Mccauley v. Trans Union, L.L.C., Docket No. 04-1386-CV.

• Decision Date: 24 March 2005
• Docket Number: Docket No. 04-1386-CV.
• Citation: 402 F.3d 340
• Parties: Peter MCCAULEY, Plaintiff-Appellant, v. TRANS UNION, L.L.C., Defendant-Appellee.
• Court: U.S. Court of Appeals — Second Circuit

Page 340

402 F.3d 340

Peter MCCAULEY, Plaintiff-Appellant, v. TRANS UNION, L.L.C., Defendant-Appellee.

Docket No. 04-1386-CV.

United States Court of Appeals, Second Circuit.

Argued January 28, 2005.

Decided March 24, 2005.

Peter McCauley, New York, NY, Plaintiff-Appellant Pro Se.

Mark E. Kogan, Philadelphia, PA (Timothy P. Creech, Satzberg, Trichon, Kogan & Wertheimer, P.C., of counsel), for Defendant-Appellee.

Before OAKES, RAGGI and WESLEY, Circuit Judges.

OAKES, Senior Circuit Judge.

This pro se appeal raises the question whether a plaintiff's rejection of an offer of judgment under Fed.R.Civ.P. 68 moots the case so that entry of judgment in favor of the defendant is appropriate. The United State District Court for the Southern District of New York, Victor Marrero, Judge, dismissed this case as moot and entered judgment in favor of the defendant when the defendant's offer of judgment was refused. Because we find that the plaintiff's refusal did not, in and of itself, moot the case, we vacate the judgment and remand for entry of a default judgment in favor of the plaintiff.

The facts behind this appeal can be quickly summarized. In May 2002, Peter McCauley filed a complaint against Trans Union, a consumer reporting agency, alleging that Trans Union had negligently indicated on McCauley's credit report that he had two outstanding tax liens, thus temporarily preventing McCauley from securing a student loan with Sallie Mae Servicing Corporation ("Sallie Mae"). McCauley demanded damages in the amount of $240, which was the fee he incurred when, after he was refused a loan by Sallie Mae, he charged over $8,000 in tuition to his credit card.

In June 2002, Trans Union filed an answer to McCauley's complaint, which denied all allegations and requested that the court dismiss McCauley's complaint with prejudice. In October 2002, Trans Union made an offer of judgment pursuant to Fed.R.Civ.P. 68¹ for $240, plus costs to be determined by the court. The offer of judgment specified that it not be construed as an admission of liability and that it remain confidential and filed under seal.

In September 2003, Trans Union moved for summary judgment, arguing that it had offered McCauley the entire amount of compensatory damages he had sought, eliminating any "case or controversy" with respect to McCauley's claims. The district court granted the motion in part, and denied in part, finding that because there remained a possibility that McCauley could recover punitive damages at the time of the settlement offer, Trans Union's offer did not encompass everything McCauley could possibly have been entitled to recover from his claims. The court acknowledged, however, that punitive damages were no longer available to McCauley and concluded that "the only possible damages McCauley may still recover ... would be $240 along with the costs of the action. Were Trans Union now to make an identical Rule 68 offer of judgment that it made prior to filing this motion ... the Court would be compelled to dismiss the action if McCauley were to reject the offer."

Thereafter, Trans Union renewed its offer of $240 plus court costs to McCauley. Because McCauley refused to accept the offer, the court dismissed the case in December 2003, holding that the offer constituted everything McCauley would potentially recover through successful litigation. Judgment was entered in favor of Trans Union.

On appeal, McCauley argues that he is seeking not just his actual damages of $240 but, more importantly, the precedential value of a judgment against Trans Union, which is frustrated by the language in Trans Union's settlement offer requiring that the settlement be confidential and filed under seal. McCauley contends that he has a legal and cognizable interest in obtaining a judgment that is not confidential and sealed, and thus can be used as precedent in future matters. He also asserts that, even if the district court properly dismissed his claim, it erred in failing to enter a judgment of $240 plus costs against Trans Union.

We have held that the federal courts lack jurisdiction in a case because of mootness "when the parties lack a legally cognizable interest in the outcome." Fox v. Bd. of Trustees of State Univ. of New York, 42 F.3d 135, 140 (2d Cir.1994) (internal quotation omitted). It is clear that Trans Union's unwillingness to admit liability is insufficient, standing alone, to make this case a live controversy. See ...