Supreme Court Holds that Unaccepted Offer of Judgment Does Not Moot Class Action

The U.S. Supreme Court yesterday dealt a blow to the defense strategy of “picking off” putative class representatives through individual offers of judgment. In Campbell-Ewald Co. v. Gomez, No. 14-857, the Court held that during the period before class certification, an unaccepted offer of judgment in full satisfaction of the named plaintiff’s claims does not moot the case, resolving the circuit split that had developed on the issue.

Petitioner Campbell-Ewald Company (“Campbell”) was engaged by the U.S. Navy to conduct a nationwide multimedia recruiting campaign involving text messages. Respondent Jose Gomez, a recipient of the Navy’s recruiting message, filed a class action lawsuit in the District Court for the Central District of California, claiming that Campbell violated the Telephone Consumer Protection Act because he never consented to receiving the message.

Before the deadline for Gomez to file a motion for class certification, Campbell offered to settle Gomez’s individual claim and filed an offer of judgment under Federal Rule of Civil Procedure 68. Gomez did not accept the offer. Campbell then moved to dismiss for lack of subject-matter jurisdiction, arguing that the offer mooted Gomez’s claims because it provided him with complete relief. Although the parties did not dispute that Campbell’s offer would have fully satisfied his individual claims, the district court denied Campbell’s motion. On appeal, the Court of Appeals for the Ninth Circuit agreed that Gomez’s claims had not been rendered moot.

In a 6-3 decision authored by Justice Ginsburg, the U.S. Supreme Court affirmed the Ninth Circuit’s ruling that an unaccepted offer of judgment does not moot a plaintiff’s claim. The Court cited Justice Kagan’s analysis in her dissenting opinion in Genesis HealthCare Corp. v. Symczyk, in which she reasoned that “[a]n unaccepted settlement offer—like any unaccepted contract offer—is a legal nullity, with no operative effect.” Thus, Article III’s case-or-controversy requirement is satisfied because “with no settlement offer still operative, the parties remained adverse; both retained the same stake in the litigation they had at the outset.”

In reaching this conclusion, the Court distinguished previous decisions holding plaintiffs’ claims to be moot where the plaintiffs had in fact received full redress for the injuries asserted in their complaints. In contrast to those cases, “when the settlement offer Campbell extended to Gomez expired, Gomez remained emptyhanded.” The Court expressly left open the possibility that the result may be different if (1) a defendant deposits the full amount of the plaintiff ’s individual claim in an account payable to the plaintiff, and (2) the court then enters judgment for the plaintiff in that amount.

Justice Thomas concurred in the judgment because, under the common law history of tenders, the mere offer of the sum owed is insufficient to decide the case. Chief Justice Roberts dissented, joined by Justices Scalia and Alito, reasoning that when a defendant agrees to fully redress a plaintiff’s injury, there is no longer a case or controversy under Article III—even where the plaintiff “won’t take ‘yes’ for an answer.” In his view, whether the payment had actually been made does not affect the mootness inquiry. There was no dispute that Campbell could and would carry through with the offered payment; and, in any event, Campbell could simply deposit a certified check with the district court. Justice Alito dissented separately to emphasize that when a defendant offers a plaintiff complete relief on a damages claim, the case is moot if—but only if—it is “absolutely clear” that the plaintiff will receive the offered relief. Justice Alito also criticized the Court’s suggestion that, to render a case moot, a defendant must both pay the requisite funds and have the court enter judgment for the plaintiff in that amount.

Before yesterday’s pronouncement, the federal courts of appeals were split on the question whether an unaccepted offer of judgment moots a plaintiff’s individual case. Moreover, the courts of appeals had reached divergent holdings as to whether, and under what circumstances, an offer made to a putative class representative prior to a ruling on class certification would moot the claims asserted on behalf of the putative class. While the Court’s decision resolves some of these issues, it remains to be seen how the lower courts will rule on the significant issues expressly left open by the Court’s decision—including whether the result would be different if the defendant actually deposits the relevant amount in an account payable to the plaintiff.