August 8, 2022

Volume XII, Number 220

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August 08, 2022

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Supreme Court Finds Full Settlement Offer Prior to Certification Does Not Moot Class Representative’s Claim

In a 6-3 decision, the U.S. Supreme Court ruled that an unaccepted settlement offer under Fed. R. Civ. P. 68 does not moot a class representative’s claim, even when the offer is made before class certification. Campbell-Ewald Co. v. Gomez, 2016 WL 228345, at * 8 (U.S. Jan. 20, 2016). In doing so, the Court resolved a split among the Courts of Appeals, which had been trending in this direction.

Defendant-Petitioner Campbell-Ewald Company (Campbell) was engaged to develop a nationwide marketing strategy for a government entity to send text messages “only to individuals who had ‘opted-in’” to receiving the solicitation. Jose Gomez, the class representative, received a communication from Defendant and claimed he had not consented to receive such messages. Gomez filed a class action law suit alleging that Campbell’s text message violated Telephone Consumer Protection Act (TCPA). 47 U.S.C. § 227(b)(1)(A)(iii).

Prior to class certification, Campbell offered to pay Gomez his court costs and $1,503 per message received under Rule 68, “thereby satisfying his personal treble-damages claim.” Gomez did not accept the offer. Campbell, claiming that it had offered Gomez complete relief, moved to dismiss Gomez’s and the classes claim for lack of a case or controversy.

The Court (Justice Ginsburg writing for the majority) disagreed with Campbell and adopted Justice Kagan’s analysis of the issue in her dissent in Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523 (2013), which was based on “basic principles of contract law.” The Court concluded that Rule 68 does not change the basic principle that “every first-year law student learns[:] the recipient’s rejection of an offer ‘leaves the matter as if no offer had ever been made.’” Rule 68 also contains a “sole built-in sanction: ‘If the [ultimate] judgment . . . is not more favorable than the unaccepted offer, the offeree must pay the costs incurred after the offer was made.’” Therefore, without Gomez’s acceptance, the Court held Campbell’s offer remained a proposal, “binding neither on Campbell nor Gomez.”

In his dissent, Chief Justice John Roberts disagreed that contract principals governed; instead, he viewed the question as whether a case or controversy exists. He reasoned that an actual controversy cannot exist where defendant is willing to give the plaintiff everything he asks for.

Justice Ginsburg and Chief Justice Roberts both agreed that the Court’s ruling is not intended to decide cases where the defendant actually pays the plaintiff relief or “deposits the full amount of the plaintiff’s individual claim in an account payable, and the court then enters judgement for the plaintiff in that amount,” leaving a defendant with the possibility of ending a class action by actually paying representative plaintiffs or depositing settlement funds with the court.

© 2022 BARNES & THORNBURG LLPNational Law Review, Volume VI, Number 22
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About this Author

David A. Frazee, Barnes Thornburg Law Firm, Washington DC, Corporate and Litigation Law Attorney
Associate

David Frazee is an attorney in Barnes & Thornburg’s Washington, D.C., office and a member of the Litigation Department. Mr. Frazee’s practice primarily concentrates on white collar crime defense, anti-trust litigation, corporate compliance, products liability and other complex business litigation.

Prior to joining Barnes & Thornburg full-time, Mr. Frazee was a summer associate in the firm’s Indianapolis office. He has also gained substantial legal experience as a law clerk in the Monroe Circuit Court for the Hon. Mary Ellen Diekoff, Hon...

317-231-7541
Christine E. Skoczylas, Barnes Thornburg Law Firm, Chicago, Insurance and Litigation Law Attorney
Partner

Christine Skoczylas is a partner in the Chicago office of Barnes & Thornburg and a member of the firm’s Litigation Department and Co-Chair of the Commercial Litigation Practice Group. She is also a member of the Policyholder Insurance Recovery and Counseling Practice Group. She concentrates her practice on resolving corporate and business disputes and has represented clients in a wide range of state and federal litigation, class action litigation, arbitration, and appellate matters, including breach of fiduciary duty, fraud, and tort actions, products liability cases...

312-214-5613
T. Joseph Wendt Litigation lawyer Barnes Thornburg
Partner

Joe Wendt is a partner in the Litigation Department in the Indianapolis office of Barnes & Thornburg and Co-Chairs the Commercial Litigation Practice Group.

Joe's practice focuses on commercial disputes, with experience representing heavy equipment manufacturers, real estate development and construction companies, utilities and entities involved in energy trading.

Representative cases include:

  • Obtained judgment in favor of a global manufacturer on claims that it violated the False Claims Act through purchases from an allegedly sham, minority-owned entity....
317-231-7748
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