As many of our readers are aware, one strategy defense counsel use to dispose of a putative class action at an early stage in the litigation is to make an individual offer of judgment under Rule 68 to the named plaintiff giving them full relief on their individual claim (also known as a “pick off”).  Last week, the Eleventh Circuit ruled that such offers will not moot the plaintiff’s ability to represent a putative class.  Stein v. Buccaneers Limited P’ship, No. 13-15417 (11th Cir. Dec. 1, 2014). 

Although the decision aligns the Eleventh Circuit with other circuits on this issue, such as the Ninth and Fifth Circuits, the decision contradicts the current law of the Seventh Circuit as well as recent district court opinions within the Sixth Circuit, which hold that such offers may render putative class cases moot.  See Diaz v. First Am. Home Buyers Protection Corp., 732 F.3d 948 (9th Cir. 2013); Damasco v. Clearwire Corp., 662 F.3d 891 (7th Cir. 2011); Machesney v. Lar-Bev of Howell, Inc., No. 10–10085 (E.D. Mich.) Compressor Eng’g Corp. v. Mfr.s Fin. Corp., No. 09–14444 (E.D. Mich.).

Background and Procedural History

In Stein, six named Plaintiffs filed a putative class action in Florida state court against the defendant.  The complaint alleged that defendant sent unsolicited faxes advertising tickets to football games in violation of the Telephone Consumer Protection Act (“TCPA”).  Plaintiffs sought injunctive relief and statutory damages of $500 to $1,500 per violation.  The defendant removed the case to federal court and issued an offer of judgment to each of the named plaintiffs pursuant to Federal Rule of Civil Procedure 68.

The named plaintiffs did not accept the offers of judgment and the defendant moved to dismiss for lack of jurisdiction, asserting that the unaccepted Rule 68 offers rendered the case moot.  Shortly thereafter, plaintiffs moved to certify the class.  The district court denied the motion to certify the class and granted defendants’ motion to dismiss.  On appeal, the Eleventh Circuit reversed this decision.

The Eleventh Circuit Opinion

The Eleventh Circuit ruled that an unaccepted offer is effectively withdrawn, leaving the parties in the same position as they were prior to the offer.  Plaintiffs still had their claims, defendant its defenses, and money had not exchanged hands.  (Slip Op. at 7).  Thus, there was no basis to consider the plaintiffs’ individual claims moot.  Further, the Court found that “even if the individual claims were moot, the class claims remain live, and the named plaintiffs retain the ability to pursue them.”  (Slip Op. at 10).  In so doing, the Court referred to several cases (none of which involved the TCPA) in which the United States Supreme Court recognized that a named plaintiff whose individual claims were moot was still allowed to represent a class.  The Court also ruled that it was immaterial whether an offer of judgment was presented before or after a motion for class certification is filed, directly contradicting the Seventh Circuit’s decision inDamasco.  According to the Eleventh Circuit, there was no significance in filing a class certification motion as opposed to a complaint or class certification order and the rule in Damasco would only lead to premature motions and unnecessary gamesmanship.  (Slip Op. at 20).  What matters most, stated the Court, was not that the named plaintiffs had filed to file motion to certify but that they acted diligently after they received the offers of judgment.   Simply receiving the offer of judgment did not “without more, disqualify them from going forward.” (Slip Op. at 17).

Conclusion and Implications

The ruling in Stein puts the Eleventh Circuit squarely at odds with the Seventh Circuit’s ruling in Damasco, which allows unaccepted offers of judgment to moot putative class actions if made before the motion to certify the class has been filed.  Plaintiffs will certainly be aware of this decision and may make jurisdictional decisions accordingly.  And, given that Stein only furthers the circuit split on the pick off issue, it is ripe for presentment to the United States Supreme Court.