Judge Erred in Denying Small Claims Court Jurisdiction, Says BIPA Defendant

U.S. District Judge Manish Shah’s May 31 ruling denying Match Group’s motion to dismiss erred by “deciding the issue of small claims court jurisdiction instead of leaving it for the small claims court to decide” and ruling that small claims courts lack jurisdiction over plaintiff’s claims, said Match’s motion to reconsider (docket 1:22-cv-06924) the ruling Thursday and dismiss the case in U.S. District Court for Northern Illinois in Chicago.

Shah’s order last month granted defendant Match Group’s motion to transfer plaintiff Marcus Baker’s Illinois Biometric Information Privacy Act (BIPA) claims to the Northern District of Texas in Dallas (see 2306010033). Baker alleges Match Group and its affiliated dating websites collect, analyze and use unique biometric identifiers associated with people’s faces in photos uploaded to their apps and websites without disclosing or acknowledging the collection or requesting consent.

Match Group sought dismissal of the complaint so it could be heard in small claims court. But Baker is seeking at least $20,000 in damages and injunctive relief, and neither the small claims courts in Texas nor in Illinois can issue damages in that amount, or injunctive relief of the kind Baker seeks, said Shah’s May order. Baker has shown small claims court “isn’t the right place for this case,” said the order. Baker and Match Group agreed to litigate claims outside of arbitration or small claims court in Texas.

On Wednesday, Shah granted Match Group and its four co-defendants their motion for a stay in the court-ordered transfer to the Texas court so they could resolve their motion for reconsideration of the transfer (see 2306010033). They based their motion to reconsider on the grounds it was a “manifest error” for the judge to conclude that an Illinois small claims court can’t hear plaintiff Marcus Baker’s case, said the defendants.

The court's determination that small claims courts in Illinois and Texas wouldn't have jurisdiction over Baker’s claim if he were to file suit there is barred by Article III’s case or controversy requirement, said the motion. The “proper course” would be for Baker to file a complaint in small claims court and let that court determine its own jurisdiction to honor the parties’ alternative dispute resolution agreements (ADR) and the decision reached by JAMS International Arbitration Center, it said.

The JAMS order is a “binding step” in the arbitral process, said the motion. The parties agreed, before appointment of an arbitrator, that JAMS would make this decision. They then argued the issues “extensively” to JAMS, which decided the court "committed manifest error by failing to enforce the JAMS Order.” A “manifest error” occurs when the court has “patently misunderstood a party” and made a decision outside the adversarial issues presented by the parties “or has made an error not of reasoning but of apprehension,” said the motion, citing Waunakee v. Rochester Cheese.

The court didn’t consider that Baker’s ADR agreement with Tinder delegates the question of small claims court jurisdiction to small claims court, the motion said. Similarly, his ADR agreement with OKCupid (with JAMS streamlined arbitration rules incorporated) makes clear the questions of whether claims are subject to arbitration, or litigation in small claims court, are "delegated exclusively to those forums," it said. The motion cited Henry Schein v. Archer & White, saying, “If the contract delegates a ‘gateway issue’ to an arbitrator -- or, in this case, a small claims court -- ‘a court may not override the contract.’”

Shah’s order “incorrectly states” that Match made no argument why the case should be in small claims court, said the motion, but defendants incorporated their letters to JAMS citing “extensive case law” on the issue in their motion to dismiss. Defendants also cited the JAMS order, “directing Baker to file his case in small claims court for a jurisdictional ruling,” it said. The Illinois Constitution, U.S. Supreme Court rules and interpreting case law combined “refute the Court’s finding that Illinois small claims court’s can’t hear Baker’s claims because small claims courts can issue injunctions," it said. Baker seeks damages below the small claims jurisdictional limits and BIPA is an appropriate subject matter for small claims court, it said.

BIPA claims should be treated the same as Illinois Consumer Fraud and Deceptive Business Practices Act and Telephone Consumer Protection Act claims “because they allege violations of privacy rights,” said the motion. Such violations “have traditionally been considered as lying in tort,” it said. The court “erred by ruling on small claims court jurisdiction and then failed to apply the Atlantic Marine standard or consider Defendants’ arguments showing small claims courts can hear Baker’s individual BIPA claims, seeking injunctive relief,” it said.