A Telephone Consumer Protection Act defendant was unsuccessful in persuading a Massachusetts federal court judge to dismiss a putative class action under the statute despite offering the plaintiff $46,500 and promising to refrain from future violations.

The dispute began when Bais Yaakov of Spring Valley, a religious corporation operating a private school in New York, sued college and career planning company ACT Inc. It asserted that the defendant sent illegal fax advertisements in 2012 without the required opt-out notice. ACT responded with an offer of judgment pursuant to Rule 68 of the Federal Rules of Civil Procedure. The plaintiff did not accept within 14 days and the offer expired.

ACT then moved to dismiss for lack of subject matter jurisdiction, arguing that its unaccepted offer of judgment rendered the case moot by negating the existence of a case or controversy. Bais Yaakov told the court its claims had not been satisfied because it had not accepted the offer. The court denied the motion and the First Circuit Court of Appeals affirmed.

The U.S. Supreme Court then issued its decision in Campbell-Ewald Co. v. Gomez, holding that an unaccepted offer to satisfy the named plaintiff’s individual claim was not sufficient to render a case moot, when the complaint sought relief on behalf of the plaintiff and a class of persons similarly situated.

However, in concurring and dissenting opinions, Chief Justice John Roberts and Justices Antonin Scalia, Clarence Thomas, and Samuel Alito stated that tendering a check or depositing one with the district court would moot a plaintiff’s individual claims. The next day, ACT filed a motion to deposit $4,800 with the district court as payment to the plaintiff to resolve all claims in the lawsuit and filed a second motion to dismiss.

Plaintiff’s counsel returned the check to defendant’s counsel and the court denied the motion. While ACT argued that the check was for the maximum amount Bais Yaakov could recover ($1,500 per fax under the TCPA and $100 per fax under New York state law), the court said the proper measure of damages for the plaintiff’s claims remained in dispute, leaving the parties with a live controversy.

In its third effort, ACT tendered to Bais Yaakov a certified check on June 13, 2016, in the amount of $45,600: $15,000 per fax for violations of the TCPA and $200 per fax for violations of New York law. The defendant also agreed to cease sending any faxes to the plaintiff that would violate either law. Plaintiff’s counsel again returned the check to defendant’s counsel.

ACT filed its third motion to dismiss, arguing that no justiciable case or controversy existed. Campbell-Ewald left open the question of whether a tender of full payment, rather than a withdrawn offer under Rule 68, will moot a case, the defendant told the court, adding that its most recent check is unconditional, will not expire, and indisputably covered the total amount of damages to which plaintiff could be entitled.

U.S. District Court Judge Timothy S. Hillman agreed that Bais Yaakov no longer has a live individual claim based on the $45,600 check. As for the “thornier issue” of whether the class action remained justiciable, the court noted First Circuit precedent that “a putative class action ‘ordinarily must be dismissed as moot if no decision on class certification has occurred by the time that the individual claims of all named plaintiffs have been fully resolved.’ ”

“However, a narrow exception to this rule has been carved out,” Judge Hillman added. “[W]here a named plaintiff’s individual claim becomes moot before the district court has an opportunity to rule on the certification motion, and the issue would otherwise evade review, the certification might ‘relate back’ to the filing of the complaint.” The relation-back doctrine applies when “other persons similarly situated” will continue to be subject to the challenged conduct and the claims raised are “so inherently transitory” that the trial court will not have enough time to rule on a motion for class certification before the proposed representative’s individual interest expires.

TCPA defendants have employed a “recurring strategy” of picking off named plaintiffs before class certification, the court said, and ACT’s “nifty stratagem” implicated the “inherently transitory” standard of the relation-back doctrine. “Accordingly, I find that although Plaintiff’s individual claims have become moot, a justiciable controversy remains,” Judge Hillman concluded.

To read the memorandum and order in Bais Yaakov of Spring Valley v. ACT, Inc., click here.

Why it matters: For the third time, the district court denied ACT’s motion to dismiss the TCPA suit. While the defendant successfully mooted the plaintiff’s individual claims with its $45,600 check and promise not to violate the statute in the future, the court said the “relation-back” doctrine prevented dismissal of the suit because the claims of class members remained a justiciable controversy.