Court Opinion

ID: 4151287
Source: CourtListenerOpinion
Date Created: 2017-03-08 21:00:55.801439+00
Date Added: 2024-06-11T07:46:30.606828
License: Public Domain

In the

    United States Court of Appeals
                 For the Seventh Circuit
                     ____________________
No. 16-3472
CAFFERTY, CLOBES, MERIWETHER & SPRENGEL, LLP, on behalf
 of itself and all others similarly situated,
                                              Plaintiff-Appellant,

                                 v.

XO COMMUNICATIONS SERVICES, LLC,
                                                 Defendant-Appellee.
                     ____________________

         Appeal from the United States District Court for the
           Northern District of Illinois, Eastern Division.
             No. 16 C 2331 — Milton I. Shadur, Judge.
                     ____________________

    ARGUED FEBRUARY 7, 2017 — DECIDED MARCH 8, 2017
                     ____________________

   Before BAUER, POSNER, and SYKES, Circuit Judges.
     POSNER, Circuit Judge. The plaintiff, a law firm, seeks both
individual and class relief against XO Communications, a
large provider of telecommunications services to business
customers, such as the plaintiff, and wholesalers. The plain-
tiff’s contract with XO provided that the contract would be
automatically renewed at the end of the customer’s current
service term “for a similar term and at the same rates” set
2                                                    No. 16-3472

forth in the contract. A customer who didn’t want to renew
was required to so notify XO at least 30 days prior to the ex-
piration date in the contract; if it failed to do so, the contract
would renew automatically. The contract also provided that
XO would notify the customer of the automatic-renewal fea-
ture of the contract (which it did from time to time), thus
reminding the customer that if it decided not to renew the
contract it would have to so notify XO at least 30 days before
expiration. The contract further stated that if the customer
terminated the contract after the deadline it would have to
pay XO a termination fee based on the revenue that XO
would have received from the customer over the remaining
months of the contract had it not been terminated prema-
turely and thus in violation of the contract. XO’s monthly
invoices contain a prominent reminder of the automatic-
renewal feature of the contract.
    The plaintiff’s contract with XO had an initial term of
three years and renewed automatically (that is, upon the end
of the contract term, the plaintiff not having terminated)
three times. But shortly after the third renewal began the
plaintiff reneged because it was moving to a different loca-
tion, one not serviced by XO. By thus violating the contract
the plaintiff owed XO a termination fee.
    All this is straightforward, leaving one to wonder how it
could give rise to this lawsuit, let alone to this appeal, which
complains only about the district judge’s denial of leave to
the plaintiff to file a third amended complaint, a ruling to
which the plaintiff takes violent exception. The multiple
complaints in this case alleged breach of contract, violation
of Illinois consumer protection statutes, unjust enrichment,
and unconscionability, among other things. But the plaintiff
No. 16-3472                                                   3

has no case, as all its claims pivot on its contention that XO’s
monthly reminders of the automatic-renewal feature of the
contract should have included, but didn’t, the date of the au-
tomatic renewal, or that XO should have otherwise notified
the plaintiff of the renewal date before the contract renewed.
But as the automatic renewal comes at the end of the cus-
tomer’s term of service, it is child’s play for the customer to
keep track of the deadline (30 days before the end of the
term) for declining—without any penalty—to renew the con-
tract. Remember too that the customer receives a monthly
reminder that the contract will renew if the customer doesn’t
terminate it in compliance with its terms—terms that include
the deadline that the plaintiff missed.
    Its complaint about having to pay a termination fee for
violating the contract falls with its challenge to XO’s not ad-
vising it of the date of the contract’s automatic renewal. Be-
cause the plaintiff, having failed to keep track of the renewal
date, terminated the contract after the contract had been re-
newed, thereby violating the terms of the contract, it was re-
quired to pay the termination fee of some $9,000 (it’s paid
some, but not all of it), based as we said on the loss to XO of
the revenues that the contract would have generated for it
had the plaintiff not violated the contract. The contract had
been renewed, and thus was in force, because the plaintiff,
apparently losing track of its terms, had failed to terminate it
before the renewal took effect.
    The plaintiff’s argument comes down to a baseless asser-
tion that the renewal clause in the contract “assigned re-
sponsibility to XO to track customers’ renewal dates and to
give them fair warning that the window of opportunity to
avoid renewal of their Agreements was closing.” No, the re-
4                                                  No. 16-3472

newal clause doesn’t say that and doesn’t have to, since eve-
ry customer is informed that the contract automatically re-
news at the end of the customer’s term of service unless that
renewal is cancelled by the customer at least 30 days before
the end of the term. The plaintiff’s other statutory and com-
mon-law claims, all based on its having to pay a termination
fee for failing to cancel the contract before the deadline, fail
for the same reason.
     It’s not as if the plaintiff were some hapless consumer
bamboozled by a huge company. According to the plaintiff’s
website (www.caffertyclobes.com/home, visited March 3,
2017), “Cafferty Clobes Meriwether & Sprengel LLP, which
has offices in Chicago, Philadelphia, and Ann Arbor, com-
bines the diverse talents of attorneys with a wide range of
litigation experience. Since its founding in 1992, the firm has
focused on representing plaintiffs, such as investors, em-
ployees, consumers and companies, in complex civil litiga-
tion throughout the country. The firm and its attorneys have
helped recover billions of dollars for the benefit of repre-
sented plaintiffs and classes, and in some cases, have se-
cured the reform of corporate practices alleged to be unlaw-
ful or abusive. The skill and experience of our attorneys has
been recognized on repeated occasions by courts that have
appointed these attorneys to leadership positions in complex
multidistrict or consolidated litigation.” Had this substantial
enterprise kept track of the date of its contract with XO
(more precisely the date of its latest renewal of the contract),
it would not have incurred the modest termination fee that it
seeks to recover by this suit.
  Of course its real aim, doubtless, was, in the words of its
website, to “recover billions of dollars for the benefit of rep-
No. 16-3472                                                  5

resented plaintiffs and classes.” It can’t have brought this
suit just to recover a $9,000 termination fee (less, actually,
because it hadn’t paid the entire fee); it must have hoped
that a class would be certified, although a different law
firm—Lite DePalma Greenberg, LLC—would be represent-
ing the class in the litigation.
    Ultimately the district judge dismissed the case and en-
tered judgment for XO. The plaintiff appeals the dismissal,
complaining of not having been given an opportunity to be
heard. But it had multiple options: it could have filed a mo-
tion, expanded its arguments at the hearing, or raised its
procedural concerns with the district judge. It complains of
the judge’s denial of leave to file a third amended complaint.
But given the insufficiency of the first and second amended
complaints, the denial of leave to file a third is reviewed un-
der the same standard as a dismissal (see Runnion v. Girl
Scouts of Greater Chicago, 786 F.3d 510, 524 (7th Cir. 2015)),
and is therefore affirmed, ending the litigation.