Proof of Classwide Injury & Damages Found Possible in Target Data Breach Litigation
S. Ct. to decide availability of post-dismissal review of class cert denial

US Supreme Court Predicting the Future For Class Actions

By: Jeremy M. Creelan

Capture


During its next term, the Supreme Court will consider whether class action defendants can end the cases against them simply by offering complete relief to individually named plaintiffs and offering nothing to the classes those plaintiffs purport to represent.[1]

The legal issue involves the intersection of two Federal Rules of Civil Procedure, namely the effect that Rule 68—which allows defendants to serve offers of judgment on specified terms and requires plaintiffs to respond to them—has on Rule 23, which governs class actions.  Some circuit courts have held that when a Rule 68 offer of judgment offers a plaintiff all the relief available to him, he can have no further interest in litigation and his legal claims are moot.  In the class action context, at least one circuit has further held that when a defendant makes a complete offer of judgment under Rule 68 before the plaintiff has moved for class certification, the plaintiff can have no interest in representing the class.  Under this analysis, the plaintiff’s class claims are moot in addition to his or her individual claims. 

Notably, the circuits to have considered the issue have held that the plaintiff’s claims are moot when the defendant makes the Rule 68 offer, regardless of whether the plaintiff decides to accept it.

            Other circuit courts have taken different approaches, and as a general matter federal courts have embraced one of three different theories when considering these issues.  First, the Seventh Circuit has held that a defendant’s Rule 68 offer of complete relief moots both the plaintiff’s individual and class claims.[2]  Second, the Ninth, Tenth, and Eleventh Circuits have held that a Rule 68 offer moots neither a plaintiff’s individual nor his class claims.[3]  Finally, the Third Circuit has held that while a Rule 68 offer moots a putative class action plaintiff’s individual claims, his class claims survive because they “relate back” to the filing of the complaint.[4]

            Complicating matters further, the Supreme Court recently held in Genesis Healthcare v. Symczyk that a Rule 68 offer of complete relief could moot both a plaintiff’s individual claim under the Fair Labor Standards Act (FLSA) as well as the plaintiff’s ability to invoke the FLSA’s protections on behalf of “similarly situated” employees.[5]  In so holding, however, the Court distinguished class actions brought under Rule 23 from collective actions brought under the FLSA, concluding—without analysis—that “Rule 23 actions are fundamentally different from collective actions under the FLSA.”[6]  Accordingly, no circuit has yet seen fit to change its rule as it relates to Rule 68’s effect on Rule 23 classes in light of Genesis Healthcare.[7]

            That will change next term, when the Court decides Campbell-Ewald Co. v. Gomez.  In Gomez, the plaintiff received an unsolicited automated marketing text message and filed a putative class under Rule 23 on behalf of all recipients of the message under the Telephone Consumer Protection Act (TCPA).  The TCPA provides statutory damages of $500 per violation, and treble damages for violations that are willful or knowing.[8]  Before Gomez moved for class certification, Campbell-Ewald made a Rule 68 offer that included $1,503 per violation—more than Gomez could have obtained by litigating the case under the TCPA.  After Gomez rejected the Rule 68 offer, Campbell-Ewald moved to dismiss, arguing that its Rule 68 offer for complete relief to Gomez mooted both his individual and class claims.

            The Ninth Circuit held that neither Gomez’s individual claims nor his class claims were moot after he rejected Campbell-Ewald’s Rule 68 offer.  On May 18, 2015, the Supreme Court granted Campbell-Ewald’s petition for certiorari.

            Campbell-Ewald has major practical implications for class action litigants.  If the Court reverses the Ninth Circuit, it could hold that a rejected Rule 68 offer of complete relief moots a putative class plaintiff’s ability to bring claims on behalf of himself and a class.  Under such a rule, class action defendants would be armed with a powerful tool to end the cases against them quickly.  By offering the individually named plaintiffs everything they seek, defendants could avoid lengthy litigation expenses and any potential classwide exposure.  By contrast, if the Court affirms the Ninth Circuit, it could ensure that, no matter where class action plaintiffs bring their claims, defendants cannot employ Rule 68 to moot the litigation.  Regardless of what it holds, the Court is all but guaranteed to reverse the law of at least one circuit, and class action litigants will have to plan accordingly.



[1] See Campbell-Ewald Co. v. Gomez, No. 14-857 (U.S.) (cert. granted May 18, 2015).

[2] See Damasco v. Clearwire Corp., 662 F.3d 891 (7th Cir. 2011).

[3] See Gomez v. Campbell-Ewald Co., 768 F.3d 871 (9th Cir. 2014); Lucero v. Bureau of Collection Recovery, Inc., 639 F.3d 1239 (10th Cir. 2011); Stein v. Buccaneers Ltd. Partnership, 772 F.3d 698 (11th Cir. 2014).

[4] Weiss v. Regal Collections, 385 F.3d 337 (3d Cir. 2004).

[5] See 133 S. Ct. 1523 (2013).

[6] Id. at 1529.

[7] See, e.g., Swanigan v. City of Chicago, 775 F.3d 953 (7th Cir. 2015); Walker v. Fin. Recovery Services, Inc., 599 F. App’x 359 (11th Cir. 2015).  The Third Circuit is currently considering whether its “relation back” rule must be altered in light of Genesis Healthcare.  See Weitzner v. Sanofi Pasteur, No. 14-3423 (3d Cir.).

[8] See 47 U.S.C. § 227(b)(3).

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

The comments to this entry are closed.