TCPA Connect

Supreme Court Holds for Plaintiff on Rule 68 Issue, but Suggests Alternatives for Mootness

Authors: Christine M. Reilly | Andrew Case

In a 6-3 decision on January 20, the U.S. Supreme Court provided clarity regarding the impact of Rule 68 offers of judgment and settlement offers in class actions by issuing its eagerly awaited decision in Campbell-Ewald Co. v. Gomez. While the decision, authored by Justice Ginsburg with a concurring opinion by Justice Thomas, and dissents authored by Chief Justice Roberts and Justice Alito, was a victory for plaintiff Gomez, it may not have as broad an impact on Rule 68/settlement strategies as plaintiffs had hoped.

In Gomez, an advertising agency caused an unwanted text message to be sent on behalf of the U.S. Navy to plaintiff, who responded by filing a TCPA class action lawsuit. The defendant made a Rule 68 offer and freestanding settlement offer to pay plaintiff more than he could hope to recover on his individual claim. When the plaintiff rejected the offer, the defendant argued that its offer had rendered the case moot, and therefore the court lacked subject matter jurisdiction. While several federal courts had held that a Rule 68 offer that provides a plaintiff with complete relief renders a case moot, the Supreme Court disagreed.

Applying basic principles of contract law, the Court held that an unaccepted offer is a nullity, and that "[w]ith the offer off the table, and the defendant's continuing denial of liability, adversity between the parties persists." (Page 1.) The Court confirmed what many observers had predicted since its ruling in Genesis HealthCare Corp. v. Symczyk, 133 S. Ct. 1523 (2013). In Genesis, the Court assumed, but did not decide, that an unaccepted offer of complete relief renders an individual claim for relief moot. Justice Kagan wrote a spirited dissent suggesting that the Court should have reached this threshold question and held that it does not because the "rejection of an offer 'leaves the matter as if no offer had ever been made.'" (Page 8.) Since Genesis, several federal circuit courts agreed and now the majority in Gomez does as well.

Specifically, the Court in Gomez held that "an unaccepted settlement offer or offer of judgment does not moot a plaintiff's case, so the District Court retained jurisdiction[.]" Further, while recognizing that a class lacks independent status until certified, the Court nonetheless held that a class representative with a live claim "must be accorded a fair opportunity to show that certification is warranted." In other words, if the named plaintiff's individual claim remains a live claim, so do the alleged claims of the purported class.

While Gomez initially appears to be a setback, the Court left significant questions for another day. The Court expressly reserved ruling on "whether the result would be different if a defendant deposits the full amount of the plaintiff's individual claim in an account payable to the plaintiff, and the court then enters judgment for the plaintiff in that amount." The Court refused to decide this question because Gomez had only been offered, but not paid, full relief and essentially "remained empty-handed" after the offer expired. (Page 11.)

Dissenting opinions by Justice Alito and Chief Justice Roberts provide alternative theories on how a defendant may succeed on Rule 68/settlement strategies. Writing for Justices Alito and Scalia, Chief Justice Roberts noted that "this case is limited to its facts" and emphasized that while the majority held that an offer itself does not moot a case, it left open the possibility that payment of complete relief may moot a case. Roberts stated that "the majority's analysis may have come out differently if Campbell had deposited the offered funds with the District Court." (Roberts dissent at 10.)

Justice Alito, in a separate dissent, opined that the majority opinion appears to endorse "the proposition that a plaintiff's claim is moot once he has 'received full redress' from the defendant for the injuries he has asserted." (Alito dissent at 4; emphasis in original.). He notes that "[t]oday's decision does not prevent a defendant who actually pays complete relief—either directly to the plaintiff or to a trusted intermediary—from seeking dismissal on mootness grounds." Alito suggested that "[t]he most straightforward way [for 'the requisite mootness showing'] is simply to pay over the money," such as handing the plaintiff a certified check, depositing the funds in a bank account in the plaintiff's name, or depositing the money with the district court or an intermediary on the condition that the money be released to plaintiff when the court dismisses the case as moot. In his view, "[a] plaintiff cannot thwart mootness by refusing complete relief presented on a silver platter." (Alito dissent at 2, n.1.) However, he did not foreclose other means of showing mootness because, in his view, the question is not whether the defendant has already paid, but whether "it is certain the defendant will pay."

While the ruling in Gomez that a mere offer of complete relief to the named plaintiff does not moot individual claims (or putative class claims) is unfavorable, its reach is limited. Freestanding settlement offers or Rule 68 offers may very well moot class actions under different circumstances, and defendants should continue to explore the alternatives outlined by the Court.

manatt-black

ATTORNEY ADVERTISING

pursuant to New York DR 2-101(f)

© 2024 Manatt, Phelps & Phillips, LLP.

All rights reserved