Last year, in Gomez v. Campbell-Ewald Co., No. 13-55486, 2014 WL 4654478 (9th Cir. Sept. 19, 2014), the U.S. Court of Appeals for the Ninth Circuit held that offers of complete relief made to individual plaintiffs under Fed. R. Civ. P. 68 do not moot either individual or class claims. This holding mirrors decisions by the Second and Eleventh Circuits but conflicts with decisions by the Third and Seventh Circuits. Now the Supreme Court has granted certiorari to address the circuit split, dialing up an issue with implications for class actions generally, including false advertising class actions.
Gomez, the named plaintiff in the 2014 Ninth Circuit case, alleges that advertising firm Campbell-Ewald sent him, and approximately 100,000 others, unsolicited recruiting messages for the U.S. Navy in violation of the T.C.P.A. Prior to class certification, Campbell-Ewald offered Gomez $1,503 as an offer of judgment under Rule 68. This offer was more than three times the statutory penalty per text message and at least equal to what Gomez could hope to obtain if his damage award were trebled. This, Campbell-Ewald argued, constituted complete relief and mooted Gomez’s claim. But the Ninth Circuit held Gomez’s suit could continue.
The Supreme Court granted certiorari to address questions including whether a case becomes moot when a plaintiff receives an offer of complete relief on his claim and whether the answer to that question differs when the plaintiff has asserted a class claim under F.R.C.P. Rule 23, but receives an offer of complete relief before a class is certified.
Advocates for the Ninth Circuit’s position argue that a contrary decision could allow defendants to pull the plug on potential class actions by strategically picking off plaintiffs before class certification. On the other hand, many members of the class action defense bar have argued that such offers make plaintiffs whole and are mainly to the detriment of plaintiff’s lawyers who seek large settlements (and resulting fees) further down the line.
Whatever the Supreme Court decides is likely to have major implications for class actions generally. In the false advertising context, if the Court overturns the Ninth Circuit’s decision and sides with Campbell-Ewald, potential defendants could receive a powerful new tool to defend against budding class actions at their earliest stages. Stay tuned for more analysis of the outcome and implications of this important case.