As you probably know, on Wednesday, the Supreme Court finally issued its long-awaited opinion in Campbell-Ewald Co. v. Gomez.  Tammy Adkins & Helen Arnold of McGuireWoods’s Chicago office wrote up an excellent summary, which I’m quoting below:

On January 20th, 2016, in Campbell-Ewald Co. v. Gomez, a case closely watched by both sides of the class action bar, the U.S. Supreme Court ruled in an opinion authored by Justice Ruth Bader Ginsberg that an unaccepted Rule 68 offer of judgment did not moot the Telephone Consumer Protection Act (TCPA) putative class action brought by plaintiff Jose Gomez.

Defendant Campbell-Ewald, a contractor and advertising partner for the U.S Navy, allegedly sent the plaintiff unsolicited marketing text messages urging him to join the U.S. Navy. Plaintiff Gomez sued on behalf of himself and a nationwide class under the TCPA. He sought treble statutory damages, costs and attorney’s fees, as well as an injunction against Campbell-Ewald’s unsolicited messaging.

Campbell-Ewald extended to the plaintiff a Rule 68 settlement offer of $1,503 per text message, satisfying his treble damages claim. The plaintiff let the offer lapse without accepting it. Campbell-Ewald then filed a motion to dismiss Gomez’s claims, based on the offer of settlement, arguing that there was no longer a case or controversy as required for federal jurisdiction.

In the majority opinion, the Court found that an unaccepted settlement offer cannot moot a complaint. Under basic contract law, the Court held that in this circumstance, there is no offer and no acceptance, and therefore the offer can have no effect on the plaintiff’s claim, aside from Rule 68’s penalty of stopping the clock on costs. The Court stated: “We hold today … that an unaccepted settlement offer has no force. Like other unaccepted contract offers, it creates no lasting right or obligation. With the offer off the table, and the defendant’s continuing denial of liability, adversity between the parties persists.”

The Court further stated that Article III requires only a case or controversy, and the case does not become moot so long as the parties have a concrete interest, however small, in the litigation. According to the Court, a case becomes moot only “when it is impossible for a court to grant any effectual relief whatever to the prevailing party.” Because the plaintiff rejected the defendant’s settlement offer, and the offer itself did not admit liability, “Gomez gained no entitlement to the relief Campbell previously offered.”

Although the Court’s majority opinion seemingly holds that defendants cannot strategically moot class action claims by offering the named plaintiff all of his or her requested relief, the Court expressly left open the question of whether the result would be different if the defendant were to deposit the full amount of the plaintiff’s individual claim in an account payable to the plaintiff and the court entered judgment for the plaintiff in that amount. Moreover, the concurring and dissenting opinions indicated other possible ways that the case could have come out differently if the facts were different – such as if the defendant had deposited the funds with the court or if the defendant had admitted its liability in the settlement offer. These questions leave the door open to other possible outcomes, and therefore, we will likely continue to see variations of this case in the future.

Justice Ginsburg’s majority opinion was joined by Justices Anthony Kennedy, Stephen Breyer, Elena Kagan and Sonia Sotomayor. Justice Clarence Thomas concurred in the judgment, and filed his own concurrence. Chief Justice Robert G. Roberts authored a dissenting opinion, which was joined by Justices Antonin Scalia and Samuel Alito. Justice Alito also filed a separate dissenting opinion.

A few other thoughts about the opinion:

  • The logic here is completely Justice Kagan’s from her dissent in Symczyk.  In fact, Justice Ginsburg’s opinion explicitly adopts her reasoning there.
  • Because the court relied on Justice Kagan’s logic, it did nothing to resurrect the entity theory of class actions.  It appears that the “class as pre-certification entity” is still a dead letter in the Roberts Court.
  • I’m a little surprised that the Court did not resolve the mootness question once and for all, but it makes sense they would avoid controversial decisions when they had an easy basis for decision.
  • But that means it’s time to watch for “escrow pickoffs,” a tactic first raised in oral argument and mentioned again in the opinions.  Basically, a defendant can tender complete payment to an account with the plaintiff’s name on it, or to the court.  At that point, it’s unclear whether there is still complete adversity.
  • This will not have a huge effect on day to day practice.  Only the Seventh Circuit had really smiled on the Rule 68 offer of judgment as a mootness tactic (in Damasco), and it reversed itself recently.  And, even in the Seventh Circuit, actual mooting of claims was comparatively rare.
  • The Court did not rule on the use of a Rule 68 offer to limit costs in a class action.  That still remains a valid and potentially powerful tool for defendants to use.

So, the main takeaway here is that the Court has offered some guidance on mooting class actions, but has not yet closed off the strategy entirely.


NOTE – This post was edited to fix a few typos.