Courts have struggled with the issue of whether an offer of judgment by a defendant for the maximum statutory award in a Telephone Consumer Protection Act suit renders the case moot.

A new decision from a federal court in Michigan offers one tip for defendants considering the strategy: include injunctive relief.

Compressor Engineering Corporation sued Chicken Shack and owner Charles J. Thomas after allegedly receiving an unsolicited fax advertisement. He requested injunctive relief as well as damages for a putative class. Thomas made an offer of judgment to Compressor pursuant to Federal Rule of Civil Procedure 68 for $1,500, as well as attorneys’ fees and costs.

When Compressor did not respond within 14 days of being served with the offer, the defendant then moved to dismiss the suit pursuant to Federal Rule of Civil Procedure 12(b)(1), on grounds that the suit was now moot.

Noting a split in courts that considered the question, U.S. District Court Judge Paul D. Borman concluded that the defendant failed to satisfy the plaintiff’s entire demand. Accordingly, he denied the motion.

An offer limited to the relief the defendant believes is appropriate does not suffice to moot a case, Judge Borman explained. Instead, a defendant must meet the plaintiff on the plaintiff’s terms, as “mootness occurs only when the offer is accepted or the defendant indeed offers to provide every form of individual relief the claimant seeks in the complaint.”

“Plaintiff has requested certain relief that is not reflected in Defendant Thomas’s offer of judgment—here, injunctive relief,” the court said.

Thomas countered that injunctive relief was not a necessary part of the offer because the plaintiff received only one fax and the defendant no longer employs the “fax blaster” service previously used.

But as long as the parties have a concrete interest, however small, in the outcome of the litigation, the case is not moot, Judge Borman said. “Therefore, the correct inquiry is whether Plaintiff’s injunctive claim is ‘so insubstantial’ that it fails to present a federal controversy. [I]t appears that an ‘insubstantial claim’ is one that was created solely to manufacture subject matter jurisdiction or one that is so frivolous that it is beyond the scope of reason. Neither of these descriptions fit Plaintiff’s injunctive relief claims.”

The defendant also appeared to ask for the court to determine the merits of Compressor’s injunctive claim, which was improper, the court said.

Applicable Sixth Circuit Court of Appeals precedent “is clear that where a party’s argument hinges on the merits of the claim or even the legal availability of a claim, that argument should be made in a motion to dismiss for failure to state a claim, not a motion to dismiss for lack of subject matter jurisdiction,” in a Rule 12(b)(1) motion, Judge Borman wrote.

He also noted that in all three of the TCPA cases in the district that were dismissed after unaccepted offers of judgment pursuant to Rule 68, the defendant included injunctive relief.

“In summary, the Court will deny Defendant Thomas’s motion to dismiss based on lack of subject matter jurisdiction for the reason that Defendant Thomas’s offer of judgment failed to satisfy Plaintiff’s ‘entire’ demand,” the court said.

To read the opinion and order in Compressor Engineering Corp. v. Thomas, click here.

Why it matters: The question of mooting a suit with an offer of judgment has challenged courts generally and resulted in mixed decisions in TCPA disputes. For example, a Minnesota federal court judge tossed a suit after the defendant made a two-part settlement offer of a $3,500 check and a promise not to send another fax in the future. That decision stands in contrast to a ruling from the Eleventh Circuit Court of Appeals that unaccepted offers of judgment to the six named plaintiffs, but not to class members, did not render the case moot.