The Supreme Court’s opinion today in Campbell-Ewald v. Gomez, No. 14-857 significantly limits the defense tactic of making an offer of judgment to moot a plaintiff’s or putative class representatives’ claim:
We hold today, in accord with Rule 68 of the Federal Rules of Civil Procedure, that an unaccepted settlement offer has no force. Like other unaccepted contract offers, it creates no lasting right or obligation. With the offer off the table, and the defendant’s continuing denial of liability, adversity between the parties persists.
In short, defendant cannot make a Rule 68 offer and then argue that an unacceptable offer renders the plaintiff’s claim moot (i.e. no Article III standing).
The cost-shifting consequence of plaintiff not accepting a Rule 68 offer remains: the plaintiff must pay costs incurred after the offer was made “if the judgment that the [plaintiff] finally obtains is not more favorable than the unaccepted offer.” Rule 68(d). This is important, especially when a statute defines costs to include attorney fees; a rejected Rule 68 offer of judgment potentially enables a defendant both to foreclose recovery of plaintiff’s attorney fees incurred after the making of the offer and makes the plaintiff liable for defendant’s fees accrued post-offer.
One last point: the majority opinion applies only to unaccepted Rule 68 offers. A defendant is still free to make an offer of judgment and the putative class representative (presumably over the advice of counsel) may accept the offer, thereby ending the litigation.