The Eastern District of Michigan recently issued a decision recognizing the power of class action defendants to “pick off” class representatives, and thus prevent class certification, with an Offer of Judgment under Fed. R. Civ. P. 68. In an April 2, 2014 entry, this blog discussed the unclear status of the law in the Sixth Circuit as to whether defendants can preclude class certification with a Rule 68 offer. The court’s decision, here, suggests defendants have the right to pick off class representatives early in the litigation when a motion for class certification is not pending. But it stops short of stating when this right expires.
In Mey v. North American Bancard, LLC, the named plaintiff filed a complaint and motion for class certification on the same day in late March 2014. Just three days later, the court denied the motion for class certification as premature. Significantly, the plaintiff never filed a motion to reconsider the motion for class certification.
In early May 2014, the defendant submitted a Rule 68 offer, which the plaintiff rejected. Shortly thereafter, the defendant filed a motion to dismiss under Fed. R. Civ. P. 12(b)(1). Relying on the Supreme Court’s recent decision in Genesis Healthcare Corporation v. Symczyk, the defendant argued for dismissal on the grounds that its Rule 68 offer mooted the plaintiff’s claims, thus depriving the court of an active case or controversy. The plaintiff argued against dismissal on two grounds: (1) the Genesis decision is limited to claims brought under the Fair Labor Standards Act (“FLSA”), and (2) the motion for class certification remained pending.
The court agreed with the defendant, electing to enter judgment on the plaintiff’s individual claims and dismiss the claims of the putative class. The court began by noting the Sixth Circuit has previously recognized that putative class claims must be dismissed when the representative’s claims are rendered moot, even when those claims are not brought under the FLSA. Therefore, the court concluded, the reasoning of Genesis decision is not limited to FLSA claims.
Next, the court distinguished the Sixth Circuit’s decision in Carroll v. United Compucred Collections. In Carroll, the court pointed out, the defendant submitted its Rule 68 offer nearly three years after the plaintiff filed a motion for class certification and two months after the magistrate judge issued a recommendation to certify the class. The court found the facts before it were distinguishable because the defendant submitted its Rule 68 offer very early in the litigation. Further, the court noted, the plaintiff’s motion for class certification was not pending at the time the defendant submitted its Rule 68 offer. As such, the class representative’s claims were moot.
Although the court’s decision is unquestionably a boon for class action defendants, it leaves significant questions remaining. Specifically, it does not answer whether the passage of time or occurrence of events can extinguish the defendant’s right to preclude class certification with a Rule 68 offer. To this point, one could argue the reasoning of the court’s decision applies only to situations in which a motion for class certification is not pending at the time the Rule 68 offer is submitted.
The more reasonable reading of the court’s decision, however, is that there is a definite window of time at the beginning of a lawsuit in which defendants have the right to moot a class representative’s claims with a Rule 68 offer. A plaintiff cannot circumvent this right by filing an immediate motion for class certification.
With that said, it remains unclear how wide this window of time to submit a Rule 68 offer is. In light of this uncertainty, defendants faced with potential class actions would be wise to act promptly where the strategy of making a Rule 68 offer is advisable in order to avoid waiving that right.