The Supreme Court will decide whether a defendant can “pick off” the named plaintiff in a Telephone Consumer Protection Act (TCPA) class action – and moot the putative class claims – by making a Rule 68 offer of judgment before the putative class representative files a motion for class certification. Thus, the Supreme Court could streamline putative class actions by eliminating the need for plaintiffs to file “protective” motions for class certification at the same time they file their complaints. The case, Gomez v. Campbell-Ewald Co., also involves important vicarious liability issues that litigants routinely address in TCPA class actions.

In Gomez v. Campbell-Ewald Co., the defendant marketing consultant allegedly arranged to send the plaintiff unsolicited text messages in violation of the TCPA through a third-party caller called Mindmatics, purporting to recruit for the U.S. Navy. Before the plaintiff filed a motion for class certification, Campbell-Ewald offered to pay the plaintiff $1,503.00 per violation, in full satisfaction of the plaintiff’s claims. The plaintiff allowed the offer to lapse and sought class certification. Campbell-Ewald argued to the United States District Court for the Central District of California and then to the Ninth Circuit that its Rule 68 offer of judgment mooted the plaintiff’s individual and putative class claims. The Ninth Circuit disagreed with the defendant, aligning the decision with other circuits which have also held that a rejected Rule 68 offer does not moot claims if the offer is made prior to filing or, or ruling on, a motion for class certification. The Seventh Circuit, in contrast, held in Damasco v. Clearwire Corp. that a Rule 68 offer made before the plaintiff had filed a motion for class certification mooted the class claims. 

The Supreme Court granted the petition to resolve the existing circuit split and to address the mootness issue first identified in 2013’s Genesis Healthcare v. Symczyk, in which the Court was unable to decide whether an offer of complete relief moots a plaintiff’s individual claims. In Genesis Healthcare, the Court held that the mootness issue was “not properly before [them]” based on what amounted to a technicality. Justice Thomas explained that because the Third Circuit had ruled the case moot and Symczyk had waived the issue by failing to raise it in on appeal, the Court was barred from deciding the mootness issue. At this time the Court “assume[d] without deciding, that petitioners’ Rule 68 offer mooted respondent’s individual claim.” Two years later, the Court now is set to address the mootness issue directly.

The Court also reaffirmed that Campbell-Ewald could be held liable under a vicarious liability theory, finding that “given Campbell-Ewald’s concession that a merchant can be liable for outsourced telemarketing, it is unclear why a third-party marketing consultant shouldn’t be subject to the same liability.” The case is consistent with the Federal Communications Commission’s position on vicarious liability and Satterfield v. Simon & Schuster, in which the court allowed a case to proceed against “an analogous marketing consultant who was not responsible for the actual transmission of the text messages.” The Ninth Circuit concluded “the present case affords an opportunity to clarify that a defendant may be held vicariously liable for TCPA violations where the plaintiff establishes an agency relationship, as defined by federal common law, between the defendant and a third-party caller.”

Campbell-Ewald also considers whether an advertiser or contractor’s “derivative sovereign immunity” protects it from TCPA lawsuit or alternatively that the doctrine of derivative sovereign immunity in Yearsley v. W.A. Ross Construction Co., 309 U.S. 18 (1940), applies only to claims arising out of property damage caused by public works projects. The advertising campaign in Campbell-Ewald was on behalf of the United States Navy, which is not a named party. The Ninth Circuit agreed with the district court in finding that the Yearsley was inapplicable and established only a narrow rule. The Ninth Circuit also noted that the evidence suggested the unsolicited text messages sent were contrary to the Navy’s policy permitting texts only to persons who had provided consent and that sovereign immunity “must be extended with the utmost care.” As such, the Court declined to extend sovereign immunity to Campbell-Ewald.

Gomez is the second Supreme Court case this year that could have a significant bearing on the TCPA. Earlier this week, we explained the potential impact of Spokeo, Inc. v. Robins, where the court will address whether actual damages are necessary for Article III standing for suits brought under statutes with statutory damages provisions. Although plaintiffs’ attorneys are aggressively using the TCPA and other laws with statutory damages to pursue large judgments, businesses are hitting back with legal arguments intended to take some of the bite out of these statutes. We will keep you updated of any developments.