On May 18, 2015, the United States Supreme Court granted a petition for a writ of certiorari to address (1) whether a case becomes moot when the plaintiff receives an offer of complete relief on his claim and (2) whether the answer to the first question is any different when the plaintiff has asserted a class claim under Federal Rule of Civil Procedure 23, but receives an offer of complete relief before any class is certified.   The Court will also address the applicability of the doctrine of derivative sovereign immunity.

The case, Campbell-Ewald Co. v. Gomez, No. 14-857, comes before the Court on the petition of Campbell-Ewald after the Ninth Circuit ruled on September 9, 2014, that Campbell-Ewald could be held liable under the Telephone Consumer Protection Act (TCPA) for text messages it sent to approximately 100,000 individuals in connection with Navy recruitment.

In the underlying case, Campbell-Ewald offered the plaintiff, Jose Gomez, $1503 per violation of the TCPA.  The TCPA permits statutory damages ranging from $500 to $1500 per violation.  Accordingly, Campbell-Ewald’s offer would have afforded Gomez his full measure of damages available.  Gomez subsequently rejected the offer by allowing it to lapse in accordance with its terms.  Campbell-Ewald then moved to dismiss the case under Rule 12(b)(1), arguing that Gomez’s rejection of the offer mooted the personal and putative class claims.  In denying Campbell-Ewald’s motion, the Ninth Circuit held that the plaintiff’s individual claim was not mooted by the plaintiff’s refusal to accept a settlement offer under Federal Rule of Civil Procedure 68 – commonly known as the Offer of Judgment Rule.  Additionally, the Ninth Circuit held the putative class claims are not moot because an unaccepted offer of judgment – for the full amount of the named plaintiff’s individual claim and made before the named plaintiff files a motion for class certification – does not moot a class action.  In support of its motion, Campbell-Ewald argued that the Supreme Court’s holding in Genesis Healthcare Corp. v. Symczyk was controlling.  The Ninth Circuit rejected Campbell-Ewald’s assertion finding that the Genesis holding, which involved a collection action brought pursuant to the Fair Labor Standards Act, does not apply to class actions brought under Rule 23 – such as claims for violations of the TCPA.

It is expected that the Supreme Court’s decision in this case will clarify a split among the Circuit Courts as to whether a full offer of relief to the named plaintiff ends the case or not.  As we previously discussed, the Eleventh Circuit, similar to the Ninth Circuit, has held that an unaccepted offer of judgment to a named plaintiff did not moot the named plaintiff’s claims.  In contrast, the Seventh Circuit, has held that an offer of judgment to the named plaintiff, made prior to the filing of a motion for class certification, can moot the class action.  As a plaintiff’s damages under the TCPA are specified by the statute and thus easily ascertainable, this split has likely affected the defense and prosecution of TCPA claims.  In particular, the plaintiffs’ bar may prefer to bring TCPA claims in a Circuit where an offer of judgment cannot render a class action moot; while the defense bar may seek to utilize the offer of judgment to eliminate potential class claims where a limited number of plaintiffs are actually named in the suit.

The Supreme Court’s decision in this case will likely have a significant impact on TCPA claims, as well as class actions brought pursuant to Rule 23.    Should the Court agree with Campbell-Ewald, a TCPA defendant will be permitted to address a specific plaintiff’s damages without concern for a theoretical class of plaintiffs.  By contract, should the court disagree with Campbell-Ewald, defendants will need to reconsider how they defend, and seek to resolve, class action complaints brought under the TCPA.

For additional insight, please see the related post from our Class and Collective Action group.