Schwartz v. Supply Network, Inc., d/b/a Viking SupplyNet, a foreign corporation

Filing 78

MEMORANDUM Opinion and Order Signed by the Honorable Georgia N Alexakis on 11/22/24.(ca, )

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
JEFFREY SCHWARTZ,
Plaintiff,
No. 23 CV 14319
v.
Judge Georgia N. Alexakis
SUPPLY NETWORK, INC., D/B/A VIKING
SUPPLYNET,
Defendant.
MEMORANDUM OPINION AND ORDER
From October 2017 to June 2022, Illinois citizen Jeffrey Schwartz worked as a
delivery driver for defendant Supply Network Inc., a Michigan company which does
business as Viking SupplyNet (“Viking”). Schwartz alleges that during that period
Viking used a time clock system that scanned his fingerprints in violation of the
Illinois Biometric Information Privacy Act (“the Act”). 740 ILCS 14/1. But Schwartz
relies on diversity jurisdiction to get his state-law suit into federal court, and Viking
moves to dismiss under Federal Rule of Civil Procedure 12(b)(1), arguing that a recent
amendment to the Act makes it a legal impossibility for Schwartz to meet the $75,000
amount-in-controversy requirement of 28 U.S.C. § 1332(a). Because the amendment
does not apply retroactively and Schwartz met the amount-in-controversy
requirement at the time of filing, Viking’s motion is denied. [45].
I.

Legal Standards
Federal Rule of Civil Procedure 12(b)(1) governs dismissals based on a lack of

subject-matter jurisdiction. “In evaluating a challenge to subject matter jurisdiction,

the court must first determine whether a factual or facial challenge has been raised.”
Silha v. ACT, Inc., 807 F.3d 169, 173 (7th Cir. 2015). A factual challenge is one where
there is “in fact” no subject matter jurisdiction, even if the pleadings are formally
sufficient. Id. A facial challenge is one where the plaintiff has not “sufficiently alleged
a basis of subject-matter jurisdiction.” Id. (internal quotations omitted).
Here, Viking presents a facial challenge to subject-matter jurisdiction. Even
assuming the truth of Schwartz’s allegations, Viking maintains that Schwartz still
cannot satisfy the amount-in-controversy requirement. Apex Digit., Inc. v. Sears,
Roebuck & Co., 572 F.3d 440, 443–44 (7th Cir. 2009).
Schwartz bears the burden of establishing jurisdiction. Id. at 443. At this stage,
the Court accepts all factual allegations in his complaint as true and draws all
reasonable inferences in his favor. Lee v. City of Chicago, 330 F.3d 456, 468 (7th Cir.
2003).
II.

Background
The relevant facts are straightforward. The Court accepts as true Schwartz’s

allegation that his biometric information was collected “not less than 1,000 times
during the course of his employment,” each time Viking’s time clock scanned his
fingerprints or hand geometry. [1] ¶¶ 12, 21. The “biometric identifiers” protected by
the Act include “fingerprint[s]” and “scan[s] of hand . . . geometry,” 740 ILCS 14/10,
and a violation of the Act results in liquidated damages of $1,000 per violation or
$5,000 per intentional or reckless violation. 740 ILCS 14/20.
In 2023, the Supreme Court of Illinois read the Act to include a “per-scan”
theory of violation, which Schwartz relies on here: That is, each scan of Schwartz’s
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fingerprints or hand geometry in violation of the Act was its own violation, which at
1,000+ scans could result in more than $1 million in liquidated damages under the
Act. Cothron v. White Castle Sys., Inc., 2023 IL 128004 ¶ 24. Perhaps recognizing
Cothron’s concern that its interpretation of the Act might result in “potentially
excessive damages,” id. ¶ 43, the Illinois legislature amended the Act in August 2024.
See 740 ILCS 14/20, as amended by SB 2979, Public Act 103-0769. The amended Act
clarifies that when an entity subject to the Act “in more than one instance, collects,
captures, purchases, receives through trade, or otherwise obtains the same biometric
identifier or biometric information from the same person using the same method of
collection” in violation of the Act, the entity “has committed a single violation ... for
which the aggrieved person is entitled to, at most, one recovery.” Id. 14/20(b)–(c).
III.

Analysis
A.

Retroactivity of the Amended Act

The parties agree that the Act as amended does away with Cothron’s “per-scan”
theory of violation, and if Schwartz’s alleged violations were to begin today, he would
at most be entitled to $5,000 for a single violation of the Act. [45-1] at 2–3; [50] at 2.
The dispute is over timing. Viking argues that the amendment merely clarified “that
the BIPA does not—and never did—allow for an award of statutory damages on a
‘per-scan’ basis” and that Schwartz thus could only ever recover for a single violation
of the Act. [45-1] at 2. Under Viking’s theory, it is not now, and never was, legally
possible for Schwartz to meet the $75,000 damages threshold for diversity
jurisdiction. Id. For his part, Schwartz contends that the amendment is not
retroactive, and his claims thus remain subject to the more generous-to-him Cothron
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“per-scan” rule, under which he has easily alleged the required amount in
controversy. [50] at 5.
Viking cites public statements by legislators to suggest the amendment merely
clarified the true and original meaning of the Act. [45-1] at 7–8. But Illinois law
presumes that amendments are intended to change, not clarify, “the law as it
previously existed.” K. Miller Const. Co. v. McGinnis, 238 Ill. 2d 284, 299 (2010).
Although that presumption “may be overcome” when “the enacting body declare[s]
that it was clarifying a prior enactment,” id., public statements by a handful of
individual lawmakers does not convincingly demonstrate such a declaration. As the
Seventh Circuit has noted, “the text is law and legislative intent a clue to the meaning
of the text, rather than the text being a clue to legislative intent.” Cont’l Can Co., Inc.
v. Chicago Truck Drivers, Helpers & Warehouse Workers Union (Indep.) Pension
Fund, 916 F.2d 1154, 1158 (7th Cir. 1990). Nothing in the text of the amendment
indicates that it is merely clarifying the Act, even though the legislature can
expressly indicate its intent to clarify in the statutory text. See Harris Bank St.
Charles v. Weber, 298 Ill. App. 3d 1072, 1078, 1080 (2d Dist. 1998). Moreover, even if
the Court were to look beyond the amendment’s text, Viking cites no “authoritative
source” of legislative intent; again, it cites only various comments from various
legislators. See Garcia v. United States, 469 U.S. 70, 76 (1984) (explaining that “the
authoritative source for finding the Legislature’s intent lies in the Committee Reports
on the bill, which “represen[t] the considered and collective understanding of those

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Congressmen involved in drafting and studying proposed legislation,” not “passing
comments of one Member” and “casual statements from the floor debates”).
“[C]onflict or ambiguity ... prior to the amendment” can also indicate an
amendment is a clarification and thus rebut the presumption that an amendment
“was intended to change the law as it previously existed.” See McGinnis, 238 Ill. 2d
at 299 (cleaned up). But the Court is neither able nor willing to revisit the Illinois
Supreme Court’s conclusions regarding the clarity of the Act’s original text. See
Montana v. Wyoming, 563 U.S. 368, 377 n.5 (2011) (“The highest court of each State,
of course, remains the final arbiter of what is state law.”) (cleaned up). Cothron at
several points notes that “the [2008] statutory language clearly supports” its per-scan
interpretation. 2023 IL 128004, ¶ 40; see also id. ¶ 28 (“We agree with plaintiff that
the plain language of the statute supports her interpretation” of per-scan violation.”);
accord id. ¶¶ 20, 24, 29, 30, 32, 41. Simply put, Cothron saw no ambiguity in the text
of the Act itself. Likewise, while “conflict” can indicate legislative intent to clarify a
statute, there was no conflict to resolve in Cothron: the question in Cothron was
certified from the Seventh Circuit, and Cothron reached the “same conclusion” about
per-scan violations as an earlier Illinois appellate court. Id. ¶¶ 1, 24.
Viking argues that Cothron’s tail-end suggestion “that the legislature review
… policy concerns [regarding potentially excessive damages] and make clear its
intent regarding the assessment of damages under the Act,” Cothron, 2023 IL 128004,
¶ 43, serves as evidence of the legislature’s intent to clarify the Act when later
amending it. [45-1] 11–12. But Cothron’s “make clear” phrasing does not cabin the

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legislature’s future action or by itself overcome the presumption that the law has been
changed rather than clarified. See McGinnis, 238 Ill. 2d at 299. If the Illinois
legislature had responded to Cothron’s invitation by repealing the Act altogether, that
action could not be credibly characterized as a mere “clarification.”
Viking also points to a recent case in this district to support its argument that
the amendment is merely a clarification. [72] at 2–5; [72-1]; see Gregg v. Cent. Transp.
LLC, No. 24 C 1925, 2024 WL 4766297 (N.D. Ill. Nov. 13, 2024). [72], [72-1]. Gregg
does not change the Court’s analysis. As discussed above, while ambiguity in a statute
prior to an amendment can indicate clarification rather than change, see McGinnis,
238 Ill. 2d at 299 (citing Middleton, 578 F.3d at 663), the relevant inquiry concerns
ambiguity in the statutory text itself, see Middleton, 578 F.3d at 664 (“As we
explained in the first portion of our opinion ... text of the two statutes was not
ambiguous, leaving nothing for Congress to ‘clarify.’”). And the Illinois Supreme
Court found the statutory language here clear. E.g., Cothron, 2023 IL 128004 ¶¶ 30,
40.
Finally, although the amendment is arguably “consistent with a reasonable
interpretation of the prior enactment and legislative history,” McGinnis, 238 Ill. 2d
at 299, it is also consistent with the legislature course-correcting the unintended
results of the original statute. So that consistency by itself cannot overcome the statelaw presumption that the statute has been changed rather than clarified. Id.
Because the amendment is a change rather than a clarification, the Court must
determine if that change is retroactive. Neither party cites to a precedential Illinois

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case interpreting the amended Act, nor has the Court discovered one, so the Court
reviews this question as a matter of first impression. In evaluating retroactivity, both
parties discuss at length Dardeen v. Heartland Manor, Inc., 186 Ill. 2d 291 (1999),
which considered whether the repeal of a statute’s treble damages provision affected
a “vested right” of the plaintiff. [45-1] at 14–15; [50] at 6–7; [60] at 6–7.
In Dardeen, the Supreme Court of Illinois applied its holding from First of
America Trust Co. v. Armstead, 171 Ill.2d 282 (1996), “that the application of new
legislation to pending suits or preexisting causes of action is governed by the law that
applies by its terms at the time of the appeal, unless doing so would interfere with a
vested right.” Dardeen, 186 Ill. 2d 291 at 295 (cleaned up). Dardeen explained that
“vested rights” in Illinois are “interests that are protected from legislative
interference by [the Illinois] due process clause.” Id. Dardeen concluded that because
the treble damages provision “related solely to a remedy” and “a plaintiff has no
vested right to a particular ... remedy” under the Illinois constitution, the repeal of
the provision did “not affect a vested right” and therefore could apply retroactively.
Id. at 296.
Dardeen is of limited use, however, as the Illinois Supreme Court has since
instructed that “Illinois courts no longer utilize a vested rights analysis to determine
temporal reach.” See Perry v. Dep’t of Fin. & Prof’l Regulation, 2018 IL 122349, ¶ 64.1
Instead of the Armstead approach, Illinois courts have now expressly adopted the

1 The existence of a “vested right” might still provide the basis for a state constitutional due-

process challenge to a law, but the Court does not understand either party to be making such
an argument. Perry, 2018 IL 122349, ¶ 64.

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approach toward retroactivity set out by the United States Supreme Court in
Landgraf v. USI Film Products, 511 U.S. 244 (1994). See Perry, 2018 IL 122349, ¶ 64.
Under the Landgraf approach, “the first question is whether the legislature has
clearly indicated the temporal reach of an amended statute.” Caveney v. Bower, 207
Ill. 2d 82, 91 (2003). If so, that intent is given effect absent some constitutional
prohibition. Id. But if the legislature has not indicated its intent, a court moves on to
look at the retroactive impact of the amended statute. Id.
Section 4 of the Illinois Statute on Statutes provides a default answer to the
legislative-intent question: amendments that are “procedural in nature may be
applied retroactively, while those that are substantive may not.” People ex rel.
Madigan v. J.T. Einoder, Inc., 2015 IL 117193, ¶¶ 31–32; 5 ILCS 70/4. Owing to this
default answer, “the [Illinois] legislature has clearly indicated the temporal reach of
every amended statute,” Caveney, 207 Ill. 2d at 92, and it is thus “virtually
inconceivable that an Illinois court will ever go beyond step one of the Landgraf
approach, id. at 94 (“In light of section 4, the Landgraf analysis in Illinois becomes
quite simple.”). Because the “vested rights” analysis would be Landgraf step two, the
Supreme Court of Illinois has cautioned against it. Perry, 2018 IL 122349, ¶ 64 (“To
consider whether a right has vested necessarily involves an inquiry into retroactive
impact, which would contravene this court’s repeated holding that we do not reach
step two of Landgraf.”). “Stated differently, a lack of retroactive impact in a pending
case does not somehow negate or trump the legislature’s intent that a change of law
is to be applied to future cases only.” Id.

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Returning to the facts at hand: In the text of the amendment to the Act, the
Illinois legislature has not expressly indicated its intent regarding the amended
statute’s temporal reach. See 740 ILCS 14/20, as amended by SB 2979, Public Act
103-0769. That is, even though “the legislature is undoubtedly aware of how to clearly
indicate its intent that a statute apply to causes of action currently pending in the
courts,” Perry, 2018 IL 122349, ¶ 66, it has not done so here.
So the decisive issue under § 4 is whether the amendment is substantive or
procedural. “A substantive change in the law establishes, creates or defines rights.”
Deicke Ctr. v. Ill. Health Facilities Planning Bd., 389 Ill. App. 3d 300, 304 (1st Dist.
2009). Put another way, “a substantive change in law establishes, creates, defines, or
regulates rights, and thus could actually make [ ] one a party to a suit. GreenPoint
Mortg. Funding, Inc. v. Poniewozik, 2014 IL App (1st) 132864 ¶ 18 (cleaned up). In
contrast, “a procedural change in the law prescribes a method of enforcing rights or
involves pleading, evidence and practice.” Deicke Ctr., 389 Ill. App. 3d at 303 (cleaned
up). It involves “legal rules which direct the means to bring parties into court or the
manner in which the court process shall proceed.” Ores v. Kennedy, 218 Ill. App. 3d
866, 871 (1st Dist. 1991).
The Court does not find the Illinois Senate’s short description of the bill
amending the Act—which does not appear in the text of the amendment itself—to be
dispositive on the legal question of whether the amendment is procedural or
substantive. Nor does Viking, which argues that the short description is dispositive,
cite any authority suggesting that it is. [41-1] at 13.

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The Court also finds unpersuasive Viking’s argument that because Schwartz
has “no vested right to an award of statutory liquid damages, which relates to a
remedy,” the amendment must be procedural. [45-1] at 14 (citing Dardeen, 186 Ill.2d
at 299). Again, Illinois courts no longer use Dardeen’s “vested rights” approach to
determine temporality. See Perry, 2018 IL 122349, ¶ 64. But even under that
approach, the amendment does not merely change the remedy for a violation of the
Act; it also redefines what constitutes a violation of the Act in the first place. In
Cothron, the Illinois Supreme Court held that “the statutory violation itself is the
injury for purposes of a claim under the Act.” 2023 IL 128004, ¶ 38. For Schwartz,
the amendment changes the number of statutory violations—and thus injuries that
he has suffered—from more than a thousand to just one. Accord Rojo v. Homer Tree
Care, Inc., No. 23 L 8588, slip op. at 8 (Cook Co., Ill. Cir. Ct. Oct. 30, 2024) (“[T]he
amendment did add substantive provisions that completely altered what actions
constitute a violation. ... The Court finds that the amendment is a substantive change
in the law rather than procedural and thus, cannot be retroactively applied.”).
Although the line between substance and procedure “may often be unclear,”
Deicke Ctr., 389 Ill.App.3d at 303 (quoting Rivard v. Chicago Fire Fighters Union,
Local No. 2, 122 Ill.2d 303, 310 (1988)), the basic question of whether Schwartz has
been injured just once or injured more than a thousand times strikes the Court as a

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matter of substance, not of procedure.2 See, e.g., People v. Atkins, 217 Ill. 2d 66, 72
(2005) (“Substantive amendments include those that alter the scope or the elements
of a crime.”). And the mere fact that a substantive amendment also has procedural
ramifications does not transform it into a procedural amendment. Id. at 73.
The Court’s conclusion that the amendment does not merely change the
remedy is supported by principles of statutory construction. Under Illinois law
“[s]tatutes should be construed, if possible, so that no term is rendered superfluous
or meaningless.” Bonaguro v. Cnty. Officers Electoral Bd., 158 Ill. 2d 391, 397 (1994).
Viking focuses on that portion of the amendment that states “the aggrieved person is
entitled to, at most, one recovery under this Section,” but the amendment also
provides that “a private entity that, in more than one instance, collects ... or otherwise
obtains the same ... biometric information from the same person using the same
method of collection in violation of subsection (b) of Section 15 has committed a single
violation.” 740 ILCS 14/20 (emphasis added). It would be superfluous to read this
provision redefining a violation for purposes of the Act as merely a limitation on the
plaintiff’s recovery, where the amendment already expressly limits plaintiffs to “one
recovery.”

2 Several Illinois circuit courts have recently reached the same conclusion. See Wallace v. Vee

Pak, LLC, No. 24 L 4560, slip op. at 8 (Cook Co., Ill. Cir. Ct. Oct. 10, 2024); Gagen v. Mandell
Menkes, LLC, No. 2023 L 008294, slip op. at 4 (Cook Co., Ill. Cir. Ct. Oct. 24, 2024); Rojo, No.
23 L 8588, slip op. at 8 (Cook Co., Ill. Cir. Ct. Oct. 30, 2024).

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Because the amendment to the Act is substantive, and the Illinois legislature
did not expressly make it retroactive, Illinois law compels that the amendment be
applied prospectively, not retroactively.
B.

The Time-of-Filing Rule

Even if the amendment to the Act did limit the amount Schwartz can now
recover, the amendment would not affect the Court’s subject-matter jurisdiction.
Schwartz filed his complaint on September 29, 2023, more than ten months before
the Act was amended. [1]. And as discussed above, the amendment was not a
“clarification” of the 2008 Act but a change to it. This means that when Schwartz filed
his complaint, Cothron’s “per-scan” theory was still in effect. All Schwartz must do to
meet the amount-in-controversy requirement of 28 U.S.C. § 1332(a) is, “on the date of
filing . . . allege in good faith that over $75,000 was at stake.” Sykes v. Cook Inc., 72
F.4th 195, 206 (7th Cir. 2023) (emphasis added). And there is no doubt that his
alleged 1,000+ violations of the Act met that amount-in-controversy requirement
when Schwartz filed: after Cothron but before the amendment.
IV.

Conclusion
For the foregoing reasons, the amendment to the Act is not retroactive, and, in

any event, Schwartz would have met the amount-in-controversy requirement at time
of filing. Schwartz has sufficiently alleged the Court’s subject matter jurisdiction, and
Viking’s motion to dismiss [45] is therefore denied.

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ENTER: 11/22/24

___________________________
Georgia N. Alexakis
United States District Judge

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