Eleventh Circuit: Attempt to Pick Off a Class Representative Doesn’t Moot the Class Action

by Deepak Gupta

The Eleventh Circuit issued issued a very comprehensive and well reasoned opinion this week on a hot issue in consumer class-action practice: Can a defendants' attempt to "pick off" a class representative moot the class action?  Or, as the opinion puts it: "This case presents the question whether a defendant may moot a class action through an unaccepted Federal Rule of Civil Procedure 68 offer of complete relief to the named plaintiffs—but not to class members—before the named plaintiffs move to certify the class. In the circumstances of this case, the answer is no." Here, the issue arose in a Telephone Consumer Protection Act case (Stein v. Buccaneers Ltd. P'ship.); it's a recurrent issue in cases under the Fair Debt Collection Practices Act and other consumer laws that authorize statutory damages.

1. Individual mootness. Here's the heart of the court's analysis on the threshold question of individual mootness:

Giving controlling effect to an unaccepted Rule 68 offer—dismissing a case based on an unaccepted offer as was done here—is flatly inconsistent with the rule. When the deadline for accepting these offers passed, they were “considered withdrawn” and were “not admissible.” See Fed. R. Civ. P. 68(b). The plaintiffs could no longer accept the offers or require the court to enter judgment. In short, the plaintiffs still had their claims, and [the defendant] still had its defenses. [The defendant] had not paid the plaintiffs, was not obligated to pay the plaintiffs, and had not been enjoined from sending out more faxes. The named plaintiffs’ individual claims were not moot.

That's the same common-sense approach sketched out by Justice Kagan's dissenting opinion in Genesis Healthcare Corp. v. Symczyk (joined by three other Justices and contradicted by none), which offered this "friendly suggestion" to the lower court that had found the case moot: "Rethink your mootness-by-unaccepted-offer theory. And a note to all other courts of appeals: Don’t try this at home." The defendant in the TCPA case, the Eleventh Circuit noted, "invites us to try this at home. We decline." On this point, the Eleventh Circuit joins the Ninth Circuit's opinion last year in Diaz v. First Am. Home Buyers Prot. Corp., 732 F.3d 948, 954-55 (9th Cir. 2013).

2. Class mootness. The Eleventh Circuit also went on to hold that, "[e]ven if the individual claims are somehow deemed moot, the class claims remain live, and the named plaintiffs retain the ability to pursue them." On this point, the court relied on a precedent of the Old Fifth Circuit, binding in the Eleventh, and a tour of the Supreme Court's class-action mootness jurisprudence going back to the '70s. Here's the upshot of that analsysis: "In the Third, Fifth, Ninth, and Tenth Circuits, as now in the Eleventh, a Rule 68 offer of full relief to the named plaintiff does not moot a class action, even if the offer precedes a class-certification motion, so long as the named plaintiff has not failed to diligently pursue class certification." Only the Seventh Circuit's decision in Damasco v. Clearwire stands apart, and the panel's opinion includes some nice criticism of the bizarre practical consequences of the Damasco regime.

The panel didn't deny that there may appear to be "tension" between its opinion and a bit of the Genesis majority's dicta — particularly the Court's distinction between "inherently transitory" claims mooted by the passage of time and damages claims. But the panel explained that (1) Genesis doesn't conflict with the panel's analysis of individual mootness, (2) Genesis emphasized differences between Rule 23 class actions and the FLSA collective action at issue there, and (3) a contrary approach "would prove too much. It would mean that a named plaintiff could not represent a class if the defendant sufficiently proffered full relief at any time before the class was certified, not just before the plaintiff filed a motion to certify." Even the Seventh Circuit doesn't take that approach, and nobody is seriously suggesting it.

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