The First Circuit recently joined the Second, Fifth, Seventh, Ninth, and Eleventh Circuits in holding that a Rule 68 offer made prior to class certification and rejected by plaintiff does not moot the plaintiff’s claim. The plaintiff, a private high school, brought the action against the corporate developer of a college-entrance exam, alleging violations of the Telephone Consumer Protection Act and an analogous state statute related to unsolicited faxes it received. Prior to plaintiff’s deadline to move for class certification, the defendant made an offer of judgment, offering plaintiff the amount it could receive under the two statutes for each fax. Plaintiff did not respond within 14 days, rendering the offer withdrawn under Rule 68, and instead moved for class certification. Defendant then moved to dismiss, arguing that the withdrawn offer rendered plaintiff’s claims moot and divested the court of subject matter jurisdiction. The district court denied the motion, holding that plaintiff’s claim was not moot, but certified the question of whether an unaccepted Rule 68 offer, made before certification, moots the entire action and deprives the court of jurisdiction.

The First Circuit first framed the issue by discussing the Supreme Court’s decision in Deposit Guaranty National Bank v. Roper, 445 U.S. 326 (1980). In Roper, the lower court entered judgment of full payment on the plaintiffs’ individual claims after denying class certification.  The Supreme Court held that the plaintiffs’ claims were not moot and they could still appeal the denial of certification, reasoning that they had a “continuing economic interest” in shifting part of their litigation costs to other class litigants if the class was ultimately certified and prevailed. Drawing from that decision, the plaintiff in the First Circuit case argued that it too had an ongoing interest in shifting its fees as well as in the receipt of an incentive award for serving as lead plaintiff. The First Circuit noted that Roper seemingly defeated defendant’s argument that plaintiff’s claims were moot. However, the court expressed skepticism about Roper’s continuing validity, which the Supreme Court cast doubt on in Genesis Healthcare v. Symczyk, 113 S. Ct. 1523 (2013), and thus went on to determine that the result would be the same even if Roper did not apply.

Labeling a rejected offer a “red herring” that “does not, in itself, provide any relief,” the First Circuit explained that such an offer is treated as withdrawn and is only admissible to determine costs; Rule 68 does not contemplate its use as a basis for dismissal. The court further rejected defendant’s argument that the district court could simply enter judgment as if plaintiff had accepted the offer, noting this was also not authorized by the rule. The fact that plaintiff disagreed about what constituted full relief underscored this point. Under defendant’s approach, whenever a plaintiff rejected a Rule 68 offer, a court would be required to undertake a qualitative assessment of the claims and evidence in order to determine the amount that constituted full relief: “courts would find themselves ruling on the merits of claims under the guise of determining whether cases are moot.”

Emphasizing the importance of the issue of pick-offs of class representatives to class action jurisprudence, the First Circuit lamented that “uncertainty will reign” until the Supreme Court weighs in on this issue. That resolution may come soon, as the Supreme Court has granted a petition for writ of certiorari in Campbell-Ewald Co. v. Gomez, 135 S. Ct. 2311 (2015) to address whether a named plaintiff’s rejection of a pre-certification offer of judgment moots putative class claims. Petitioner and Respondent, along with 17 amici curiae, have submitted briefs.  Stay tuned to the Classified blog for more developments.

Bais Yaakov of Spring Valley v. Act, Inc., No. 14-1789 (1st Cir. Aug. 21, 2015).