Supreme Court Holds Defendant Cannot Moot Putative Class Action by Making Unaccepted Offer of Judgment for Complete Relief to Representative Plaintiff -

In Campbell-Ewald Co. v. Gomez, No. 14-857, 2016 U.S. LEXIS 846 (S. Ct. Jan. 20, 2016), plaintiff filed a putative nationwide class action in the United States District Court for the Central District of California alleging the defendant multimedia developer violated the Telephone Consumer Protection Act (“TCPA”) by sending unsolicited text messages to him and the other class members. Before plaintiff moved for class certification, defendant filed an offer of judgment pursuant to Fed. R. Civ. P. 68 to allow judgment to be entered against defendant on plaintiff’s individual claim in the amount of triple the statutory damages, as is available under the TCPA where a “defendant willfully or knowingly violate[s]” the statute. The offer also included reimbursing plaintiff’s costs, but not his attorneys’ fees, and a stipulated injunction in which defendant denied liability but would henceforth be barred from sending any text messages that violated the TCPA. Plaintiff did not accept defendant’s offer within the 14-day window provided by Rule 68. Thereafter, defendant moved to dismiss, arguing its offer of judgment mooted plaintiff’s individual claims because it provided him complete relief and, because it was made before he had moved for class certification, the putative class claims were also moot. The district court denied the motion to dismiss but awarded defendant summary judgment on other grounds. On appeal, the United States Court of Appeals for the Ninth Circuit agreed the claims were not moot and also reversed the summary judgment decision, reinstating the action in its entirety.

Despite the non-final nature of the judgment below, the United States Supreme Court granted review to resolve a split among the federal circuits on the mootness issue—which was of considerable importance to class action litigation—and held plaintiff’s claims were not moot. The Court began by noting that “[a]n unaccepted settlement offer—like an unaccepted contract offer—is a legal nullity, with no operative effect,” and that under the terms of Rule 68 itself an “unaccepted offer is considered withdrawn.” Accordingly, defendant’s offer in this case, once rejected, had no continuing efficacy, the parties remained adverse and there was still a live case or controversy supporting federal court jurisdiction. In this respect, therefore, the case differed from a series of tax collection cases that the Court had held moot after the railroads paid the taxes claimed, as in those cases the plaintiffs had actually been paid. Further, while the putative class here lacked independent status because it was not yet certified, because plaintiff himself had a live claim he was entitled to the opportunity to argue for certification.