Supreme Court Holds Offer of Judgment Does Not Moot a Class Action

In a much-anticipated ruling, the Supreme Court today held that a class-action defendant cannot moot a plaintiff’s case by making a pre-class-certification offer of judgment that would satisfy the individual plaintiff’s personal claims but not those of the class. The decision in Campbell-Ewald Co. v. Gomez, holds that such an offer does not moot the individual plaintiff’s claim because, if the plaintiff rejects it, the offer is a nullity and does not deprive the court of the ability to grant relief between the parties. In other words, the court can still award whatever damages, injunctive relief, and other relief the plaintiff seeks if the plaintiff proves his claims. Thus, the case does not meet the Supreme Court’s definition of mootness, under which a case is moot “only when it is impossible for a court to grant any effectual relief whatever to the prevailing party.” And if the individual plaintiff’s own claims are not moot, he can pursue class relief as well, because “a would-be class representative with a live claim of her own must be accorded a fair opportunity to show that certification is warranted.”

The decision will put an end to one of the most common gambits defendants have used to behead class actions before they are certified, especially actions seeking statutory damages that are readily determinable (such as the TCPA action that gave rise to Campbell-Ewald). After Campbell-Ewald, defendants will no longer be able to argue that an unaccepted offer of judgment or other settlement offer moots a case. A decision the other way would have made class actions very difficult to maintain in statutory damages cases and severely damaged their utility as a means of redressing wrongdoing that inflicts small losses on many people—exactly the kinds of cases to which class actions are most suited.

Defendants no doubt will turn to other tactics to support claims of mootness or otherwise attempt to "pick off" class representatives, but those possible stratagems are of dubious validity and carry greater risks to defendants than simply offering a nominal sum to the named plaintiff. The majority opinion in Campbell-Ewald leaves the possibility that defendants may have other ways of achieving the same goal to another day, in a case that actually presents that issue. For now, though, the opinion definitively rejects the one tactic that defendants have made wide use of over the past several years to moot class actions: the offer of judgment.

The opinion also rejects the claim that a government contractor is entitled to broad “derivative sovereign immunity,” which would have insulated contractors against statutory or common law claims, even when they in fact departed from the government’s instructions and engaged in unauthorized wrongful acts. Although that issue was in some ways the tail wagging the dog in the case, as it would not likely have independently persuaded the Court to grant certiorari had the mootness issue not been in the case, the Court’s opinion on it squelches another argument that defendants have attempted to use in a number of cases to avoid liability.

In sum, it was a good day in the Court for consumer class actions.


(Note: The author of this post was co-counsel in the case.)

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