The U.S. Court of Appeals for the Third Circuit recently upheld a trial court’s ruling that an unaccepted offer of judgment under Fed. R. Civ. Pro. Rule 68, made before a plaintiff files a motion for class certification, does not make the case moot.

The copy of the opinion is available at:  Link to Opinion.

The named plaintiff filed a putative class action against the defendants for alleged violation of the federal Telephone Consumer Protection Act (TCPA). The plaintiff alleged that the defendants transmitted more than 10,000 facsimiles to the plaintiff and other members of the class without express invitation or permission.

On Nov. 15, 2013, before the plaintiff filed a motion for class certification, the defendants made offers of judgment under Fed. R. Civ. Pro. 68 to the named plaintiff.

The defendant offered “$1,500 for each and every facsimile advertisement sent to Plaintiff . . . as alleged in Plaintiffs’ complaint . . . and in addition any such other relief which is determined by a court of competent jurisdiction to be necessary to fully satisfy all of the individual claims of Plaintiff . . . arising out of or related to the transmission of facsimile advertisements sent to Plaintiff . . . by or on behalf of Defendants.”

The defendant also offered to pay costs and stop sending any facsimile advertisements that violated the TCPA. The plaintiff did not respond to the offers of judgment.

On Dec. 4, 2013, the defendants moved to dismiss for lack of subject matter jurisdiction under Fed. R. Civ. Pro. 12(b)(1), arguing the unaccepted offers of judgment mooted the case.

The trial court judge, relying on Weiss v. Regal Collections, 385 F.3d. 337 (3d Cir. 2004), denied the defendants’ motion to dismiss on the grounds that the plaintiff’s action could proceed because they had not engaged in “undue delay” in failing to file their motion for class certification and a successful class certification would relate back to the filing of the class complaint. The relation back of the certification of the proposed would allow for the class representative to retain standing to litigate class certification, though his individual claim might moot.

The defendants subsequently moved to certify the trial judge’s order for interlocutory appeal. The trial judge certified his order denying defendants’ motion in order that the appellate court could review the question of whether an unaccepted offer of judgment under Rule 68 in a putative class action, when the offer is made before the plaintiff files a motion for class certification pursuant to Rule 23, moots the plaintiff’s entire action including the putative class claims, and thereby deprives the court of federal subject matter jurisdiction.

As you may recall, FRCP 68 provides:

At least 14 days before the date set for trial, a party defending against a claim may serve on an opposing party an offer to allow judgment on specified terms, with the costs then accrued. If, within 14 days after being served, the opposing party serves written notice accepting the offer, either party may then file the offer and notice of acceptance, plus proof of service. The clerk must then enter judgment. . . . An unaccepted offer is considered withdrawn, but it does not preclude a later offer. Evidence of an unaccepted offer is not admissible except in a proceeding to determine costs.

See Fed. R. Civ. P. 68(a)-(b).

The Third Circuit upheld the trial court’s ruling, expressly relying on Campbell-Ewald Company v. Gomez, 136 S. Ct. 663 (2016).  According to the Appellate Court, the underlying allegations in Campbell-Ewald were indistinguishable from the present case.

In Campbell-Ewald, the Supreme Court of the United States held that “an unaccepted offer to satisfy [a] named plaintiff’s individual claim [is not] sufficient to render a case moot when the complaint seeks relief on behalf of the plaintiff and a class of persons similarly situated.” Id. It further held that “in accord with Rule 68 of the Federal Rules of Civil Procedure . . . an unaccepted settlement offer has no force.” Id. Accordingly, because an unaccepted settlement offer has no force, it moots neither the plaintiff’s individual claims nor the case as a whole.

The Third Circuit found that Campbell-Ewald overruled their previous holding in Weiss that an offer of compete relief will generally moot a plaintiff’s claim, as at that point the plaintiff retains no personal interest in the outcome of the litigation.

Accordingly, the Appellate Court found that an unaccepted offer of judgment under Fed. R. Civ. Pro. 68, made before a plaintiff files a motion for class certification, does not make the case moot, and thus affirmed the trial court’s order denying defendants’ motion to dismiss.