On January 20, 2016, the Supreme Court held in a 6-to-3 decision that an unaccepted offer to settle a class representative's individual claim does not moot a case brought on behalf of the class representative and a proposed class. In Campbell-Ewald Co. v. Gomez, No. 14-857, 2016 WL 228345 (U.S. Jan. 20, 2016), a class representative alleged a violation of the Telephone Consumer Protection Act. Before the deadline to file a motion for class certification, Campbell-Ewald made a Rule 68 offer of judgment that would have extended complete relief to the class representative for his individual claim. The class representative allowed the offer to lapse without response, however, and Campbell-Ewald filed a motion to dismiss for lack of subject-matter jurisdiction pursuant to Rule 12(b)(1), arguing that the class representative's claim and the claims of the proposed class were now moot. The district court denied the motion, and the Ninth Circuit affirmed.
The Supreme Court affirmed. Drawing on contract law principles, the Court held, "[a]n unaccepted settlement offer—like any unaccepted contract offer—is a legal nullity, with no operative effect." Because the class representative rejected Campbell-Ewald's settlement bid, and because Campbell-Ewald continued to deny liability, the representative had not gained entitlement to the relief Campbell-Ewald had offered. Therefore, the class representative's claim—and, by extension, the claims of the proposed class—were not moot.
Of note, the Court left open the possibility that a defendant might moot a class representative's claim and the claims of the proposed class by actually paying the class representative (and obtaining a court-ordered judgment) rather than merely extending a settlement offer. Even so, Gomez significantly cabins a defendant's ability to put a stopper on costly litigation in situations where the plaintiff insists on proceeding despite an offer to settle for all the relief to which he is entitled under the law.