Federal courts continue to grapple with procedural limits upon class action claims, balanced against the substantive rights of litigants. In Stein v. Buccaneers Ltd. Partnership, the Court of Appeals reinstated claims based upon alleged violations of the Telephone Consumer Protection Act ("TCPA"). This Court concluded that "a plaintiff's individual claim is not mooted by an unaccepted Rule 68 offer of judgment"; and that even "a proffer that moots a named plaintiff's individual claim does not moot a class action in circumstances like those presented here, even if the proffer comes before the plaintiff has moved to certify a class.'
Prior entries in this blog have discussed Genesis Healthcare Corp. v. Symczyk,133 S. Ct. 1523 (2013) ("Picking Off Class Representatives" - Using a Rule 68 Offer of Judgment to "Moot" Potential Class Claims) and Mey v. North. Am. Bancard, LLC, No. 14-CV-11331, 2014 WL 6686773 (E.D. Mich. Nov. 26, 3014) (posted Dec. 7, 2014; Eastern District of Michigan holds that Rule 68 Offer of Judgment moots proposed class representative's claims). In Stein v. Buccaneers Ltd. Partnership, 772 F.3d 698 (11th Cir. 2014), the Court reversed a district court's dismissal of claims based upon alleged violations of the Telephone Consumer Protection Act ("TCPA"). The Stein plaintiffs alleged TCPA violations based upon claims that the defendant ("Buccaneers") sent unsolicited faxes to more than 100,000 consumers in advertising tickets to professional football games.
Eighteen days after service of the Complaint and three days after the case had been removed to federal court, the Buccaneers served an offer of judgment on each named plaintiff pursuant to Fed. R. Civ. P. 68. Each offer included an offer of judgment equal to the treble damages allegedly suffered by the particular named plaintiff (ranging from $1,500 to $7,500), plus "all reasonable costs incurred to date by [the particular named plaintiff] to be decided by the Court, and an entry of a stipulated injunction enjoining the defendant from any future violations of [the TCPA]. ... [Defendant] hereby offers to provide [the particular named plaintiff] with any other relief which is determined by the Court to be necessary to fully satisfy all of the individual claims of [the particular named plaintiff]. 772 F.3d, at 700-701.
Before expiration of the period provided for a party to accept a Rule 68 offer of judgment, the Buccaneers moved for dismissal. The Stein plaintiffs countered with a motion to certify a class, which the district court denied six days after the plaintiffs filed it. The plaintiffs allowed the Rule 68 offer to lapse. About six weeks later, the district court dismissed the action as moot. On appeal, the Court observed that the "only question presented ... is whether [the Buccaneers'] Rule 68 offer rendered the case moot." 772 F.3d, at 701. The Court squarely held that an unaccepted Rule 68 offer of judgment does not moot a named plaintiff's individual claims. In so doing, the Court noted that in Symczyk, a majority of the Supreme Court had accepted the parties' stipulation in that case that "an unaccepted Rule 68 offer mooted the individual plaintiff's claim." Id., at 702; Symczyk, 133 S. Ct. at 1529. But the Eleventh Circuit focused upon Justice Kagan's dissenting opinion, as the opinion of "the only four [justices] who have weighed in on this issue":
An unaccepted settlement offer -- like any unaccepted contract offer -- is a legal nullity, with no operative effect. As every first-year law student learns, the rejection of an offer "leaves the matter as if no offer had ever been made." Nothing in Rule 68 alters that basic principle; to the contrary, the rule specifies that "[a]n unaccepted offer is considered withdrawn."
So a friendly suggestion to the Third Circuit: Rethink your mootness-by-unaccepted-offer theory. And a note to all other courts of appeals: Don't try this at home.
Symczyk, 133 S. Ct. at 1533-34 (Kagan, J., dissenting).
The Eleventh Circuit noted that one other Court of Appeals expressly has adopted Justice Kagan's reasoning in Symczyk. 772 F.3d, at 703, citing Diaz v. First Am. Home Buyers Prot. Corp., 732 F.3d 948, 954-55 (9th Cir. 2013). And pre-Symczyk, two courts of appeals had held that a Rule 68 offer of judgment could be made binding if the district court entered judgment for the amount of the unaccepted offer. Id., citing O'Brien v. Ed Donnelly Enterprises, Inc., 575 F.3d 567, 575 (6th Cir. 2009); McCauley v. Trans Union LLC, 402 F.3d 340 (2d Cir. 2005). In Stein, the Buccaneers' form of offer specifically provided that the named "Plaintiff must serve written acceptance of this offer within 14 days, or this offer will be deemed rejected." Id., at 704.
The Eleventh Circuit also held in the alternative that even if the named plaintiffs' claims did not survive the Buccaneers' Rule 68 offer, they nevertheless could continue to pursue class claims. By controlling Eleventh Circuit precedent, an alleged but uncertified class action should not be dismissed for mootness upon tender to the named plaintiffs of judgment for their personal claims. 772 F.3d at 704, citing Zeidman v. J. Ray McDermott & Co., 651 F.2d 1030 (5th Cir. 1981). To assess the ability of the Stein plaintiffs to continue as potential class representatives, the Eleventh Circuit focused upon (1) whether the district court had an opportunity to rule upon a properly supported motion for class certification, and (2) whether such a certification properly might be considered to relate back to the filing of the original complaint in the action. Id., at 705-707. Because the case was not ripe for consideration of class certification and the Stein plaintiffs had not failed "to act diligently," the Rule 68 offers of judgment would not "disqualify them from going forward" for purposes of seeking class certification. Id., at 18.
The Court cited decisions of the Third, Fifth, Ninth, and Tenth Circuits as consistent with its reasoning in Stein. 772 F.3d at 707, citing Weiss v. Regal Collections, 385 F.3d 337 (3d Cir. 2004); Sandoz v. Cingular Wireless LLC, 553 F.3d 913 (5th Cir. 2008); Pitts v. Terrible Herbst, Inc., 653 F.3d 1081 (9th Cir. 2011); Luvero v. Bureau of Collection Recovery, Inc., 639 F.3d 1239 (10th Cir. 2011). The Court criticized contrary precedent in Damasco v. Clearwire Corp., 662 F.3d 891 (7th Cir. 2011), as encouraging plaintiffs to "file a premature certification motion with the complaint, a practice we are told is now common in the Seventh Circuit." Id. at 708,citing Falls v. Silver Cross Hosp. & Med. Ctrs, No. 13 C 695, 2013 WL 2338154 (N.D. Ill. May 24, 2013). See also, Damasco, 662 F.3d at 896 ("A simple solution … is available … Class-action plaintiffs can move to certify the class at the same time that they file their complaint").
Finally, Stein acknowledged some tension with a point of analysis in Symczyk. The Supreme Court in Symczyk distinguished its posture as an opt-in "collective action" distinct from class actions. 772 F.3d at 708; Symczyk, 133 S. Ct. at 1529 ("Rule 23 actions are fundamentally different from collective actions under the FLSA"). However, the Supreme Court also distinguished the mootness issue according to whether the claims were "inherently transitory" and inevitably would be mooted by the passage of time. 772 F.3d at 709; Symczyk, 133 S. Ct. at 1530-31. Stein addressed the issue by holding that where it is feasible for a defendant to make sufficient proffers of full relief to all named plaintiffs, that fact "renders a case transitory within the meaning of the [Supreme Court] cases." 772 F.3d at 709. The Eleventh Circuit concluded that "a plaintiff's individual claim is not mooted by an unaccepted Rule 68 offer of judgment"; and that even "a proffer that moots a named plaintiff's individual claim does not moot a class action in circumstances like those presented here, even if the proffer comes before the plaintiff has moved to certify a class.' 772 F.3d at 709.