LawFlash

US Supreme Court Hands Down Long-Awaited Decision in Campbell-Ewald v. Gomez

January 22, 2016

Court holds that offers of full relief, without more, do not moot claims brought by named plaintiffs in putative class actions in federal court.

On January 20, the US Supreme Court issued its long-awaited decision in Campbell-Ewald Co. v. Gomez.[1] The Supreme Court held that an unaccepted offer for full relief under Rule 68 of the Federal Rules of Civil Procedure or as a settlement offer, without more, cannot moot a named plaintiff’s claims in a putative class action.[2]

Justice Ginsburg delivered the Court’s opinion, which was joined by Justices Kennedy, Breyer, Sotomayor, and Kagan. Justice Thomas wrote a concurring opinion, and Chief Justice Roberts wrote a dissenting opinion that Justices Scalia and Alito joined. Justice Alito also authored a separate dissenting opinion.

Background

Plaintiff Jose Gomez was one of over 100,000 recipients of texts relating to marketing solicitations. Gomez did not consent to the receipt of the text messages and filed a putative nationwide class action against Defendant Campbell-Ewald Company, a government contractor, for allegedly violating the Telephone Consumer Protection Act (TCPA). Gomez sought treble damages for alleged willful violations of the TCPA, along with costs, attorney fees, and an injunction against Campbell to prevent unsolicited messaging.

Before the deadline to file a motion for class certification, Campbell made both a settlement offer and an offer of judgment that would have given Gomez full relief on his TCPA claim. Gomez did not accept either offer and allowed the 14-day wait period under Rule 68 to expire. Campbell then moved to dismiss the case for lack of subject-matter jurisdiction. The motion was denied, and after limited discovery, the district court granted summary judgment in favor of Campbell on a discrete but separate sovereign immunity issue. The US Court of Appeals for the Ninth Circuit reversed the grant of summary judgment. The Supreme Court granted certiorari to resolve whether a case becomes moot under Article III when the plaintiff receives an offer of complete relief on his claim, and, if so, whether the answer changes when the plaintiff has asserted a class claim.

The Court’s Opinion

In the Court’s opinion, the majority held that an unaccepted settlement offer or offer of judgment for full relief, without more, does not moot a plaintiff’s claims under Article III. The majority applied “basic” contract principles, reasoning that once a settlement offer or offer of judgment is rejected, it has “no continuing efficacy.”[3] Furthermore, because Rule 68 provides that an unaccepted offer of judgment is considered “withdrawn” if not accepted within 14 days of service, that is the “sole built-in sanction.”[4] Thus, when a settlement offer or offer of judgment is not accepted, the parties remain adverse, retaining “the same stake in the litigation they had at the outset.”[5] Because the majority held that Gomez’s claims were not moot, it did not reach the question of how, if it all, a request for class relief by a named plaintiff impacts the mootness analysis.       

Notably, the majority limited its holding to situations where there is merely an “offer” to settle claims. Once the offer of judgment expired, Gomez remained “empty-handed” and his TCPA complaint “stood wholly unsatisfied.”[6] The majority expressly stated that it was not deciding whether a claim can be mooted “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.”[7]
Justice Thomas issued a concurring opinion. He agreed that an offer of complete relief on a claim does not moot that claim, but based his conclusion on the “common-law history of tenders,”[8] not contract law principles or the language of Rule 68.

Chief Justice Roberts issued a dissent, which was joined by Justice Scalia and Justice Alito. Surveying the Supreme Court’s mootness jurisprudence, the Chief Justice explained that “[t]he agreement of the plaintiff is not required to moot a case.”[9] Thus, while an unaccepted offer of judgment is a legal nullity as a matter of contract law, it nonetheless moots a case because once “the defendant is willing to give plaintiff everything he asks for, there is no case or controversy to adjudicate . . .”[10] It does not matter whether the plaintiff spurns the offer—so long as full relief is made available, there is no injury in need of redress by the court. In addition, the Chief Justice emphasized that Gomez would not be left empty-handed because there was no question that Campbell would pay the full relief offered upon dismissal.   

Justice Alito also issued a separate dissent, explaining that the mootness determination rests upon the certainty that the defendant will pay full relief to the plaintiff, not whether the defendant already has paid.[11] Because there was no dispute that Campbell would pay the money offered if the case were dismissed, the case was moot.

Looking Forward

The Supreme Court’s ruling restricts the ability of defendants to use Rule 68 offers of judgment (or settlement offers) to resolve named plaintiffs’ claims in putative class actions. That approach has been frequently used in consumer class actions, like those brought under the TCPA, where the value of the named plaintiff’s claim is low and his or her alleged damages can be easily calculated. Courts of appeals had reached different conclusions on this issue. Now, if a defendant makes a Rule 68 offer of judgment or settlement offer for full relief, the named plaintiff need only let that offer lapse; that lapsed offer, without more, will not moot the named plaintiff’s claims.     

The Supreme Court’s opinion, however, does not completely rule out the use of Rule 68 offers of judgment—or other settlement offers—as an effective tool for resolving a named plaintiff’s claims. The majority expressly refused to decide the issue of whether a claim can be mooted under circumstances where a plaintiff actually receives full relief, such as when “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.”[12] The dissenting opinions also provide a roadmap for alternative approaches, such as depositing full relief with the district court on the condition that it be released to the plaintiff when the case is dismissed as moot.[13] Whether such an approach will be deemed to moot a named plaintiff’s claim remains to be decided. Defendants in class action litigation should evaluate the possibility of incorporating this approach in defending actions against them.

In addition, some courts have held that even if a named plaintiff’s claims are moot, the named plaintiff still may pursue relief on behalf of a class. While the dissent expressed the view that class relief cannot be pursued when the claims of the named plaintiff are moot, the majority opinion does not address this critical issue or whether a request for class relief somehow changes the mootness calculus.[14] Thus, district courts will be bound to apply controlling circuit-court precedent on this issue, absent further clarification from the Supreme Court.

Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

Chicago
Scott T. Schutte
Elizabeth B. Herrington

Philadelphia
J. Gordon Cooney, Jr.
Steven A. Reed

San Francisco
Molly Moriarty Lane



[1] No. 14-857 (U.S. Jan. 20, 2016), available here.

[2] The majority also held that a government contractor allegedly violating federal law and working outside the scope of the government’s instructions was not shielded by derivative sovereign immunity from lawsuits by persons adversely affected by the alleged violation. Because the three dissenting justices believed that the case was moot, they did not address this issue.

[3] Id.at 8.

[4] Id.at 9.

[5] Id.

[6] Id.at 11.

[7] Id.

[8] Id.at 1 (Thomas, concurring).

[9] Id. at 9 (C.J. Roberts, dissenting).  

[10] Id.

[11] Id. at 1 (Alito, dissenting). 

[12] Id.at 11 (majority opinion).

[13] Id. at 3 (Alito, dissenting).  

[14] The majority did not address this issue because it took the position that “[w]hile a class lacks independent status until certified . . . a would-be class representative with a live claim of her own must be accorded a fair opportunity to show that certification is warranted.” Id.at 11.