As highlighted in my June 16 blog post, the Supreme Court has granted certiorari, in Campbell-Ewald Co. v. Gomez, No. 14-857 (SCOTUSblog page), to decide whether an offer of complete relief to a named plaintiff renders a putative class action moot. Notwithstanding that the Supreme Court is about to decide this question (with oral argument scheduled on October 14), the Fifth and Seventh Circuits both recently weighed in on it, and both ruled in favor of the plaintiffs. Some commentators have suggested that these decisions make it likely that the Supreme Court will rule for the plaintiff in Campbell-Ewald. I tend to disagree because the Fifth and Seventh Circuits were construing Rule 68, and Campbell-Ewald presents the issue not merely under Rule 68. but also in the context of a tender of full relief by the defendant independent of Rule 68. I suspect that the focus in Campbell-Ewald will be on the fact that a court logically must be able to bring an end to litigation where the defendant is willing to throw in the towel, and whether a class action can still proceed where the defendant has tendered full relief to a named plaintiff (independent of Rule 68). The Seventh Circuit, while ruling in favor of the plaintiff, highlights some of these remaining questions, which the Supreme Court might address, or might leave for another day.
In Hooks v. Landmark Industries, Inc., No. 14-20496, 2015 U.S. App. LEXIS 14116 (5th Cir. Aug. 12, 2015), a putative class action under the Electronic Funds Transfer Act, the defendant made an offer of judgment to the named plaintiff under Rule 68, which was not accepted and expired. There was a dispute over whether the offer was for complete relief, but the Fifth Circuit found it unnecessary to decide that because, even if complete relief was offered, the case was not moot. The Fifth Circuit relied on the fact that Rule 68 expressly states that “[a]n unaccepted offer is considered withdrawn,” and on Justice Kagan’s dissenting opinion in Genesis Healthcare Corp. v. Symczyk. The Fifth Circuit further explained that “[t]he court is not deprived of the ability to enter relief—and thus the claim is not mooted—when a named plaintiff in a putative class action rejects a settlement offer from the defendant.” Id. at *13. The Fifth Circuit did not address, however, the broader question (which was not before the court) of what happens when a defendant simply tenders complete relief to the named plaintiff, and whether a named plaintiff can still properly represent a class in that circumstance.
Chapman v. First Index, Inc., Nos. 14-2773 & 14-2775, 2015 U.S. App. LEXIS 13767 (7th Cir. Aug. 6, 2015) was another case involving a Rule 68 offer of judgment to the named plaintiff. The Seventh Circuit overruled its own prior precedent and agreed with Justice Kagan’s dissent in Genesis Healthcare that “an expired (and unaccepted) offer of a judgment does not satisfy the Court’s definition of mootness, because relief remains possible.” Id. at *7. But what I found most interesting from a defense perspective was Judge Easterbrook’s comments about how defendants might well have a good argument, but mootness is the wrong way to frame the argument. Judge Easterbrook suggested that “[f]ailure to accept a fully compensatory offer also may suggest that the plaintiff is a bad representative of the class, for he has nothing to gain (implying poor incentives to monitor counsel) and may have given up something the class values (here, an injunction that would have stopped any further improper faxing).” Id. at *8. Judge Easterbrook also suggested that there is a question about “whether a spurned offer of complete compensation should be deemed an affirmative defense, perhaps in the nature of an estoppel or a waiver.” Id. at *9. And “Why should a judge do legal research and write an opinion on what may be a complex issue when the plaintiff can have relief for the asking? Opinions are supposed to be the by-products of real disputes.” Id. at *11. These are all arguments that defendants should consider making. Some of this may be addressed in Campbell-Ewald – they are not all squarely before the Court, but the Court often addresses the broader context of the issue before it. Or these questions may be left for another day.
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