Like many commentators, we have noted a potential loophole in the Supreme Court’s recent decision in Campbell-Ewald Co. v. Gomez, 136 S.Ct. 663 (2016). In that case, the Court did not decide whether the actual deposit with the court or sending of a check in the full amount of the plaintiff’s individual damages claim would moot the plaintiff’s case. As such, many expected that defendants would try this in the future to moot a Telephone Consumer Protection Act (“TCPA”) claim or other potential class action plaintiff claim.
In Genesis Healthcare Corp. v. Symczyk, 133 S.Ct. 1523 (2013), the Supreme Court suggested in dicta that a settlement offer making the plaintiff whole mooted the plaintiff’s individual claims. But, inCampbell-Ewald, the Supreme Court pivoted away from this dicta by holding that an unaccepted settlement offer is “a legal nullity with no operative effect.” After Campbell-Ewald, the power to end an uncertified class action appeared to reside with the plaintiffs. Now, just a month after Campbell-Ewald was decided, there are at least two instances of the aforementioned loophole being tested. Both cases stem from actions brought in New York federal courts in 2013.
In Brady v. Basic Research LLC, No. 2:13–cv–7169, 2016 WL 462916 (E.D.N.Y. Feb. 3, 2016), the plaintiffs sued Basic Research, the maker of the weight loss supplement “Zantrex 3,” alleging that the product, which former “Jersey Shore” star and spokeswoman, Snooki endorsed, was falsely advertised and is neither safe nor effective as the company claimed. The court refused to allow Basic Research to moot the case by depositing with it the full offer of relief purportedly sought by the named plaintiffs. Under Rule 68 of the Federal Rules of Civil Procedure, the defendants sought to deposit $400 with the court to satisfy the plaintiffs’ claims. In denying this effort at bringing an end to the case, the court stated that would-be class representatives with a live claim “must be accorded a fair opportunity to show that certification is warranted.” Further, the court stated that Rule 67 of the Federal Rules of Civil Procedure, which provides the mechanism for depositing money with the court, was not the correct procedural mechanism because the defendants were not administering an asset.
At the same time, in a separate TCPA class action before the Southern District of New York – Leyse v. Lifetime Entertainment Services LLC, No. 13 Civ. 5794 – defendant Lifetime Entertainment Services has moved to dismiss the case by paying more than what the plaintiff would receive at trial. The suit centers around a prerecorded message Lifetime allegedly left in 2009 regarding the television show “Project Runway” for Time Warner Cable customers in New York City. The plaintiff, who was not a Time Warner customer, filed suit in August 2013 alleging that the company had left an unsolicited prerecorded message on his home answering machine in violation of the TCPA. Class certification already had been denied on the basis of ascertainability. In its motion to dismiss, the defendant argues that even though the plaintiff may have an interest in appealing the denial of class certification, the plaintiff’s interest in the case would be the same whether he prevailed at trial or had judgment entered in his favor now and granted full relief pursuant to a Rule 68 offer. In both instances, the defendant argues, the plaintiff would still have standing to appeal the denial of class certification. Oral argument on the motions is currently scheduled for March 23, 2016.
We will have to wait and see how more courts rule on these issues, but the post-Campbell-Ewaldprogeny is quickly developing in the TCPA context. A digest of recent TCPA cases can be accessed here.