Courts look down on offers of judgment in class actions as a procedural trick.  Used properly, however, they are an effective early screen for cases that can’t be certified. 

One of the most heated debates in the last five years of class action practice has been the proper use of Rule 68’s offer of judgment.  Defendants like the offer of judgment because it can either moot a case early in (thus shutting down lawsuits that could cost hundreds of thousands of dollars to defeat in conventional litigation), and because the cost-shifting procedures place some of the financial risk of the … Continue Reading

Two couples, the Varsamises and the Giannopolouses, sued Iberia Air Lines for not properly compensating them after their international flights were delayed. Their counsel soon ran into plaintiff-related difficulties: the Giannopolouses were not typical of the class (and wound up accepting Iberia’s Rule 68 offer of judgment); the Varsamises’ claims were dismissed at the summary judgment stage. The class action was over; all that was necessary was for someone to call time of death. And Iberia filed a motion for final judgment to do just that.

At that point, plaintiffs’ counsel filed a motion of their own, “to reopen discovery Continue Reading

Securities class actions are interesting for many reasons. They involve large stakes, and so they also attract outsized personalities. They are also more strictly regulated than other class actions. And, as a result, they often lead to unusual tactics for class action litigation. For example, as Professor Mark Gideon points out in his article Recanting Confidential Witnesses in Securities Litigation, 45 Loy. U. Chi. L.J. 575 (2014), because of the heightened pleading requirements they face, securities plaintiffs rely increasingly on confidential witnesses to prop up their complaints, particularly when pleading scienter.

Professor Gideon expresses concern about those courts Continue Reading

In Franco v. Allied Interstate LLC, No. 13 Civ. 4503, 2014 U.S. Dist. LEXIS 47077 (S.D.N.Y. Apr. 2, 2014), the named plaintiff sued the defendant for sending him a debt collection letter that implied he could face garnishment of his wages if he did not pay his debt. He did not allege any actual damages, relying instead on the FDCPA’s statutory damages provision.

In response, the defendant made a Rule 68 offer of judgment of $1,501 plus reasonable costs and attorneys’ fees as allowed by the court, one dollar more than the statutory maximum damages the plaintiff could receive. … Continue Reading

In Labou v. Cellco Partnership, No. 2:13-cv-00844-MCE-EFB, 2014 U.S. Dist. LEXIS 26974 (E.D. Cal. Mar. 3, 2014), the named plaintiff sued cell phone company Verizon. She alleged that Verizon had used an automatic dialer to call her cell phone in an attempt to get her former brother-in-law to pay his cell phone bill, a practice that allegedly violated the Telephone Consumer Protection Act (TCPA). And she sought to certify a class of everyone else Verizon had contacted with an automatic dialer.

There was a twist: the TCPA does not prohibit collection calls so long as the recipient is not … Continue Reading

Rule 68 offers of judgment have been controversial in the class action context. Defendants will often use them in an attempt to moot the class claims of the named plaintiff: offering full relief first, and then moving to dismiss the case on jurisdictional grounds should the plaintiff decline the offer.

But there is a second, also controversial, use of the offer of judgment, where the defendant makes the offer as a means of limiting litigation costs. Under Rule 68(d), if the defendant makes an offer for a definite amount, the plaintiff rejects the offer, and then recovers less than … Continue Reading

 It’s a tale as old as the Telephone Consumer Protection Act ("TCPA"): defendant Janssen Pharmaceuticals sent out a fax reporting on the reclassification of its drug Levaquin for insurance purposes. The plaintiff sued it for violating the TCPA, claiming the fax was an advertisement; Janssen responded that the content of the fax was informational. It won a motion to dismiss, but the court allowed the plaintiff to file an amended complaint.

At that point, Janssen moved the court to bifurcate discovery. But where the typical motion to bifurcate asks for merits discovery after class-related discovery, Janssen asked for Continue Reading

University of Idaho law professor Wendy Gerwick Couture has published an interesting working paper analyzing a data set of dismissal opinions from securities fraud class actions: Around the World of Securities Fraud in 80 Motions to Dismiss. The paper is a quick read, distilling her data into eight major observations.

Among her most interesting findings:

Scienter is the largest problem for plaintiffs. Most defendants have had an intuition that plaintiffs have difficulty meeting the scienter requirement of the PSLRA.  Professor Couture’s data supports that intuition.

Failure to plead a strong inference of scienter, as required by the Private

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Robert Lisk of Alabama was building a fence. So he bought some fence lumber from Lumber One. Three years later (he alleged) he discovered that his lumber was rotting prematurely. He filed a class action against Lumber One, asserting, among other claims, that it had violated Alabama’s Deceptive Trade Practices Act (the ADTPA).

Lumber One moved to dismiss the ADTPA claim, arguing that the statute specifically prohibited class actions. A court in the Northern District of Alabama agreed, and dismissed the case in Lisk v. Lumber One Wood Preserving, LLC, No. 3:13-cv–01402-AKK, 2014 U.S. Dist. LEXIS 1784 (N.D. Ala. … Continue Reading

 Ellen Delgado sued collection agency Collecto, Inc., accusing it of violating the Fair Debt Collection Practices Act by sending her an improper debt collection letter. After she filed suit (but before she moved for class certification), Collecto made an offer of judgment for Ms. Delgado’s full damages, as well as attorneys’ fees and costs. It then, some minor procedural maneuvering aside, moved to dismiss the case as moot.

These facts should sound familiar to readers of this blog; they’re part of the ongoing battle over whether a defendant can moot a named plaintiff’s claims in a class action by offering Continue Reading