WASHINGTON (Legal Newsline) - Defendants can’t moot class action lawsuits by offering to pay the named plaintiff’s claim in full, the U.S. Supreme Court ruled in January.
In Campbell-Ewald Co. v Gomez, the defense argued that since it had offered to pay everything the plaintiff demanded, there was nothing left for the court to decide on and the case should be dismissed.
“The court took away a class action defense tool that we couldn’t really use anyway,” said Mark W. Batten, partner at Proskauer and co-head of the Class and Collective Actions Group. “It’s not going to have a huge impact.”
This defense rested on a 2013 ruling in Genesis HealthCare Corp. v Symczyk. In that case, the defendant had offered to pay the plaintiff, and she had conceded that this mooted her personal claim, but still sought to continue as a class representative.
The court said that she could not be class representative without a personal claim.
“People were wondering whether the court might allow parties defending class actions to just knock out the case by making a full offer to the plaintiff,” Batten said. “That always seemed to me like an extreme result that was not likely to be sustained.”
This theory was tested in Gomez. The case involved Campbell-Ewald Company, which had secured an agreement with the U.S. Navy to develop a multimedia recruiting campaign aimed at young adults who had opted-in to receive marketing text messages.
A subcontractor, Midmatics LLC, generated a list of 18 to 24 year olds who had opted-in and transmitted the message to more than 100,000 recipients.
One of these was Jose Gomez, who was 40 years old and alleged that he had not opted-in to receive text messages. Gomez filed a lawsuit claiming that Campbell had violated the Telephone Consumer Protection Act, which prohibits companies from using an automatic dialing system to contact consumers without the recipients' express written consent.
Campbell proposed to settle the claim by paying Gomez the full amount. He declined. Campell moved to dismiss the case, claiming that the offer mooted Gomez’s claim. The lower courts rejected this argument.
““A lot of courts were not very sympathetic to that and not really interested in allowing that to happen, in effect predicting that would not work in front of the Supreme Court,” Batten said. “It appears that the lower courts who were hesitant to allow these cases to be mooted were right.”
In the Supreme Court’s opinion, Justice Ruth Bader Ginsburg wrote, “An unaccepted settlement offer has no force. Like other unaccepted contract offers, it creates no lasting right or obligation.”
The court was divided in this decision. A dissenting opinion, offered by Chief Justice John Roberts and joined by justices Antonin Scalia and Samuel Alito, stated, “Campbell has offered to pay Gomez that amount, but it turns out he wants more. He wants a federal court to say he is right. The problem for Gomez is that the federal courts exist to resolve real disputes, not to rule on a plaintiff’s entitlement to relief already there for the taking.”
Batten said the court didn't give an opinion on what would've happened if the defendant paid.
“A lot of commentators are saying, well there’s your answer, instead of making the offer, just deposit the money somewhere," he said.
"I think it’s something that’s not going to work and people are reading way too much into this little loophole that the court left open”