Mooting Plaintiff's Case Might Not End Class Action

Law360, New York (October 19, 2012, 12:17 PM ET) -- Defendants in class actions frequently wonder how, and whether, they can resolve the individual named plaintiff's case and thus get rid of the class action all together. Sometimes these issues arise at the start of a class action. Defendants wonder whether they can just make an offer of judgment and be done with the case. Sometimes, after a motion for class certification is denied, or after a certified class is decertified for some reason (which a district court has authority to do), defendants wonder whether they can end the class action by simply settling with the named plaintiff. The answer to both questions is, as with so many things in the law, maybe.

The Requirement of Standing

It is well known that under Article III of the United States Constitution, federal courts only have jurisdiction over live "cases and controversies." See, e.g., Spencer v. Kemna, 523 U.S. 1, 7 (1998); A.M. v. Butler, 360 F.3d 787, 790 (7th Cir. 2004). The cases and controversy requirement demands that parties in a federal case always maintain a personal stake in the outcome of the litigation. See United States v. Juvenile Male, 131 S. Ct. 2860, 2864 (2011); Spencer, 523 U.S. at 7. One standing issue that often arises in a class action is whether an offer of judgment to, or settlement with, the named plaintiff moots his or her claims and thus destroys standing.

What many parties are finding out is that there are limits to mooting a class action through offers of judgment or settlement.1 This term, the U.S. Supreme Court will weigh in on whether an offer of judgment under Federal Rule of Civil Procedure 68 moots a collective action under the Fair Labor Standards Act (for these purposes, actions that are analogous to class actions). See Genesis Healthcare Corp. v. Symczyk, No. 11-1059 (U.S.); see also Symczyk v. Genesis Healthcare Corp., 656 F.3d 189 (3d Cir. 2011). Below is a brief summary of the current law relating to whether an offer of judgment or a settlement with a named plaintiff will effectively end the particular class action.

Offers of Judgment

Federal Rule of Civil Procedure 68 allows a defending party, at least 14 days before the date set for trial, to serve on an opposing party "an offer to allow judgment on specified terms, with the costs then accrued." Fed. R. Civ. P. 68(a). In general, an offer of judgment for full relief moots an individual plaintiff's claims because "[o]nce the defendant offers to satisfy the plaintiff's entire demand, there is no dispute over which to litigate, and a plaintiff who refuses to acknowledge this loses outright, under Fed. R. Civ. P. 12(b)(1), because...