Introduction
Hit with a putative consumer class action? One of the first questions that should be considered is whether to make an offer of judgment to the named plaintiff(s). Federal Rule of Civil Procedure 68 permits a defendant to “serve on an opposing party an offer to allow judgment on specified terms, with the costs then accrued.” [1] If the opposing party accepts the offer, judgment is entered against the defendant for the amount offered. If, however, the opposing party does not take the offer and obtains a judgment that is less than the offered amount, the defendant is entitled to recover from the opposing party the “costs incurred after the offer was made.” [2] Rule 68 can serve as an important tool for defendants, particularly where damages are sufficiently defined and calculable (for example, where a plaintiff seeks solely statutory damages). A plaintiff will be forced to choose whether to accept an offer of full relief or risk owing costs down the road.

Though seemingly simple, however, the application of Rule 68 has raised many questions. Does an offer of judgment eliminate any case or controversy, and thereby moot a plaintiff’s claim, if it exceeds any damages the plaintiff could possibly expect to recover? If so, does it matter if the offer is accepted or not? Are there risks inherent in having judgment entered against your client? Does the statute at issue award attorneys’ fees to the prevailing party and, if so, does your offer account for attorneys’ fees?  And, if an offer does moot the claims of a named plaintiff in a Rule 23 class action, does the offer warrant dismissal not only of the named plaintiff’s individual claims, but the class claims as well?

In April 2013, the United States Supreme Court had the opportunity to decide that last question once and for all.  In Genesis HealthCare Corp. v. Symcyzk, [3] the Court was asked to opine on the propriety of the Third Circuit’s holding that motions for class certification should relate back to the filing of the complaint no matter when such motions are actually filed so as to preserve the claims of the putative class members, even if a Rule 68 offer of judgment had otherwise mooted the named plaintiff’s claims (thereby divesting the court of jurisdiction to further adjudicate the class claims). [4] The Supreme Court reversed and held that “[b]ecause respondent had no personal interest in representing putative, unnamed claimants, nor any other continuing interest that would preserve her suit from mootness, her suit was appropriately dismissed for lack of subject-matter jurisdiction.” [5] The Supreme Court’s decision, however, was critically narrow, limited specifically to collective actions pursuant to the Fair Labor Standards Act, and expressly inapplicable to Rule 23 class actions. Having declined the opportunity to address the broader viability of Rule 68 offers of judgment in the context of Rule 23 class actions, the Supreme Court left in its wake continued uncertainty regarding an already confused body of law. 

Rule 68 Jurisprudence
The viability of Rule 68 offers of judgment in the context of class actions has been the subject of inconsistent and conflicting judicial authority, both across and within jurisdictions. Courts have been largely divided with respect to whether a Rule 68 offer of judgment that moots a named plaintiff’s claims equally moots the class action in its entirety.

The Third, Ninth, and Tenth Circuit Courts of Appeals have found that offers of judgment to a named plaintiff do not moot a class action prior to a final decision on class certification. Akin to the treatment sought by the respondent in Genesis, these Courts have applied the relation-back doctrine such that timely certification motions are regarded as having been filed the same day as the complaint. [6] The Ninth Circuit summed up this approach as follows:

[A]n unaccepted Rule 68 offer of judgment—for the full amount of the named plaintiff’s individual claim and made before the named plaintiff files a motion for class certification—does not moot a class action. If the named plaintiff can still file a timely motion for class certification, the named plaintiff may continue to represent the class until the district court decides the class certification issue…. Only once the denial of class certification is final does the defendant’s offer—if still available—moot the merits of the case because the plaintiff has been offered all that he can possibly recover through litigation. [7]

Pursuant to this approach, defendants are prohibited from using Rule 68 as a mechanism to cut off the Court’s ability to adjudicate the issue of class certification and to “pick off” class representatives. [8]

The Seventh Circuit, on the other hand, has largely settled the issue such that offers of judgment are permitted in—and can moot—class actions either before a motion for certification is filed or after the denial of such a motion. [9] According to the Seventh Circuit, an offer of judgment filed prior to the time at which class certification is sought is acceptable because “before the class is certified, which is to say at a time when there are many potential party plaintiffs to the suit, an offer to one is not an offer of the entire relief sought by the suit. . . unless the offer comes before class certification is sought, and so before the existence of other potential plaintiffs has been announced.” [10]

The case law in other jurisdictions is uncertain on this issue. District courts in the Second and Eighth Circuits, for example, ruling in the absence of express guidance from their respective Circuit Courts of Appeals, have issued inconsistent decisions. Some have mooted class actions altogether where an offer of judgment satisfied the named plaintiff’s claims prior to a decision on class certification; others have followed the reasoning of the Third, Ninth, and Tenth Circuits and prohibited such a result. [11]

Conclusion
Approaching the one-year anniversary of the Genesis decision, sufficient time has passed to evaluate its impact. In fact, dozens of published decisions have cited the Genesis decision since its issuance in April 2013. Yet, the Supreme Court’s decision does not appear to have changed the game with respect to Rule 68 in the class action context. Rather, the inconsistency persists, and Genesis has repeatedly been dismissed as inapplicable in the Rule 23 context. [12] Nevertheless, defendants should continue to evaluate Rule 68 as a procedural mechanism for the potential, inexpensive resolution of putative class action claims in the early stages of litigation. The effectiveness of the tool will depend largely on the law in a particular jurisdiction, but given the pervasive inconsistencies in the authorities, considering the offer of judgment option and exploring a jurisdiction’s body of law in each case may be well worth the effort.