Hoppe v. Great Western Business Services, LLC, No. 06 C 3026.
| Decision Date | 03 March 2008 |
| Docket Number | No. 06 C 3026. |
| Citation | 536 F.Supp.2d 888 |
| Parties | Linda HOPPE and Jerry Brown, individually and on behalf of all others similarly situated, Plaintiffs, v. GREAT WESTERN BUSINESS SERVICES, LLC, doing business as GWBS, and John Does 1-10, Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
Cathleen M. Combs, Daniel A. Edelman, Heather A. Kolbus, James O. Latturner, Edelman, Combs, Latturner & Goodwin, LLC, Chicago, IL, for Plaintiffs.
Jerry Brown, Pro se.
A. Colin Wexler, Daniel P. Shapiro, Jonathan Hale Claydon, Goldberg, Kohn, Bell, Black, Rosenbloom & Moritz, Ltd., Chicago, IL, for Defendants.
The plaintiffs have requested that I "enforce" the class action settlement agreement that the parties concede they entered into in 2006. By this they mean that I should order Great Western Business Services, LLC (GWBS) to honor that aspect of the settlement agreement requiring it to seek an order from the district court preliminary approving the settlement. The motion thus seeks "specific performance; that is, a mandatory injunction to perform." American Hosp. Supply. Corp. v. Hospital Products Ltd., 780 P.M 589, 594 (7th Cir.1986) (Posner, J.). See also Resolution Trust Corp. v. Ruggiero, 994 F.2d 1221, 1225 (7th Cir.1993). While plaintiffs' motion does not explicitly seek a finding that the settlement agreement is still binding between the parties, the requested relief cannot be granted if the agreement is no longer operative.
The defendant has objected to the motion on the ground that it made such an application to Judge Norgle in 2007 and that the motion was denied. Hence it has fully performed and cannot be required to make a second application. In addition, and more importantly, it contends that when Judge Norgle "denied" the motion for preliminary approval of the settlement agreement, the "condition subsequent" that was essential to the continuing validity of the agreement — namely approval of the settlement agreement — not having occurred, the agreement is no longer binding on the parties. (GWBS Response in Opposition to Motion to Enforce Class Action Settlement at 4) ("GWBS Response"). The plaintiffs describe the denial as "a technicality" and they take issue with the characterization of the condition as a condition subsequent.
But the real question in this case is interpretive not taxonomic. It is certainly not whether judicial approval of a motion for preliminary approval of a class action settlement is a condition subsequent or a condition precedent, for however the condition is denominated, Rule 23, Federal; Rules of Civil Procedure, requires the court's imprimatur. Rather, the question is`Whether an order that in form is a denial of a motion for preliminary approval but which in substance merely postpones the merits-based consideration required by Rule 23 because of a perceived procedural irregularity was intended by the parties to end the agreement. As discussed below, to answer that question in the affirmative requires a construction of the settlement agreement that is neither rational, probable, nor consonant with common sense, which "`is as much a part of contract interpretation as is the dictionary or the arsenal of canons." Dispatch Automation, Inc. v. Richards, 280 F.3d 1116, 1119 (7th Cir.2002) (Posner, J.). See discussion, infra at 8.
This case began in the Circuit Court of Cook on May 3, 2006, when plaintiffs filed a class action complaint alleging that GWBS sent out unsolicited facsimile advertising in Illinois in violation of the Telephone Consumer Protection Act and the Illinois Consumer Fraud and Deceptive Business Practices Act. GWBS removed the case to the United States District Court for the Northern District of Illinois and on June 15th forwarded the complaint to its insurance carrier, Valley Forge Insurance Company, requesting that it be defended and indemnified under its commercial general liability and excess liability insurance policies. (GWBS's Response, Ex. 1, Affidavit of A. Colin Wexler at ¶ 2) ("GWBS's Response").
This was the first of a series of letters which Valley Forge dealt with by ignoring them. Two-and-a-half months would pass in silence. Understandably frustrated and anxious, Mr. Wexler, counsel for GWBS, sent a virtually identical letter enclosing his previous letter and another copy of the complaint on September 1st. Two more weeks would pass before Valley Forge responded with a letter stating that the carrier had a number of similar requests for coverage and would be making a coverage determination. (Id. at ¶¶ 13-5). In ensuing telephone conversations, Mr. Wexler informed the carrier that the plaintiffs were interested in pursuing settlement and that his client was also interested in pursing settlement discussions. A specific request for prompt response from the carrier was made by Mr. Wexler so that the carrier could be included in settlement discussions. (Id. ¶ 6).
Several more weeks passed in silence, prompting Mr. Wexler to phone the carrier on October 9th. Mr. Wexler again importuned the carrier to make a coverage determination so that his client would know its level of coverage. Although Valley `Forge's "claims consultant" said he would "expedite" Valley Forge's consideration of GWBS's claim, nothing happened. A week later, Mr. Wexler sent another letter to Valley Forge expressing concern that GWBS's position was being prejudiced by Valley Forge's apparent insouciance. Mr. Wexler set a deadline of October 27th for a reply and said that in the absence of a reply, GWBS would assume that Valley Forge had "abandoned [its] insured and [would] not provide a defense or indemnification...." (Id. at ¶ 9).
There was no response by October 27th or even by November 8, 2006. (Id. at 11). On the 8th, Mr. Wexler informed Valley Forge that his client would be making a settlement offer and that the time for waiting had passed. He said that in light of Valley Forge's failure to have acted responsibly in connection with the handling of the claim that had been made and remade, GWBS had assumed that coverage for the suit was denied. (Id. at ¶¶ 11-12).1 Also on the 8th, the plaintiffs sent a settlement offer to GWBS that was forwarded to Valley Forge. Still without a response from Valley Forge, on November 29th GWBS made a counter offer to the plaintiffs. (Id. at ¶¶ 13-14).
The original offer of November 8th envisioned a payment from GWBS of $1.8 million to cover some 6,500 improper facsimile advertisements GWBS allegedly sent to Illinois residents on December 12, 2005. (Id. at ¶ 12, Ex. 7). On November 29, 2006, GWBS sent plaintiffs a counter-offer that would increase the class by adding nearly 40,000 class members in order to cover the approximately 45,000 advertisements sent to ten states on the 12th. (Id. at ¶ 14; Ex. 9). The amount of settlement was increased from $1.8 million to $3.0 million, which represented a decrease in the settlement amount per plaintiff from $280 to $67. Plaintiffs accepted the proposal the same day.
Astonishingly, by December 21st, six months had elapsed and Valley Forge had not meaningfully responded to GWBS's entreaties. Finally, on that date, Valley Forge's lawyer wrote and said that the carrier would be issuing "shortly" a letter denying coverage in its entirety, (Id. at ¶ 15). Despite all that had, occurred, GWBS sent a draft of the settlement agreement to Valley Forge on November 29th. (Id. at ¶ 16; see also Plaintiffs' Motion to Enforce Class Action Settlement, Ex A).
On January 5, 2007, GWBS agreed to all of the terms proposed by the plaintiff and the settlement was fully documented. (Id. ¶ 8). What motivated. Valley Forge to take the next step is unknown. But a week later, it sent a letter offering to defend GWBS under a reservation of rights.
On January 29th, the plaintiffs filed a motion before Judge Norgle for preliminary approval of the class action settlement. (Plaintiffs' Motion to Enforce Class Action Settlement, Ex. B). The motion contained a provision noting the parties' stipulation to a certification of the settlement class consisting of all businesses and individuals to whom defendant faxed advertisements on or about December 12, 2005 without permission and absent a business relationship with the recipient. (Motion, at 2, 4(a)). The motion went on to explain why the agreement passed muster under Rule 23(a). See Id. at 2e-7.2 The motion, however, defined a class broader than that in the complaint.
Unhappy with the settlement GWBS made, Valley Forge moved to intervene on February 1, 2007. At this point, the parties realized that the class as defined by the settlement agreement did not match the narrower class in the complaint. Thus, on February 5th, plaintiffs and GWBS stipulated to the filing of an amended complaint which expanded the class from only those having an Illinois fax number to anyone with a fax number who received the prohibited communication in any state. [Docket No. 34].
In mid April, 2007, with the motion for preliminary approval pending, Judge Norgle granted the motion to intervene over the strenuous objections of the plaintiffs and GWBS. Valley Forge filed its intervenor complaint a month later and filed an opposition to the settlement on August 8th. GWBS filed a reply in support of the motion for preliminary approval two weeks later on August 22nd. [Docket No. 92].3 The reply brief was directed to the settlement agreement of the amended class action complaint that had been filed by stipulation on February 5th.
The situation now confronting Judge Norgle was, in his view, procedurally irregular. Because of the sequence in which the motion for preliminary approval and the amended complaint were filed, he understandably assumed the motion for preliminary approval was based on the Illinois class in the original complaint, rather than the amended complaint, which had deleted the...
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