Seventh Circuit Rejects Rule 67 Deposit Into Court Account as Easier Alternative to Rule 68 Offer of Judgment

by BakerHostetler
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Over the years, Rule 68 offers of judgment have been touted as a means of picking off class representatives and a potentially easy way to terminate a class or collective action before it starts. It rarely really works that way, as many courts, particularly those that are disposed to class actions, have found endless ways of finding them unenforceable. We’ve blogged some of these attempts in the past, but the Supreme Court’s decision Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523 (2013), seemed to give some slight hope that such an attempt might work. In Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (2016), however, the Court largely negated the Symczyk holding and seemed to have put at least one nail in the coffin of the claim that an unaccepted offer of judgment could moot a class action. (We blogged that decision here.)

The defendant in Fulton Dental, LLC v. Bisco, Inc., Case No. 16-3574 (7th Cir. June 20, 2017), tried a different avenue to what was essentially an offer of judgment, but it too failed. Bisco was not an employment case but rather one involving unsolicited faxes. The defendant, apparently following Symczyk, first tried to make an offer of judgment to the named plaintiff, but only two days later, the Supreme Court issued its decision in Campbell-Ewald, suggesting strongly that avenue would not work. Undaunted, the defendant used Rule 67, which permits a party to deposit a disputed money judgment into the court’s account. That move was not entirely unwarranted because even the decision in Campbell-Ewald had held out that possibility:

We need not, and do not, now decide whether the result would be different

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.

(136 S. Ct. 672).

The defendant, upon depositing the disputed amount under Rule 67, argued that the individual claim was thus moot, as the amount deposited would provide all of the relief to which the named plaintiff was entitled. The District Court accepted the maneuver and found that the deposit both mooted the named plaintiff’s claim and rendered it an inappropriate class representative under Rule 23(a).

It was, of course, too good to be true. The Seventh Circuit concluded that the move was simply a “variation” of the Rule 68 theme and that Rule 67 was “just a procedural mechanism that allows a party to use the court as an escrow agent.” Indeed, the court noted limitations contained in Rule 67 itself, which do not give the plaintiff automatic access to the deposited funds. More importantly, the court viewed the move as simply an effort to avoid the Campbell-Ewald holding and to short-circuit class litigation. The court also showed its hand by converting, as some courts do, Rule 23’s procedural mechanisms into some kind of procedural right, declaring that the offer might not be “sufficient to compensate plaintiff . . .  for its loss of the opportunity to represent the putative class.” The court did not explain how that purely procedural role was somehow a right or conferred any legally cognizable benefit.

The decision in Fulton is not a surprise. Courts and judges that like class actions as a convenient vehicle to use litigation expense to impose rough justice are adverse to steps that might limit their scope or make them less costly to terminate. Still, the court essentially closed this avenue as a means of bringing the case to an early resolution.

One difficulty with holdings like these is that they fail to come to grips with the fact that class litigation is lengthy, difficult and expensive irrespective of the merits of the underlying claim. Defendants frequently look to means of terminating these cases early because they are costly even if meritless. Rather than simply swat down efforts to control those costs, courts should consider other avenues to end class actions at an early stage when questions arise as to their viability or merits.

The bottom line: An unaccepted deposit of funds under Rule 67, like an offer of judgment under Rule 68, will not moot the named plaintiff’s claims or cut off class action litigation.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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