Last week, the Supreme Court issued its much anticipated decision in Campbell-Ewald Co. v. Gomez, 577 U.S. ___ (2016). In a 6-3 opinion, Justice Ginsburg, writing for the majority, held that an unaccepted Rule 68 offer of judgment does not “moot” a claim because “[u]nder basic principles of contract law,” an offer without acceptance is a legal nullity.” If a plaintiff does not accept a defendant’s offer, the Court reasoned, “the parties remain adverse; both retain the same stake in the litigation they had at the outset.”
Chief Justice Roberts, joined by Justices Scalia and Alito, dissented. “The majority is correct that because Gomez did not accept Campbell’s settlement, it is a “legal nullity” as a matter of contract law. The question, however, is not whether there is a contract; it is whether there is a case or controversy under Article III.” As Justice Roberts explained, “[t]his Court has long held that when a defendant unilaterally remedies the injuries of the plaintiff, the case is moot—even if the plaintiff disagrees and refuses to settle the dispute, and even if the defendant continues to deny liability.” “Applying those basic principles to this case,” he concluded, “it is clear that the lawsuit is moot.”
Justice Roberts went on to observe that “[t]he good news is that this case is limited to its facts. The majority holds that an offer of complete relief is insufficient to moot a case. The majority does not say that payment of complete relief leads to the same result. For aught that appears, the majority’s analysis may have come out differently if Campbell had deposited the offered funds with the District Court.”
Justice Thomas concurred separately with the majority, but disagreed with its reasoning. The proper analysis, he explained, does not draw from modern contract law principles, but rather from the common-law history of tenders. “At common law, a prospective defendant could prevent a case from proceeding, but he needed to provide a “tender”—an offer to pay the entire claim before a suit was filed, accompanied by “actually produc[ing]” the sum “at the time of tender” in an “unconditional” manner.” Nineteenth century state statutes expanded the common-law-tender regime in some ways, such as to allow defendants to offer a tender during the pendency of an action, but they retained the core-common law tender principles. Rule 68 was molded after these early statutes, he explained. The majority reached the correct result because the plaintiff had not tendered the offer amount, not because the offer was a contractual nullity.
The majority declined to address whether the result in this case would be different if the defendant had tendered payment and the court had entered judgment in favor of the plaintiff. “That question is appropriately reserved for a case in which it is not hypothetical.”
Echoing Justice Roberts, the good news is that this decision may be limited to its facts. Even the majority opinion leaves open the possibility that defendants facing individual or class action lawsuits seeking statutory penalties or other sum certain amounts can potentially moot the plaintiff’s claim by offering complete relief and then tendering the amount of the offer to the plaintiff or depositing it with the Court. We can expect future litigation over Rule 68 to challenge whether creating an account payable to a plaintiff or delivering a check along with an offer of judgment eliminates any case or controversy for Article III purposes. But, for now, Rule 68 remains a potentially viable tool for class action defendants.