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Rule 68 Offer of Judgment

SCOTUS: Rule 68 Offer Does Not Moot Class Action

By a vote of six to three, in Campbell-Ewald Co. v. Gomez, the Supreme Court held that an unaccepted settlement offer or Rule 68 offer of judgment does not moot a plaintiff’s case.

The U.S. Navy contracted with Campbell-Ewald Company to develop a multimedia recruiting campaign that included sending text messages to consenting 18- to 24-year olds. Jose Gomez, age 40, received one of these unsolicited text messages, and filed a class action lawsuit against Campbell for violating the Telephone Consumer Protection Act (TCPA), which prohibits “using any automatic dialing system” to send a text message to a cell phone without prior consent. Campbell sent a Rule 68 offer of judgment, proposing to settle Gomez’s individual claim. If Gomez had accepted the offer, his individual claim would have been satisfied, but all the class members he sought to represent would have received no satisfaction for their claims. Gomez did not accept the offer and allowed the Rule 68 submission to expire (14 days), in which Campbell moved to dismiss the case due to lack of subject-matter jurisdiction.

Justice Ginsburg delivered the opinion of the Court, holding that, under Rule 68 of the Federal Rules of Civil Procedure, an unaccepted settlement offer has no force. Gomez’s claim therefore was not effaced by Campbell’s unaccepted offer to satisfy his individual claim. The Court adopted the reasoning of Justice Kagan’s dissent from Genesis HealthCare Corp. v. Symczyk, 569 U.S. ___ (2013) , which argued that when a plaintiff rejects such an offer, her interest in the lawsuit remains just what it was before, or “leaves the matter as if no other offer had ever been made.”

A second question before the Court was whether Campbell’s status as a federal contractor grants it immunity from suit for violating the TCPA. The United States and its agencies are not subject to the TCPA’s prohibitions because no statute lifts their exemption. However, the Court held that a company’s status as a government contractor does not entitle it to “derivative sovereign immunity.”

The majority opinion left for another day the question of 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. The Court did note, however, that a case becomes moot “only when it is impossible for a court to grant any effectual relief whatever to the prevailing party.” Gomez sought treble statutory damages and an injunction on behalf of a nationwide class. But Campbell-Ewald’s offer only proposed relief to Gomez alone. Far from admitting liability to the larger class, by offering judgment only to Gomez individually, Campbell-Ewald sought to avoid a potential adverse decision that could have exposed it to much larger class-wide damages. As Gomez made clear, the Supreme Court will not so easily allow defendants to use a Rule 68 offer to avoid class-wide liability by picking off individual class representatives’ claims.

Class action lawyers representing plaintiffs nationwide in consumer protection, product defect, FCRA, and other complex cases. Both Michael Caddell and Cynthia Chapman have been named by LawDragon as two of the “500 Leading Plaintiffs’ Lawyers in America.” All Caddell & Chapman lawyers have been recognized by SuperLawers as outstanding in their field.

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