Is a Telephone Consumer Protection Act class action moot where a defendant actually deposits sufficient funds with the court to satisfy a plaintiff’s claim pursuant to Federal Rule of Civil Procedure 67?

No, a federal court judge in Illinois ruled, finding that a controversy remained between the parties.

Wendall H. Stone Company filed a putative class action suit alleging that Metal Partners Rebar ran afoul of the TCPA by sending at least one unsolicited fax advertisement. Before Stone filed for class certification, Metal Partners moved to deposit $30,500 with the court pursuant to Rule 67, an amount it claimed would fully satisfy the plaintiff’s individual claims.

Relying on the U.S. Supreme Court decision in Campbell-Ewald v. Gomez, the defendant requested that the court enter judgment in favor of Stone, arguing that the deposit of funds would render moot both the individual and class claims.

But U.S. District Court Judge Matthew F. Kennelly denied the motion, ruling that even if the court permitted the deposit, a case or controversy would continue to exist.

The court first determined that Metal Partners’ requested deposit was permissible, noting that district courts have discretion as to whether to employ Rule 67. The deposit would not overburden the court nor would it run counter to the purposes of the Rule, the court said, and rejected Stone’s argument that allowing the deposit would lead to similar deposits in other class actions.

However, despite permitting the deposit, the court said it did not render moot Stone’s individual claims or those of the putative class.

“The mere filing of a motion to deposit funds does not render a plaintiff’s claims moot, for the same reason that an unaccepted offer under Rule 68 does not do so,” the court wrote. “If submitting an offer immediately rendered a case moot, the court would have no authority to enter a decree, enforce the order, or ensure that the plaintiff receives the relief provided for in the offer. Therefore a plaintiff’s claim cannot be rendered moot—based on the premise that he has received full relief—before the Court actually exercises its authority to grant the relief.”

Judge Kennelly declined to exercise his authority to grant such relief, ruling that “permitting Metal Partners to make Stone’s individual claim moot in this manner would undermine the purposes of the class action device,” something the Seventh Circuit Court of Appeals has frowned upon. “By separating Stone’s interests from those of other potential class members, Metal Partners attempts to defeat a potential class action by satisfying only Stone’s individual claim. In this way, Metal Partners might perpetually evade a class action by making a similar motion for every representative plaintiff that comes forward.”

Because the court found that Stone’s individual claim would not be rendered moot, the class claims likewise remained active.

After reaching its conclusion, the court then added an alternative basis for its holding. “[E]ven if it were to rule that a defendant’s deposit of funds could render a plaintiff’s claims moot, Metal Partners’ proposed deposit would not do so here,” Judge Kennelly wrote. The defendant said it conducted an investigation and found nine potential faxes sent to the fax number Stone provided, which provided the basis for an estimate of Stone’s damages (9 x $1,500 = $13,500, jumping to $30,500 for a “significant cushion”).

But the parties disputed the number of unauthorized faxes, the court said, with Stone claiming that the number of faxes sent by Metal Partners is “unknown at this time.” “Because the Court cannot determine definitely whether this offer would provide complete relief on Stone’s individual claim, Metal Partners’ deposit of $30,500 cannot render moot either Stone’s individual claim or his class claims,” the court declared.

To read the opinion and order in Wendell H. Stone Company, Inc. v. Metal Partners Rebar LLC, click here.

Why it matters: TCPA defendants had looked with hope to the suggestion in Campbell-Ewald v. Gomez that a deposit of funds with the court pursuant to Rule 67 could moot a plaintiff’s claims. This Illinois federal court disagreed, thus foreclosing this strategy in that district. Whether this decision deters defendants in other districts around the country remains to be seen.