicated
case. Rather, the delay in moving it toward completion re‐
flects poor case management. The case has been reassigned
twice, and thus has been overseen by three different judges
in succession. More than two and a half years elapsed be‐
tween the initial briefing on certification and the decision to
certify. The plaintiffs’ counsel failed to appear for two status
conferences before a magistrate judge assigned to the case
(the fourth judicial officer) and defense counsel skipped one
status conference. The plaintiffs had to be compelled (a mat‐
ter taking months) to answer interrogatories. One of the
plaintiffs’ witnesses failed to show up to two subpoenaed
depositions, requiring the defendants to seek an order to
show cause in the District of Massachusetts.
A rapid resolution of this case is in order. But as the pro‐
posed appeal has no merit, the petition for leave to appeal
under Fed. R. Civ. P. 23(f) is
DENIED.