Evenson v. Palisades Collection, LLC et al
Filing
33
ORDER denying 23 Motion to Dismiss for Lack of Jurisdiction. Signed by Judge James L. Graham on 10/09/14. (jlg1)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
Christine Evenson,
Plaintiff,
v.
Case No. 2:13-cv-1226
Palisades Collection, LLC,
et al.,
Defendants.
OPINION AND ORDER
This is an action filed by plaintiff Christine Evenson against
Palisades Collection, LLC; Levy & Associates, LLC; and Yale R. Levy
and
Abbe
Lee
Simmons
(individuals
affiliated
Associates) (collectively “the defendants”).
with
Levy
&
Plaintiff asserts
claims for violations of the Fair Debt Collection Practices Act, 15
U.S.C. §1692, et seq. (“FDCPA”), and the Ohio Consumer Sales
Practices Act, Ohio Rev. Code §1345.01, et seq. (“OCSPA”), and a
claim for abuse of process under Ohio law.
Plaintiff alleges that
she was mistakenly and wrongfully named as a judgment debtor of
AT&T in an action filed by defendant Palisades Collection in the
Municipal Court of Franklin County, Ohio, resulting in a judgment
of over $2,800.00 being levied against her, and that the Levy &
Associates defendants wrongfully attempted to collect this alleged
debt from her.
suffered
As to each claim, plaintiff alleges that she “has
actual
damages,
including
emotional
distress
humiliation and has incurred attorney fees and costs[.]”
¶¶ 34, 37, 40.
and
Doc. 1,
In the demand section of the complaint, plaintiff
seeks statutory and actual damages, recovery for attorney fees and
costs, and punitive damages “for a total award in excess of
$25,000.00[.]”
Doc. 1, p. 10.
This matter is before the court on defendants’ June 6, 2014,
motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(1) for lack of
subject matter jurisdiction. Defendants note that on May 29, 2014,
defendant Levy & Associates served upon plaintiff an offer of
judgment pursuant to Fed. R. Civ. P. 68.
Levy
&
Associates
would
pay
to
The offer specified that
plaintiff
“the
sum
total
of
$7,000.00" as well as plaintiff’s “actual costs and reasonable
attorney’s fees incurred in this federal case, in an amount agreed
upon by the parties or as determined by the court.”
1.
Doc. 23-1, p.
Defendants contend that the amount of $7,000.00 offered in
damages
was
more
than
enough
to
satisfy
plaintiff’s
claims,
specifically: plaintiff’s claim for $5,100.00 in actual damages
consisting of attorney’s fees incurred by plaintiff in securing the
removal of her name from the state court case, as identified in her
initial
disclosure
statement
under
Fed.
R.
Civ.
P.
26(a)(1)(A)(iii); $1,000.00 in statutory damages under the FDCPA;
and $200.00 in statutory damages under the OSCPA.1
This offer did
not take into account other actual damages which might be awarded
under the FDCPA or the OSCPA, nor did it address damages which
would be recoverable under Ohio law under the abuse of process
claim.
Plaintiff did not accept the offer.
Nonetheless, relying on
O’Brien v. Ed Donnelly Enterprises, Inc., 575 F.3d 567 (6th Cir.
1
The FDCPA provides for an award for actual damages as well as additional
statutory damages not to exceed $1,000. 15 U.S.C. §1692k(a)(1) and (2). Where
deceptive or unconscionable acts are proved, the OSCPA allows for the recovery
of the greater of three times the consumer’s actual economic damages or $200,
whichever is greater, plus noneconomic damages not exceeding $5,000. Ohio Rev.
Code §1345.09(B).
2
2009), defendants argue that because plaintiff has been offered a
settlement allegedly sufficient to satisfy her claims, no case or
controversy exists.
Defendants contend that the case should be
dismissed upon entry of judgment in plaintiff’s favor as specified
in the offer of judgment.
Plaintiff opposes the motion, noting
that she is also seeking actual damages for intangible factors such
as emotional distress, humiliation, loss of self-esteem, and stress
on interpersonal relationships, and that the prayer for damages in
the complaint includes a request “for a total award in excess of
$25,000.00[.]”
Pursuant to Rule 68, a party defending against a claim “may
serve on an opposing party an offer to allow judgment on specified
terms.”
Fed. R. Civ. P. 68(a).
clerk must enter judgment.
If the offer is accepted, then the
Rule 68(a).
An offer which is not
accepted within fourteen days is considered withdrawn.
Civ. P. 68(b).
Fed. R.
However, if “the judgment that the offeree finally
obtains is not more favorable than the unaccepted offer, the
offeree must pay the costs incurred after the offer was made.”
Fed. R. Civ. P. 68(d).
Under Article III of the United States Constitution, the
jurisdiction
of
federal
courts
is
limited
to
“cases”
and
“controversies,” a requirement that must be satisfied throughout
the life of the case.
U.S. Const. art. III, §2, cl. 1;
Fialka-
Feldman v. Oakland Univ. Bd. of Trustees, 639 F.3d 711, 713 (6th
Cir. 2011).
A case becomes moot when the plaintiff no longer has
a “personal stake” in the outcome of the litigation.
Kemna, 523 U.S. 1, 7 (1998)(citation omitted).
Spencer v.
In O’Brien, the
Sixth Circuit noted that “a Rule 68 offer can be used to show that
3
the court lacks subject-matter jurisdiction.” O’Brien, 575 F.3d at
574 (citing Greisz v. Household Bank (Illinois), N.A., 176 F.3d
1012, 1015 (7th Cir. 1999)(an offer of judgment that encompasses
the relief claimed “eliminates a legal dispute upon which federal
jurisdiction can be based,” because “[y]ou cannot persist in suing
after you’ve won”)).
Thus, “an offer of judgment that satisfies a
plaintiff’s entire demand moots the case.”
O’Brien, 575 F.3d at
574; see also Warren v. Sessoms & Rogers, P.A., 676 F.3d 365, 372
(4th Cir. 2012)(when plaintiff makes a specific demand in the
complaint for damages or otherwise specifies the value of his
claims, an offer of judgment in excess of that value will moot the
case).
In such a case, the proper approach not to dismiss the case
outright for lack of subject-matter jurisdiction; rather, the court
should enter judgment in favor of the plaintiff in accordance with
the Rule 68 offer of judgment.
O’Brien, 575 F.3d at 575.
The
O’Brien court also held that the defendant is not required to offer
a number certain for plaintiff’s attorney’s fees; it is sufficient
if the defendant offers to pay reasonable attorney’s fees to be
determined by the court.
Id.
In Hrivnak v. NCO Portfolio Management, Inc., 719 F.3d 564
(6th Cir. 2013), involving facts remarkably similar to those in the
instant case, the Sixth Circuit further addressed the requirements
for finding a case to be moot following a Rule 68 offer of
judgment.
Hrivnak asserted claims under the FDCPA and the OCSPA,
seeking statutory, compensatory and punitive damages exceeding
$25,000, as well as declaratory and injunctive relief. Id. at 566.
As in the instant case, the defendants made an offer of judgment in
the total amount of $7,000.00, plus reasonable costs and attorney’s
4
fees.
Id.
Defendants also argued that the plaintiff could not
recover any additional actual or punitive damages, and that the
offer encompassed everything that plaintiff deserved or could
recover. Id. at 567. The Sixth Circuit reiterated that “[t]o moot
a case or controversy between opposing parties, an offer of
judgment must give the plaintiff everything he has asked for as an
individual. That means his ‘entire demand,’ as we have said.” Id.
(quoting O’Brien, 575 F.3d at 574)(emphasis in original).
“An
offer limited to the relief the defendant believes is appropriate
does not suffice.”
Id. (emphasis in original).
The court went on to observe:
In this case, the defendants did not offer to satisfy all
of Hrivnak’s individual demands. They offered to satisfy
just those demands they believed were legitimate under
state law and the FDCPA. Hrivnak asked for more than
$25,000, reasonable attorney’s fees and injunctive and
declaratory relief.
Yet the defendants offered him
$7,000 plus costs and attorney’s fees. That was it.
Reasonable though the defendants’ offer may have been
(and may still prove to be), the disparity between what
they offered and what the plaintiff sought generally will
preclude a finding of mootness. Just so here.
Id. at 568 (emphasis in original); see also Sibersky v. Borah,
Goldstein, Altchuler & Schwartz, P.C., 242 F.Supp.2d 273, 277-78
(S.D.N.Y. 2002)(case was not moot where Rule 68 offer included only
statutory damages, whereas complaint, when liberally construed,
could be read as also requesting actual damages).
Noting the distinction between the merits of a claim and the
existence of a live controversy, the court commented that “‘[a] bad
theory (whether of liability or of damages) does not undermine
federal jurisdiction.’” Hrivnak, 719 F.3d at 568 (quoting Gates v.
Towery, 430 F.3d 429, 432 (7th Cir. 2005)).
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The court concluded
that although defendants disputed what plaintiff should receive on
the
merits,
because
insubstantial’
that
plaintiff’s
they
other
‘fail[ed]
claims
to
“were
present
a
not
‘so
federal
controversy,’ the defendants’ Rule 68 offer did not deprive the
court of subject matter jurisdiction.”
Id. at 569 (quoting Moore
v. Lafayette Life Ins. Co., 458 F.3d 416, 445 (6th Cir. 2006)).
Here, as in Hrivnak, plaintiff’s complaint prays for statutory
and actual damages, recovery for attorney fees and costs, and
punitive damages “for a total award in excess of $25,000.00[.]”
Doc. 1, p. 10. Plaintiff further alleges in her complaint that she
“has suffered actual damages, including emotional distress and
humiliation and has incurred attorney fees and costs[.]”
¶¶ 34, 37, 40.
Doc. 1,
The offer of judgment was only for $7,000, plus
reasonable attorney’s fees and costs, less than the plaintiff
requested in her complaint.
In
their
reply,
defendants
argue
that
only
the
damages
identified in plaintiff’s initial disclosure pursuant to Rule
26(a)(1)(A)(iii) should be considered in determining whether the
Rule
68
offer
plaintiff.
of
judgment
exceeded
the
relief
requested
by
Under Rule 26, a party must provide to the other
parties “a computation of each category of damages claimed by the
disclosing party” and must also “make available for inspection and
copying ... the documents or other evidentiary material .. on which
each computation is based, including materials bearing on the
nature and extent of injuries suffered[.]” Rule 26(a)(1)(A)(iii).
In her initial disclosure, plaintiff provided documents supporting
her claim for actual expenses, specifically, attorney’s fees, she
allegedly incurred in the amount of $5,100.00, to secure the
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amendment of the state court judgment, see Doc. 23-3, pp. 2-5, but
she did not list any other damages.
Defendants cite no authority for the proposition that a
determination of mootness following a Rule 68 offer of judgment
must be based solely on the damages identified in a party’s initial
disclosure statement, as opposed to the party’s complaint.
In
fact, applying such a de facto estoppel in this case would conflict
with
the
discovery
process
itself.
A
Rule
26(a)(1)(A)(iii)
statement is, by the express language of that Rule, an “initial
disclosure.”
Rule 26 anticipates that a party may need to update
an
disclosure
initial
statement.
See
Fed.
R.
Civ.
P.
26(e)(1)(A)(“A party ... “must supplement or correct its disclosure
or response ... if the party learns that in some material respect
the disclosure or response is incomplete or incorrect, or if the
additional or corrective information has not otherwise been made
known to the other parties during the discovery process or in
writing”).
According to the order entered by the magistrate judge
in this case (Doc. 17), discovery does not close until November 29,
2014, and plaintiff can arguably supplement her initial disclosure
statement before the cut-off date.
In her initial disclosure statement, plaintiff identified
herself as a person with discoverable knowledge relevant to the
claims.
Doc. 23-3, p. 1.
The court would expect that evidence
bearing on emotional distress would be of the sort elicited through
plaintiff’s
documents.
deposition
testimony
rather
than
discoverable
In addition, courts have generally recognized that
emotional distress and punitive damages are typically not amenable
to the type of disclosures contemplated by Rule 26(a)(1)(A)(iii),
7
and have held that the failure to disclose a number or calculation
for such damages was substantially justified.
See Scheel v.
Harris, No. 3:11-17-DCR, 2012 WL 3879279 at *7 (E.D.Ky. Sept. 6,
2012)(noting that because emotional suffering is personal and
difficult
to
quantify,
and
because
compensatory
damages
are
typically considered a fact issue for the jury, emotional distress
damages are not subject to the kind of calculation required for
initial disclosure; punitive damages are also not amenable to the
initial disclosure requirements); see also Williams v. Trader
Publishing Co., 218 F.3d 481, 486 n. 3 (5th Cir. 2000)(because
compensatory damages for emotional distress are necessarily vague
and are generally considered a fact issue for the jury, they may
not be amenable to the kind of calculation disclosure contemplated
by Rule 26); E.E.O.C. v. Wal-Mart Stores, Inc., 276 F.R.D. 637, 639
(E.D.Wash.
2011)(denying
motion
to
compel
computation
of
plaintiff’s emotional distress and punitive damages on the basis
that they are issues for the factfinder, but noting that plaintiff
may be foreclosed from suggesting a specific amount to the jury for
emotional distress damages if plaintiff fails to supplement its
Rule 26 disclosures with a computation of damages); Sandoval v.
American Bldg. Maintenance Industries, Inc., 267 F.R.D. 257, 281-83
(D. Minn. 2007)(same).
In this case, plaintiff alleged in her complaint that she “has
suffered
actual
damages,
including
emotional
distress
humiliation and has incurred attorney fees and costs[.]”
¶¶ 34, 37, 40.
and
Doc. 1,
The complaint further states that plaintiff seeks
statutory and actual damages, recovery for attorney fees and costs,
and punitive damages “for a total award in excess of $25,000.00[.]”
8
Doc. 1, p. 10.
The Rule 68 offer of judgment did not meet her
entire demand, and therefore a case or controversy is still
presented in this case. Defendants’ motion to dismiss (Doc. 23) is
denied.
It is so ordered.
Date: October 9, 2014
s/James L. Graham
James L. Graham
United States District Judge
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