Why it matters
A hotly contested defense strategy is the subject of an upcoming U.S. Supreme Court case with major implications for employers. In the context of a Telephone Consumer Protection Act (TCPA) consumer class action, the justices will determine whether or not an offer of complete relief in a putative class action made before a class is certified moots the individual and/or the class claims. The question has occupied courts across the country not just in TCPA cases but employment law as well. At the very least, a decision from the U.S. Supreme Court will provide much-needed clarity to courts across the country that have struggled with the issue. A ruling that a complete offer can moot either individual and/or class claims would keep alive one strategy for employers facing class action litigation.
The case before the justices involves Campbell-Ewald, a marketing consultant hired by the U.S. Navy to develop and execute a recruiting campaign targeting young adults. Campbell-Ewald outsourced texting responsibility for the campaign to a third party and was named in a lawsuit filed by Jose Gomez, who alleged he received an unwanted text in May 2006.
Campbell-Ewald offered Gomez $1,053 per violation, plus reasonable costs, but the plaintiff allowed the offer to lapse. The company moved to dismiss the case as moot. A trial court judge said the unaccepted offer alone was insufficient to moot Gomez’s claim. The Ninth Circuit Court of Appeals affirmed that the case remained a live controversy, and Campbell-Ewald filed a writ of certiorari.
The U.S. Supreme Court granted cert in May.
In addition to splitting courts across the country in TCPA cases, the strategy has also been the subject of intensive litigation in the Fair Labor Standards Act (FLSA) context. In 2013, the Court assumed without deciding that an offer of full relief mooted an FLSA collective action in Genesis Healthcare Corp. v. Symczyk.
The 5-4 majority effectively shrugged about the impact of encouraging the strategy, writing that “a full settlement offer addresses plaintiff’s alleged harm by making the plaintiff whole.”
“In the absence of any claimant’s opting in, respondent’s suit became moot when her individual claim became moot, because she lacked any personal interest in representing others in this action,” the Court held. Distinguishing the nature of an FLSA collective action from a true class action suit, the justices said that “the mere presence of collective-action allegations in the complaint cannot save the suit from mootness once the individual claim is satisfied.”
Justice Elena Kagan—joined by Justices Ruth Bader Ginsburg, Stephen Breyer, and Sonia Sotomayor—authored a spirited dissent to stake out the position that an unaccepted offer cannot moot a case.
“When a plaintiff rejects such an offer—however good the terms—her interest in the lawsuit remains just what it was before,” she wrote. “And so too does the court’s ability to grant her relief. An unaccepted settlement offer—like any unaccepted contract offer—is a legal nullity, with no operative effect.”
The majority in the Genesis opinion distinguished FLSA collective actions from Rule 23 class actions, leaving parties and courts across the country uncertain as to the viability of the strategy in other cases.
While a reversal of the Ninth Circuit’s ruling in Campbell-Ewald would be a victory for employers, four members of the Court have seemingly staked out their position against the strategy.
To read the petition for certiorari in Campbell-Ewald v. Gomez, click here.