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U.S. Supreme Court Rejects Class Action Defendants’ Attempt to “Moot” Named Plaintiffs’ Claims through Early Settlement Offer

The United States Supreme Court has ruled that “an unaccepted settlement offer or offer of judgment does not moot a plaintiff’s case,” even if the offer includes everything the plaintiff would be entitled to recover at trial. By a 6-3 majority, the Court in Campbell-Ewald Co. v. Gomez rejected the defendant’s contention that the named plaintiff in a putative nationwide class action could no longer pursue a claim, either individually or on behalf of a class, after he refused to accept an offer that both sides agreed “would have fully satisfied the individual claims that were asserted, or that could have been asserted” by the plaintiff. This ruling appears to be in direct conflict with the 2013 Supreme Court case Genesis HealthCare Corp. v. Symczyk.

Here, the plaintiff, Jose Gomez, claimed that he received a text message from the defendant but had never consented to receiving such messages. Gomez filed a nationwide class action alleging the defendant violated the Telephone Consumer Protection Act and that he was entitled to statutory damages of $500 per text, which he alleged should be trebled to $1,500. Before Gomez could move for class certification, the defendant made a formal “offer of judgment” to settle Gomez’s individual claim for $1,503 per text message, as well as the court costs he incurred, which amounted to everything Gomez could possibly recover in the lawsuit. Because Gomez never responded, the offer lapsed.

The defendant then moved to dismiss Gomez’s claim on the ground that his claim was moot. The majority principally relied on basic contract principles in rejecting the defendant’s argument, noting that an offer that is not accepted creates no agreement and has no legal effect. Because the plaintiff did not agree to settle the dispute, there remained a live controversy between the parties that the federal courts were obligated to entertain.

Chief Justice Roberts, joined by Justices Scalia and Alito, dissented, noting that: “When a plaintiff files suit seeking redress for an alleged injury, and the defendant agrees to fully redress that injury, there is no longer a case or controversy for purposes of Article III [of the United States Constitution].” The dissenting Justices expressed frustration with a plaintiff continuing to pursue a claim merely because the plaintiff “wants a federal court to say he is right.” The dissenters opined that “the federal courts exist to resolve real disputes, not to rule on a plaintiff’s entitlement to relief already there for the taking.”

The decision in this case precludes parties facing potential class actions from effectively “picking off” named plaintiffs by simply offering to pay what, in many kinds of cases, could be relatively nominal sums of money. The Court did not decide—and expressly reserved for another day—“whether the result would be different if a defendant deposits the full amount of the plaintiff’s individual claim in an account payable to the plaintiff, and the court then enters judgment for the plaintiff in that amount.”

This last point is important as it clarifies how the present case can co-exist with Genesis HealthCare Corp. v. Symczyk. In Symczyk, the Court held that mooting a representative plaintiff’s claim does end a collective action. The key distinction between the two cases is that the plaintiff in Symczek conceded that an unaccepted offer of complete relief mooted her claim. In the present case, the plaintiff argued it did not. The Court agreed and held his claim was not moot.

What this ultimately means is that mootness is not dead as a defense to class actions. A defendant, however, must be certain it has actually mooted the named plaintiff’s claim.  

©2022 MICHAEL BEST & FRIEDRICH LLPNational Law Review, Volume VI, Number 25
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About this Author

Paul E. Benson, product and tort liability litigator, michael best law firm
Partner

For more than 25 years, Paul has specialized in product liability defense, class action defense, insurance litigation, and complex commercial litigation. He is particularly well known for his work in the class action and food and beverage sectors, where he is a nationally and locally recognized speaker and thought leader on product liability issues and regulatory trends.

In all of these areas, Paul has established a reputation for outstanding results. He has used motion practice to obtain summary judgment and/or dismissal in more than half of the cases he has defended in Wisconsin...

414-225-2757
Evan Strassberg, Michael Best Law Firm, Life Sciences and Litigation Attorney
Partner

Evan Strassberg is a civil litigator who holds active licenses in both Utah and California. Evan has extensive experience in a wide variety of litigation matters, including defense of consumer class actions and disputes regarding trademarks, breach of contract, fraud, securities, employment discrimination, eminent domain, and personal injury.

Evan has also assisted in the defense of large-scale consumer class actions. Evan has a strong background in serving dietary supplement companies, among other businesses. He has successfully argued...

801-833-0477
Joseph Olson, Michael Best Law Firm, Employee Benefits Litigation Attorney
Partner

Joe is a trial attorney practicing primarily in the areas of class action defense, wage and hour litigation, employee benefits litigation, regulatory compliance, and complex commercial litigation. In this capacity, he:

  • Routinely helps clients deal with class actions suits across all subject matters

  • Handles all aspects of complex employment litigation including wage and hour suits arising under the federal Fair Labor Standards Act (FLSA) and applicable state laws, plus benefits litigation...

414-277-3465
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