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Illinois Supreme Court reaffirms tendering full relief moots claims of plaintiff and class

Sidley Austin LLP

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USA November 16 2015

At least since Wheatley v. Board of Education, 99 Ill. 2d 481, 485 (1984), the Illinois Supreme Court has approved of defendants’ practice of mooting putative class actions by tendering full relief to the named plaintiff, as long as the tender was made before the plaintiff filed a motion for class certification. This practice has come under increased scrutiny in federal courts, but the Illinois Supreme Court recently reaffirmed the practice in Ballard RN Center, Inc. v. Kohll’s Pharmacy & Homecare, Inc., 2015 IL 118644. The Court also held that a plaintiff could avoid mootness in some circumstances by filing a class certification motion before the defendant’s tender of relief even if that motion would fail on the merits.Id. at ¶39. In so holding, the Court preserved a useful tool to put an early end to class action litigation, but also provided plaintiffs with a potential counter to it. 

This alert addresses the Illinois Supreme Court jurisprudence leading to Ballard, the Ballard holding itself, and how Illinois law differs from the latest Seventh Circuit opinion on this subject. 

Wheatley, the earliest Illinois Supreme Court case on mooting putative class actions, illustrates the value of the strategy. There, teachers who were dismissed by their school board, brought a class action seeking a writ of mandamus and a declaratory judgment that the board violated the School Code by dismissing them without first holding a hearing. Because the named plaintiffs were reinstated before they filed a motion for class certification, and no representative was substituted in their place, the Court held that the case was moot. 99 Ill. 2d. at 485-86. Presumably lengthy litigation was avoided and the putative class members were apparently satisfied, as no one else stepped forward to file a new action. 

As class action defendants followed the teachings of Wheatley by tendering full relief to named plaintiffs early in the case—a strategy pejoratively labeled by the plaintiffs’ bar as a “pick off” strategy—some courts developed a “pick off exception.” These courts held that a defendant could not moot the claim until the plaintiff had a “reasonable opportunity” to move for class certification. 

The Illinois Supreme Court rejected this “pick off exception” in Barber v. American Airlines, 241 Ill. 2d 450, 458 (2011). In Barber, a plaintiff brought a class action against the airline because he was charged a baggage fee even though his flight was cancelled. Id. at 452. Before plaintiff moved for class certification, the defendant contacted her counsel and offered to refund the fee. Id. at 453. Although plaintiff declined the offer, the defendant issued a refund to plaintiff’s credit card three weeks later. Id.Because the defendant tendered the requested relief before plaintiff moved for class certification, the Court upheld the dismissal on the basis of mootness. Id. at 459. 

The plaintiffs’ bar soon responded to this tactic by filing a class certification motion, often with little or no support, with the original complaint. That’s what happened in Ballard. The plaintiff filed a class action complaint concurrently with a pro forma motion for class certification. Ballard, at ¶8. The motion identified the putative classes, and cited case law, but included no supporting evidence or memorandum of law. Id. at ¶¶8-9. Thereafter, the defendant tendered three “unconditional offer[s] of payment exceeding the total recoverable [statutory] damages,” for one of the three counts of the complaint. Id. at ¶10. The offers were rejected. Id. at ¶11. The defendant then moved to dismiss based on mootness. 

The defendant argued that the motion for class certification was so insufficient that it “could not operate to preclude a finding of mootness under Barber.” Id. at ¶26. The appellate court agreed, holding that the motion for class certification was a “shell” or “placeholder” motion containing insufficient factual allegations to bring the interests of the class before the trial court for purposes ofBarber. Id. at ¶37. Otherwise, the court held, allowing such motions to preclude findings of mootness would “effectively eviscerate the Barber decision.” Id. 

The Illinois Supreme Court reversed. While agreeing “in principle . . . that a contentless shell motion, or otherwise frivolous pleading, would be insufficient to preclude a mootness finding under Barber,” the Court held that plaintiff’s motion was sufficient because it “contain[ed] a general outline of plaintiff’s class membership, class action allegations, and effectively communicate[d] the fundamental nature of the putative class action.” Id. at ¶38 (internal quotations omitted). The Court explained that even if the motion for class certification was not sufficient to support class certification, the focus was not on the adequacy of the motion but when it was filed. Id. at ¶40. 

The Illinois Supreme Court has thus preserved the validity of the “pick off” strategy and the sanctity of Article III standing requirements, but also provided plaintiffs with a potential counter to it—the filing of a class certification motion early in the case that meets the criteria outlined in the opinion. Although one might lament that the pick-off strategy is less likely to succeed because plaintiffs’ counsel will file an early class certification motion, that is not always the case. Inexperienced or out-of-state plaintiffs’ lawyers may not be aware of the law in Illinois with respect to mooting class claims. 

Illinois’s approach differs from the approach of the Seventh Circuit. Damasco v. Clearwire Corp., 662 F.3d 891 (7th Cir. 2011), one of the leading cases supporting the mootness strategy, was recently overruled in Chapman v. First Index, Inc., 796 F.3d 783, 787 (7th Cir. 2015), “to the extent that [it] hold[s] that a defendant’s offer of full compensation moots the litigation or otherwise ends the Article III case or controversy.” Id. In other words, in the Seventh Circuit the so-called “pick off” strategy has been eliminated. 

The Seventh Circuit relied on Justice Kagan’s dissent in Genesis Healthcare Corp. v. Symcyzk, 133 S. Ct. 1523 (2013), where she wrote that an unaccepted offer of full relief does not moot a named plaintiff’s claim. As she explained:

"A case becomes moot only when it is impossible for a court to grant any effectual relief whatever to the prevailing party. By those measures, an unaccepted offer of judgment cannot moot a case. When a plaintiff rejects such an offer—however good the terms—her interest in the lawsuit remains just what it was before. And so does the court’s ability to grant her relief. An unaccepted settlement offer—like any unaccepted contract offer—is a legal nullity, with no operative effect."

Genesis Healthcare, 133 S. Ct. at 1533. Because of the procedural posture of Genesis Healthcare, we do not yet know the views of a majority of the Court on this important question. 

But soon we may. The Court granted certiorari in Campbell-Ewald Co. v. Gomez, No. 14-857, on this very question in the context of a class action, and heard oral argument on October 14, 2015. 

Ballard serves as a reminder to class action defendants that they should pay attention to the “pick off” rules in each relevant jurisdiction. The Illinois Supreme Court must know that the Seventh Circuit has overruled Damasco and yet specifically chose to maintain the Barber rule. This means that while an unaccepted offer of full relief may not moot a class action in federal court, it can in Illinois state court. 

Sidley Austin LLP - Eugene A. Schoon, Elizabeth M. Chiarello and Jessica B. Beringer
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