In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 15‐2771
MICHAEL B. JOHNSON, et al., on behalf of themselves and all
others similarly situated,
Plaintiffs‐Appellants,
v.
PUSHPIN HOLDINGS, LLC, et al.,
Defendants‐Appellees.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 13 C 7468 — Charles P. Kocoras, Judge.
____________________
ARGUED MARCH 30, 2016 — DECIDED MAY 6, 2016
____________________
Before WOOD, Chief Judge, and POSNER and ROVNER, Cir‐
cuit Judges.
POSNER, Circuit Judge. 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 sep‐
arately—for simplicity we’ll pretend that Pushpin is the only
defendant), of having violated the Illinois Consumer Fraud
2 No. 15‐2771
and Deceptive Business Practices Act, and committed related
torts, all in the course of attempting to collect debts in Illi‐
nois. Pushpin removed the case to federal district court un‐
der 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 mil‐
lion. 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 impossible for the class to establish a
right to damages of more than $5 million.
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, 748 F.3d 769, 773 (7th Cir. 2014). On
remand the district judge, reversing his earlier ruling, ruled
that the amount in controversy did exceed the threshold, be‐
cause Pushpin had already obtained judgments totaling $1.3
million that the plaintiffs wished to recoup and punitive
damages equal to nine times that amount were also a possi‐
bility. But the judge later dismissed the suit on the merits for
failure to state a claim, Fed. R. Civ. P. 12(b)(6), and the plain‐
tiffs have again appealed.
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
No. 15‐2771 3
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 un‐
known—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 discour‐
age them from defending against Pushpin’s debt claims be‐
cause 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.
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 in‐
dividuals. 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 lit‐
igated in Cook County, Illinois and governed by Illinois law.
Each lease also requires the execution of a personal guaran‐
ty, 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
4 No. 15‐2771
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 de‐
fending 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 de‐
fending against it is likely to exceed the claim. For then just
by committing themselves to spend heavily on the legal de‐
fense to any small‐claims suit brought against them, poten‐
tial defendants could insulate themselves from liability for
small claims.
The class further contends that Pushpin violated the Illi‐
nois Consumer Fraud and Deceptive Business Practices Act,
815 ILCS 505/2, by among other things failing to register as a
debt collection agency, as required by the Illinois Collection
Agency Act, 225 ILCS 425/4. But when Pushpin filed its suits
the Act required registration only by collectors of consumer
as distinct from commercial debt. Compare 225 ILCS 425/2
(2008) and 425/2 (2013), with 425/2 (2016). And even if Push‐
pin had been required to register, its failure to do so would
not have invalidated the final judgments that it had obtained
in the suits it brought. LVNV Funding, LLC v. Trice, 32 N.E.3d
553, 563 (Ill. 2015).
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
No. 15‐2771 5
had not leased the machines to anyone or determined any
lease payments. It was merely a subassignee of CIT and as
such the enforcer of contracts between CIT and the lessees
and guarantors.
Invoking both the Illinois statute of limitations for enforc‐
ing a lease contract and the doctrine of laches, the class ar‐
gues that Pushpin waited too long to sue the guarantors. But
the Illinois statute of limitations applicable to written guar‐
anties 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, 896 F. Supp. 2d
746, 755–56 (N.D. Ill. 2012). Pushpin sued within the 10‐year
period.
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, 656 F.3d
646, 649–51 (7th Cir. 2011) (Illinois law), which Pushpin’s
were not—requires that the plaintiff be shown to not have
been diligent in suing and by that lack of diligence to have
harmed the defendant. There is no indication of either fault
in this case—no basis, for example, for thinking that if only
the members of the class had been sued a year or two or
three earlier they would have had a stronger defense.
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 argument (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
6 No. 15‐2771
proper defendants. Usually the guarantor of debts of a cor‐
poration is excused from having to make good on the guar‐
anty 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 be‐
fore the filing of a suit to enforce the guaranty. Riley Acquisi‐
tions, Inc. v. Drexler, 946 N.E.2d 957, 964–65 (Ill. App. 2011).
But there is no indication that any of the lessees’ survival pe‐
riods had expired before Pushpin filed its small‐claims suits.
Some, it is true, expire after five years, which is the survival
period for Illinois corporations. 805 ILCS 5/12.80; Perry v.
Western Motor Car Co., 279 Ill. App. 195, 202–03 (1935). But
the class has not alleged that any of the lessees were dis‐
solved Illinois corporations or that the survival periods of
any of the non‐Illinois corporations, periods governed by the
laws of other states, had expired under their states’ statutes.
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 signa‐
tures 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 clos‐
ing two features of the case that we find troubling, though
there is nothing we can do about them. The first is the en‐
No. 15‐2771 7
forceability of forum‐selection clauses against unsophisticat‐
ed signers of the clauses, which may describe many of the
sole proprietors and other small businesses that leased cred‐
it‐card processing machines from CIT. In Carnival Cruise
Lines, Inc. v. Shute, 499 U.S. 585 (1991)—a much‐criticized de‐
cision (see, e.g., Linda S. Mullenix, “Carnival Cruise Lines, Inc.
v. Shute: The Titanic of Worst Decisions,” 12 Nevada Law
Journal 549 (2012)), the Supreme Court upheld a forum‐
selection clause printed on the “contract” pages attached to a
cruise ticket. The clause had not been negotiated but simply
imposed by the cruise line on the passengers, who were un‐
likely to appreciate its significance—the prospect of bringing
a lawsuit against the line was not something many passen‐
gers would have been thinking about when they bought
their tickets. The same may be true in this case with regard
to the individuals and small businesses that leased the cred‐
it‐card processing machines. But in light of Carnival, and
considering that most lessees of credit‐card processing ma‐
chines lease them for use in business, a defense of uncon‐
scionability to the enforcement of the leases and the guaran‐
ties would be unlikely to succeed. And even if it were possi‐
ble within the compass of existing law to invalidate the
clauses in a case such as this, the class has challenged the fo‐
rum‐selection clauses only on the ground that they are an
inconvenience to nonresidents of Cook County, Illinois, the
selected forum. Any forum‐selection clause will be an incon‐
venience to a nonresident signer of the contract containing
the clause, so that the challenge by the class amounts to urg‐
ing a blanket prohibition of such clauses, which goes too far.
Our other concern is with the relation of debtor to guar‐
antor. Pushpin sued the guarantors rather than the debtors.
Suppose it had said to a debtor, “we’ll not sue you if you
8 No. 15‐2771
pay us a 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 ex‐
ceed the debt. But the debtor and guarantor might be differ‐
ent—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 future cases. But it has not been made an
issue in this case.
The judgment of the district court dismissing the com‐
plaint with prejudice is
AFFIRMED.