Demmler v. ACH Food Companies, Inc.: Mooting Consumer Class Actions in Response to Pre-Suit Demand Letters
We previously blogged about Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (2016), in which the Supreme Court held that an unaccepted Rule 68 offer of judgment does not moot a class plaintiff’s claims and, in turn, a class action. But the Court postulated that actual satisfaction of a class plaintiff’s claims – such as tendering a check or depositing funds in a bank account – might moot those claims.
Since then, some courts have held that a refund/deposit moots a class plaintiff’s claims and the class action. Others have disagreed. Some have refused to dismiss class actions even when the class plaintiff’s claims are moot, reasoning that the plaintiff retains an interest in pursuing the class claims.
This jumbled case law offers little guidance. One observation is that the payment should have no strings attached – the plaintiff should have immediate control of the funds. Where injunctive relief is sought, the defendant may need to cease the challenged conduct rather than just offer to do so. The payment also should be made before a certification motion is filed.
In Demmler v. ACH Food Companies, Inc., No. 15-13556-LTS (D. Mass. June 9, 2016), a court recently approved this strategy in dismissing a class action under Massachusetts’ Consumer Protection Act (93A). Demmler claimed that the use of “All Natural” on the labeling for ACH’s Weber barbeque sauces was unfair and deceptive in violation of 93A because the product contained an artificial coloring. As required by 93A, he sent a demand letter before filing suit. ACH responded by sending a check for $75 – more than the $25 statutory damages. The plaintiff rejected the check.
The court held that the plaintiff’s claims were moot because the check was an unconditional payment, not an offer. And because the class had not been certified, it lacked legal status and had no independent interests. Further, there was no evidence of ACH “picking off” plaintiffs to insulate its labeling from review.
The plaintiff did not seek to enjoin use of “All Natural” since the product had been discontinued. But a request for injunctive relief should be irrelevant. Once a plaintiff challenges labeling as deceptive, it can no longer claim to be deceived and thus has no personal interest in an injunction.
Demmler did not expressly turn on the fact that ACH was responding to a pre-suit demand letter. But there are advantages to doing so:
To the extent that the filing of a lawsuit or class certification motion activates the class’s interests, making a named plaintiff whole before those events is critical.
Minimal fees and costs likely will have been incurred by the demand letter stage. Thus, resolving a case early should help diffuse the argument that the named plaintiff has a separate interest in obtaining fees and costs.
Consumer protection statutes require demand letters to encourage early resolution. It seems incongruous to characterize efforts to further this goal as improper “picking off.”
Few state consumer protection statutes require a pre-suit demand letter. But those that do offer a unique opportunity to moot a class action.