In Chapman v. First Index, Inc., 796 F.3d 783 (7th Cir. 2015) (No. 14-2773), the Seventh Circuit addressed whether a rejected offer of judgment moots the case. The court acknowledged that many courts, including the Seventh Circuit, had applied the label “moot” to cases in which plaintiff had declined an offer that would satisfy the entire demand. The court recognized the Supreme Court declined to reach this issue in Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523 (2013), but the Seventh Circuit adopted the reasoning of Justice Kagan’s dissent, that an unaccepted offer of judgment does not moot the underlying case because relief remains possible. The court recognized the issue was before the Supreme Court in Gomez v. Campbell-Ewald Co., 768 F.3d 871 (9th Cir. 2014), cert. granted, 135 S. Ct. 2311 (2015), but wished to “clean up the law of this Circuit promptly.” Separately, the court noted that rejecting a fully compensatory offer may have consequences other than mootness. Particularly in an individual case, courts may be reluctant to order a defendant to do what the defendant has already agreed to do. Nonetheless, the court stated “settlement proposals designed to decapitate the class upset the incentive structure” of class action litigation and therefore courts are reluctant to assign any consequences to a rejected offer of judgment.
In Hooks v. Landmark Industries, Inc., 797 F.3d 309 (5th Cir. 2015) (No. 14-20496), the Fifth Circuit reached the same conclusion. In that case, the district court found a declined offer of judgment mooted a class representative’s claim. The Fifth Circuit reversed. Noting that the Fifth Circuit had not resolved whether an offer of judgment mooted an individual’s claim, the court followed Justice Kagan’s dissenting opinion in Genesis and held that the rejection of an offer of judgment nullifies the offer and a refused offer of judgment cannot moot a claim. In addition to basing its ruling on Rule 68 and principals of contract law, the court expressed concern that a defendant could “pick off” individual plaintiffs before class certification and attempt to moot meritorious class claims.