WASHINGTON (Legal Newsline) - The U.S. Supreme Court this week said an unaccepted offer of complete relief to a named plaintiff in a class action lawsuit does not moot the plaintiff’s claim.
On Wednesday, the nation’s highest court ruled 6-3 that the U.S. Court of Appeals for the Ninth Circuit’s 2014 decision in Gomez v. Campbell-Ewald Co. was correct. The Ninth Circuit vacated and remanded a summary judgment ruling in favor of the defendant in a case brought under the Telephone Consumer Protection Act, or TCPA.
Justice Ruth Bader Ginsburg wrote the majority opinion, joined by justices Anthony Kennedy, Stephen Breyer, Sonia Sotomayor and Elena Kagan. Justice Clarence Thomas authored his own concurring opinion. Chief Justice John Roberts, joined by justices Antonin Scalia and Samuel Alito, filed a dissenting opinion.
“We hold today, in accord with Rule 68 of the Federal Rules of Civil Procedure, that an unaccepted settlement offer has no force,” Ginsburg wrote in the 15-page ruling. “Like other unaccepted contract offers, it creates no lasting right or obligation. With the offer off the table, and the defendant’s continuing denial of liability, adversity between the parties persists.”
Ginsburg said absent plaintiff Jose Gomez’s acceptance, Campbell-Ewald’s settlement offer remained “only a proposal,” binding neither the company nor Gomez.
“In short, with no settlement offer still operative, the parties remained adverse; both retained the same stake in the litigation they had at the outset,” the justice wrote.
Gomez alleged Campbell-Ewald violated the TCPA by sending -- through a third-party vendor -- unsolicited text messages on behalf of the U.S. Navy.
The TCPA restricts telephone solicitations, i.e. telemarketing, and the use of automated telephone equipment.
In particular, the law limits the use of automatic dialing systems, artificial or prerecorded voice messages, SMS text messages and fax machines. It also specifies several technical requirements for fax machines, autodialers and voice messaging systems -- principally with provisions requiring identification and contact information of the entity using the device to be contained in the message.
Generally, the act makes it unlawful “to initiate any telephone call to any residential telephone line using an artificial or prerecorded voice to deliver a message without the prior express consent of the called party” except in emergencies or in circumstances exempted by the Federal Communications Commission.
The law permits any “person or entity” to bring an action to enjoin violations of the statute and/or recover actual damages or statutory damages ranging from $500 to $1,500 per violation.
Campbell-Ewald offered Gomez full relief on his claims -- $1,503 per violation, plus reasonable costs -- but the offer was rejected.
The Ninth Circuit, in its ruling, held that the unaccepted offer did not moot the named plaintiffs’ individual claims or the putative class claims.
The Supreme Court said it would not 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,” Ginsburg wrote.
The majority also held that federal contractors -- like Campbell-Ewald, in this case -- do not share the government’s unqualified immunity from liability and litigation for violating the TCPA by sending text messages to unconsenting recipients.
Plaintiffs lawyers, of course, applauded the Supreme Court’s ruling.
American Association for Justice CEO Linda Lipsen said the case threatened the viability of class actions and could have resulted in a rule that allowed defendants to “pick off” named plaintiffs and extinguish the entire litigation.
“Class actions are necessary to help ensure fairness and efficiency in our judicial system,” she said in a statement. “By allowing groups of similarly-harmed individuals to join together, the Supreme Court ensured that Americans with even the most limited means can hold the most powerful corporations accountable for wrongdoing.
“An alternative result in this case would have upended that balance and, as Justice Ginsberg writes, ‘would place the defendant in the driver’s seat’ of the civil justice system.”
From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.