U.S. Supreme Rejects Argument that an Expired Offer of Judgment Can Moot a Putative Class Action

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A putative class action was brought under the Telephone Consumer Protection Act (TCPA), alleging the receipt of unsolicited text messages. Prior to the agreed-upon deadline for the plaintiff, Mr. Gomez, to file his motion for class certification, the defendant, Campbell-Ewald, proposed to settle Gomez’s individual claim and filed an offer of judgment pursuant to Federal Rule of Civil Procedure 68. Campbell offered to pay Gomez his costs, excluding attorney’s fees, and $1,503 per message, for the May 2006 text message and any other text message Gomez could show he had received, thereby satisfying his personal treble-damages claim. Campbell also proposed a stipulated injunction in which it agreed to be barred from sending text messages in violation of the TCPA. (The proposed injunction, however, denied liability and the allegations made in the complaint, and disclaimed the existence of grounds for the imposition of an injunction.) The settlement offer did not include attorney’s fees, Campbell observed, because the TCPA does not provide for an attorney’s-fee award. Gomez did not accept the settlement offer and allowed Campbell’s Rule 68 submission to lapse after the time, 14 days, specified in the Rule.

The U.S. Supreme Court held that the action was not rendered moot under Article III:

“Under basic principles of contract law, Campbell’s settlement bid and Rule 68 offer of judgment, once rejected, had no continuing efficacy. Absent Gomez’s acceptance, Campbell’s settlement offer remained only a proposal, binding neither Campbell nor Gomez. Having rejected Campbell’s settlement bid, and given Campbell’s continuing denial of liability, Gomez gained no entitlement to the relief Campbell previously offered. In short, with no settlement offer still operative, the parties remained adverse; both retained the same stake in the litigation they had at the outset. The Federal Rule in point, Rule 68, hardly supports the argument that an unaccepted settlement offer can moot a complaint. An offer of judgment, the Rule provides, ‘is considered withdrawn’ if not accepted within 14 days of its service. Fed. Rule Civ click for more info. Proc. 68(a), (b). The sole built-in sanction: ‘If the [ultimate] judgment … is not more favorable than the unaccepted offer, the offeree must pay the costs incurred after the offer was made.’ Rule 68(d).”

“We need not, and do not, now decide 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. That question is appropriately reserved for a case in which it is not hypothetical.”

Campbell-Edwards Co. v. Gomez, No.14-857, 2016 WL 228345 (Jan. 20, 2016).

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