The Supreme Court Rules That An Unaccepted Offer Of Judgment Cannot Moot A Case, But What About Payment Of Complete Relief?

A divided U.S. Supreme Court recently ruled in Campbell-Ewald Co. v. Gomez1 that an unaccepted settlement offer or offer of judgment is a legal nullity that cannot moot a case. However, the Court left open the possibility that payment of complete relief may suffice.

Factual Background and District Court Proceedings

The U.S. Navy contracted with Campbell to develop a multi-media recruiting campaign that included sending text messages to young adults if they "opted in" to receiving such marketing solicitations. Campbell used a subcontractor to identify the cell phone numbers of such individuals. The subcontractor sent a text message to Jose Gomez ("the plaintiff") encouraging him to explore opportunities in the Navy. The plaintiff filed a nationwide class action against Campbell in federal court in Los Angeles claiming that he had not consented to receiving such solicitations and alleging violation of the Telephone Consumer Protection Act ("TCPA").2The plaintiff sought treble damages for a willful and knowing violation, an injunction against Campbell's involvement in unsolicited messaging, and attorneys' fees and costs.

Early in the case Campbell made a settlement offer and a Rule 68 offer of judgment to the plaintiff, both offering $1,503 per message (three times the maximum statutory damages of $500) plus costs, and a stipulated injunction. Attorneys' fees were not recoverable by statute. The plaintiff did not accept the settlement offer or the offer of judgment, which automatically lapsed under Rule 68.Campbell then moved to dismiss the case for lack of subject matter jurisdiction, arguing that the unaccepted offers provided the plaintiff with complete relief and there was no longer a "case or controversy."In opposition, the plaintiff argued that the Rule 68 offer was an improper attempt to pick off his claim before he had the opportunity to move for class certification.

The district court observed that there was no dispute that the settlement offer and offer of judgment would have fully satisfied the plaintiff's individual claims.3In the absence of Ninth Circuit authority on point, the district court followed the Third, Fifth and Tenth Circuits and held that the Rule 68 offer could not moot the putative class action prior to class certification, applying the "relation-back doctrine. "This doctrine provides that class claims relate back to the date of the filing of the complaint for the purposes of a subsequent motion for class certification if the named plaintiff's claims are found to be moot.4The district court reasoned that otherwise the defendant could "make an end-run around a class action simply by virtue of a facile procedural 'gotcha,' i.e., the conveyance of a Rule 68 offer of judgment to 'pick off' the named plaintiff prior to the filing of a class certification motion."5Without further analysis, the district court also held that the unaccepted settlement offer did not moot the plaintiff's claim and denied the motion to dismiss.6

Ninth Circuit Decision

The Ninth Circuit affirmed the district court's decision, focusing on the fact that the plaintiff had not accepted the Rule 68 offer or the settlement offer. As a result, the court held that the offers were legal nullities that could not moot the plaintiff's claim.7

The Ninth Circuit also ruled that the relation-back doctrine prevented the plaintiff's class claims from being rendered moot. In so ruling, it distinguished the Supreme Court's decision not to apply the relation-back doctrine in Genesis HealthCare Corp.,8 as that the case involved a FLSA collective action, not a Rule 23 class action.Class certification under Rule 23 creates a class with an independent legal status, and relating class certification back to the date the complaint was filed would save the class claims from being moot. In contrast, in a FLSA collective action, relating conditional certification back to the date the complaint was filed would not save any claims from being moot because conditional certification does not create a class, but only...