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<img class="alignright wp-image-2361 size-medium" src="https://classactionlawsuitdefense.bakerhostetlerblogs.com/wp-content/uploads/sites/9/2015/04/supreme-court-iStock_000005215190_Large-300x200.jpg" alt="supreme court iStock_000005215190_Large" width="300" height="200" />Relying on “basic principles of contract law,” the Supreme Court on Wednesday held that an unaccepted settlement offer and offer of judgment under Rule 68 are “legal nullit[ies]” that have no effect on whether a live controversy remains between the parties. <a href="http://www.supremecourt.gov/opinions/15pdf/14-857_8njq.pdf">Campbell-Ewald Co. v. Gomez, No. 14-857</a>. The upshot of the Court’s decision is that a defendant cannot moot a putative class action by merely offering full relief to the named plaintiff on his or her individual claims. The Court, however, expressly left open the question of whether payment of full individual relief could moot the case.

The plaintiff in Campbell-Ewald brought individual claims under the Telephone Consumer Protection Act (TCPA) for text messages that he allegedly received without his consent. The plaintiff also sought to represent a nationwide class. But before the plaintiff’s deadline to file a class certification motion, the defendant made a settlement offer and an offer of judgment under Rule 68 that would completely satisfy the plaintiff’s individual claims for monetary and injunctive relief, but denied liability. The plaintiff did not accept the settlement offer.

The question before the Court was whether the defendant’s unaccepted offer of complete relief mooted the plaintiff’s individual claim (and, consequently, the putative class claims), thereby depriving federal courts of Article III jurisdiction. In an earlier case, Genesis HealthCare Corp. v. Symczyk, 569 U. S. ___ (2013), the Court assumed without deciding that an unaccepted offer of complete relief under Rule 68 moots a plaintiff’s claim. When presented with the live question, however, the Court in Campbell-Ewald adopted the analysis of Justice Kagan’s dissent in Genesis, which 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.”

The other three opinions in Campbell-Ewald – Justice Thomas’ concurrence in the judgment (by way of the common-law history of tenders), Chief Justice Roberts’ dissent, and Justice Alito’s dissent – all state that the majority misses the mark by relying on principles of contract law. The issue is not, the other opinions emphasize, whether Campbell’s unaccepted offer created a binding contract, but whether a live “case or controversy” still exists between the parties to bestow Article III jurisdiction on the federal judiciary. In the eyes of the dissenting justices, an offer of complete relief is sufficient to deprive federal courts of authority to hear the case because “there is no longer any ‘necessity’ to ‘expound and interpret’ the law” (Roberts, C.J., dissenting, quoting Marbury v. Madison).

Although Campbell-Ewald closes the door on the facts before it, the Court opened another door: all four opinions issue a clear invitation to defendants to actually deliver the relief sought by the plaintiff, rather than merely offer to make the plaintiff whole. The majority expressly reserved this question, stating:
We need not, and do not, now decide whether the result would be different if a defendant deposits the full amount of the plaintiff’s individual claim in an account payable to the plaintiff, and the court then enters judgment for the plaintiff in that amount. That question is appropriately reserved for a case in which it is not hypothetical.
Chief Justice Roberts’ dissent views actual delivery of the promised relief to be a mere formality unnecessary to moot the claim, dismissing as “pettifoggery” the idea that a multimillion-dollar business like Campbell-Ewald would not make good on its promise to pay a few thousand dollars. Nevertheless, he suggested “an easy answer: have the firm deposit a certified check with the trial court.”

A surprising aspect of Campbell-Ewald is what it did not address. Circuit Courts of Appeal, including the Ninth Circuit’s decision below, have characterized a defendant’s efforts to fully satisfy a putative class action plaintiff’s claims as “pickoff” offers that would short-circuit class certification and therefore frustrate the objectives of Rule 23. To avoid this result, the Ninth Circuit labeled the class action claims as “transitory in nature” and invoked the “relation back” doctrine, stating that it is “properly invoked to preserve the merits of the case for judicial resolution . . . [and in the class action] context thus avoids the spectre of plaintiffs filing lawsuit after lawsuit, only to see their [class] claims mooted before they can be resolved.” Pitts v. Terrible Herbst, Inc., 653 F.3d 1081, 1091 (9th Cir. 2011). The Supreme Court in Genesis, however, expressly rejected the “inherently transitory” rationale underlying the “relation back” doctrine when statutory damages, such as those available under the TCPA, are requested. 133 S. Ct. 1531. The Campbell-Ewald majority noted the Ninth Circuit’s reliance on Pitts, but did not address it.

Thus, the conceptual framework of the “relation back” doctrine in this context is debatable, and perhaps explains the majority’s reliance on traditional contract principles, rather than on Article III, in reaching a decision with such an exposed flank – that actually paying the full amount of the plaintiff’s claim, and entering judgment, could have a “different result.” Defendants in putative class actions are certainly considering this opening, and a third entry in this epic is probably just around the corner.

*Note: BakerHostetler was counsel for the National Black Chamber of Commerce as amicus curiae in Campbell-Ewald Co. v. Gomez.

Supreme Court Holds Unaccepted Offers for Full Relief Do Not Moot Class Actions