In the
United States Court of Appeals
For the Seventh Circuit
____________________
Nos. 15-‐‑2164 & 15-‐‑2256
IRA HOLTZMAN, individually and as representative of a class,
Plaintiff-‐‑Appellee, Cross-‐‑Appellant,
v.
GREGORY P. TURZA,
Defendant-‐‑Appellant, Cross-‐‑Appellee.
____________________
Appeals from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 08 C 2014 — Robert W. Gettleman, Judge.
____________________
ARGUED JANUARY 11, 2016 — DECIDED JULY 8, 2016
____________________
Before EASTERBROOK, WILLIAMS, and SYKES, Circuit Judges.
EASTERBROOK, Circuit Judge. Attorney Gregory Turza
tried to solicit business by sending fax advertisements to ac-‐‑
countants. Three years ago we held that these faxes violated
the Telephone Consumer Protection Act of 1991, 47 U.S.C.
§227. Ira Holtzman, C.P.A., & Associates, Ltd. v. Turza, 728 F.3d
682 (7th Cir. 2013). The district judge had ordered Turza to
post a fund of about $4.2 million, stating that he planned to
distribute this sum to the class members and donate any re-‐‑
2 Nos. 15-‐‑2164 & 15-‐‑2256
mainder to a charity. We reversed that part of the district
court’s order. We held that “this action stems from discrete
injuries suffered by each recipient of the faxes; it does not
create a common fund.” 728 F.3d at 688. We remanded the
case to the district court for further proceedings.
While that appeal was pending, Turza had posted a su-‐‑
persedeas bond. After losing on the merits he deposited $4.2
million into the court’s registry. Invoking the common-‐‑fund
doctrine of Boeing Co. v. Van Gemert, 444 U.S. 472 (1980), the
district judge decided that class counsel gets a third of this
money (about $1.4 million) as compensation for legal ser-‐‑
vices. The Act authorizes an award of up to $500 per im-‐‑
proper fax. 47 U.S.C. §227(b)(3)(B). The district court ordered
two-‐‑thirds of that, or $333 per fax, sent to every class mem-‐‑
ber. (The names and phone numbers of the persons and
businesses that received the faxes are known; the court’s or-‐‑
der does not require class members to submit requests for
payment.) If some class members fail to cash their checks, or
if they have moved and cannot be tracked down, then there
will be a second distribution. The maximum paid out per fax
is to be $500. If money remains in the fund after counsel
have received $1.4 million and all members who can be lo-‐‑
cated (and take the payments) have received $500 per fax,
the residue goes back to Turza. Both the class and Turza
have appealed from these orders.
Turza contends that paying counsel based on the total
value of the fund is inappropriate, and he’s right. Boeing
holds that counsel are entitled to be compensated from a
common fund, but our 2013 opinion held that this is not a
common-‐‑fund case. Class counsel maintain that our decision
is mistaken, but it is the law of the case. Our decision cites
Nos. 15-‐‑2164 & 15-‐‑2256 3
Boeing; it is not a new development or a controlling authority
of which we were unaware. We thought then, and think
now, that suits under the Telephone Consumer Protection
Act seek recovery for discrete wrongs to the recipients. See
Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240,
263–67 & n.39 (1975) (explaining the difference between
common-‐‑fund cases and class actions that aggregate indi-‐‑
vidual claims); Snyder v. Harris, 394 U.S. 332 (1969) (same);
Travelers Property Casualty v. Good, 689 F.3d 714 (7th Cir.
2012) (same). Under our 2013 decision the $4.2 million repre-‐‑
sents security for payment, not a genuine common fund (see
Boeing, 444 U.S. at 479–80 n.5).
If all class members claim their awards, this will make no
difference. Under the American Rule for the allocation of at-‐‑
torneys’ fees, litigants must cover their own legal costs. (The
Telephone Consumer Protection Act is not a fee-‐‑shifting
statute.) So the members of the plaintiff class must pay their
lawyers, and none of the class members has appeared to
contend that a third of the recovery is an excessive fee. This
means that, of each $500 in damages for a given fax, counsel
are entitled to about $167, and the fax recipient gets the rest.
But if a given recipient cannot be located, or spurns the
money, counsel are not entitled to be paid for that fax. The
district judge held that Turza gets the money back, and
awarding counsel $167 per fax when the class member gets
nothing would be equivalent to treating the Act as a fee-‐‑
shifting statute and requiring Turza to pay the class’s attor-‐‑
neys just because he lost the suit.
The district judge ordered a second round of distribu-‐‑
tions, so that a class member could receive as much as $500
per fax (if some class members could not be located or did
4 Nos. 15-‐‑2164 & 15-‐‑2256
not cash their checks). But that second round of distribution
would be inconsistent with the American Rule on the alloca-‐‑
tion of legal fees. The statute authorizes a maximum award
of $500 per fax, out of which counsel must be paid. Given the
district court’s conclusion that Turza is entitled to the return
of the excess in the fund (which, to repeat, is only a security
device), distributing more than $500 per fax ($333 to the re-‐‑
cipient and $167 to counsel) would either exceed the statuto-‐‑
ry cap or effectively shift the class’s legal fees to Turza. See
Pearson v. NBTY, Inc., 772 F.3d 778, 781–82 (7th Cir. 2014).
The class protests the district court’s conclusion that any
residue goes back to Turza. It would prefer to direct the
money to a charity, as the district court had announced be-‐‑
fore our 2013 decision. This argument is of a piece with the
class’s contention that the $4.2 million represents a common
fund. Given our conclusion that the class members have suf-‐‑
fered discrete rather than undifferentiated losses, however,
the money represents security for payment rather than a
common fund. And once a debt has been satisfied, a security
interest is released. So if X borrows from a bank and pledges
stock as security, once X repays the loan the stock is re-‐‑
turned; it is not given to charity.
We do not mean to foreclose the possibility of a cy pres
distribution (as these charitable uses are called) in all cases
with individual harms. Our original opinion observes that
settlements sometimes provide that none of the money will
be returned, and then the judge must do something with the
residue. If the government does not demand escheat, a chari-‐‑
table distribution to an organization that will do some good
for the class becomes attractive. And our 2013 decision did
not hold that the absence of a settlement makes a cy pres
Nos. 15-‐‑2164 & 15-‐‑2256 5
remedy impossible. A district judge might conclude that the
inability to track down the current address of a victim who
has moved should not automatically benefit the wrongdoer.
But, for the reasons we gave in 2013, a judge is never legally
obliged to divert money from the litigants to a charity. The
district judge’s decision that any surplus goes back to Turza
cannot be called either a legal blunder or an abuse of discre-‐‑
tion.
The judgment is affirmed in part (on the class’s appeal)
and reversed in part (on Turza’s appeal), and the case is re-‐‑
manded for the entry of judgment consistent with this opin-‐‑
ion.