Combating TCPA Class Actions with a Rule 68 Offer of Judgment

Summary

If your company or nonprofit organization has been sued in a TCPA class action, it is important to consider making an offer of judgment before the plaintiff has moved for class certification.


Article

Telemarketing companies and nonprofit organizations are aware that they must comply with the Telephone Consumer Protection Act (“TCPA”) to prevent potentially damaging class action lawsuits.  But if a company or nonprofit organization has already been sued under the TCPA, what can be done to mitigate the costs of the lawsuit?

The answer may be a Rule 68 offer of judgment.  Under the Federal Rules of Civil Procedure, a defendant can make an offer of judgment, which provides full relief to the named plaintiff in an effort to make his claims against the defendant moot, such that he cannot proceed as a class representative.  However, the effectiveness of an offer of judgment to make a class representative moot is a matter of great dispute and will likely be resolved by the Supreme Court in the near future.

Currently, the Circuit Courts are split on whether an unaccepted offer of judgment will moot an individual plaintiff’s claim.  See O’Brien v. Ed Donnelly Enters., 575 F.3d 567, 574 (6th Cir. 2009) (an unaccepted offer moots a consumer’s claim); Rand v. Monsanto Co., 926 F.2d 596, 598 (7th Cir. 1991) (a consumer loses outright if she does not accept an offer that would satisfy her entire demand).  But see Diaz v. First American Home Buyers Protection Corp., 732 F.3d 948, 950 (9th Cir. 2013) (an unaccepted offer of judgment cannot moot a case); McCauley v. Trans Union, LLC, 402 F.3d 340, 342 (2nd Cir. 2005) (an unaccepted offer does not moot an otherwise satisfied claim unless liability is undisputed). 

Most courts do agree, however, that an offer of judgment must be made before a plaintiff files a motion for class certification.  See Carroll v. United Compucred Collections, Inc., 399 F.3d 620, 624 (6th Cir. 2005).  This has resulted in plaintiffs rushing to file a motion for class certification simultaneously with the complaint or immediately thereafter.  Courts do not look favorably on these premature motions.

For example, in Physicians Healthsource, Inc. v. Purdue Pharma L.P., plaintiffs brought a TCPA class action against defendant and quickly followed, before discovery, with a motion for class certification in an attempt to prevent an offer of judgment.  2013 U.S. Dist. LEXIS 127117, *2-3 (D. Conn. 2013).  The Court explained:

Here, such “rigorous analysis” [as required under Rule 23] is impracticable, at least on the current record, because the plaintiff filed its motion for class certification prior to discovery. Indeed, the plaintiff appears to concede that more discovery is needed before any determinations can be made on certification, having requested “leave to submit a memorandum of law in support of its Motion and other evidence after it obtains discovery.”

Id. at *3.  The Court concluded that even assuming that a putative class can be saved by filing a place-holder motion for class certification at the earliest possible juncture, “it does not follow that an initial, under-developed motion - like the one at bar - must linger on the docket while the court awaits the filing of a later, fully-developed motion following discovery.”  Id. at *5.  The Court denied the motion for class certification without prejudice and ordered discovery to begin.  See also Haight v. Bluestem Brands, Inc., 2013 U.S. Dist. LEXIS 179885, *1 (M.D. Fla. 2013). 

Thus, if your company or nonprofit organization has been sued in a TCPA class action, it is important to consider making an offer of judgment before the plaintiff has moved for class certification.  While we cannot speculate on how a court will rule in any particular case, the offer will likely give the plaintiff cause to consider whether the action is worth continuing versus taking a quick payment.