A recent ruling by the United States Supreme Court held that a defendant cannot terminate a putative class action by offering the representative plaintiff complete relief, rejecting some courts’ dismissals of class action litigation where a plaintiff does not “accept” the defendants’ “offer” of judgment for the full amount of statutory damages and fees. But the Court’s opinion suggests that an actual payment to the plaintiff or into an escrow account – versus an offer of payment –  might produce a different result.

On January 20, 2016, the U.S. Supreme Court ruled in Campbell-Ewald v. Gomez that an unaccepted offer of judgment that would provide complete relief to a class representative is not enough by itself to moot the plaintiff’s pending class action claim. In its decision, the majority held that under Rule 68 of the Federal Rules of Civil Procedure, an unaccepted settlement offer is considered withdrawn and ineffective.

Campbell-Ewald resolves an important split in the circuit courts on the issue.  However, in doing so, the Court’s decision unfortunately requires companies subject to a host of laws that allow plaintiffs to collect statutory damages and attorneys’ fees – including the Telephone Consumer Protection Act (TCPA), which was the subject of Campbell-Ewald – to remain in the case, even where the company would gladly pay the named plaintiffs’ damages and fees to avoid the costs of continuing to litigate.As we’ve mentioned, TCPA class action litigation has exploded in recent years, with plaintiffs like Gomez using base violations of the statute to build class action claims that often cost the defending companies tens of millions of dollars in litigation and settlement fees, even when the harm to consumers is relatively minor.

Given the significance of the Supreme Court’s decision, it’s important to ask: practically speaking, what does Campbell-Ewald mean for businesses facing class action litigation under the TCPA and similar statutes that are attractive to class action lawyers given the availability of statutory damages and/or attorney’s fees?

  • More action from the plaintiffs’ bar is likely. Campbell-Ewald resolved a circuit split in favor of class action plaintiffs. The aftershocks of the Supreme Court’s decision are likely to be felt by companies frequently targeted for violations of the TCPA or similarly structured laws, as some plaintiffs’ lawyers will see the decision as encouraging.
  • All is not lost? While an unaccepted settlement offer isn’t enough to moot a claim, Chief Justice John Roberts pointed out in his dissent that the majority’s analysis left unresolved whether a plaintiff’s claim could be mooted by actually cutting a check for the plaintiff’s complete relief. Specifically, the opinion for the Court chose not to address “whether the result would be different if a defendant deposits the full amount of the plaintiff’s individual claim in an account payable to the plaintiff, and the court then enters judgement for the plaintiff in that amount.” According to the Chief Justice, this approach by the majority leaves the answer to this possible defense strategy “for another day–assuming there are other plaintiffs out there who, like Gomez, won’t take ‘yes’ for an answer.”
  • Ensure TCPA compliance. Finally, companies may find that the best way to avoid a lengthy TCPA class action is to make sure that a prospective plaintiff does not have an actual claim in the first place. Consequently, a company that uses autodialers and/or robocalls to reach its customers will need to redouble its efforts to ensure they are in compliance with the TCPA and Federal Communication Commission (FCC) rules. This includes, but is not limited to:
  • Confirming acquisition of prior express written consent before attempting to transmit autodialed/prerecorded telemarketing calls or text messages to the consumer’s cellphone and for prerecorded telemarketing to residential lines, and receipt of prior express consent for all other autodialed/prerecorded calls to cellphones;
  • Refraining from telemarketing numbers on the company’s internal do-not-call list, as well as those on the National Do-Not-Call Registry, unless as to the latter there is an established business relationship or prior express written consent;
  • Removing from all future call lists consumers who have revoked their consent and phone numbers for which consent was originally obtained but was later reassigned to a new consumer; and
  • Reviewing whether specific calling and texting practices are permitted under the FCC’s rules and policies, including, most recently the 2015 TCPA Declaratory Order and Ruling.