Just two months before the U.S. Supreme Court hears argument in Campbell-Ewald Co. v. Gomez, two federal circuit court panels have ruled on jurisdictional issues presented in the case. Both the Seventh Circuit in Chapman v. First Index, Inc., and the Fifth Circuit in Hooks v. Landmark Industries, Inc., rejected the argument that a plaintiff’s claims are rendered moot when the plaintiff declines a Rule 68 offer of judgment by the defendant that would fully satisfy his demands.
In Gomez, which will be argued on October 14, 2015, the Supreme Court granted certiorari to review a similar ruling by the Ninth Circuit. The Court has agreed to decide, inter alia, whether a case becomes moot, and thus beyond the judicial power of Article III of the Constitution, when the plaintiff receives an offer of complete relief on his claim, and whether the answer to the first question is any different when the plaintiff has asserted a class claim under Federal Rule of Civil Procedure 23, but receives an offer of complete relief before any class is certified.
The Seventh Circuit in Chapman expressed a desire to “clean up the law of this circuit promptly” before Gomez is decided. In so doing, it overruled prior circuit case law which had held that the plaintiff’s claims are rendered moot by a fully sufficient offer of judgment from the defendant, even if the plaintiff rejects the offer. In Hooks, the Fifth Circuit acknowledged that “the Supreme Court recently granted certiorari [in Gomez] to resolve the issue presented in this case,” but noted that the parties did not request a stay pending the Supreme Court’s ruling.
Both Chapman (a Telephone Consumer Protection Act case) and Hooks (an Electronic Funds Transfer Act case) relied heavily on Justice Elena Kagan’s dissenting opinion in Genesis HealthCare Corp. v. Symczyk. In that opinion, Justice Kagan argued that an expired and unaccepted offer of judgment does not render the case moot.
The reasoning of these decisions is highly questionable on several grounds, among which is the Seventh Circuit’s insistence that “[n]one of the other justices in Genesis HealthCare disagreed with Justice Kagan’s analysis.” In fact, the majority in Genesis HealthCare sharply disagreed with Justice Kagan’s dissent, observing that “[w]hile we do not resolve the question whether a Rule 68 offer that fully satisfies the plaintiff’s claims is sufficient by itself to moot the action…, we note that Courts of Appeals on both sides of that issue have recognized that a plaintiff’s claim may be satisfied even without the plaintiff’s consent.”
The Chapman panel itself acknowledged that “the conclusion that a particular doctrine is not ‘jurisdictional’ does not make it vanish.” It suggested that “a spurned offer of complete compensation should be deemed an affirmative defense, perhaps in the nature of an estoppel or a waiver.” The panel also appeared to rhetorically question its own decision, asking “why should a court supply a subsidized dispute-resolution service when the defendant’s offer means that there’s no need for judicial assistance, and when other litigants, who do need the court’s aid, are waiting in a queue?” It further emphatically observed, “Ordering a defendant to do what it is willing to do has no legitimate claim on judicial time. 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.” These arguments are what previously led the Seventh Circuit to hold, prior to Chapman, that claims such as Chapman’s were rendered moot by the unaccepted offer of complete relief. Because the defendant did not make these arguments, the Chapman court left them “for another day.” That day may come when the Supreme Court issues its decision in Gomez.
Even after Chapman and Hooks, the circuit courts remain deeply divided on this issue. At least five circuit courts disagree with Chapman and Hooks and hold that an offer of complete relief by the defendant does indeed render moot the plaintiff’s claims. Therefore, the circuit split underlying the grant of certiorari in Gomez remains intact.
