A divided Supreme Court ruled today in Campbell-Ewald Co. v. Gomez, No. 14-857, that an unaccepted Rule 68 offer of judgment by a defendant cannot moot a putative class action. The decision settles a reserved question from Genesis HealthCare Corp. v. Symczyk and resolves a circuit split on the issue. Justice Ginsburg’s majority opinion holds that an unaccepted Rule 68 settlement offer “has no force” and like other unaccepted contract offers, “creates no lasting right or obligation.”
Campbell-Ewald arose in the context of a Telephone Consumer Protection Act (TCPA) lawsuit. The defendant was hired to send text messages to young adults recruiting them to join the Navy, but only if they had opted-in to receive such messages. The plaintiff, who was nearly 40 years old and had not opted-in or otherwise consented, received a text message. After the plaintiff filed a class action, but before the class certification motion deadline, the defendant filed a Rule 68 offer of judgment for $1,503 per message ($3 more than the maximum plaintiff could recover per text, under the TCPA) plus costs (excluding attorney’s fees). The plaintiff did not accept the offer.
The defendant then argued that the court lacked subject matter jurisdiction because the offer mooted the plaintiff’s individual claim, and that because the plaintiff had not yet moved for class certification, the class claims were mooted as well. The defendant relied on the Supreme Court majority’s opinion in Genesis Health that an unaccepted offer of judgment mooted Fair Labor Standards Act collective action claims.
In Genesis Health, Justice Kagan in dissent argued that an unaccepted offer cannot moot a case because “[a]s every first-year law student learns, the recipient’s rejection of an offer ‘leaves the matter as if no offer had ever been made.’” The majority in Campbell-Ewald adopted that analysis.
The three dissenting justices in Campbell-Ewald opined that the majority’s decision transfers authority from the federal courts and “hands it to the plaintiff,” reasoning that once the defendant offered to fully remedy the plaintiff’s injury, there was no longer any necessity for the court to adjudicate the case as a matter of Article III standing, irrespective of the result under contract law. The majority responded that, to the contrary, the dissent approach “would place the defendant in the driver’s seat” because the defendant “sought to avoid a potential adverse decision, one that could expose it to damages a thousand-fold larger than the bid [the plaintiff] declined to accept.”
The majority did reserve the question of whether the result would differ if the defendant had deposited the full amount of the plaintiff’s individual claim into an account payable to the plaintiff and the trial court had entered judgment for the plaintiff in that amount. In the case before the court, that question was “hypothetical.” This reservation appears to address Justice Thomas’s concurrence that the law of tenders should govern the case rather than the law of contracts, such that an actual tender of the full amount of the named plaintiff’s individual claim (as opposed to a mere contract offer, evidencing an intent to pay) would moot the claim. Thus, there remains an open question whether an actual tender of payment by certified check to the court’s registry, rather than a Rule 68 offer of judgment, would moot the individual claims and class claims as well.
Campbell-Ewald Co. v. Gomez, No. 14-857 (U.S. Jan. 20, 2016).
