The Eastern District of New York recently held that a plaintiff’s TCPA claims were not precluded by the Southern District of Texas’ ruling that the same claims against the same defendants were mooted by a Rule 68 offer of judgment.  See Bank v. Spark Energy Holdings, No. 13-6130, 2014 U.S. Dist. LEXIS 84493 (E.D.N.Y. June 20, 2014). 

The plaintiff alleged that he received telemarketing calls from defendants “using an artificial or prerecorded voice” without his prior express consent in violation of the Telephone Consumer Protection Act (“TCPA”).  He initially filed a class action suit in the Southern District of Texas, where after nearly two years of defending the case and prior to plaintiff moving for class certification, defendants made a Rule 68 offer of judgment offering plaintiff complete relief.  Although the plaintiff rejected the offer, the Texas court found that the offer rendered plaintiff’s claims moot because he no longer had a personal stake in the outcome of the litigation.  Accordingly, the Texas court dismissed the plaintiff’s claims for lack of subject matter jurisdiction. 

Shortly thereafter, the plaintiff filed suit in the Eastern District of New York and asserted the same TCPA claims against the same defendants.  The defendants moved to dismiss the claims based on the preclusive effect of the Texas court’s ruling.  The New York court denied the motion to dismiss, reasoning that neither claim nor issue preclusion applied.  The New York court held that claim preclusion only applied if there was a final judgment on the merits in the prior action and that dismissal for lack of subject matter jurisdiction is generally not considered a final judgment on the merits.  The New York court further held that issue preclusion did not apply because an identical issue was not adjudicated in the prior action:

"I find that the identical issue is not presented here because the prior’ court’s determination of mootness relied on particular factual circumstances that are not the same as the facts presented in this suit.  In the Texas case, the court decided that plaintiff’s individual TCPA claim was moot because plaintiff had rejected a Rule 68 offer that would have provided complete relief on his claim.  In this suit, defendants have not made any Rule 68 offer, so the court is not presented with the same factual scenario.  Since the first requirement to establish issue preclusion is not satisfied, the Texas court’s prior finding of mootness does not require the dismissal of plaintiff’s claims as moot in this action."

While the New York judge did express sympathy for defendants’ position (having litigated plaintiff’s TCPA claim for almost two years in Texas, successfully moving to have the suit dismissed, and now facing the same TCPA claims in New York), she nevertheless found in favor of the plaintiff, stating: “[a] finding that a claim is moot in one case simply does not mean that claim is moot in all subsequent cases.”

While the opinion appears to undermine the goals that the mootness and preclusion doctrines were meant to serve, if this tactic gains traction, defendants should consider immediately making the same offer of judgment upon notice of the second lawsuit.  Defendants should also consider filing a motion to transfer venue to the first court rather than relitigating the mootness issue in the second court. 

For more information on the aforementioned case and the TCPA generally, contact Katherine Olson at (312) 334-3444 or  

Messer Strickler, Ltd. Successfully Aids Landlord in Distress for Rent on “Cocktail” in Lakeview

Many Illinois landlords are not aware of the remedies available to them under the Illinois Distress for Rent statute, 735 ILCS 5/9-301 et seq. A Distress offers the Landlord a huge advantage through a quick, summary process that is guaranteed to get the tenant’s attention. An old common law remedy codified, the law allows a lessor to seize the personal property of a tenant who has failed to pay rent. Once a seizure is made, the lessor files a distress warrant with the clerk of the court along with a detailed inventory of the property distrained as soon as practicable. The action then proceeds to a determination by the court on the amount owed by the tenant. After receiving a favorable judgment in the proceeding, the landlord is awarded the amount of rent due and the judgment is enforceable against the seized property, which is sold at auction to satisfy the judgment. The tenant may only receive its property back prior to a determination on the merits by posting a bound in twice the amount of the rent claimed.

Known as a “self-help” remedy, a distress for rent is not without its potential pitfalls. A distress for rent could open up the landlord to potential counterclaims from the tenant if not exercised properly. For example, many times a lease provides for additional sums due to the landlord upon default, such as late fees, attorneys’ fees, or penalties. These sums, if not clearly defined as “rent” under the lease may not be satisfied through a distress. Thus, a landlord who seizes a tenant’s property for additional sums owed under the lease may find themselves in hot water. As a result, it is vital that seasoned legal counsel be consulted before exercising a distress.

Nevertheless, when faced with what can be a long and arduous eviction process in circuit court, a distress for rent can be just what a landlord needs to mitigate its damages. Messer Strickler, Ltd. has served as a resource for landlords for many years on such issues. Most recently, Messer Strickler, Ltd. facilitated a successful distress for rent for its commercial landlord client, 3357-59 N. Halsted Street, LLC (“Halsted”). Halsted was owed in excess of $85,000 in backed rent by tenant With a Stick, Inc. d/b/a Cocktail, which formerly operated a bar at the corner of Roscoe and Halsted streets. The Distress allowed Halsted to seize property from the bar to help satisfy the overdue rent. Halsted was so pleased with the results that it graciously allowed Messer Strickler, Ltd. to identify it in this post. You can read more about the distress through local news sources at: .html.

Contact Nicole Strickler at (312) 334-3442 for further information.