Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca7-15-01206/USCOURTS-ca7-15-01206-0/pdf.json

Nature of Suit Code: 820
Nature of Suit: Copyright
Cause of Action: 

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In the

United States Court of Appeals

For the Seventh Circuit ____________________

No. 15-1206

ALLIANCE FOR WATER EFFICIENCY,

Plaintiff-Appellee,

v.

JAMES FRYER,

Defendant-Appellant.

____________________

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 14 C 115 — Jeffrey Cole, Magistrate Judge.

____________________

ARGUED SEPTEMBER 9, 2015 — DECIDED DECEMBER 22, 2015

____________________

Before EASTERBROOK, KANNE, and WILLIAMS, Circuit Judges.

EASTERBROOK, Circuit Judge. Alliance for Water Efficiency 

engaged James Fryer to analyze how urban water agencies’ 

programs affect the elasticity of demand for water during 

droughts. The Alliance agreed to coordinate several sponsors of Fryer’s analysis. Fryer prepared a draft report, which 

left the Alliance dissatisfied, and it filed this suit in an effort 

to prevent Fryer from publishing the report. But the CaliforCase: 15-1206 Document: 35 Filed: 12/22/2015 Pages: 8
2 No. 15-1206

nia Department of Water Resources, one of the project’s 

sponsors, is happy with Fryer’s work and willing to present 

his findings under its auspices.

The parties consented to final decision by a magistrate 

judge. See 28 U.S.C. §636(c)(3). After settlement negotiations, 

the parties agreed to go their separate ways. Fryer promised

to remove the Alliance’s name from his report and to issue it 

under California’s sponsorship. He also promised to provide 

his data to the Alliance, which would issue a separate report 

in its own name. During a hearing on March 13, 2014, the 

judge stated (without objection from the litigants) that “[t]he 

parties have decided that they have a binding settlement 

agreement today even though there will be a written agreement [later].” Counsel then proceeded to “put on the record 

the material terms of the settlement.” The first and foremost 

of these is that “James Fryer may prepare his own report for 

DWR [California] provided he removes all references to the 

Alliance for Water Efficiency, AWE, in his report. Conversely, AWE will prepare its own report for the remaining funding participants of the Project Advisory Committee excluding DWR.”

Acrimony resumed when Fryer declined to sign the more 

elaborate written text that the Alliance’s counsel prepared. 

Fryer contended that the Alliance had introduced terms beyond those agreed on March 13. Drafts and counterdrafts 

were circulated; complete written agreement was never 

reached. That left the March 13 exchange as the definitive 

settlement. See, e.g., PFT Roberson, Inc. v. Volvo Trucks North 

America, Inc., 420 F.3d 728 (7th Cir. 2005) (agreement on 

some terms does not allow a court to fill in contested terms).

Case: 15-1206 Document: 35 Filed: 12/22/2015 Pages: 8
No. 15-1206 3

The Alliance protested to the court when Fryer circulated 

a new draft report that identified, as providers of data and 

assistance, some of the organizations that had participated

through a committee that the Alliance had organized. The 

Alliance maintained that naming any organization that had 

dealt with Fryer through the Alliance would imply that the 

report had the Alliance’s imprimatur. Fryer, by contrast, 

contended that the organizations wish to be identified in his 

report and that a consultant is entitled to name sponsors and 

collaborators.

The magistrate judge concluded that paragraphs 1.0(3) 

and 1.1 of the Alliance’s proposed draft (which Fryer had 

not signed) commits Fryer to remove from his report any 

reference to entities that worked with him through or in 

connection with the Alliance, unless those entities take the 

initiative to contact him and say that he can mention their 

names. The judge wrote an opinion to that effect, 2014 U.S. 

Dist. LEXIS 150176 (N.D. Ill. Oct. 22, 2014), and entered a 

judgment that reads in full: “Parties shall comply with the 

Memorandum Opinion and Order [50] issued by this Court 

on 10/22/14 along with this Court’s Memorandum Opinion 

and Order dated 1/7/15 [61]” (brackets in original).

Although the magistrate judge appeared to contemplate 

injunctive relief, this document does not comply with Fed. R. 

Civ. P. 65(d)(1), which requires every injunction to “state its 

terms specifically” and to “describe in reasonable detail—

and not by referring to the complaint or other document—

the act or acts restrained or required.” After oral argument, 

at which members of this court pointed out the problem, the 

parties asked the magistrate judge to enter a self-contained 

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4 No. 15-1206

order detailing their obligations. The judge then entered this 

injunction:

1. Mr. Fryer is enjoined from and cannot state in his separate Report for himself and the California Department of Water Resources that his Report has been sponsored by any member of

the Project Advisory Committee, which is composed of the Metropolitan Water District of Southern California; Irvine Ranch 

Water District; Inland Empire Utilities; San Antonio Water System; City of Boulder, Colorado; Sonoma County Water Agency; 

and Walton Family Foundation (through a grant to Alliance for 

Water Efficiency (“AWE”)) to support or sponsor his Report except as provided below.

2. Mr. Fryer shall remove from his Report all references to: (1) 

AWE and its employees, including any reference in the Acknowledgment section of the Report; (2) Anil Bamezai, PhD 

(“Dr. Bamezai”); (3) all funding sources other than California 

Department of Water Resources (“DWR”), unless provided with 

permission from member [sic] of the Project Advisory Committee.

3. Mr. Fryer is enjoined from and cannot solicit any member of 

the Project Advisory Committee to sponsor or support his Report without the member’s prior permission.

4. AWE shall promptly notify its funding sources and PAC 

members that a settlement has been reached in this case and that 

Mr. Fryer has the right to complete his Report on behalf of DWR.

5. As part of that notification, AWE shall provide Mr. Fryer’s 

contact information (phone number and email address) and inform the recipient that if he/she/it is interested in discussing Mr. 

Fryer’s Report or participating in its preparation, sponsorship or 

issuance they are free to contact Mr. Fryer.

6. Should any of those notified choose to participate in the preparation, funding or sponsorship of Mr. Fryer’s Report, nothing in 

this injunction shall prevent Mr. Fryer from noting that sponsorship or participation in his Report.

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No. 15-1206 5

7. AWE is enjoined from and cannot state in its separate Report 

that it was prepared on behalf of or sponsored by anyone other 

than AWE and the members of the Project Advisory Committee.

8. AWE is enjoined from and shall not contact DWR regarding 

sponsorship or participation in AWE’s Report.

9. AWE shall not utilize, in whole or in part, the exact language 

used in Mr. Fryer’s Report and shall utilize a different cover 

page, and different graphs and charts from those used in Mr. 

Fryer’s Report.

10. Nothing in any provision of this injunction shall require either AWE’s or Mr. Fryer’s Report to arrive at any particular result, or use any particular mode of analysis or methodology.

Fryer contends that this injunction creates a prior restraint 

that violates the First Amendment. Before we tackle that 

subject, however, we must decide whether the suit is properly in federal court.

The Alliance’s complaint invoked federal-question jurisdiction, 28 U.S.C. §1331, via the Copyright Act. The Alliance 

claimed to be a copyright proprietor that needed judicial assistance to prevent Fryer from infringing its rights. According to the Alliance, the report is a “work made for hire” 

within 17 U.S.C. §101, so that the Alliance owns the copyright even though Fryer wrote all the words. Yet to come 

within that definition the work must be either the output of 

an employee—and Fryer is not employed by the Alliance—

or produced under “a written instrument signed by [the parties] that the work shall be considered a work made for 

hire”. The Alliance did not allege that Fryer had agreed in 

writing that his report would be a work for hire. Fryer challenged the copyright claim in the district court, and the Alliance never alleged, let alone showed, that the statutory reCase: 15-1206 Document: 35 Filed: 12/22/2015 Pages: 8
6 No. 15-1206

quirements have been satisfied. Federal-question jurisdiction 

therefore is unavailable.

Diversity jurisdiction under 28 U.S.C. §1332 is the other 

possibility. The Alliance is incorporated and has its principal 

place of business in Illinois; Fryer is a citizen of California. 

The amount in controversy exceeds $75,000. But Fryer maintains that the Alliance is just a conduit for the donors that 

sponsored Fryer’s report, and that none of the grants individually exceeds $75,000. Because separate persons’ claims 

cannot be aggregated to reach the jurisdictional threshold, 

see Snyder v. Harris, 394 U.S. 332 (1969), Fryer contends that 

§1332 does not supply jurisdiction.

Yet the Alliance contends that it, rather than the funders, 

arranged with Fryer for the report. A corporation exists independently of its investors—and of its sponsors. Where the 

Alliance got the money to pay Fryer is neither here nor there 

for jurisdictional purposes. Nor does it matter whether the 

contract is oral rather than written. Fryer might have been 

able to argue that he does not owe any contractual obligation 

to the Alliance, as opposed to the sponsors, but that would 

have been a defense on the merits—and a claim’s failure on 

the merits does not divest a district court of jurisdiction. See 

Bell v. Hood, 327 U.S. 678 (1946). Instead of defending, however, Fryer struck a bargain. Given diversity of citizenship 

and the amount in controversy, an action to enforce the settlement contract is independently within federal jurisdiction, 

even if the original suit would have failed on the merits or 

should have been dismissed. See Kokkonen v. Guardian Life 

Insurance Co., 511 U.S. 375 (1994).

Now for the merits, and we can be brief. The district 

court’s injunction has the classic attribute of a prior restraint: 

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No. 15-1206 7

It tells Fryer what he must or must not say in some future 

publication. Even an express promise not to speak, such as 

the one between secret agents and the CIA, normally is enforced by damages or restitution after the fact rather than a 

prior restraint. See Snepp v. United States, 444 U.S. 507 (1980). 

No one contends that national security or some other compelling interest is at stake here, and the district court did not 

give any reason for resorting to a prior restraint as opposed 

to, say, a declaratory judgment that might set up a claim for 

damages if the Alliance could show some concrete injury.

But courts should not decide constitutional issues unnecessarily, and we need not consider the effect of the First 

Amendment. The district court’s injunction goes beyond

what the parties agreed on March 13, 2014. It takes the Alliance’s later drafts as if they were a signed contract, which 

they aren’t. On March 13 Fryer promised to remove the Alliance’s name from his report. He did not promise to omit the 

sponsors’ names.

The Alliance contends, and the magistrate judge found, 

that unless Fryer is forbidden to mention any person or entity that participated in the Project Advisory Committee, some 

readers may associate Fryer’s report with the Alliance even 

though the Alliance’s name and logo don’t appear. Granted. 

But that’s the nature of a compromise. Neither side gets everything it wants. The Alliance did not get everything it 

wanted even in the injunction, ¶6 of which permits Fryer to 

name suppliers of data, advice, and financial support if they 

call him first.

The district court’s injunction is vacated because it contains terms on which the parties have not agreed. If Fryer 

should violate any provision of the March 13 settlement, the 

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Alliance can pursue a remedy in damages—in federal court 

if the injury exceeds $75,000, and otherwise in state court.

(The March 13 agreement specifies venue: the Alliance will 

sue Fryer only in California, and Fryer will sue the Alliance 

only in Illinois. This means that the Alliance cannot return to 

the Northern District of Illinois with any further contention 

that Fryer has failed to keep his promises.)

Some of the magistrate judge’s language suggests that he 

wanted Fryer to turn additional data over to the Alliance or 

a consultant, but no such requirement appears in the injunction or in any judgment satisfying Fed. R. Civ. P. 58. Fryer is 

therefore under no obligations beyond those undertaken in 

the settlement agreement.

REVERSED

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