On May 14, 2015, in Tanasi v. New Alliance Bank, the US Court of Appeals for the Second Circuit held that an unaccepted settlement offer made under Federal Rule of Civil Procedure 68 does not on its own render a plaintiff's individual claims moot before a judgment is entered (Tanasi v. New Alliance Bank, No. 14-1389, (2d Cir. 2015)).

Plaintiff Patrick Tanasi filed a putative class action against defendants First Niagara Financial Group, Inc. and New Alliance Bank seeking monetary damages. The defendants offered to settle Tanasi's individual claims under Rule 68 for an amount greater than the statutory damages to which Tanasi would have been entitled if successful. After Tanasi refused to accept the offer, defendants filed a motion to dismiss claiming that the unaccepted Rule 68 offer rendered Tanasi's individual and putative class action claims moot. The district court denied the defendants' motion and held that, although Tanasi's individual claims were rendered moot by the unaccepted Rule 68 offer, the court maintained subject matter jurisdiction over the putative class action claims.

On appeal, the Second Circuit affirmed the district court's conclusion but on an alternative ground. The Second Circuit recognized a circuit split on the effect of an unaccepted Rule 68 offer on whether the federal courts have subject matter jurisdiction over the case. Clarifying its earlier opinion in McCauley v. Trans Union, L.L.C., 402 F.3d 340 (2d Cir. 2005), the Second Circuit joined the Ninth and Eleventh Circuits and held that a rejected Rule 68 settlement offer cannot by itself render a case moot. A plaintiff's individual claims only become moot after a judgment is entered. Because the district court had not yet entered judgment against the defendants on their motion to dismiss, the district court still had jurisdiction over the case.

Attorneys should be aware that a party's Rule 68 offer of judgment by itself does not render an individual's claims moot. The federal court maintains Article III subject matter jurisdiction over the case until a judgment is entered.