Supreme Court Agrees to Hear Case Regarding Contentious Rule 68 Offer of Judgment

In what will presumably answer a question multiple appeals courts have disagreed about, on May 18, 2015, the Supreme Court agreed to decide whether an individual plaintiff’s claims can be made moot by a defendant’s settlement offer (known as a “Rule 68 offer of judgment”) that fully satisfies the plaintiff’s claims such that the individual can no longer represent a “class” of injured people. 

As we have discussed in previous articles, if the settlement offer makes the individual’s claim  moot,  that individual can no longer act as the representative of a class of similar plaintiffs (e.g. a class of people who allege illegal calls under the Telephone Consumer Protection Act (“TCPA”)), and the class action must be dismissed.  This is relevant not just to TCPA claims, but many types of class actions.

This case, Gomez v. Campbell-Ewald Co., 768 F.3d 871 (9th Cir. 2014), comes from the Ninth Circuit Court of Appeals.  Specifically, the plaintiff alleged he and other class members received unsolicited text messages on their cell phones encouraging them to join the Navy without their prior express consent, in violation of the TCPA.

The defendant offered the plaintiff a cash payment that exceeded the maximum statutory damages allowed under the TCPA, plus reasonable costs.  After the plaintiff failed to respond, and thus rejected the offer, the defendant moved for summary judgment, arguing that the plaintiff’s claim was moot and no longer presented a live case or controversy as required to bring a lawsuit.

While the trial court ruled in favor of the defendant based on a separate issue, the appeals court ruled the plaintiff’s individual and class claims survived the rejected offer of judgment under Rule 68.  Id. at 874-75.  In its request to the Supreme Court to take the case, the defendant argued Supreme Court guidance was essential on this divisive issue

Currently, an unaccepted offer of judgment makes a plaintiff’s individual claim moot in the Second, Third, Fourth, Fifth, Sixth, and Seventh Circuits (with varying requirements).  The Ninth and Eleventh Circuits have held that an offer of judgment does not moot a plaintiff’s individual claim, while the First, Eighth, and Tenth Circuits have not definitively addressed the issue.

Until the Supreme Court rules on Gomez, if you get sued in a purported TCPA class action, one of the first things your attorney should do is review this issue to determine the applicable law, and maybe make a Rule 68 offer of judgment to the individual anyway in expectation of the Supreme Court decision.