Deposits made in court accounts do not render actions moot

With treble damages and attorneys’ fees compounding already high dollar judgments, defendants in TCPA class actions understandably try their best to escape litigation before class certification is decided. But a recent decision in the Seventh Circuit Court of Appeals made clear that one such attempt to block class actions from moving forward will not work.

In 2016’s Campbell-Ewald Company v. Gomez, the Supreme Court considered whether an unaccepted offer of judgment made by the defendant under Rule 68 of the Federal Rule of Civil Procedure was enough to moot the class representative’s individual claim or the claims of the class. The Court found that an unaccepted offer did not commit either party, and allowed the putative class action to proceed. However, the Court left one question open – whether “the result would be different if a defendant deposits the full amount of the plaintiff’s individual claim in an account payable to the plaintiff, and the court then enters judgment for the plaintiff in that amount.”

Unresolved Question

This open issue was predictably enticing for defense counsel in Fulton Dental, LLC v. Bisco, Inc., which was resolved in the Seventh Circuit on June 20. The defendant argued that, under Rule 67, a deposit of an amount necessary to satisfy a claim – in a bank account held by the court – would moot the class representative’s claim, effectively unraveling the class.

The Seventh Circuit decided, in a unanimous panel decision, that the argument advanced in Fulton Dental did not fit the hypothetical situation left open by the Supreme Court in the earlier case. The Campbell-Ewald decision raised the hypothetical of a deposit made to an account held by the plaintiff, not an account held by the court.

The Seventh Circuit held that deposits governed by Rule 67 did not grant ownership of the funds to the plaintiff, and that these deposits were therefore no different than an unaccepted offer – which the Supreme Court had disposed of in Campbell-Ewald. The question raised by the Supreme Court in that case remains open.

The Takeaway

Recent cases in the Ninth and Second Circuit Courts of Appeal (2016 and 2017, respectively) reached contradictory conclusions about how such a situation might affect the overall litigation. Given the creativity demonstrated by defendants in their attempts to shake loose of class actions, we can expect further discussion of the open Rule 68 question in the future.