On April 12, 2016, in Chen, et al. v. Allstate Insurance Co., No. 13-16816, the Ninth Circuit considered whether an unaccepted offer of judgment and tender of payment under Federal Rule of Civil Procedure 68 to fully settle—and thereby moot—a plaintiff’s individual claims would also moot putative class action claims. Relying on the Supreme Court’s recent decision in Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (2016), Judge Raymond C. Fisher, writing for the panel, held that an unaccepted offer and tender of payment was not sufficient to moot a plaintiff’s class action claims.
On February 14, 2013, plaintiff Florencio Pacleb filed a class action complaint against defendant Allstate in the Northern District of California, alleging he received five phone calls from Allstate in violation of the Telephone Consumers Protection Act (TCPA). In April 2013, Allstate made a Rule 68 offer of judgment to plaintiff to settle his individual claims, plus injunctive relief and attorneys’ fees and costs. Allstate deposited $20,000 in full settlement in an escrow account, to be paid to plaintiff upon entry of a district court judgment. When the offer elapsed without a response from plaintiff, Allstate filed a motion to dismiss for lack of subject matter jurisdiction, arguing that because its Rule 68 offer would have satisfied all of plaintiff’s individual claims, his claims were effectively moot. Allstate also sought dismissal of plaintiff’s class claims, arguing that if plaintiff’s individual claims were mooted, his class claims were also mooted. District Court judge Phyllis J. Hamilton denied Allstate’s motion to dismiss, and later granted its motion to certify the issue for interlocutory appeal to the Ninth Circuit.
Campbell-Ewald’s Unanswered Question
While the court agreed with Allstate that its offer of judgment would fully satisfy plaintiff’s individual claims, it rejected Allstate’s argument that this mooted plaintiff’s class claims. The court relied on Campbell-Ewald to hold that an unaccepted offer of judgment to settle individual claims does not moot class action claims. (For more information on Campbell-Ewald, see our client alert here).
Campbell-Ewald left unanswered the question of whether the outcome would be different if a defendant deposited the full settlement amount into an account payable to plaintiff, and the court entered judgment for plaintiff in that amount. Allstate argued that because it deposited the full amount of settlement funds—$20,000 —into an account payable to plaintiff upon entry of judgment, plaintiff’s individual and class claims were mooted. Relying on Pitts v. Terrible Herbst, Inc., 653 F.3d 1081 (9th Cir. 2011), the court held that Allstate’s tender of payment was irrelevant, because even if plaintiff’s individual claims were fully satisfied, an unaccepted Rule 68 offer still would not moot a class action, as long as the plaintiff could still file a timely motion for class certification, which he could.
Alternate Reasons to Deny
The Court then offered two alternate reasons why plaintiff’s individual and class claims were not mooted by Allstate’s offer of judgment and deposit of funds into an account payable to plaintiff. First, the Court went on to say that even if Pitts were not controlling, its ruling would not change. Relying on Campbell-Ewald, the Court held that a plaintiff is entitled to decline an offer of judgment on individual claims in order to pursue relief on behalf of a putative class. To hold otherwise, the Court reasoned, would allow defendants to use the mootness doctrine to “pick off” named plaintiffs and deny them a fair opportunity to pursue class-wide relief.
Second, the Court held that even if Allstate could moot an entire class action by mooting a plaintiff’s individual claims, here plaintiff’s claims were not mooted because under Campbell-Ewald, plaintiff must actually receive all the relief to which he is entitled. Since Allstate’s release of the $20,000 was contingent on the district court’s dismissal, plaintiff had not yet received funds, and therefore had not received his entitled-to relief.
Chen is one of several post-Campbell-Ewald cases rejecting defendants’ attempts to moot a putative class action by mooting the named plaintiff’s individual claims. See, e.g., Weitzner v. Sanofi Pasteur, Inc., No. 14-3423, 2016 WL 1359220 (3d Cir. Apr. 6, 2016); Bais Yaakov of Spring Valley v. Graduation Source, LLC, No. 14-cv-3232 (NSR), 2016 WL 872914, at *1 (S.D.N.Y. Mar. 7, 2016); Brady v. Basic Research, L.L.C., 312 F.R.D. 304, 306 (E.D.N.Y. 2016). (See our Brady post here).
However, another judge in the Southern District of New York saw things differently in Leyse v. Lifetime Entertainment Services, LLC, No. 13 Civ. 574 (AKH), 2016 WL 1253607 (S.D.N.Y. Mar. 17, 2016), holding that a defendant’s payment of plaintiff’s individual claims plus court costs required entry of judgment. (For more information on Leyse, see our post).