Within roughly three weeks, the Second Circuit issued two opinions applying the Supreme Court’s Campbell-Ewald Co. v. Gomez decision to class action cases involving Rule 68 offers of judgment. On February 15, 2017, in Leyse v. Lifetime Entertainment Services, LLC, the Second Circuit upheld entry of judgment in a case brought by a plaintiff individually and on behalf of a putative class alleging violations under the Telephone Consumer Protection Act (TCPA). The plaintiff moved for class certification, which was denied. The defendant subsequently made a Rule 68 offer of judgment to the plaintiff and deposited “the full amount of damages and costs recoverable by [the plaintiff] under the TCPA, even though [the plaintiff] had not accepted” the offer of judgment. Despite the plaintiff’s rejection of the offer, the district court granted the defendant’s motion to enter judgment on behalf of plaintiff. The plaintiff appealed, arguing that Campbell-Ewald abrogated Second Circuit precedent holding that “an offer, if rejected, may nonetheless permit a court to enter a judgment in the plaintiff’s favor.”
The Second Circuit affirmed, holding that the case fell outside the holding of Campbell-Ewald because “the Court expressly stated that its holding did not extend to cases in which 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.’” Thus the Second Circuit reasoned that the case presented the “precise scenario” discussed in Campbell-Ewald and did not overrule controlling circuit precedent.
On March 9, 2017, the Second Circuit issued its opinion in Geismann v. ZocDoc Inc., in which it vacated and remanded an order dismissing a putative TCPA class action based on an unaccepted Rule 68 offer of judgment. The plaintiff brought claims individually and on behalf of a putative class alleging TCPA violations and moved for class certification. While class certification motion was pending, the defendant made a Rule 68 offer of judgment, which the plaintiff rejected. The defendant then moved to dismiss the complaint, arguing that its offer of judgment mooted the plaintiff’s action. The district court granted the defendant’s motion and dismissed the entire action for lack of subject matter jurisdiction. The plaintiff appealed, arguing that the district court erred under Campbell-Ewald. While the appeal was pending, the defendant deposited into the district court’s registry the funds referenced in its offer of judgment.
The Second Circuit vacated the District Court’s order and reasoned that when plaintiff rejected defendant’s Rule 68 offer, it remained empty-handed because it had not been compensated in satisfaction of its claim. The Second Circuit also explained that the case also did not match the hypothetical discussed in Campbell-Ewald where a defendant deposits the full amount of a plaintiff’s claim into an account payable to the plaintiff and then the court enters judgment. Thus, the Second Circuit refused to “decide whether a different outcome would result if the facts here matched the Campbell-Ewald hypothetical.” The Second Circuit did not mention Leyse.
Leyse v. Lifetime Entertainment Servs, LLC, Case Nos. 16-1133 and 16-1425, (2nd Cir. Feb. 15, 2017).
Geismann v. ZocDoc Inc., Case No. 14-3708 (2nd Cir. Mar. 9, 2017).