Unaccepted Offers Do Not Halt Class Actions

One of the many tools defendants use to stem class actions involves paying a claimant their full damages at the outset of the lawsuit. The theory being, if the person bringing the lawsuit is now fully compensated, they have no standing to carry the case forward and thus no standing to represent a potential class action. This practice was recently addressed by the U.S. Supreme Court.

In Campbell-Ewald Co. v. Gomez, No. 14-857, the Supreme Court held that an unaccepted settlement offer of complete relief to a named plaintiff—proffered under Rule 68 of the Federal Rules of Civil Procedure—had “no force” and did not moot a class action. The Court reasoned that like any unaccepted contract offer, there were no lasting rights or obligations created between the parties. Thus, once the offer lapsed, adversity between the parties remained and a court was not deprived of its subject-matter jurisdiction.

At first glance, the decision may appear to bolster the class mechanism, yet the Court carefully noted that the holding was predicated upon the strictly prescribed facts of the case. That is, Campbell involved a situation in which the defendant merely tendered an offer to the named plaintiff, but did not take any additional steps such as placing the settlement funds with the court or some third-party.

The Court specifically declined to address this hypothetical, noting:

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.

However, there should be little doubt concerning how the Court would rule in such an instance. Indeed, the dissents go on to offer a step-by-step guide—culminating with a defendant “deposit[ing] a certified check with the trial court”—explaining how to properly utilize a Rule 68 Offer of Judgment to moot a case.

Trief & Olk was recently on the receiving end of this guidance, wherein a defendant directly wired our named plaintiff a settlement offer in excess of her individual damages.