What happens when you make an offer they can't refuse . . . and they refuse? The Supreme Court addressed this question in the context of complete relief offers to lead plaintiffs in Campbell-Ewald Co. v. Gomez, a Telephone Consumer Protection Act (TCPA) class action.
Claims under the federal Telephone Consumer Protection Act (TCPA) have become a powerful tool for consumer rights lawyers seeking to limit “robocalls” made for marketing and collection purposes. When coupled with the Rule 23 class action procedure, the $500-$1,500 relief available per offending call or text message under the TCPA can reach astronomical levels.
Gomez dealt with a TCPA claim against a contractor for the U.S. Navy that sent recruiting text messages to individuals who had allegedly not “opted in” to receive such calls. The lead plaintiff was a 40-year-old man who claimed that he had not agreed to receive such calls and was out of the target age range of the marketing campaign.
As a general matter, the Constitution requires “standing” for a law suit to proceed. This requires an active “case or controversy.” Thus, when a case between the parties is resolved, the litigation must come to an end. The defendant in Gomez, in hopes to undo this standing requirement, offered the maximum available amount under the TCPA to the lead plaintiff—$1,500 per text, plus costs—which he did not accept, even though there was no other relief he could obtain.
In finding the existence of standing, the majority opinion referenced the familiar principles of contract law—as well as Rule 68 of the Federal Rules of Civil Procedure—where an offer that is not accepted is deemed rejected. “With the offer off the table, and the defendant's continuing denial of liability,” the opinion read, “adversity between the parties persists.”
In 2013, the Supreme Court had ruled in Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523, 1528 (2013) that when “an intervening circumstance deprives the plaintiff of a ‘personal stake in the outcome of the lawsuit,’ at any point during litigation, the action can no longer proceed and must be dismissed as moot.” Genesis involved a Fair Labor Standards Act “collective action,” in which the lead plaintiff had actually accepted a settlement offer.
Gomez, by contrast, involved an offer that resolved all of the Plaintiff’s claims, but it was never accepted. In Gomez, the Court suggested that an alternate scenario—where the actual funds were tendered in the form of a cashier’s check or placed in the depository of the court—may have defeated standing. The majority stated that “[w]e 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. That question is appropriately reserved for a case in which it is not hypothetical.”
This passage from the opinion likely provides false hopes to defendants seeking to moot a class action by reaching a resolution with the lead plaintiff after class certification. Earlier Supreme Court decisions in Sosna v. Iowa, 419 U.S. 393 (1975) and U.S. Parole Commission v. Geraghty, 445 U.S. 388 (1980), held that standing for a class action will be treated differently. These precedents hold that a class action is not rendered moot, even when the named plaintiff's individual claim is resolved, if that occurs after the class has been duly certified or where class certification was wrongly denied. A class, in contrast to a “collective action,” retains independent standing once it is certified, even if the lead plaintiff’s claims are resolved prior to the final resolution of the case.
Defendants seeking to avoid a class action case—whether in defense of TCPA claims or otherwise—could take this ruling to mean that the best course of action is to:
- Make a maximum offer of judgment to the lead plaintiff in advance of class certification;
- Deposit the proffered funds in the court registry, as allowed by Rule 67, or, alternately, include a cashier’s check for the full amount of the proposed settlement with the offer;
- Move to dismiss the case on the grounds of mootness or lack of standing in advance of class certification.
There is no guarantee this procedure would survive a novel pro-class-certification ruling at the highest level, but the majority opinion in Gomez has indeed left this course open. In addition, the concurring opinion by Justice Thomas, which focused on the law of tender, as well the dissent of Justices Roberts, Scalia, and Alito, have provided a road map for appellate courts to distinguish such a situation from the facts of Gomez.