July 22, 2019

July 22, 2019

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Mooting Plaintiff’s Class Action Even After Plaintiff Refuses An Offer Of Judgment

For years, litigants have battled over whether a defendant’s offer of judgment, which completely satisfies the plaintiff’s individual claim, can moot a class action. In Campbell-Ewald v. Gomez, 136 S. Ct. 663 (2016), the U.S. Supreme Court recently held that no case is mooted when a plaintiff refuses to accept an offer of judgment.  The Supreme Court, however, left open the question of what happens when a defendant follows through with its offer by tendering complete individual relief, depositing the monetary relief with the court, and moving for entry of judgment.

The Southern District of New York recently addressed this precise issue in Leyse v. Lifetime Entertainment Services, LLC, Case No. 13-civ-5794 (S.D.N.Y. March 17, 2016).  In that case, the plaintiff sued on a class action basis for alleged violation of the Telephone Consumer Protection Act (“TCPA”), the same claim at issue in Campbell.  After the trial court denied the plaintiff’s motion for class certification, the defendant offered full monetary relief of $1,503, a stipulated injunction to never call the plaintiff again, and costs.  When the plaintiff refused this offer, the defendant moved for entry of judgment based on the offer.

The plaintiff argued that the defendant’s motion should be denied based on Campbell.  The court disagreed, finding: “Campbell-Ewald expressly did not reach the question of whether the district court had authority to enter a judgment for the plaintiff over the plaintiff’s objections and dismiss the action, if the full amount in controversy were actually paid.”  The court found that it would enter judgment, once the defendant paid the Clerk of the Court the $1,503 offered, plus $400 to cover costs.  This, plus the defendant’s offer of injunctive relief in the form of an order not to call the plaintiff again, would “eliminate the live controversy before the court.”  The trial court noted that its decision is consistent with law in the Second Circuit.

Because it had previously denied class certification, the trial court in Leyse did not address what effect an individual judgment would have on class claims prior to a ruling on class certification.  Indeed, this remains an open question in the Second Circuit and elsewhere. See Tanasi v. New All. Bank, 786 F.3d 195, 201 (2d Cir. 2015) (leaving “for another day the question of whether putative class action claims under Rule 23 generally provide an independent basis for justiciability after a plaintiff’s individual claims are rendered moot”).  The trial court in Leyse did comment that the judgment in plaintiff’s favor “would not necessarily preclude plaintiff’s subsequent appeal on the class certification issue.”  How this will play out on appeal and remand, however, also remains to be seen.

What is certain is that class action litigants will continue to battle over these issues for the foreseeable future.

Copyright © 2019, Sheppard Mullin Richter & Hampton LLP.

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About this Author

Eric J. DiIulio, Business Trial Attorney, Sheppard Mullin Law Firm
Associate

Eric DiIulio is an associate in the Business Trial Practice Group in the firm's San Francisco office.

Mr. DiIulio earned his J.D. from U.C. Hastings, where he participated in Moot Court and the Civil Justice Clinic.  Mr. DiIulio earned his B.A. in International Relations from Stanford University, where he was a varsity swimmer.  Prior to attending law school, Mr. DiIulio was a high school math teacher in Waipahu, Hawaii.

415-774-2955
Shannon Z. Petersen, Business Trial Legal Specialist, Sheppard Mullin
Partner

Shannon Z. Petersen is a partner in the Business Trial Practice Group in the firm’s Del Mar office and is co-chair of the firm’s consumer class action defense team and the firm’s TCPA class action defense team.

Areas of Practice

Dr. Petersen has substantial trial experience as a business litigator, including consumer class action defense. He has successfully represented clients in claims involving the federal Telephone Consumer Protection Act (TCPA), the Fair Debt Collection Practices Act (FDCPA), the Fair Credit Reporting Acting (FCRA), the Truth in Lending Act (TILA), the Real Estate Settlement Procedures Acts (RESPA); California's Unfair Competition Law (UCL), Consumers Legal Remedies Act (CLRA), Rosenthal Act, Automobile Sales Finance Act (ASFA or Rees-Levering), Vehicle Leasing Act, Confidentiality of Medical Information Act (CMIA); breach of contract, insurance bad faith, unfair business practices, false advertising, fraud, breach of fiduciary duty, negligence, wrongful foreclosure, wrongful repossession, unfair debt collection, unfair credit reporting, unjust enrichment, misappropriation of trade secrets, trademark infringement, quiet title, emotional distress, construction defect, privacy, and receiverships, among others.

619-338-6656