The First District of Illinois recently issued a significant decision holding that a “shell” motion for class certification, filed concurrently with a complaint, does not preclude a defendant from making an offer of judgment that may moot the named plaintiff’s claim.  Ballard Rn Ctr. V. Kohll’s Pharm & Homecare, 1st Dist. No. 1-13-1543, 2014 Ill. App. LEXIS 780 (Ill App. Nov. 6, 2014).  In Ballard, the plaintiff, Ballard RN Center, Inc. (“Ballard”) filed a putative class action against Kohll’s Pharmacy & Homecare, Inc. (“Kohll’s), alleging that Kohll’s had sent Ballard an unsolicited fax advertisement, and seeking to hold Kohll’s liable under the Telephone Consumer Protection Act, 47 U.S.C. § 227 (“TCPA”), the Illinois Consumer Fraud and Deceptive Business Practices Act (“Consumer Fraud Act”), and also seeking damages for conversion of ink and paper.

The trial court granted Ballard’s motion for class certification.  On appeal, the Court of Appeals for the First District of Illinois reversed the trial court’s decision in part and affirmed in part.  The First District held that because Ballard alleged that the faxes uniformly did not contain a proper opt-out notice as required by the TCPA, it did not matter if Kohll’s had obtained either consumers’ consent or had an established business relationship with consumers, as neither of those defenses are available when there is a deficient opt-out notice, and that the remaining elements for class certification were satisfied.

Significantly, however, the First District held that Kohll’s offer of judgment to Ballard mooted Ballard’s TCPA claim, even though Ballard had filed a motion for class certification contemporaneous with its complaint. 

As we have previously reported (and as numerous other courts have similarly held), a defendant’s offer of judgment to a named plaintiff may moot a claim if the offer is made before the plaintiff moves for class certification.  To avoid this outcome, many plaintiffs have begun filing “placeholder” motions for class certification at the time of filing a complaint.  These placeholder motions are not genuine requests for class certification; instead, they are typically only skeletal arguments meant to prevent a defendant from making an offer of judgment and are instead supplanted by the plaintiff with a subsequent (and fully developed) motion for class certification.

Ballard filed one of these “placeholder” motions for class certification simultaneously with its complaint.  Kohll’s subsequently made several offers of judgment up to $2,500, above the statutory maximum damages permitted by the TCPA, which Ballard rejected.

Kohll’s argued that Ballard’s TCPA claim was mooted by its rejection of the offer of judgment.  (Kohll’s did not argue that the offer of judgment mooted Ballard’s claims under the Consumer Fraud Act or for conversion, for which Ballard also sought an award of attorney’s fees).  Kohll’s argued that Ballard’s “shell” motion for class certification filed with its complaint did not sufficiently prove that its interests aligned with those of the putative class.  Ballard argued that any motion for class certification, regardless of its contents, was sufficient to preclude an offer of judgment from mooting a claim, and that the offer should be disregarded because it pursued class certification with “sufficient diligence.”

The First District rejected Ballard’s arguments.  The Court noted that a motion for class certification precluded an offer of judgment from mooting an action because the motion sufficiently brought the interests of the other class members before the court, and aligned their interests with that of the named plaintiff.  Under that reasoning, the Court concluded that a motion for class certification must, in fact, contain sufficient factual allegations to bring the interests of absent class members before the court.  Because Ballard’s “shell” motion was filed simply for the purpose of preventing an offer of judgment and was devoid any of facts regarding putative class members, it was insufficient to prevent Kohll from making an offer of judgment to moot the action.  Likewise, the Court rejected Ballard’s argument that it had pursued class certification with “sufficient diligence” such that the offer of judgment should be ignored, noting that under Illinois precedent, that position had “no basis in law.”

Thus, the First District concluded that Kohll’s offer of judgment of $2,500 was sufficient to moot Ballard’s claim for an alleged violation of the TCPA (for which the maximum statutory damage is $1,500).  The First District reversed the trial court’s decision and remanded the case with instructions that the trial court reconsider the propriety of class certification of the remaining counts in light of the dismissal of the TCPA claim.