A Pick Off Play Strikes Out at the First Circuit, But There Are More Innings to be Played; the Debate Over Rule 68 Offers of Judgment Continues
Sorry, we couldn’t resist mixing our baseball metaphors. In Bais Yaakov of Spring Valley v. ACT, Inc., the First Circuit affirmed a district court decision refusing to dismiss a putative class action as moot based on an unaccepted offer under FRCP 68 that defendant claimed would provide complete relief to the plaintiff. In so holding, the First Circuit became the latest Circuit Court of Appeals to weigh in on Rule 68 offers in advance of the Supreme Court’s Campbell-Ewald v. Gomez case, which legal commentators hope will settle the issue once and for all.
In Bais Yaakov, Plaintiff asserted claims for violation of the “junk fax” provision of the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227(b)(1)(C), and for violation of New York General Business Law § 396-aa. The district court held that the unaccepted offer became a nullity by operation of Rule 68 (which automatically terminates unaccepted offers of judgment after 14 days) and, in any event, did not provide complete relief because, among other things, plaintiff still sought fees to be paid on behalf of (and to be apportioned to) the putative class.
The First Circuit decided the case very narrowly. It declined to resolve the question of whether an unaccepted Rule 68 offer is an nullity for purposes of determining Article III standing (while expressing some doubt about the proposition). It also rejected plaintiff’s argument that the interest in recovery of fees created a continuing controversy. There was, nonetheless, a dispute as to whether ACT’s offer provided complete relief. ACT offered $1600 per fax (trebled TCPA damages plus $100 under the NY statute). Plaintiff, however, alleged that each offending fax violated the TCPA in multiple ways, and claimed entitlement to damages of up to $1600 per statutory deficiency per fax. That dispute as to the measure of damages was a live controversy that could not be resolved on a Rule 68 offer of judgment, making it impossible to conclude that plaintiff received complete relief that might suffice to moot the claim.
The Bais Yaakov decision was clearly written in the shadow of Campbell-Ewald, which also concerns a failed attempt to moot a TCPA class action with a Rule 68 offer of judgment (the trial court dismissed; the Ninth Circuit reversed). In Campbell-Ewald, which we discussed in more depth here, the Supreme Court has been asked to address whether an unaccepted Rule 68 offer of complete relief made before class certification moots the putative class action. The First Circuit might have tried to stake out a broader position on the use of Rule 68 to moot class actions had that issue not been pending before the Supreme Court. Instead, as Judge Kayatta writes, “Until the Supreme Court addresses the whole issue of class action pick-offs more comprehensively . . . uncertainty will reign.”
As we read Bais Yaakov, the Rule 68 pick off move remains viable in the First Circuit. Nonetheless, in the absence of definitive First Circuit guidance, district courts in that circuit may be prone to side with the (sizeable) majority of federal circuit courts finding that unaccepted Rule 68 offers of judgment cannot moot claims of a putative class representative – with the Seventh Circuit being the latest court to say so. At a minimum, absent a dispute as to what constitutes complete relief, defendants can continue to attempt this maneuver in good faith in courts of the First Circuit pending the likely definitive resolution of this issue by the Supreme Court.