Class and collective action claims involve a named plaintiff who files the action on behalf of himself or herself, along with a class of similarly situated individuals. In the employment context, a typical collective action claim involves a single former employee who sues, claiming that the same unpaid wage issues apply to other current and former employees. Obviously, the financial impact of class or collective action matters rises exponentially if the court finds liability for a large number of persons who were never active participants in the suit.
In recent years, employers and others have developed a “pick-off” defense strategy when faced with some class actions claims. The employer offers the single named plaintiff an offer of judgment, stating that it will pay his or her individual claims in full. If the plaintiff rejects the offer (which is almost always), the defendant seeks to dismiss the lawsuit on the basis that it is moot, and that without a representative individual, the class action must be dismissed. If the plaintiffs’ attorneys had problems finding another named party, or if a statute of limitations ran in the meantime, this strategy could defeat the entire class action claim.
Plaintiffs’ class action attorneys have understandably contended that this strategy cannot operate to defeat class action status. On Wednesday, the U.S. Supreme Court agreed, concluding that a rejected offer of judgment does not moot a pending class or collective action suit. Campbell-Ewald Co. v. Gomez involved a class action claim brought against a U.S. Navy contractor who sent recruiting text messages to a large number of persons. The named plaintiff claimed that he had not opted to receive such messages, and that the defendant violated the Telephone Consumer Protection Act. He filed a class action claim on his behalf along with a class of other persons who received unauthorized texts.
The defendant made an offer of judgment to Mr. Gomez, offering payment of the maximum claim under the statute. The plaintiff rejected the offer, and the lower court refused to dismiss the entire action on the basis that the claim was moot. In a 6-3 decision, the Supreme Court concluded that a rejected offer of judgment does not moot the claim, because the rejection of the offer results in a continuing controversy between the parties. Absent a decision on the class certification issue, the parties remain adverse to one another despite the offer of relief to the named plaintiff.
The Court left open a small window of opportunity for defendants by stating that its decision does not address situations where the defendant actually pays the plaintiff, not simply offers such payment. This decision removes a potential strategy for addressing employment and other class and collective action claims. It may result in more class action claims proceeding to the certification stage.
