Guest post by Jacqueline Matthews, Associate, BakerHostetler
The Supreme Court recently held that a defendant cannot get rid of a class action by merely offering to settle with the named plaintiff on his or her individual claims. In the past, class action defendants have sometimes attempted to dispose of the entire class action in this manner by making “pickoff” offers that give the named plaintiff everything he or she asked for on an individual basis, before the court approves the lawsuit to go forward as a class action. But in a recent decision, the Supreme Court held that such “pickoff” offers do not moot the class claims. Campbell-Ewald Co. v. Gomez, ___ U.S. ___, 136 S.Ct. 663 (2015). The Court, however, expressly left open the question of whether actual payment in full for the named plaintiff’s individual claims (as opposed to just an offer) could moot the case.
The plaintiff in Campbell-Ewald brought individual claims under the Telephone Consumer Protection Act (TCPA) for text messages that he said he received without his consent. The plaintiff also sought to represent a nationwide class of individuals who had received similar unconsented-to text messages. Before the plaintiff’s deadline to request the court’s approval for the lawsuit to proceed as a class action, the defendant made a settlement offer for the full amount of monetary damages individually claimed by the plaintiff. The plaintiff did not accept the settlement offer.
The question before the Supreme Court was whether the defendant’s unaccepted settlement offer for the full amount of the named plaintiff’s claim mooted the plaintiff’s individual lawsuit—and, consequently, the proposed class action lawsuit. In an earlier case, Genesis HealthCare Corp. v. Symczyk, 569 U.S. ___ (2013), the Court suggested, without actually deciding the issue, that an unaccepted settlement offer for the full amount demanded by the plaintiff may render a plaintiff’s claim moot. When presented directly with the question, however, the Court in Campbell-Ewald concluded: “When a plaintiff rejects such an offer—however good the terms—her interest in the lawsuit remains just what it was before. And so too does the court’s ability to grant her relief. An unaccepted settlement offer—like any unaccepted contract offer—is a legal nullity with no operative effect.” In other words, the Supreme Court stated that a rejected settlement offer does not affect a plaintiff’s ability to pursue a case as a class action.
Although the Campbell-Ewald decision closes the door on this particular pattern of facts, the Court possibly left open another: the Court issued a clear invitation to defendants to actually deliver the amount of money sought by the plaintiff, rather than merely offer to pay the plaintiff’s claim. Or, as the Chief Justice of the Court suggested, “have the firm deposit a certified check with the trial court.”
Defendants in class actions are certainly considering this opening. One federal court has already been confronted with a case where the defendant attempted to deposit the full amount of the named plaintiff’s individual claim with the court. See Brady v. Basic Research LLC et al., E.D.N.Y. No. 2:13-cv-7169, Doc. #81. The court, however, denied the defendant’s request to deposit the sum, stating that a named plaintiff must be given a fair opportunity to show that the case should move forward as a class action. But other defendants are likely to keep trying this tactic, and it’s not clear how other courts will decide the issue. If a clear consensus does not emerge, this issue may soon be back in front of the Supreme Court.
*Note: BakerHostetler was counsel for the National Black Chamber of Commerce as amicus curiae in Campbell-Ewald Co. v. Gomez.
Jacqueline Matthews focuses her complex commercial litigation practice on class action defense, primarily for clients in the insurance industry. She uses her analytical and problem-solving skills to provide creative solutions for her clients.