On May 18, 2015, the United States Supreme Court granted certiorari in a matter that may decide a fundamental question in class actions in general and class actions under the Telephone Consumer Protection Act ("TCPA") in particular: whether a case becomes moot, and thus beyond the judicial power of Article III, when the plaintiff receives an offer of complete relief on his or her claim. See Campbell-Ewald Co. v. Gomez, No. 14-857 (U.S.), cert. granted, 5/18/15.
The Circuit Split on Rule 68 Offers of Judgment
In TCPA class actions (and class actions involving other consumer claims), defendants have often offered the plaintiff a judgment pursuant to Rule 68 that is equal to or greater than the plaintiff's maximum statutory damages under the applicable statute. Those efforts have met with mixed results, resulting in a significant circuit split.
The Third, Fourth, Fifth, Sixth, and Seventh Circuits have held that when a Rule 68 offer fully satisfies a plaintiff's claim, the individual claim is mooted. See, e.g., Weiss v. Regal Collections, 385 F.3d 337, 340 (3d Cir. 2004); Warren v. Sessions & Rogers, P.A., 676 F.3d 365, 371 (4th Cir. 2012); Krim v. pcOrder.com, Inc., 402 F.3d 489, 502 (5th Cir. 2005); O'Brien v. Ed Donnelly Enters., Inc., 575 F.3d 567, 574-75 (6th Cir. 2009). In addition, the Third and Seventh Circuits have held that an offer of complete relief to the plaintiff before it moves for class certification "will generally moot the plaintiff's [individual] claim, as at that point the plaintiff retains no personal interest in the outcome of the litigation." Weiss, 385 F.3d at 340; Damasco v. Clearwire Corp., 662 F.3d 891, 895 (7th Cir. 2011).
In contrast, several circuits (including the Ninth and Eleventh) have held that a rejected Rule 68 offer of judgment does not moot the controversy. See McCauley v. Trans Union, L.L.C., 402 F.3d 340, 342 (2d Cir. 2005) (while case is not moot, the court should enter judgment in the amount of the offer); Diaz v. First Am. Home Buyers Prot. Corp., 732 F.3d 948, 954 (9th Cir. 2013); Lucero v. Bureau of Collection Recovery, Inc., 639 F.3d 1239, 1249 (10th Cir. 2011) ("[A] nascent interest attaches to the proposed class upon the filing of a class complaint such that a rejected offer of judgment … does not render the case moot under Article III."); Stein v. Buccaneers Ltd. P’ship, 772 F.3d 698, 709 (11th Cir. 2014).
Campbell-Ewald and the Mootness Issue
Campbell-Ewald thus presents a familiar fact pattern for class actions under the TCPA.
Jose Gomez asserted that he received an unsolicited and unwanted text message on his cell phone encouraging him to join the Navy. The messages came from Campbell-Ewald, a consultant hired by the Navy to assist it in recruiting. After he filed a putative class action under the TCPA and the defendant's motion to dismiss was denied, the defendant employed Rule 68 and offered Gomez an amount of money in excess of the maximum statutory damages allowed under the TCPA plus costs.
After Gomez allowed the offer to lapse, and thus rejected the offer as a matter of law, the defendant moved for summary judgment, arguing that the matter was mooted and no longer presented a live case or controversy under Article III. In the alternative, the defendant also asserted that it was protected under the derivative immunity doctrine since it was acting on behalf of the Navy. The district court entered summary judgment for the defendant based upon its derivative immunity defense.
Gomez appealed. Urging the Ninth Circuit to sustain the judgment below, Campbell-Ewald again argued that the case was moot based on the offer of judgment. In a decision handed down in September 2014, the Ninth Circuit rejected the immunity defense and further held that the plaintiff's individual and class claims survived the rejected offer of judgment under Rule 68. Gomez v. Campbell-Ewald Co., 768 F.3d 871, 874-875 (9th Cir. 2014).
In its Petition for a Writ of Certiorari to the Supreme Court, Campbell-Ewald argued that there was a need for unequivocal Supreme Court guidance on this divisive issue and, in particular, urged that the Court should address the mootness questions that Campbell-Ewald contended were left unanswered by Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523 (2013). Genesis Healthcare involved a collective action under federal labor law and, as Campbell-Ewald argued, thus decided the mootness question only in part. Indeed, Campbell-Ewald argued that the split decision in Genesis Healthcare has contributed to the split in authority, as some courts have followed the mandate of the majority decision (finding mootness), while other courts have been persuaded by Justice Kagan's dissent (rejecting mootness).
While there can be no assurances that mootness will be the touchstone of the Court's ultimate decision (it could turn on the immunity issue instead), the importance and prominence of the mootness issue in an ever-growing number of class actions suggest that the Supreme Court may now be prepared to come to grips squarely with the implications of Rule 68 offers of judgment to class plaintiffs.