On August 21, 2015, in Bais Yaakov of Spring Valley v. ACT, Inc., the US Court of Appeals for the First Circuit held that an unaccepted FRCP 68 offer of judgment for individual relief in a putative class action does not divest the court of subject matter jurisdiction by mooting the named plaintiff's claims (No. 14-1789, (1st Cir. Aug. 21, 2015)).

Plaintiff Bais Yaakov, a private school, brought a putative class action against ACT, Inc., a college entrance examination services provider, alleging violations of the Telephone Consumer Protection Act (TCPA) (47 U.S.C. § 227) stemming from three unsolicited facsimiles that ACT sent to the school. Several months into the litigation, the parties mutually agreed on a deadline for the plaintiff's class certification motion. Before that deadline, ACT tendered to the plaintiff an FRCP 68 offer of judgment, stating that the offer represented the maximum amount of statutory damages that the plaintiff could be awarded. ACT also offered to be enjoined from sending the plaintiff additional unsolicited facsimiles, and offered to pay the plaintiff's attorneys' fees and costs if the court determined such fees were in order.

Four days after receiving the offer, the plaintiff moved for class certification and did not otherwise respond to the offer within 14 days of its receipt, leading the offer to be withdrawn under FRCP 68(b). ACT moved to dismiss the lawsuit for lack of subject matter jurisdiction, arguing that its unaccepted and withdrawn FRCP 68 offer fully resolved the controversy between the parties and rendered the plaintiff's claims moot. The US District Court for the District of Massachusetts denied ACT's motion to dismiss, but certified the question of whether an unaccepted FRCP 68 offer of judgment made before a lead plaintiff moves to certify the class moots the entire action, and thus deprives the district court of federal subject matter jurisdiction. The First Circuit agreed to review the question.

Joining the Second, Fifth, Seventh, Ninth, and Eleventh Circuits, the First Circuit held that an unaccepted FRCP 68 offer of judgment cannot, by itself, moot a plaintiff's claim. The court explained that the unaccepted offer did not by itself provide any relief to the plaintiff. It further noted that neither FRCP 68 nor any other rule contemplates use of a rejected offer to secure dismissal of a case. Rather, as the court highlighted, FRCP 68 expressly specifies that a rejected offer is deemed to be withdrawn and it is not admissible except in a proceeding to determine costs (FRCP 68(b)).