Class-action defendant cannot moot action by offering named plaintiff complete relief on individual claim

A defendant in a class action suit cannot moot the action by offering the named plaintiff the full amount of the damages sought for their individual claim.  In this case, the plaintiff filed a putative class action suit under the Telephone Consumer Protection Act after he received an unwanted text message from a contractor running a marketing campaign for the Navy.  The defendant made a settlement offer pursuant to FRCP 68 for the maximum amount allowed for the plaintiff’s individual claims, which the plaintiff rejected.  The defendant moved to dismiss on the grounds that its offer to provide the plaintiff with complete relief mooted his individual claims, and thus the putative class actions claims were mooted as well.  The District Court denied the motion but granted summary judgment on derivative sovereign immunity grounds.  The Ninth Circuit reversed as to the immunity.

In an opinion delivered by Justice Ginsburg, the U.S. Supreme Court affirmed the Ninth Circuit’s judgment and remanded.  The Court held that settlement offers function as contract offers, stating that “[u]nder basic principles of contract law, [the defendant]’s settlement bid and Rule 68 offer of judgment, once rejected, had no continuing efficacy.”  Thus, since the plaintiff rejected the defendant’s settlement offer, the plaintiff had a continuing interest in the case, a controversy still existed for the purposes of Article III, and the case was not moot.  The Court also affirmed the Ninth Circuit’s judgment as to the immunity.

Chief Justice Roberts, joined by Justice Alito and Justice Scalia, dissented, stating that the defendant’s offer to settle for the full amount the plaintiff sought for his individual claims left no case or controversy for the purposes of Article III.  He wrote, “[I]f a defendant is willing to remedy the plaintiff’s injury without forcing him to litigate, the plaintiff cannot demonstrate an injury in need of redress by the court.”  [Campbell-Ewald Co. v. Gomez, (U.S. 2016) 14 C.D.O.S. 698]

Categories: Legal Developments