Is there a silver lining for defendants in the recent class action decision by the Supreme Court?

On January 20, 2016, the U.S. Supreme Court issued an opinion in Campbell-Ewald Co. v. Gomez, 577 U.S. __ (2016), holding that an unaccepted offer of judgment made by a defendant pursuant to Rule 68 of the Federal Rules of Civil Procedure does not moot a plaintiff’s individual claim.

Prior to the Court’s decision in Gomez, there was a split of authority among federal courts, with some holding that a defendant could eliminate a class action by making an offer of judgment for complete relief to the individual named plaintiff before the case was certified as a class action. Those courts reasoned that the offer eliminated the case’s “controversy,” which is a required element for a plaintiff to have standing to bring a claim in federal court under Article III of the U.S. Constitution. Under this reasoning, once the named plaintiff no longer had an individual claim, he could not represent a putative class to bring a class action, so the case (and threat of a possible class action) would be dismissed. This offer of judgment approach had become an effective strategy for many faced with defending a potentially costly class action with low damage claims per individual class member. Widely reported, Gomez now settles this question and removes an arrow from the quiver of class action defense strategies.