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Massachusetts Federal Court Dismisses Putative Class Action After Defendant Issues Plaintiff $75 Check

Laptop_iStock_000004929105MediumBy Kelly M. Morrison

The plaintiff in Demmler v. ACH Food Companies, Inc. alleged that Weber BBQ sauces containing caramel color were falsely labeled as “All Natural.”  Prior to initiating the lawsuit, and pursuant to state statute, plaintiff’s counsel sent a demand letter asserting that the “All Natural” label violated Massachusetts law and demanding compensation to the plaintiff and the class.  ACH responded by sending a $75 check, characterized as “the extent of [ACH’s] willingness to compromise in the circumstances.”  The plaintiff rejected the check on the ground that it offered no relief to the class, and filed a complaint.  ACH subsequently tendered a second $75 check, which the plaintiff again rejected, and moved to dismiss the lawsuit for lack of standing. 

Notwithstanding the plaintiff’s express rejection of the checks, the court held that the defendant’s offer extinguished the dispute, leaving the parties without a live “case or controversy” as mandated by Article III.  In distinguishing the Supreme Court’s opinion in Campbell-Ewald, the court emphasized that “the $75 check did not represent a settlement offer—ACH sent the check unprompted, and did not impose any preconditions on Demmler for doing so,” asserting that “[t]his distinction makes all the difference.”  Although it noted that the first check was issued before the complaint was filed (and therefore arguably implicated the plaintiff’s standing), while the second check was issued during the pendency of the lawsuit (and therefore arguably implicated the mootness doctrine), the court declined to distinguish between the two offers.

This latest opinion confirms that the debate over whether an individual settlement offer can moot a class action is far from over.