Priest D. Butler v. Google, LLC

United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted March 28, 2023 *
Decided April 3, 2023
Before
DIANE S. SYKES, Chief Judge
ILANA DIAMOND ROVNER, Circuit Judge
MICHAEL B. BRENNAN, Circuit Judge
No. 22-2113
PRIEST D. BUTLER,
Plaintiff-Appellant,
v.
GOOGLE, LLC, et al.,
Defendants-Appellees.
Appeal from the
United States District Court for the
Eastern District of Wisconsin.
No. 20-CV-1834-JPS
J.P. Stadtmueller,
Judge.
O R D E R
Priest Butler sued YouTube and its parent companies for allegedly preventing
his videos from earning money. He sought $25 million in punitive damages but no
compensatory damages. Because he raised only state-law claims, his suit had to satisfy
the criteria for invoking the district court’s diversity jurisdiction. The judge concluded
* We have agreed to decide the case without oral argument because the briefs and
record adequately present the facts and legal arguments, and oral argument would not
significantly aid the court. FED. R. A PP. P. 34(a)(2)(C).
NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with FED. R. A PP. P. 32.1

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that it was legally certain that Butler could not meet the jurisdictional threshold of
$75,000. We affirm. Butler has waived any claim for compensatory damages, and under
the applicable law, this waiver makes punitive damages unavailable.
Because we are reviewing a dismissal for lack of jurisdiction, we take as true the
allegations from the complaint. See A.F. Moore & Assocs. v. Pappas, 948 F.3d 889, 891
(7th Cir. 2020). Butler posts videos to his YouTube channel. He agreed with YouTube
that any advertising revenue generated by those videos would be split between him
and the company. YouTube flagged his videos (wrongly, he asserts) as violent,
inappropriate for minors, or otherwise “[n]ot suitable for most advertisers.” As a result,
he says, his channel earned less money.
Butler sued YouTube and its parent companies in federal court, bringing state-
law claims for breach of contract and defamation. The complaint sought $25 million in
punitive damages but said nothing about compensatory damages. Raising the
jurisdictional issue on his own, the judge noted that because Butler did not allege any
federal claims, he had to rely on diversity jurisdiction and meet the jurisdictional
threshold of $75,000. The parties are diverse, so the inquiry focused on the latter
requirement. After briefing the judge concluded that under Wisconsin law Butler could
not recover any punitive damages because (1) they are not available for contract actions
and (2) Butler had not pleaded facts suggesting “express malice,” which is required for
punitive damages in a defamation suit. The judge then ordered limited discovery to
determine if compensatory damages could clear the jurisdictional threshold. The parties
submitted documents showing how much ad revenue Butler had received from his
channel. They disagreed on the exact number, but the evidence showed that it was not
more than $600.
The judge dismissed the case for lack of jurisdiction. He reasoned that the
documents showed that any possible amount in controversy for compensatory damages
was no more than $600, far below the jurisdictional threshold. And because punitive
damages were unavailable, he concluded, it was legally certain that Butler could not
recover $75,000. Butler appealed.
We note two flaws in the judge’s analysis. First, the judge wrongly concluded
that compensatory damages necessarily fall somewhere “between $400.00 and $600.00.”
The judge relied on the accounting statements that the parties submitted, showing that
over the relevant timeframe, Butler earned around $400 to $600. But this information
does not support the judge’s conclusion about compensatory damages. In a breach-of-
contract case, damages are not what a party earned but what the party would have

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earned had the defendant not breached the contract. United Concrete & Constr., Inc. v.
Red-D-Mix Concrete, Inc., 836 N.W.2d 807, 824 (Wis. 2013). And for a defamation claim,
damages compensate the harm to the plaintiff’s reputation, not however much money
the plaintiff made despite the defamatory conduct. See Laughland v. Beckett, 870 N.W.2d
466, 476 (Wis. Ct. App. 2015).
Second, the judge’s ruling that no punitive damages were available in the
defamation claim because Butler did not allege malice is based on a pleading defect that
Butler might have cured by amending his complaint. The judge ruled that further
amendment was “futile,” but his rationale depended on the error described above.
Having concluded that compensatory damages could not exceed $600, the judge
reasoned that even if Butler could allege malice, punitive damages would need to
exceed actual damages by a ratio of over 100:1 to meet the jurisdictional threshold of
$75,000. Because such a ratio would likely offend due process, the judge continued,
Butler could not meet the threshold. See generally Rainey v. Taylor, 941 F.3d 243, 255
(7th Cir. 2019) (discussing permissible punitive-damages ratios). But the judge’s
analysis about punitive damages hinges on the faulty assumption that compensatory
damages were maxed out at $600, and so it too was flawed.
Nevertheless, these errors are harmless. In his opening appellate brief, Butler
argues that the potential for punitive damages alone puts the amount in controversy
above the jurisdictional threshold of $75,000. See 28 U.S.C. § 1332(a). He expressly
disavows any other damage relief: “[I] did not sue the defendants for loss, injury or
actual damages but for punitive damages to penalize the defendants for the particularly
egregious, wrongful conduct against [me] … . The calculation of actual damages is not
applicable … [because I am] solely suing the defendants for punitive damages … .” He
has therefore waived any claim for compensatory damages. See Accident Fund Ins. Co. of
Am. v. Custom Mech. Constr., Inc., 49 F.4th 1100, 1108 (7th Cir. 2022). (Butler mentions
compensatory damages for the first time in his reply brief, too late to avoid waiver. Id.)
Butler’s waiver of compensatory damages dooms his argument that he can meet
the monetary threshold for diversity jurisdiction. When a party relies on punitive
damages to satisfy the amount-in-controversy requirement, the first question is whether
punitive damages are available under state law. LM Ins. Corp. v. Spaulding Enters. Inc.,
533 F.3d 542, 551 (7th Cir. 2008). Under Wisconsin law punitive damages are available
only if compensatory damages are possible. Groshek v. Trewin, 784 N.W.2d 163, 173
(Wis. 2010); Country Visions Coop. v. Archer-Daniels-Midland Co., 946 N.W.2d 169, 187
(Wis. Ct. App. 2020), aff’d, 958 N.W.2d 511 (Wis. 2021). Because Butler has waived

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compensatory damages, it is “legally certain” that he will not recover any punitive
damages, let alone enough to meet the $75,000 threshold. LM Ins., 533 F.3d at 551.
Butler also argues that when the judge raised the jurisdictional issue on his
own—without the defendants contesting jurisdiction—the judge both legally erred and
demonstrated bias against Butler. But the court has “an independent obligation to
determine whether subject-matter jurisdiction exists, even when no party challenges it,”
and must dismiss a case if federal subject-matter jurisdiction is absent. Hertz Corp. v.
Friend, 559 U.S. 77, 94 (2010); F ED. R. C IV. P. 12(h)(3). It was thus proper, in fact required,
for the judge to inquire about the jurisdictional defect. Finally, the order of dismissal, by
itself, is not evidence that the judge was biased against Butler. See Liteky v. United States,
510 U.S. 540, 555 (1994).
AFFIRMED

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