Alliance for Water Efficiency v. James Fryer
Filing
Filed opinion of the court by Judge Easterbrook. REVERSED. Frank H. Easterbrook, Circuit Judge; Michael S. Kanne, Circuit Judge and Ann Claire Williams, Circuit Judge. [6716501-1] [6716501] [15-1206]
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Case: 15-1206
Document: 35
Filed: 12/22/2015
Pages: 8
In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 15-‐‑1206
ALLIANCE FOR WATER EFFICIENCY,
Plaintiff-‐‑Appellee,
v.
JAMES FRYER,
Defendant-‐‑Appellant.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 14 C 115 — Jeffrey Cole, Magistrate Judge.
____________________
ARGUED SEPTEMBER 9, 2015 — DECIDED DECEMBER 22, 2015
____________________
es.
Before EASTERBROOK, KANNE, and WILLIAMS, Circuit Judg-‐‑
EASTERBROOK, Circuit Judge. Alliance for Water Efficiency
engaged James Fryer to analyze how urban water agencies’
programs affect the elasticity of demand for water during
droughts. The Alliance agreed to coordinate several spon-‐‑
sors of Fryer’s analysis. Fryer prepared a draft report, which
left the Alliance dissatisfied, and it filed this suit in an effort
to prevent Fryer from publishing the report. But the Califor-‐‑
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nia Department of Water Resources, one of the project’s
sponsors, is happy with Fryer’s work and willing to present
his findings under its auspices.
The parties consented to final decision by a magistrate
judge. See 28 U.S.C. §636(c)(3). After settlement negotiations,
the parties agreed to go their separate ways. Fryer promised
to remove the Alliance’s name from his report and to issue it
under California’s sponsorship. He also promised to provide
his data to the Alliance, which would issue a separate report
in its own name. During a hearing on March 13, 2014, the
judge stated (without objection from the litigants) that “[t]he
parties have decided that they have a binding settlement
agreement today even though there will be a written agree-‐‑
ment [later].” Counsel then proceeded to “put on the record
the material terms of the settlement.” The first and foremost
of these is that “James Fryer may prepare his own report for
DWR [California] provided he removes all references to the
Alliance for Water Efficiency, AWE, in his report. Converse-‐‑
ly, AWE will prepare its own report for the remaining fund-‐‑
ing participants of the Project Advisory Committee exclud-‐‑
ing DWR.”
Acrimony resumed when Fryer declined to sign the more
elaborate written text that the Alliance’s counsel prepared.
Fryer contended that the Alliance had introduced terms be-‐‑
yond those agreed on March 13. Drafts and counterdrafts
were circulated; complete written agreement was never
reached. That left the March 13 exchange as the definitive
settlement. See, e.g., PFT Roberson, Inc. v. Volvo Trucks North
America, Inc., 420 F.3d 728 (7th Cir. 2005) (agreement on
some terms does not allow a court to fill in contested terms).
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The Alliance protested to the court when Fryer circulated
a new draft report that identified, as providers of data and
assistance, some of the organizations that had participated
through a committee that the Alliance had organized. The
Alliance maintained that naming any organization that had
dealt with Fryer through the Alliance would imply that the
report had the Alliance’s imprimatur. Fryer, by contrast,
contended that the organizations wish to be identified in his
report and that a consultant is entitled to name sponsors and
collaborators.
The magistrate judge concluded that paragraphs 1.0(3)
and 1.1 of the Alliance’s proposed draft (which Fryer had
not signed) commits Fryer to remove from his report any
reference to entities that worked with him through or in
connection with the Alliance, unless those entities take the
initiative to contact him and say that he can mention their
names. The judge wrote an opinion to that effect, 2014 U.S.
Dist. LEXIS 150176 (N.D. Ill. Oct. 22, 2014), and entered a
judgment that reads in full: “Parties shall comply with the
Memorandum Opinion and Order [50] issued by this Court
on 10/22/14 along with this Court’s Memorandum Opinion
and Order dated 1/7/15 [61]” (brackets in original).
Although the magistrate judge appeared to contemplate
injunctive relief, this document does not comply with Fed. R.
Civ. P. 65(d)(1), which requires every injunction to “state its
terms specifically” and to “describe in reasonable detail—
and not by referring to the complaint or other document—
the act or acts restrained or required.” After oral argument,
at which members of this court pointed out the problem, the
parties asked the magistrate judge to enter a self-‐‑contained
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order detailing their obligations. The judge then entered this
injunction:
1. Mr. Fryer is enjoined from and cannot state in his separate Re-‐‑
port for himself and the California Department of Water Re-‐‑
sources that his Report has been sponsored by any member of
the Project Advisory Committee, which is composed of the Met-‐‑
ropolitan Water District of Southern California; Irvine Ranch
Water District; Inland Empire Utilities; San Antonio Water Sys-‐‑
tem; City of Boulder, Colorado; Sonoma County Water Agency;
and Walton Family Foundation (through a grant to Alliance for
Water Efficiency (“AWE”)) to support or sponsor his Report ex-‐‑
cept as provided below.
2. Mr. Fryer shall remove from his Report all references to: (1)
AWE and its employees, including any reference in the Ac-‐‑
knowledgment section of the Report; (2) Anil Bamezai, PhD
(“Dr. Bamezai”); (3) all funding sources other than California
Department of Water Resources (“DWR”), unless provided with
permission from member [sic] of the Project Advisory Commit-‐‑
tee.
3. Mr. Fryer is enjoined from and cannot solicit any member of
the Project Advisory Committee to sponsor or support his Re-‐‑
port without the member’s prior permission.
4. AWE shall promptly notify its funding sources and PAC
members that a settlement has been reached in this case and that
Mr. Fryer has the right to complete his Report on behalf of DWR.
5. As part of that notification, AWE shall provide Mr. Fryer’s
contact information (phone number and email address) and in-‐‑
form the recipient that if he/she/it is interested in discussing Mr.
Fryer’s Report or participating in its preparation, sponsorship or
issuance they are free to contact Mr. Fryer.
6. Should any of those notified choose to participate in the prep-‐‑
aration, funding or sponsorship of Mr. Fryer’s Report, nothing in
this injunction shall prevent Mr. Fryer from noting that sponsor-‐‑
ship or participation in his Report.
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7. AWE is enjoined from and cannot state in its separate Report
that it was prepared on behalf of or sponsored by anyone other
than AWE and the members of the Project Advisory Committee.
8. AWE is enjoined from and shall not contact DWR regarding
sponsorship or participation in AWE’s Report.
9. AWE shall not utilize, in whole or in part, the exact language
used in Mr. Fryer’s Report and shall utilize a different cover
page, and different graphs and charts from those used in Mr.
Fryer’s Report.
10. Nothing in any provision of this injunction shall require ei-‐‑
ther AWE’s or Mr. Fryer’s Report to arrive at any particular re-‐‑
sult, or use any particular mode of analysis or methodology.
Fryer contends that this injunction creates a prior restraint
that violates the First Amendment. Before we tackle that
subject, however, we must decide whether the suit is proper-‐‑
ly in federal court.
The Alliance’s complaint invoked federal-‐‑question juris-‐‑
diction, 28 U.S.C. §1331, via the Copyright Act. The Alliance
claimed to be a copyright proprietor that needed judicial as-‐‑
sistance to prevent Fryer from infringing its rights. Accord-‐‑
ing to the Alliance, the report is a “work made for hire”
within 17 U.S.C. §101, so that the Alliance owns the copy-‐‑
right even though Fryer wrote all the words. Yet to come
within that definition the work must be either the output of
an employee—and Fryer is not employed by the Alliance—
or produced under “a written instrument signed by [the par-‐‑
ties] that the work shall be considered a work made for
hire”. The Alliance did not allege that Fryer had agreed in
writing that his report would be a work for hire. Fryer chal-‐‑
lenged the copyright claim in the district court, and the Alli-‐‑
ance never alleged, let alone showed, that the statutory re-‐‑
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quirements have been satisfied. Federal-‐‑question jurisdiction
therefore is unavailable.
Diversity jurisdiction under 28 U.S.C. §1332 is the other
possibility. The Alliance is incorporated and has its principal
place of business in Illinois; Fryer is a citizen of California.
The amount in controversy exceeds $75,000. But Fryer main-‐‑
tains that the Alliance is just a conduit for the donors that
sponsored Fryer’s report, and that none of the grants indi-‐‑
vidually exceeds $75,000. Because separate persons’ claims
cannot be aggregated to reach the jurisdictional threshold,
see Snyder v. Harris, 394 U.S. 332 (1969), Fryer contends that
§1332 does not supply jurisdiction.
Yet the Alliance contends that it, rather than the funders,
arranged with Fryer for the report. A corporation exists in-‐‑
dependently of its investors—and of its sponsors. Where the
Alliance got the money to pay Fryer is neither here nor there
for jurisdictional purposes. Nor does it matter whether the
contract is oral rather than written. Fryer might have been
able to argue that he does not owe any contractual obligation
to the Alliance, as opposed to the sponsors, but that would
have been a defense on the merits—and a claim’s failure on
the merits does not divest a district court of jurisdiction. See
Bell v. Hood, 327 U.S. 678 (1946). Instead of defending, how-‐‑
ever, Fryer struck a bargain. Given diversity of citizenship
and the amount in controversy, an action to enforce the set-‐‑
tlement contract is independently within federal jurisdiction,
even if the original suit would have failed on the merits or
should have been dismissed. See Kokkonen v. Guardian Life
Insurance Co., 511 U.S. 375 (1994).
Now for the merits, and we can be brief. The district
court’s injunction has the classic attribute of a prior restraint:
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It tells Fryer what he must or must not say in some future
publication. Even an express promise not to speak, such as
the one between secret agents and the CIA, normally is en-‐‑
forced by damages or restitution after the fact rather than a
prior restraint. See Snepp v. United States, 444 U.S. 507 (1980).
No one contends that national security or some other com-‐‑
pelling interest is at stake here, and the district court did not
give any reason for resorting to a prior restraint as opposed
to, say, a declaratory judgment that might set up a claim for
damages if the Alliance could show some concrete injury.
But courts should not decide constitutional issues unnec-‐‑
essarily, and we need not consider the effect of the First
Amendment. The district court’s injunction goes beyond
what the parties agreed on March 13, 2014. It takes the Alli-‐‑
ance’s later drafts as if they were a signed contract, which
they aren’t. On March 13 Fryer promised to remove the Alli-‐‑
ance’s name from his report. He did not promise to omit the
sponsors’ names.
The Alliance contends, and the magistrate judge found,
that unless Fryer is forbidden to mention any person or enti-‐‑
ty that participated in the Project Advisory Committee, some
readers may associate Fryer’s report with the Alliance even
though the Alliance’s name and logo don’t appear. Granted.
But that’s the nature of a compromise. Neither side gets eve-‐‑
rything it wants. The Alliance did not get everything it
wanted even in the injunction, ¶6 of which permits Fryer to
name suppliers of data, advice, and financial support if they
call him first.
The district court’s injunction is vacated because it con-‐‑
tains terms on which the parties have not agreed. If Fryer
should violate any provision of the March 13 settlement, the
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Alliance can pursue a remedy in damages—in federal court
if the injury exceeds $75,000, and otherwise in state court.
(The March 13 agreement specifies venue: the Alliance will
sue Fryer only in California, and Fryer will sue the Alliance
only in Illinois. This means that the Alliance cannot return to
the Northern District of Illinois with any further contention
that Fryer has failed to keep his promises.)
Some of the magistrate judge’s language suggests that he
wanted Fryer to turn additional data over to the Alliance or
a consultant, but no such requirement appears in the injunc-‐‑
tion or in any judgment satisfying Fed. R. Civ. P. 58. Fryer is
therefore under no obligations beyond those undertaken in
the settlement agreement.
REVERSED
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