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The Supreme Court Holds that Unaccepted Rule 68 Offer Does Not Per Se Moot Plaintiff’s Claims or Defeat Class Certification

October 2, 2017

            The United States Navy contracted with the Campbell-Ewald Company (“Campbell”) to develop a multimedia recruiting campaign that targeted 18 to 24 year-olds.  As part of the campaign, text messages were sent to individuals that had “opted in” to the receipt of marketing solicitations that included Navy service.  Over 100,000 individuals were sent text messages based on a list compiled by a Campbell subcontractor.  One individual, Jose Gomez, claimed that he did not consent to receiving text messages, and at age 40, he was not even in the target class.  Gomez then filed a nationwide class action, alleging that Campbell violated the Telephone Consumer Protection Act (“TCPA”), which prohibits the use of an automatic dialing system to send text messages without the recipient’s prior consent.  Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (2016), as revised (Feb. 9, 2016). 

           

            Campbell attempted to settle Gomez’s individual claim by filing an offer of judgment pursuant to Federal Rule of Civil Procedure 68.  Gomez did not respond to the offer and it expired after fourteen (14) days.  Campbell then moved to dismiss the action based on lack of subject matter jurisdiction.  Campbell argued that the offer of judgment mooted Gomez’s individual claim by providing him with complete relief.  Additionally, Campbell alleged that Gomez’s failure to move for class certification before his claim became moot caused the class claims to become moot as well.  The Ninth Circuit held that Gomez’s case remained live. The Supreme Court of the United States granted certiorari to resolve the issue of whether an unaccepted offer can moot a plaintiff's claim, thereby depriving federal courts of Article III jurisdiction.  Id.

 

            A case becomes moot “only when it is impossible for a court to grant any effectual relief whatsoever to the prevailing party.”   Knox v. Serv. Employees Int'l Union, Local 1000, 132 S. Ct. 2277, 2287 (2012).  In determining whether Gomez’s claim became moot the Court applied basic principles of contract law, finding that Campbell’s unaccepted offer to settle, once rejected, had no continuing efficacy.  Campbell at 670.  Therefore, the parties remained adverse, and both parties retained the same stake in the litigation that they had at the outset.  Additionally, the Court held that the plain language of Rule 68 does not support the argument that an unaccepted offer can moot a complaint.  Id.  Rule 68 states that an unaccepted offer is considered withdrawn, and the sole sanction only occurs “if the [ultimate] judgment ... is not more favorable than the unaccepted offer, then the offeree must pay the costs incurred after the offer was made.”  Rule 68(d). 

 

            In determining that an unaccepted settlement offer does not moot a plaintiff’s claim, the Court specifically noted “we need not, and do not, now decide whether the result would be different if 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.”  Campbell at 672. But see Fulton Dental, LLC v. Bisco, Inc., 860 F.3d 541 (7th Cir. 2017) (unaccepted offer to settle a case, accompanied by a payment under Rule 67, is no different in principle from an offer of settlement made under Rule 68).

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