The United States Supreme Court has heard oral arguments in the much-watched Campbell-Ewald Co. v. Gomez, No. 14-857, case. The two questions presented in Gomez that are of importance to class action practice are:
- Whether a case becomes moot, and thus beyond the judicial review power of Article III, when the plaintiff receives an offer of complete relief of his claim and
- Whether the answer to the first question is any different when the plaintiff has asserted a class claim under Federal Rule of Civil Procedure 23, but receives an offer of complete relief before any class is certified.
The petitioner, Campbell-Ewald Company (CEC), was the defendant at the district court level. Before the plaintiff, Jose Gomez, filed a motion for class certification, CEC made him offers of full relief. CEC then argued to the district court that its offers mooted both Gomez’s individual and class claims under basic Article III principles and that, therefore, Gomez’s action must be dismissed for lack of subject matter jurisdiction. Gomez, and the Ninth Circuit, said the offers did not moot the claims.
The dispute reached the United States Supreme Court. During oral arguments on October 14, Gomez, and the United States as amicus curiae, argued that a defendant cannot unilaterally “moot” a case and deprive a district court of jurisdiction by making an offer that the defendant characterizes as one for complete relief.
All justices but Justice Clarence Thomas extensively questioned counsel and presented several hypotheticals in challenging counsel to plug holes in their respective positions. Justices Elena Kagan, Sonia Sotomayor, and Ruth Bader Ginsburg appeared to be aligned; they directed the vast majority of their questions to CEC. Chief Justice John Roberts and Justices Samuel A. Alito and Antonin Scalia also appeared to be aligned and directed the vast majority of their questions to Gomez and the United States. Justice Anthon M. Kennedy played devil’s advocate during the arguments of both CEC and Gomez and, along with Justice Stephen G. Breyer, likely represent the swing votes. For his part, Justice Breyer posed tough questions to Gomez, but suggested that “mooting” a claim may require more than “offering” full relief; in so doing, he posed a hypothetical way to “tender” full relief that may dispose a claim.
Procedural and factual history
The US Navy, in 2005, contracted with CEC for the provision of recruitment-related advertising services. Under this contract, CEC sent Navy-branded text messages to individuals’ cell phones, including to Gomez. Gomez, the plaintiff, alleged that neither he, nor members of the putative class, consented to receive the texts and, therefore, CEC violated the Telephone Consumer Protection Act by sending the texts to him and the putative class.
Before Gomez moved to certify the putative class, CEC made an offer of judgment pursuant to Fed. R. Civ. P. 68 that offered Gomez (1) more than the maximum statutory damages to which he was entitled; (2) all “reasonable costs “ that Gomez would recover if he were to prevail; and (3) a stipulated injunction prohibiting CEC from engaging in the alleged wrongs. CEC also made a separate offer (i.e., outside of Fed. R. Civ. P. 68), which it characterized as a “tender,” for the same relief. Both offers stated that CEC would “arrange for” prompt payment.
Gomez did not accept the offers and filed a motion for class certification. CEC moved to dismiss the action for lack of jurisdiction, arguing that its offers of complete relief mooted both the plaintiff’s individual and class claims under basic Article III principles.
The district court refused to dismiss the claim for lack of jurisdiction. Although it expressly found that CEC’s offers would have “fully satisfied” Gomez’s claims, it believed that Gomez’s motion for class certification related back to the filing of the class complaint, before CEC had made the offers of complete relief. The district court, however, granted summary judgment in favor of CEC after concluding that in sending the text messages, CEC was acting as a Navy contractor and was, therefore, “immune from liability under the doctrine of derivative sovereign immunity.”
Gomez appealed to the Ninth Circuit Court of Appeal. A month after Gomez filed his appeal, the Supreme Court decided Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523 (2013), in which it held that an unaccepted offer of full relief mooted a collective action under the Fair Labor Standards Act. Relying on Symczyk, CEC moved to dismiss Gomez’s appeal for lack of jurisdiction.
The Ninth Circuit denied CEC’s motion to dismiss and reversed the district court’s grant of summary judgment in favor of CEC. First, on the jurisdictional question, it held that neither the plaintiff’s individual claim nor the class claim was mooted by CEC’s offer of complete relief because an unacceptedoffer that would fully satisfy a plaintiff’s claim is not sufficient to render either an individual or class claim moot. On the merits, the Ninth Circuit concluded that the doctrine of derivative sovereign immunity was not applicable. CEC appealed to the Supreme Court.
Supreme Court oral argument: CEC
CEC’s counsel opened his argument with two propositions he said the Court must accept to conclude that the district court retained jurisdiction after CEC made its offers for full relief: (1) “a plaintiff can force a court to adjudicate the merits of his claim simply by refusing the defendant’s offer of capitulation and complete relief” and (2) “a plaintiff has what amounts to a substantive right to class litigation that applies as soon as the complaint is filed and that entitles the case to proceed even if his individual claim drops out.”
Justices Kagan and Sotomayor suggested that what constitutes “complete relief” is a merits question and involves “critical liability determinations that were not made by the court below,” such as the scope of an injunction and entitlement to attorneys’ fees. Justice Kagan pointed out that CEC’s offers did not offer everything that the plaintiff asked for in his complaint, such as certification of a class and declaratory relief. Even though CEC contended that Gomez was “not entitled” to such relief, Justice Kagan proclaimed, “there’s a dispute about whether he’s entitled to these things,” which must be adjudicated. The “measure of complete relief,” she said, “has to be, at this stage, about what his complaint asks for.”
Further still, Justices Kagan and Sotomayor each espoused their view that a Rule 56 judgement is the only appropriate mechanism for a court to determine to what a plaintiff is entitled. Accordingly, Justice Kagan stated, where it is clear that the “defendant has offered everything that the plaintiff himself has asked for, the appropriate thing to do, in order to prevent wasteful litigation, is not to dismiss the case for mootness, but to grant judgment in favor of the plaintiff.”
CEC’s counsel countered by arguing that that “complete relief” means “everything that [the plaintiff] could receive if he were to win a judgment.” He further stated that in the context of determining whether an offer moots a case, courts are empowered to determine to what relief a plaintiff is entitled. Justice Scalia added that the plaintiff “could ask for the keys to Fort Knox” and that “if it’s a frivolous claim, I don’t see why the Court can’t dispose of that initially . . . in connection with the mootness [determination].”
Justice Kennedy expressed his concern that CEC was arguing that a settlement offer is equivalent to a judgment. Justice Kennedy tacitly accepted CEC’s statement that it is an “accepted principal [that] a settlement moots the case and requires the court to dispose of the case,” but suggested that to end the case after settlement one must move the court to enter judgement, something CEC did not do in the case below. An opinion that says “a settlement offer is the same as a judgment,” Justice Kenney warned, “just doesn’t equate with the Federal Rules of Civil Procedure or with [Supreme Court precedent].”
CEC’s counsel responded to Justice Kennedy’s point first by clarifying CEC’s position as follows: “when the offer of complete relief is made and when a court has determined that it is, indeed, for complete relief, then the case has to come to an end.” It is no matter, he suggested, “whether you say . . . it’s moot at that precise moment or whether you say it starts the ball rolling down the hill toward as dismissal or judgment for the plaintiff based on the terms of the offer, the point is. . .when the defendant has offered everything, the courts can’t go ahead and expound on the law.” To this same point, CEC’s counsel argued that “once a case has come to an end, the court has ancillary jurisdiction to dispose of it” and, therefore, can enter judgment even after the court has determined the case is moot.
Supreme Court oral argument: Gomez
Gomez’s counsel attempted to focus his argument on the technical difference between a mootness dismissal, which is a dismissal for lack of subject matter jurisdiction, and a forced judgment entered in favor of the defendant that has capitulated. The two remedies, he argued, are “mutually exclusive. If the case is moot, a court cannot enter a judgment ever, under any circumstances.” He went on to argue that even if a judgment is entered in favor of a plaintiff providing him his full individual relief, he still has an interest in representing a class. Chief Justice Roberts and Justices Alito, Scalia, and Kennedy challenged both of these propositions.
Seconds after Gomez’s counsel began his argument, Chief Justice Roberts focused in on the “live case or controversy” requirement for subject matter jurisdiction. He asked: if the plaintiff is getting everything it wants “[w]hat is the live dispute in which you have a personal stake toward the terms we used under Article III?” The “live dispute” Gomez’s counsel identified “is in obtaining a court judgment that incorporates that relief that’s been offered.” Justice Alito followed up with a hypothetical in which a plaintiff in an individual action was offered everything he requested and stated that there could be no live case or controversy in that circumstance. Gomez’s counsel responded that the defendant would have a “defense on the merits,” but there is still a controversy because “there’s a past injury that has been allege[dly] caused by the defendant that could be redressed, in theory, with judicial relief.” Justice Kennedy summarized Gomez’s position as: “a plaintiff has an interest in the judgment.” Gomez’s counsel confirmed.
Justice Kennedy went on to point out that Article III requires adversity, and stated that if the plaintiff has actually been paid what he requests (instead of merely offered it), “there’s no adversity.” Gomez’s counsel responded that there would be adversity if the plaintiff came into the court and said he wanted more, even if the defendant said the plaintiff was not entitled to it. “Redressability under Article III,” he argued, “does not ask whether the plaintiff is legally entitled to the relief he demands. He could be making an utterly meritless claim for relief.”
To this, Chief Justice Roberts reminded Gomez’s counsel that aside from the plaintiff’s interest, the court has an interest. He questioned whether it was appropriate to take up the court’s time where the defendant has capitulated and there is nothing more that they can give. He told Gomez’s counsel, “You won’t take ‘yes’ for an answer.” Gomez’s counsel claimed that Gomez had not been offered all the relief requested. Chief Justice Roberts pointed out, however, that the district court found that the defendant’s offer “would have fully satisfied the individual claims asserted.” Even if that were true, Gomez’s counsel argued, “[i]t may justify a forced entry of judgment, but it does not moot the case.”
Justice Scalia jumped in to question whether there was a meaningful technical difference between a forced entry of judgment and a dismissal for mootness. He stated that a forced entry of judgment is one of the remedies for mootness and asserted that there are circumstances in which a court can enter judgment after a case is moot, such as when the parties settle. Gomez’s counsel disagreed and stated that “[i]f the case is moot, a court cannot enter a judgment ever, under any circumstances.” “A jurisdictional dismissal,” he argued, “sends the plaintiff home empty-handed, with nothing. No judicial relief at all. This unaccepted offer of judgment is just out there. It hasn’t been accepted. It can’t be enforced in any way.”
Justice Breyer seized on the distinction between an offer of relief and a tender of relief. He pointed to the AFL-CIO’s amicus curiae brief, filed in support of Gomez, wherein it suggested that the proper way to end a case when the plaintiff will not accept an offer of full relief is to tender the relief to the court. According to Justice Breyer, “The judge at that point should say, ’the [plaintiff] has all he wants. The case is over. Goodbye.’” He went on to state that “of course, if that person now has all he wants, he can’t certify this as a class because he isn’t harmed.”
Gomez’s counsel explained that in such situation the plaintiff may get judgment on the merits, but he has not gotten all he asked for because he hasn’t gotten class certification and the case is not moot. In support of this position, he argued that “[t]he case is not over if you’re talking about class certification because [Deposit Guar. Nat’l Bank v.]. Roper[, 445 U.S. 326 (1980)] holds specifically that the representative plaintiff can continue litigating the class certification . . . because he had a financial stake in the class certification decision.
Chief Justice Roberts expressed his opinion that the refusal to accept an offer of judgment offering complete relief is “all about class certification” and meant to benefit class action lawyers. He questioned whether that was a legitimate interest for an individual plaintiff to be able to maintain an action. Chief Justice Roberts went on to extensively question Gomez’s counsel on what Gomez’s continued financial stake in the litigation would be if the defendant had offered him, or paid him, the monetary damages he sought plus attorneys’ fees. Gomez’s counsel identified the “incentive award” that Gomez could recover if the class is certified.
Supreme Court oral argument: United States
The United States presented argument in support of Gomez’s contention that although a court may enter a forced judgment in favor of a plaintiff when the defendant capitulates, the case is not moot. Justice Scalia quickly pointed out during the US argument that Article III also requires “adverseness” and contended that once the defendant capitulates there is no adverseness and, therefore, the action is moot. As they had during Gomez’s argument, Chief Justice Roberts and Justice Scalia challenged the assertion that courts may never enter judgment after a case is determined to be moot. Justice Sotomayor rephrased Gomez’s and the government’s argument as saying that a case is not moot when a defendant claims to offer full relief because a court has to say that it is in fact complete relief and enter judgment for that relief. This is a point she made during CEC’s argument.
Justices Kagan, Sotomayor, and Ginsburg appear aligned in the position that an unaccepted settlement offer cannot end a case. Chief Justice Roberts and Justices Alito and Scalia appear to agree that in making a mootness determination, a court can consider whether a settlement offer offers complete relief and, if so, can dismiss a case as moot or enter a forced judgment enforcing the offer. Justice Breyer found the method presented by the AFL-CIO to be “practical” and may believe that simply “offering” complete relief, without actually tendering it, may not be sufficient for a court to conclude that a case should be ended. But he does not appear to be concerned that the tender of full relief would prevent the plaintiff from representing a class. Whichever way Justice Kennedy is leaning, he kept it close to the vest. The justices’ conference sessions on this case will no doubt be as spirited as the oral argument.
A ruling from the Court that the offers made by CEC mooted the case and deprived the district court of subject matter jurisdiction would provide defendants facing class actions involving small-dollar products a powerful weapon to avoid the potential high costs and damages associated with class actions. However, since the case currently before the Supreme Court involves only offers made prior tothe filing of a motion for class certification, to prevent a "pick-off" of the named plaintiff, putative class representatives around the country have begun to routinely file a bare-bones motion for class certification at the time they file their complaint, which they amend or supplement after the record is developed. If the Court rules in favor of CEC, we are sure to see the Supreme Court in the future have to answer whether an offer made after the filing of a bare-bones motion for class certification, but prior to certification, also moots the case.