Like many cell-phone users, Jerome Damasco received an an unsolicited text message on his phone. Unlike many cell-phone users, he decided to make a federal case of it. So he filed a class action in federal court, alleging that Clearwire (the advertiser) had violated the Telephone Consumer Protection Act.
Faced with the complaint, Clearwire offered Damasco the full damages he sought as an individual. (It also offered to make the same payment to ten other unnamed individuals, suggesting that this may have been a technical glitch rather than a knowing TCPA violation.) It warned Damasco that it considered this offer to moot his claims, and it moved to dismiss because Damasco no longer had standing. A trial court for the Northern District of Illinois granted the motion.
Damasco appealed to the Seventh Circuit, which, in the recent opinion Damasco v. Clearwire Corp., affirmed the trial court.
The question of mootness is hotly contested in class actions. The plaintiff wants to be able to assert a classwide claim as early as possible, with as little up-front expense as possible. (Locating a class representative who cares enough to prosecute the litigation can be a significant up-front expense.) The defendant wants to be able to get rid of a case if it is clear to it that it is dealing with a small customer-relations problem instead of a systemic problem.
Unlike the Third Circuit, which has consistently held that offers to make the named plaintiff whole do not moot class actions, the Seventh characterized the fight over mootness as one where some courts interpret the standing doctrine as it … well … stands, and others impose a "new rule" that would prevent mooting an individual plaintiff’s claim.
Those circuits, citing the flexible nature of the mootness doctrine and concerns about buy-offs, have fashioned a new rule that, absent undue delay, a plaintiff may move to certify a class and avoid mootness even after being offered complete relief.
And the Seventh Circuit has now gone on record saying that it does not follow this exception:
We believe that the exception created by these circuits is unnecessary. To allow a case, not certified as a class action and with no motion for class certification even pending, to continue in federal court when the sole plaintiff no longer maintains a personal stake defies the limits on federal jurisdiction expressed in Article III. See Juvenile Male, 131 S. Ct. at 2864; Lewis v. Cont’l Bank Corp., 494 U.S. 472, 477-78 (1990); Holstein, 29 F.3d at 1147. That the complaint identifies the suit as a class action is not enough by itself to keep the case in federal court. Even when a "complaint clearly and in great detail describes the suit as a class action suit," if the plaintiff does not seek class certification, then "dismissal of the plaintiff’s claim terminates the suit."
(Emphasis added.) The Seventh Circuit also considerd the traditional objection, that this would allow a defendant to "buy off" an individual named plaintiff. It found a simple solution to that problem.
A simple solution to the buy-off problem that Damasco identifies is available, and it does not require us to forge a new rule that runs afoul of Article III: Class-action plaintiffs can move to certify the class at the same time that they file their complaint. The pendency of that motion protects a putative class from attempts to buy off the named plaintiffs.Damasco argues that this solution would provoke plaintiffs to move for certification prematurely, before they have fully developed or discovered the facts necessary to obtain certification. But this objection is unpersuasive. If the parties have yet to fully develop the facts needed for certification, then they can also ask the district court to delay its ruling to provide time for additional discovery or investigation.
(Internal citations omitted.) Now, if I were a plaintiff, I might object here that what the Seventh Circuit has done is recommended that I violate Rule 11 by filing a motion for certification without a sufficient basis in law or fact. But I would be wrong to do so. After all, plaintiffs have to allege in their complaint that the case is appropriate for class treatment. If they have done that without a sufficient basis in law or fact, then they have already violated Rule 11.
The more interesting thing the Seventh Circuit has done here is to reframe the debate over standing in class actions. For the most part, legal doctrine treats an uncertified class as an individual case. But, in practice, courts do often assume that since a plaintiff has alleged a class action, there is something different about the case that justifies its continuation when an ordinary case might go off the rails. And there is no real justification in caselaw for doing so. Here, the Seventh Circuit has made that distinction more explicit: just saying a case is a class action does not make it so. A plaintiff must at the very least file a motion for certification to justify the special treatment courts afford a class action.