In a recent ruling, the Seventh Circuit abandoned its previous stance as to whether a complete offer of judgment prior to the filing of a class certification motion would moot a class action brought pursuant to the Telephone Consumer Protection Act (TCPA).

In 2009, the plaintiff, Arnold Chapman, brought a class action alleging First Index Inc. had violated the TCPA when it sent “junk faxes” without the consent of the recipients.  While Chapman’s class certification motion was pending, First Index made an offer of judgment under FRCP 68 for Chapman’s entire damages.  Thereafter, Chapman did not respond.  Following Chapman’s failure to respond, and on application from First Index, the district court dismissed Chapman’s claims as moot.

The Seventh Circuit reversed the district court’s decision, holding that Chapman’s case is only moot when it is impossible for a court to grant any effectual relief whatsoever to the prevailing party.  Using this analysis, the Circuit Court ruled Chapman’s case was not moot as the district court could award damages and/or enter an injunction.  In reaching its decision, the Circuit Court acknowledged, but refused to follow and in fact, overruled, its earlier decisions, including Damasco v. Clearwire Corp., which mooted claims when a plaintiff declines an offer that would satisfy his/her entire demand. In doing so, the Circuit Court relied on the dissent by U.S. Supreme Court Justice Elena Kagan in Genesis Healthcare Corp. v. Symczyk.

The Circuit Court’s ruling, which comes as the U.S. Supreme Court considers the impact of an offer of judgment on TCPA class actions, may provide insight into how SCOTUS will ultimately decide this issue.  In fact, the Circuit Court acknowledged this point and stated it is “best to clean up the law of this circuit promptly, rather than require Chapman and others in his position to wait another year for the Supreme Court’s decision.”

While we continue to await the decision from SCOTUS, this case provides insight into how the Seventh Circuit anticipates SCOTUS will rule.  At the same time, this decision is detrimental to TCPA defendants who sought to rely on the Seventh Circuit’s prior rulings to support a claim that a case is moot after an offer of judgment for full relief to the named plaintiff.