In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 16‐3574
FULTON DENTAL, LLC,
Plaintiff‐Appellant,
v.
BISCO, INC.,
Defendant‐Appellee.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 15 C 11038 — Edmond E. Chang, Judge.
____________________
ARGUED FEBRUARY 21, 2017 — DECIDED JUNE 20, 2017
____________________
Before WOOD, Chief Judge, and FLAUM and ROVNER, Circuit
Judges.
WOOD, Chief Judge. In recent years, the Supreme Court has
twice addressed the question whether an unaccepted offer to
a person seeking to represent a class is capable of mooting ei‐
ther the putative representative’s claim or the claims of the
class as a whole. See Campbell‐Ewald Co. v. Gomez, 136 S. Ct.
663 (2016); Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523
(2013). The case now before us presents yet another variation
2 No. 16‐3574
on that theme. Our putative class representative, Fulton Den‐
tal, LLC, received an unsolicited fax from Bisco, Inc., and it
has sued for damages under the Telephone Consumer Protec‐
tion Act (TCPA), 47 U.S.C. § 227 et seq. Before Fulton moved
for class certification, Bisco tried to moot its claim by tender‐
ing an offer that (Bisco says) gives Fulton all of the individual
relief it could possibly expect. This offer, however, was not
submitted pursuant to Federal Rule of Civil Procedure 68, as
were the offers in Genesis and Campbell‐Ewald. Instead, Bisco
tried to use Rule 67, which allows a party to deposit a pay‐
ment with the court. The district court concluded that Bisco’s
maneuver was enough to moot Fulton’s individual claim and
to disqualify it from serving as a class representative, and so
it dismissed the entire action. We conclude, however, that this
step was premature, and so we return the case to the district
court for further proceedings.
I
Fulton’s case against Bisco arose after Bisco faxed to Fulton
a generic, unsolicited advertisement for its dental products.
The TCPA prohibits such contacts, unless one of several ex‐
ceptions applies, such as a previous business relationship or
use of certain approved ways to obtain the fax number. In ad‐
dition, the sender must include an opt‐out notice in clear and
conspicuous language. Violations of the TCPA can be re‐
dressed with statutory damages of $500 per negligent viola‐
tion, or $1,500 per willful violation. Fulton filed a complaint
against Bisco on December 8, 2015. In it, Fulton sought statu‐
tory damages for two alleged violations (lack of consent and
omission of the opt‐out notice), injunctive relief banning fu‐
ture violations, and certification of a class (to be represented
No. 16‐3574 3
by Fulton) of all those who had similarly received faxes from
Bisco.
On January 18, 2016, before Fulton had filed a motion for
class certification, Bisco made Fulton an offer of judgment
pursuant to Federal Rule of Civil Procedure 68. The offer was
for $3,005 plus accrued costs, and it included an agreement to
have the requested injunction entered against it. Two days af‐
ter Bisco’s offer was filed, the Supreme Court decided Camp‐
bell‐Ewald, in which it held that “an unaccepted settlement of‐
fer or offer of judgment does not moot a plaintiff’s case.”
136 S. Ct. at 672. Taking its cue from that language, Fulton re‐
jected Bisco’s offer on January 24, because the offer provided
no relief to the rest of the class. Bisco then tried another tack:
it moved for leave to deposit $3,600 with the district court un‐
der Rule 67. This sum represented what Bisco regarded as the
maximum possible damages Fulton could receive, plus $595
for fees and costs. In light of that fact, along with its renewed
acquiescence to the injunction, Bisco argued that the deposit
had made Fulton’s claim moot, and that the district court
should thus enter judgment in Fulton’s favor on the moot
claims for $3,600 plus the injunction. Fulton opposed the lat‐
ter motion, on the ground that this was not a proper use of
Rule 67 and that the simple deposit of funds could not moot
the case.
The district court granted Bisco’s motion. It treated the
Rule 67 deposit of funds as the equivalent of giving the money
directly to Fulton, and it treated Bisco’s offer to submit to the
injunction as the equivalent of a commitment that it already
had stopped sending the offending faxes. The language of
mootness appears throughout the order, but the court para‐
doxically ordered relief on the merits. Fulton has appealed.
4 No. 16‐3574
II
If Bisco’s deposit of money into the court’s registry had the
effect of mooting this appeal, we would be in a strange situa‐
tion: there would no longer be a case or controversy between
the parties, and we would need to dismiss the action on that
basis. In essence, Bisco is arguing that it has forced a settle‐
ment that moots the case, along the same lines as the Supreme
Court faced in U.S. Bancorp Mortg. Co. v. Bonner Mall P’ship,
513 U.S. 18 (1994). There the Court held that the power to or‐
der vacatur of the lower court’s decision remains, even if the
case has become moot. Id. at 21. In the normal case, Bonner
Mall continued, “mootness by reason of settlement does not
justify vacatur of a judgment under review.” Id. at 29. But the
Court did not hold that the district court could take steps on
the merits, as opposed to steps designed to wrap up a case
such as an award of costs or a decision on vacatur. To the con‐
trary, it said “[o]f course, no statute could authorize a federal
court to decide the merits of a legal question not posed in an
Article III case or controversy.” Id. at 21.
A decision that a certain amount of damages should be
paid and that an injunction should be entered is quintessen‐
tially a ruling on the merits of a case. The logic of Bisco’s po‐
sition is that all it had to do was deposit the estimated dam‐
ages with the court in order to moot the case. It overlooks the
fact that once the case is moot, the court lacks power to enter
any judgment on the merits. Logically, money paid into the
court’s registry would either stay there for five years, after
which it would escheat to the United States, see
No. 16‐3574 5
28 U.S.C. § 2042, or perhaps Bisco could ask the court to re‐
turn it. Neither of those outcomes would be very satisfactory
to Fulton, nor to Bisco if escheat were the result.
Mootness, plainly, is not the correct legal concept for the
course of events that took place here. See Chapman v. First In‐
dex, Inc., 796 F.3d 783, 786 (7th Cir. 2015) (circulated to the full
court under 7th Circuit Local Rule 40(e)). Bisco is instead talk‐
ing about something more like accord and satisfaction or pay‐
ment, both affirmative defenses recognized by Federal Rule
of Civil Procedure 8(c)(1). Bisco insists that its Rule 67 pay‐
ment somehow erased any claim that Fulton may have had
against it. In order to decide whether that is true, we find it
helpful to take a closer look at Campbell‐Ewald, which inti‐
mated that such a payment might have legal effects.
The question before the Court was whether “an unac‐
cepted offer to satisfy the named plaintiff’s individual claim
[is] sufficient to render a case moot when the complaint seeks
relief on behalf of the plaintiff and a class of persons similarly
situated.” Campbell‐Ewald, 136 S. Ct. at 666. Notably, nothing
in this question is necessarily limited to a settlement offer pre‐
sented pursuant to Federal Rule of Civil Procedure 68, which
sets out special rules that include the “stick” of liability for
post‐offer costs for an offeree who gambles on trial and wins
less than the offer. See FED. R. CIV. P. 68(d). To the contrary, the
Court drew no distinction between unaccepted Rule 68 settle‐
ment offers and other unaccepted settlement or contract of‐
fers. It wrapped up its discussion of this issue with the follow‐
ing paragraph:
In sum, an unaccepted settlement offer or of‐
fer of judgment does not moot a plaintiff’s case,
6 No. 16‐3574
so the District Court retained jurisdiction to ad‐
judicate Gomez’s complaint. That ruling suffices
to decide this case. We need not, and do not,
now decide whether the result would be differ‐
ent if a defendant deposits the full amount of
the plaintiff’s individual claim in an account
payable to the plaintiff, and the court then en‐
ters judgment for the plaintiff in that amount.
That question is appropriately reserved for a
case in which it is not hypothetical.
136 S. Ct. at 672.
Bisco was quick to test the issue left open by Campbell‐
Ewald. The $3,600 it paid into the district court’s registry rep‐
resented, in its view, an amount that fully satisfies Fulton’s in‐
dividual claim, either if the “offer” is accepted or if acceptance
is irrelevant. It argues that by following the Supreme Court’s
roadmap (as it sees it), it mooted Fulton’s claim and at the
same time destroyed Fulton’s ability to serve as a class repre‐
sentative. In so arguing, it has assumed that by reserving com‐
ment on this situation, the Supreme Court meant to say that a
proposed settlement structured this way could be forced on a
plaintiff.
That is a risky assumption; it is normally best to take the
Court at its word and recognize that it reserves issues when
they are not necessary to the decision in the case before it and
will benefit from further attention. We begin our inquiry with
a closer look at Rule 67. On its face, it is just a procedural
No. 16‐3574 7
mechanism that allows a party to use the court as an escrow
agent. Here is what it says, in its entirety:
(a) Depositing Property. If any part of the relief
sought is a money judgment or the disposi‐
tion of a sum of money or some other deliv‐
erable thing, a party—on notice to every
other party and by leave of court—may de‐
posit with the court all or part of the money
or thing, whether or not that party claims
any of it. The depositing party must deliver
to the clerk a copy of the order permitting
deposit.
(b) Investment and Withdrawing Funds.
Money paid into court under this rule must
be deposited and withdrawn in accordance
with 28 U.S.C. §§ 2041 and 2042 and any like
statute. The money must be deposited in an
interest‐bearing account or invested in a
court‐approved, interest‐bearing instru‐
ment.
FED. R. CIV. P. 67. Sections 2041 and 2042 do not give any party
an unrestricted right to remove money from the court’s regis‐
try. Section 2041 permits “the delivery of [deposited] money
to the rightful owners upon security, according to agreement
of parties, under the direction of the court.” Section 2042 be‐
gins with the unequivocal statement that “[n]o money depos‐
ited under section 2041 of this title shall be withdrawn except
by order of court.”
8 No. 16‐3574
The First Circuit has held that “[t]he core purpose of Rule
67 is to relieve a party who holds a contested fund from re‐
sponsibility for disbursement of that fund among those claim‐
ing some entitlement thereto.” Alstom Caribe, Inc. v. George P.
Reintjes Co., 484 F.3d 106, 113 (1st Cir. 2007). What Rule 67 is
not is a vehicle for determining ownership; that is what the
underlying litigation is for. Bisco itself seems to have recog‐
nized this: after the district court entered its judgment, Bisco
indicated that it might request the return of any leftover
funds. That alone suggests that Bisco did not, as Campbell‐
Ewald suggested, “deposit[] the full amount of the plaintiff’s
individual claim in an account payable to the plaintiff.”
136 S. Ct. at 672.
From a broader perspective, we see no principled distinc‐
tion between attempting to force a settlement on an unwilling
party through Rule 68, as in Campbell‐Ewald, and attempting
to force a settlement on an unwilling party through Rule 67.
In either case, all that exists is an unaccepted contract offer,
and as the Supreme Court recognized, an unaccepted offer is
not binding on the offeree. Justice Thomas’s opinion concur‐
ring in the judgment in Campbell‐Ewald does not help Bisco
either. He would have relied on the common law of tenders,
under which “a mere offer of the sum owed is insufficient to
eliminate a court’s jurisdiction to decide the case to which the
offer related.” 136 S. Ct. at 674 (Thomas, J., concurring). At
common law, he said “a plaintiff was entitled to deny that the
tender was sufficient to satisfy his demand and accordingly
go on to trial.” Id. at 675 (internal quotation marks and brack‐
ets omitted). That is just what Fulton is trying to do: it is say‐
ing that its suit is about more than the statutory damages to
which it believes it is entitled; it is also about the additional
reward that it hopes to earn by serving as the lead plaintiff for
No. 16‐3574 9
a class action. Nothing forces it to accept Bisco’s valuation of
the latter part of the case.
It is also inaccurate to say that the court’s registry is “an
account payable to the plaintiff.” Id. at 672 (majority opinion).
It is nothing like a bank account in the plaintiff’s name—that
is, an account in which the plaintiff has a right at any time to
withdraw funds. As both Rule 67 and 28 U.S.C. §§ 2041 and
2042 recognize, funds can be withdrawn from the court’s reg‐
istry only under the control of, and with the permission of, the
court. The fact that the 1983 amendments to Rule 67 clarified
that a deposit into the court is permissible even if the deposi‐
tor maintains an interest in the funds, which occurs (for ex‐
ample) in many statutory interpleader actions under
28 U.S.C. § 1335, does not mean that the court’s registry func‐
tions as an individual account. Once the funds are inter‐
pleaded, they will be released to the parties who have proven
an entitlement to them. The Rule simply acknowledges that
one of those parties may be the original depositor.
Our conclusion here follows not just from Campbell‐Ewald,
but also from our decision in Chapman, supra, 796 F.3d 783.
Chapman was another TCPA suit, and it too involved an effort
by the defendant to pick off a plaintiff with a Rule 68 offer of
judgment. Chapman differs from our case in that the class ac‐
tion there dropped out of the case before the Rule 68 offer,
whereas here the Rule 67 deposit attempted to eliminate Ful‐
ton while it was still trying to represent a class. That distinc‐
tion, however, is not relevant to the issue before us. Like Ful‐
ton, Chapman never replied to the offer, which lapsed accord‐
ing to its terms. Just as in this case, the defendant argued that
its offer mooted Chapman’s personal claim, and just as we
have done, the court rejected that argument. Finally, the court
10 No. 16‐3574
noted that even though the case was not moot, other hurdles
still existed, including a possible affirmative defense of pay‐
ment, estoppel, or waiver. The same can be said here. And this
is not an unimportant point: if it turns out that the named
plaintiff really has no personal stake in the litigation, the dis‐
trict judge might well question whether it is the appropriate
champion for the class.
III
The fact that Fulton’s claim is not moot means both that its
own claim remains alive and that the door is still open to a
motion for class certification. We note that our sister circuits
have held “that a named plaintiff in a proposed class action
for monetary relief may proceed to seek timely class certifica‐
tion where an unaccepted offer of judgment is tendered in sat‐
isfaction of the plaintiff’s individual claim before the court can
reasonably be expected to rule on the class certification mo‐
tion.” Lucero v. Bureau of Collection Recovery, Inc., 639 F.3d 1239,
1250 (10th Cir. 2011); accord Pitts v. Terrible Herbst, Inc.,
653 F.3d 1081, 1091–92 (9th Cir. 2011); Sandoz v. Cingular Wire‐
less LLC, 553 F.3d 913, 920–21 (5th Cir. 2008); Richardson v.
Bledsoe, 829 F.3d 273, 282–84 (3d Cir. 2016). We have observed
that the safest way to preserve the option of serving as a class
representative is to file a prophylactic motion for class certifi‐
cation at the time the lawsuit is filed, see Damasco v. Clearwire
Corp., 662 F.3d 891, 897 (7th Cir. 2011), overruled with respect
to mootness analysis by Chapman, 796 F.3d at 787, but as the
other courts have recognized, there is no reason to think that
this is the only time when a certification motion is proper.
It is enough for present purposes to reconfirm that as long
as the proposed class representative has not lost on the merits
before a class certification motion is filed, it is not barred from
No. 16‐3574 11
seeking class treatment. See, e.g., Gen. Tel. Co. of Southwest v.
Falcon, 457 U.S. 147, 156 (1982); see also Wiesmueller v.
Kosobucki, 513 F.3d 784, 787 (7th Cir. 2008) (“A decision that
the claim of the named plaintiffs lacks merit ordinarily,
though not invariably, … disqualifies the named plaintiffs as
proper class representatives.”). In General Telephone, the Court
cited with approval East Texas Motor Freight Sys. Inc. v. Rodri‐
guez, 431 U.S. 395 (1977). The Court held that
[A]t the time the class was certified it was clear
that the named plaintiffs were not qualified for
line‐driver positions, [and so] ‘they could
have suffered no injury as a result of the alleg‐
edly discriminatory practices, and they were,
therefore, simply not eligible to repre‐
sent a class of persons who did allegedly suffer
injury.’
457 U.S. at 156. (quoting East Texas Motor Freight,
431 U.S. at 403–04). Importantly, however, General Telephone
also observed that the situation would be different if the class
had been certified and only after that did it appear “that the
named plaintiffs were not class members or were otherwise
inappropriate class representatives.” Id. at 158.
We conclude that an unaccepted offer to settle a case, ac‐
companied by a payment intended to provide full compensa‐
tion into the registry of the court under Rule 67, is no different
in principle from an offer of settlement made under Rule 68.
The law governing unaccepted contractual offers, as well as
the law of tenders, supports this result. Moreover, the court’s
registry is not the kind of “individual account” controlled by
the plaintiff that was contemplated in the question reserved
by Campbell‐Ewald. Finally, we cannot say as a matter of law
12 No. 16‐3574
that the unaccepted offer was sufficient to compensate plain‐
tiff Fulton for its loss of the opportunity to represent the pu‐
tative class.
We therefore REVERSE the judgment of the district court
and REMAND for further proceedings.