In a 6-3 decision, the U.S. Supreme Court in Campbell-Ewald v. Gomez ruled last week that an unaccepted offer of judgment under Rule 68 of the Federal Rules of Civil Procedure does not divest the trial court of subject matter jurisdiction. Campbell-Ewald had made putative class representative Gomez a Rule 68 offer of judgment in the amount of $1,503 per message for each text message he could show he had received from Campbell-Ewald, which would have satisfied Gomez’s personal treble-damages claim under the Telephone Consumer Protection Act (TCPA). Gomez did not accept the offer, and the offer lapsed after 14 days, as Rule 68 contemplates. Campbell-Ewald then moved to dismiss the case, arguing that its unaccepted Rule 68 offer of judgment showed that no Article III case or controversy remained between the parties, and that since the named representative’s claim was moot, so were the claims of the putative class. The trial court denied this motion, a decision that was appealed and affirmed by the Ninth Circuit, following the trial court’s grant of summary judgment for Campbell-Ewald on governmental immunity grounds.
The Supreme Court affirmed. The majority reasoned that an unaccepted offer of judgment is, like an unaccepted settlement offer or any other unaccepted contract offer, “a legal nullity.” Thus, following an unaccepted offer of judgment, the plaintiff’s interest in the lawsuit and the court’s ability to grant relief if appropriate remain unchanged, and the Article III case-or-controversy requirement continues to be satisfied. The majority noted that this result is consistent with the language of Rule 68, which states that the only sanction for an unaccepted offer is that the offeree must pay the costs incurred after the offer was made if the ultimate result is not better than the offer.
The dissenters argued that “[w]hen a plaintiff files suit seeking redress for an alleged injury, and the defendant agrees to fully redress that injury, there is no longer a case or controversy for purposes of Article III,” mooting the lawsuit. Agreeing that an unaccepted offer is a “legal nullity,” the dissent argued, that fact does not answer the question of whether there is a case or controversy under circumstances where “the defendant is willing to give the plaintiff everything he asks for.”
The lesson of Campbell-Ewald v. Gomez is that attempts to “pick off” class representatives in putative class cases, and potentially moot the putative class’s claims, via Rule 68 offers of judgment can be thwarted if the class representative does not accept the offer. The majority left open the possibility, however, that the result might be different if a defendant paired a Rule 68 offer of judgment with payment into court (or into “an account payable to the plaintiff”) of the full amount of the plaintiff’s individual claim, “and the court then enters judgment for the plaintiff in that amount.” In such circumstances, the defendant’s offer and payment, and the court’s entry of judgment, might trump plaintiff’s decision to reject a fully-remunerative Rule 68 offer, but the Court reserved that question for another day.