Supreme Court Grants Certiorari To Resolve Circuit Split As Second Circuit Holds That Offer Of Judgment Can Moot Named Plaintiffs’ Claims If Trial Court Enters Judgment
Several pending Circuit appeals and a pending petition for certiorari to the United States Supreme Court foreshadowed that clarity might be coming to the question whether an offer of complete relief to a named plaintiff in a putative class action can moot the named plaintiff’s claim, and the related issue of whether named plaintiffs can continue to pursue claims on behalf of a putative class after their individual claims become moot. Last week the Second Circuit has provided a partial answer, and today the Supreme Court granted certiorari, which hopefully will put the issue to rest once and for all.
In Tanasi v. New Alliance Bank, No. 14-1389, 2015 WL 2251472 (2d Cir. May 14, 2015), the Second Circuit held that an unaccepted Rule 68 offer of judgment that provides complete relief does not, by itself, moot the claims of the named plaintiff. Instead, the named plaintiff’s claims become moot for purposes of Article III’s case or controversy requirement when the court enters judgment in the named plaintiff’s favor in accordance with the offer.
Here’s the wrinkle. In Tanasi, the Second Circuit did not hold that district courts are required to enter judgment in favor of the named plaintiff who refuses to accept an offer of complete relief. Rather, the Court suggested that district courts have discretion to do so. And the Court did not provide extensive guidance on the exercise of such discretion, other than noting that the purpose of Rule 68 is “to encourage settlement and avoid litigation,” and that entry of judgment is appropriate if the parties so agree, or if “a defendant “unconditionally surrenders” and “only the plaintiff’s obstinacy or madness prevents her from accepting total victory.” The Court did not suggest that this was an exhaustive list of scenarios in which a district court should enter judgment, nor did it overrule prior case law addressing this issue.
Because the district court in Tanasi never entered judgment in favor of the named plaintiff, the Second Circuit concluded that his “individual claims were not rendered moot ‘in the constitutional sense’ by the unaccepted Rule 68 offer,” and affirmed, albeit on alternate grounds, the district court’s decision that it had subject matter jurisdiction over the case. In a separate case involving a similar issue, the Second Circuit — relying on Tanasi — summarily vacated an order dismissing a class action as moot because the district court did not enter judgment in favor of the named plaintiff in accordance with the defendant’s offer of judgment. See Franco v. Allied Interstate, LLC, 14-1464 (2d Cir. May 18, 2015).
The Tanasi Court expressly left for another day the question of what happens to the putative class claims after a named plaintiff’s individual claims are rendered moot. That day likely is coming soon. Today, the United State Supreme Court granted certiorari in a TCPA class action that involves the issue of whether the entire case is rendered moot for purposes of Article III when the named plaintiff receives an offer of complete relief. Gomez v. Campbell-Ewald Co., 768 F.3d 871 (9th Cir. 2014), cert. granted sub nom. Campbell-Ewald Co. v. Gomez, 2015 WL 246885 (U.S. May 18, 2015) (No. 14-857). Our prior post about the Ninth Circuit’s decision in Campbell-Ewald is available here. Stay tuned for further developments.