On August 13, 2015, in Hooks v. Landmark Industries, Inc., the US Court of Appeals for the Fifth Circuit held that held that an unaccepted offer for complete relief under Federal Rule of Civil Procedure (FRCP) 68 does not moot the plaintiff’s individual claim or putative class claims (No. 14-20496, (5th Cir. Aug. 12, 2015)).

David Hooks filed a putative class action again Landmark Industries, Inc. (Landmark) for alleged violations of the Electronic Funds Transfer Act related to hidden ATM fees. Landmark made an offer of judgment to Hooks under FRCP 68 proposing to settle the claim for $1,000, the statutory maximum for his individual claim, as well as offering costs and attorney fees. Hooks did not accept the offer and later filed a motion for class certification. Landmark moved to dismiss the case for lack of subject matter jurisdiction, arguing that the unaccepted FRCP 68 offer mooted Hooks’s individual claim as well as the class action suit. The district court granted the motion, and Hooks appealed.

The Fifth Circuit reversed. The court noted that a circuit split exists on the issue, and joined several circuits holding that an unaccepted FRCP 68 offer to a named plaintiff is a “legal nullity” that cannot moot a claim (citing Genesis Healthcare Corp. v. Symczyk, 133 S Ct. 1523, 1533 (2013) (Kagan, J., dissenting)). The court found that it is not deprived of the ability to enter relief, and therefore the claim is not mooted, when a named plaintiff in a putative class action rejects a settlement offer from the defendant. To hold otherwise, the court reasoned, would be to give defendants the ability to unilaterally moot the named plaintiff’s claims in class actions even though the plaintiff, having turned down the offer, would receive no actual relief. Moreover, the court held that because the individual claims were not mooted by the unaccepted offer, neither were the class claims. Counsel should note there is a circuit split on the issue of whether an unaccepted FRCP 68 offer for complete relief can moot individual or class claims. The Supreme Court has granted certiorari on this issue (Gomez v. Campbell-Ewald, 768 F.3d 871 (9th Cir. 2014), cert. granted, 133 S. Ct. 2311 (2015)).