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Supreme Court: FRCP 68 Offer of Judgment Does Not Moot Class Action Claims
Practical Law Legal Update w-001-3704 (Approx. 6 pages)
Supreme Court: FRCP 68 Offer of Judgment Does Not Moot Class Action Claims
by Practical Law Litigation
| Published on 25 Jan 2016 • USA (National/Federal) |
In Campbell-Ewald Co. v. Gomez, the United States Supreme Court 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.
In recent years, defendants in putative class actions across the country have attempted to "pick off" class representatives by using Federal Rule of Civil Procedure (FRCP) 68 offers of judgment to intentionally moot the claims. Several circuit courts of appeals, however, have held that where this type of offer is not accepted, it cannot, by itself, moot a plaintiff's claim. Although the Supreme Court previously had skirted the issue, on January 20, 2016, in Campbell-Ewald Co. v. Gomez, the Court issued a much anticipated decision agreeing with those circuits and holding that an unaccepted offer to satisfy a representative plaintiff's individual claims does not moot either that plaintiff's claims, or those of the putative class ( (2016)).
Specifically, the Supreme Court held that an unaccepted offer of judgment for complete relief made under FRCP 68:
- Has no force.
- Creates no lasting rights or obligations.
- Does not impact a court's Article III subject matter jurisdiction.
Background
The United States Navy retained petitioner Campbell-Ewald Co. (Campbell) to create a recruiting campaign that involved texting people who had agreed to receive marketing solicitation from the Navy. Campbell sent a text message solicitation to over 100,000 recipients, including respondent Gomez, who claimed that he had never consented to receive these messages. Gomez filed a class action complaint alleging that Campbell violated the Telephone Consumer Protection Act (TCPA), which prohibits sending a text message solicitation to someone without prior consent. (Campbell-Ewald Co., , at *3-4.)
Before the deadline for class certification motions, Campbell made an FRCP 68 offer of judgment to settle Gomez's individual claim. Gomez did not accept the offer and allowed it to lapse after the 14 day limit set out in FRCP 68. Campbell moved to dismiss the case arguing that its offer of judgment, which would have provided Gomez with complete relief, mooted his claim and as a result the court no longer had subject matter jurisdiction. Campbell further claimed that since it made its offer prior to class certification, the offer also mooted the putative class claims. The district court denied the motion.
Campbell later moved for summary judgment arguing that because it was acting as the Navy's contractor when it sent the text message, it was entitled to the Navy's immunity from the TCPA claim. The district court granted the motion.
On appeal, the Ninth Circuit reversed the summary judgment order and held that Campbell was not entitled to derivative sovereign immunity. The Ninth Circuit did, however, agree with the district court that the offer of judgment had not mooted Gomez's claim.
The Supreme Court granted certiorari to resolve whether:
- An unaccepted FRCP 68 offer can moot a plaintiff's case and deprive a court of its Article III jurisdiction.
- A federal contractor can derive immunity from the governmental entity for which it is performing work.
Outcome
The Supreme Court held that:
- An unaccepted settlement offer or offer of judgment does not moot a plaintiff's case or strip a court of its subject matter jurisdiction.
- Although a government contractor can enjoy immunity for work it does for the government, there is no derivative immunity for a contractor who violates federal law and the government's instructions.
FRCP 68 Offer of Judgment
In addition, as an offer of judgment cannot moot an individual claim, it likewise cannot moot putative class claims. The Court explained that because "a would-be class representative with a live claim of her own must be accorded a fair opportunity to show that certification is warranted," the putative class claims remain live as well. (Campbell-Ewald Co., , at *6-8.)
Notably, the Court left open the issue of "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" (Campbell-Ewald Co., , at *8).
Derivative Immunity
The Court clarified that although a government contractor can be entitled to derivative immunity, unlike the government's immunity, derived protection is not absolute. Here the Navy had explicitly instructed Campbell to only send the solicitation text to those individuals who had agreed to receive these communications. Campbell violated both the TCPA and the Navy's direction when it sent the text message to Gomez. Under these circumstances, derivative immunity did not apply.
Practical Law has many resources to help attorneys navigate issues addressed by this opinion, as well as the use of FRCP 68 offers of judgment, including: