Smith v. Greystone Alliance, LLC, No. 14-1758 (7th Cir. Nov. 13, 2014).
Here is an elegantly reasoned case about mootness.
Tara Smith sued Greystone Alliance for violating the Fair Debt Collection Practices Act. Under the Act, a plaintiff can get both actual damages and statutory damages. Actual damages, as the name suggests, are calculated based on the amount of harm that the plaintiff has actually suffered. Statutory damages, by contrast, are set by a statute and, unlike compensatory damages, are not calculated based on how much harm the plaintiff suffered.
The Act caps its statutory damages at $1,000 per plaintiff per suit. This fact is important in light of what happened after Smith filed suit: Greystone offered her $1,500 in damages.
The district court ruled that this offer made the lawsuit moot—that there wasn’t any real controversy between the parties anymore. Smith, the district court concluded, hadn’t suffered more than $500 in actual damages, and so she couldn’t hope to recover more than what Greystone had already offered: $1,500, the sum of $500 in actual damages and $1,000 in maximum statutory damages. And, because the federal courts lack jurisdiction over moot cases, the district court dismissed Smith’s case.
The Seventh Circuit, speaking through Judge Easterbrook, notes the fatal flaw in the district court’s reasoning. Smith has always claimed that her actual damages exceed $500. Determining whether that claim is true—which includes rejecting the claim after determining it’s not true—requires a court to exercise jurisdiction over the claim. But if a case is moot, a court can’t exercise jurisdiction over it. In other words, the district court necessarily exercised jurisdiction, and yet it also dismissed the case on the ground that it lacked jurisdiction.
The district court tied itself in this knot because it failed to understand that a case isn’t moot when a plaintiff asks for more or different relief than a defendant is willing to provide. That is exactly what has happened in this case, since Smith says she’s owed more than a total of $1,500, the amount that Greystone offered.
So the case isn’t moot. The district court’s dismissal is vacated, and the case is remanded for a ruling on the merits.