In the
United States Court of Appeals
For the Seventh Circuit
No. 10-3934
JEROME D AMASCO ,
Plaintiff-Appellant,
v.
C LEARWIRE C ORPORATION,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 1:10-cv-03063—James B. Zagel, Judge.
A RGUED S EPTEMBER 8, 2011—D ECIDED N OVEMBER 18, 2011
Before M ANION, R OVNER, and T INDER, Circuit Judges.
R OVNER, Circuit Judge. Jerome Damasco filed this
putative class-action lawsuit against Clearwire Corpora-
tion in an Illinois state court, alleging that Clearwire
violated the Telephone Consumer Protection Act, 47
U.S.C. § 227, by sending unsolicited text messages to
cellphone users. Before Damasco moved for class certif-
ication, Clearwire offered him his full request for relief.
Clearwire then removed the case to federal court and
2 No. 10-3934
moved to dismiss, arguing that the offer mooted
Damasco’s claim. The district court agreed, dismissed
Damasco’s complaint, and later denied his motion to
reconsider. Damasco appeals both rulings. Under
Holstein v. City of Chicago, 29 F.3d 1145, 1147 (7th Cir.
1994), Clearwire’s offer mooted Damasco’s claim. We
thus affirm the court’s judgment and its decision to
deny reconsideration.
I.
Damasco asked the state court to enjoin Clearwire
from sending unsolicited text messages and to grant
damages to all those injured by this practice. See 47 U.S.C.
§ 227(b)(3). He estimated that more than 1,000 people
had received these messages and requested damages
fixed by the Act, $500 for each violation. See id.
§ 227(b)(3)(B). Damasco added that the court could
award three times that amount, up to $1,500 for each
violation, if it determined that Clearwire had acted
“willfully and knowingly.” See id. § 227(b)(3)(C).
Within a month, Clearwire sent a letter to Damasco’s
attorneys offering to settle the case by giving Damasco
and up to ten other affected people $1,500 for each text
message received from Clearwire, plus court costs. In
addition, Clearwire offered to stop sending unsolicited
text messages to “mobile subscribers.” Clearwire warned
that, in its view, this offer rendered the case moot.
Damasco never responded to Clearwire’s letter.
Four days after sending the letter, Clearwire removed
the suit to federal court. Damasco moved for class certifi-
No. 10-3934 3
cation within a few hours of the removal. The following
day, Clearwire moved to dismiss the case, arguing that
its settlement offer stripped Damasco of his personal
stake in the case’s outcome and rendered his claim moot.
Damasco opposed Clearwire’s motion. He contended
that Clearwire’s letter did not constitute an offer under
Illinois law because its terms were not “definite and
certain.” But even if the offer was valid, he urged
that the controversy remained live, primarily for three
reasons. First, he insisted that defendants should be
prohibited from mooting a potential class action by
buying off named plaintiffs through “involuntary” settle-
ments. Second, he argued that this type of claim is “inher-
ently transitory”—that is, bound to become moot before
the class is certified—so his motion for certification
should “relate back” to the filing of his complaint, as
permitted in Sosna v. Iowa, 419 U.S. 393, 402 n.11 (1975).
Finally, he maintained that if Clearwire had made an
offer under Federal Rule of Civil Procedure 68, then he
would have had 10 days (now 14 days under a revised
version of the rule) to ask the court to certify the class
and avoid mootness. He argued that Clearwire should
not be allowed to circumvent Rule 68 by casting its
offer in the form of a settlement.
The district court agreed with Clearwire and dismissed
the case. Finding the settlement offer to be sufficiently
definite under Illinois law, the court ruled the case moot.
The court observed, citing Holstein, that “[t]he rule in the
Seventh Circuit is clear—a complete offer of settlement
made prior to the filing for class certification moots the
4 No. 10-3934
plaintiff’s claim.” The court acknowledged Damasco’s
concerns about defendants buying off class representa-
tives, but emphasized that “Holstein has not been over-
turned and it is directly on point.” Some district courts,
the court noted, have allowed plaintiffs to avoid moot-
ness by seeking class certification after being offered
complete relief under Rule 68. But when, as here, an
offer is “not made pursuant to Rule 68,” the court rea-
soned, applying that rule’s timeframe for accepting
an offer would be “arbitrary.” The court also re-
jected Damasco’s argument that his claim was inher-
ently transitory.
Damasco moved for reconsideration, arguing that
“new evidence” showed that Clearwire’s offer was not
valid. He pointed to Fahey v. Career Education Corp.,
No. 1:10-cv-05635 (N.D. Ill.)—a similar lawsuit pending
before the same district judge with the same attorneys
but different parties—where defense counsel sent an
offer to plaintiff’s attorney that was nearly identical to
the offer here. Damasco claimed that the named plaintiff
in Fahey believed that she had accepted the offer, but
that the defendant was proceeding as if no agreement
had been reached.
Before ruling on the motion for reconsideration, the
district court held a hearing in Fahey to determine
whether a settlement had been reached. After the court
concluded that no agreement had been reached, the plain-
tiff’s attorney immediately asked the court whether
the offer mooted the case. The court replied that it did
not. But when pressed for clarification by defendant’s
No. 10-3934 5
counsel, the court revised its comments, explaining that
the hearing had not dealt with mootness, only whether
the case was settled. Shortly after this hearing, Damasco
supplemented his motion for reconsideration, arguing
that “[i]f the same letter did not moot Fahey’s claim,
then it cannot have mooted Damasco’s claim.”
The district court then denied Damasco’s motion for
reconsideration. The court remarked that “even if all the
alleged conduct from Fahey happened in this case, the
conduct amounts to dishonor of an agreement,” not “newly
discovered evidence” under Federal Rule of Civil Proce-
dure 59(e). The court explained that its comments about
mootness in Fahey were “merely dicta” since “no party
in that case had moved for dismissal on the basis of
mootness.” The court noted that the Fahey defendants
had since moved to dismiss and that “a full discussion
of the issue of mootness in that case is better left to that
context.” Fahey is currently being held in abeyance
pending the resolution of this appeal.
II.
The doctrine of mootness stems from Article III of the
Constitution, which limits the jurisdiction of federal
courts to live cases or controversies. Spencer v. Kemna,
523 U.S. 1, 7 (1998); A.M. v. Butler, 360 F.3d 787, 790 (7th
Cir. 2004). The doctrine demands that the parties to a
federal case maintain a personal stake in the outcome at
all stages of the litigation. United States v. Juvenile Male,
131 S. Ct. 2860, 2864 (2011); Spencer, 523 U.S. at 7.
6 No. 10-3934
Therefore, “[o]nce the defendant offers to satisfy the
plaintiff’s entire demand, there is no dispute over which
to litigate, and a plaintiff who refuses to acknowledge
this loses outright, under Fed.R.Civ.P. 12(b)(1), because
he has no remaining stake.” Rand v. Monsanto Co., 926
F.2d 596, 598 (7th Cir. 1991) (citation omitted);
accord Breneisen v. Motorola, Inc., No. 10-1982, 2011 WL
3873771, at *4 (7th Cir. Sept. 2, 2011).
Damasco asks us to create an exception to mootness
in potential class actions where defendants offer relief
to named plaintiffs before they have “a reasonable op-
portunity to seek certification.” He points out that
mootness is a “flexible” doctrine, see U.S. Parole Comm’n
v. Geraghty, 445 U.S. 388, 400 (1980), and argues that
Holstein, which conflicts with his proposed exception,
should be restricted to its facts or overturned.
Damasco starts by highlighting that the Supreme
Court and this court have emphasized the importance
of preventing individual buy-offs from mooting class
actions. For example, the Supreme Court has held that
defendants cannot prevent an appeal from a denial of
certification simply by offering relief to a named plain-
tiff. Deposit Guar. Nat’l Bank, Jackson, Miss. v. Roper, 445
U.S. 326, 339 (1980). The Court reasoned that the alter-
native—requiring numerous plaintiffs to file separate
actions in order to prevent them from being picked
off before appellate review of certification—“would
frustrate the objectives of class actions” and “invite
waste of judicial resources by stimulating successive
suits brought by others claiming aggrievement.” Id. Along
No. 10-3934 7
the same lines, we have long held that a defendant
cannot moot a case by making an offer after a plaintiff
moves to certify a class, observing that “[o]therwise
the defendant could delay the action indefinitely by
paying off each class representative in succession.”
Primax Recoveries, Inc. v. Sevilla, 324 F.3d 544, 546-47
(7th Cir. 2003); see Greisz v. Household Bank (Ill.), N.A., 176
F.3d 1012, 1015 (7th Cir. 1999); Susman v. Lincoln Am. Corp.,
587 F.2d 866, 869 (7th Cir. 1978).
In light of these concerns, Damasco argues that
Holstein should be overruled or distinguished so as not
to control the outcome in this case. In Holstein, the
plaintiff filed a putative class action after the City of
Chicago towed his car, arguing that the city’s towing
procedures were unconstitutional. 29 F.3d at 1147.
Before he moved to certify, the city offered him full
reimbursement. Id. We refused to let him “spurn this
offer” and avoid mootness when he “did not even move
for class certification prior to the evaporation of his
personal stake.” Id. The plaintiff’s lack of a personal
stake, we held, stripped us of jurisdiction over his claim.
Id. We repeated this holding in Greisz, remarking that
an offer to a named plaintiff does not moot a class action
unless it “comes before class certification is sought.” 176
F.3d at 1015. We later confirmed that a plaintiff cannot
avoid mootness by moving for class certification after
receiving an offer of full relief. Gates v. City of Chicago,
623 F.3d 389, 413 (7th Cir. 2010).
Four circuits disagree with this approach, but we
have not been moved to reverse course. Those circuits,
8 No. 10-3934
citing the flexible nature of the mootness doctrine and
concerns about buy-offs, have fashioned a new rule that,
absent undue delay, a plaintiff may move to certify a
class and avoid mootness even after being offered
complete relief. See Pitts v. Terrible Herbst, Inc., 653 F.3d
1081, 1091-92 (9th Cir. 2011); Lucero v. Bureau of Collection
Recovery, Inc., 639 F.3d 1239, 1249-50 (10th Cir. 2011);
Sandoz v. Cingular Wireless LLC, 553 F.3d 913, 920-21
(5th Cir. 2008); Weiss v. Regal Collections, 385 F.3d 337,
348 (3d Cir. 2004). Although these decisions address
offers that, unlike Clearwire’s, were made under Rule 68,
their same analysis seems to apply to any offer of
complete relief. We have acknowledged that this alter-
native approach creates a potential exception to moot-
ness in class actions, Wrightsell v. Cook Cnty., Ill., 599 F.3d
781, 783 (7th Cir. 2010), but we have yet to adopt it and
decline to do so here.
We believe that the exception created by these circuits
is unnecessary. To allow a case, not certified as a class
action and with no motion for class certification
even pending, to continue in federal court when the sole
plaintiff no longer maintains a personal stake defies the
limits on federal jurisdiction expressed in Article III.
See Juvenile Male, 131 S. Ct. at 2864; Lewis v. Cont’l Bank
Corp., 494 U.S. 472, 477-78 (1990); Holstein, 29 F.3d at 1147.
That the complaint identifies the suit as a class action is
not enough by itself to keep the case in federal court.
Even when a “complaint clearly and in great detail de-
scribes the suit as a class action suit,” if the plaintiff
does not seek class certification, then “dismissal of the
plaintiff’s claim terminates the suit.” Turek v. General
No. 10-3934 9
Mills, Inc., No. 10-3267, 2011 WL 4905732, at *1 (7th Cir.
Oct. 17, 2011); see Bd. of Sch. Comm’rs of City of Indiana-
polis v. Jacobs, 420 U.S. 128, 129-30 (1975). After
Clearwire made its offer, Damasco’s federal case was
over. See Greisz, 176 F.3d at 1015. (Incidentally, the case
would be over even if it had remained in state court;
the Illinois Supreme Court recently reaffirmed that its
approach is the same as ours. See Barber v. Am. Airlines,
Inc., 241 Ill. 2d 450, 539 (Ill. 2011).)
A simple solution to the buy-off problem that Damasco
identifies is available, and it does not require us to forge
a new rule that runs afoul of Article III: Class-action
plaintiffs can move to certify the class at the same time
that they file their complaint. The pendency of that
motion protects a putative class from attempts to buy
off the named plaintiffs. See Primax, 324 F.3d at 546-47.
Damasco argues that this solution would provoke
plaintiffs to move for certification prematurely, before
they have fully developed or discovered the facts neces-
sary to obtain certification. See 5 M OORE’S F EDERAL P RAC-
TICE § 23.64[1][b], at 350 (3d ed. 2011). But this objection
is unpersuasive. If the parties have yet to fully develop
the facts needed for certification, then they can also ask
the district court to delay its ruling to provide time
for additional discovery or investigation. In a variety of
other contexts, we have allowed plaintiffs to request
stays after filing suit in order to allow them to complete
essential activities. See F ED. R. C IV. P. 56(d) (allowing
stays to complete discovery before summary judgment);
Newell v. Hanks, 283 F.3d 827, 834 (7th Cir. 2002) (allowing
stays in habeas petitions to permit exhaustion without
10 No. 10-3934
risk of time bar); Johnson v. Rivera, 272 F.3d 519, 522 (7th
Cir. 2001) (allowing stays in prisoner-rights suits to
permit exhaustion without risk of statute-of-limitation
bar). Moreover, this procedure comports with Federal
Rule of Civil Procedure 23(c)(1)(A), which permits district
courts to wait until “an early practicable time” before
ruling on a motion to certify a class. We remind district
courts that they must engage in a “rigorous analy-
sis”—sometimes probing behind the pleadings—before
ruling on certification. Wal-Mart Stores, Inc. v. Dukes, 131
S. Ct. 2541, 2551 (2011). Although discovery may in some
cases be unnecessary to resolve class issues, see 3 A LBA
C ONTE & H ERBERT B. N EWBERG , N EWBERG ON C LASS A C -
TIONS § 7.8, at 25 (4th ed. 2002), in other cases a court
may abuse its discretion by not allowing for appro-
priate discovery before deciding whether to certify a
class, see Pitts, 653 F.3d at 1093 n.5; Mills v. Foremost
Ins. Co., 511 F.3d 1300, 1311 (11th Cir. 2008); Duke v. Univ.
of Tex. at El Paso, 729 F.2d 994, 996-97 (5th Cir. 1984).
Damasco also contends that the result here would
differ if Clearwire had made its offer under Rule 68. He
notes that some district courts in this circuit have
allowed plaintiffs to avoid mootness by seeking class
certification within that rule’s timeframe for accepting
or rejecting an offer. See, e.g., Wilder Chiropractic, Inc. v.
Pizza Hut of S. Wis., Inc., 754 F. Supp. 2d 1009, 1019 (W.D.
Wis. 2010). But we need not address the propriety of
that approach here. Clearwire made its offer while this
suit was in state court, and Illinois procedure has no
analog to Rule 68.
No. 10-3934 11
Damasco next argues that, even if we refuse to create a
new exception to mootness, his situation falls under
the established exception for inherently transitory claims.
But not even the circuits that disagree with us about
Damasco’s first argument go so far as to say this type
of situation gives rise to an inherently transitory claim.
See Pitts, 653 F.3d at 1091; Weiss, 385 F.3d at 347. For a
claim to be inherently transitory, uncertainty must exist
over whether “any member of the class would maintain
a live controversy long enough for a judge to certify a
class.” Olson v. Brown, 594 F.3d 577, 580 (7th Cir. 2010).
As we have discussed, any class member following
in Damasco’s footsteps can avoid the barrier he now
faces simply by moving to certify a class when filing
suit. We discern no other obstacle that would moot a
case like Damasco’s before a judge could rule on certi-
fication.
Finally, Damasco argues that the district court’s denial
of his Rule 59(e) motion is “irreconcilable” with its com-
ments during the Fahey hearing. We review a denial of a
motion to reconsider for abuse of discretion. Heyde v.
Pittenger, 633 F.3d 512, 521 (7th Cir. 2011). Because the
court initially remarked that the offer in Fahey did not
moot that case, Damasco contends that Clearwire’s offer
should not have mooted his case. But as the district court
later observed, the focus of the hearing in Fahey was to
determine whether a settlement agreement had been
reached, not to decide whether the case was moot. The
court’s initial, off-the-cuff comments about the existence
of mootness are subject to de novo review in this court,
see Breneisen v. Motorola, Inc., 656 F.3d 701, 706 (7th Cir.
12 No. 10-3934
2011), and we have already explained why Clearwire’s
offer, which preceded any motion for class certification,
mooted this case. The court thus did not abuse its dis-
cretion in denying reconsideration.
A FFIRMED.
11-18-11