F OR P UBLICATION



### UNIT E D ST AT E S CO URT O F APPE AL S FO R T H E NINT H CIRCUIT

E M I L Y D I A Z , on behalf of herself and all others similarly

situated, Plaintiff-Appellant
,

v

.

F I R S T A M E R

I C A N H O M E B U

Y E R S P R O T E C T I O N C O R

P O R A T I O N , a California corporation,

Defendant-Appellee

. N o. 11-57239

D.C. No. 3:09-cv-00775- H-W MC

OPI NI ON

A ppeal from the United States District Court for the Southern District of California Marily n L

. Huff, District J udg e, Presiding

Arg ued and Submitted May 6, 2013—Pasadena, California

F iled October 4, 2013

B efore: Harry

Preg erson and Ray

mond C. F isher, Circuit J udg es, and J ames S. Gwin, District J udg e. *

O pinion by

J udg e F isher

* T h e Ho n o rab l e J a m es S. Gw in
, Un ited States District J u d g e f or th e No rth ern District o f

Oh io , sittin g b y

d esig n atio n

.D I A Z V

. F I R S T A M E R I C A N 2

SUMMARY * *

F ed. R. Civ. P . 68 Of

f e r of Judgm ent

The panel vaca ted the district court’s dismissal o f
p l a i n tiff’s individual claims, and held that an unaccepted Fe d

. R. Civ. P. 68 offer o f judg ment made by the defendan t did not render moot p laintiff’s claims for misrepresentation, breach of contract, and b reach of th e implied covenant o f
g ood faith and fair dealing

.

The panel, acknowledg ing a circuit split o n the issue, h eld that a n u n a c cepted Rule 68 offer that would fully satisfy a plaintiff’s claim is insufficient to render the claim moot.

COUNSEL

E d ward D. Chapin and F rancis A. B ottini (arg ued), Chapin F itz g erald & B ottini L L P, San Dieg o, California, for Plaintiff-Appellant.

J oel D. Sieg el (arg

u ed) and P a u l M. Kakuske, SNR D enton US L L P, L os Ang eles, California; Charles A. Newman, SNR Denton US L L P, St. L ouis, Missouri; Edward Patrick Swan, J ones Day , San Dieg o, California, for Defendant-Appellee.

** T h is su m m ary co n stitu

t es n o p ar t o f t h e o p in io n o f th e co u rt. It h as b een p rep ared b y

co u rt staf

f f o r th e co n v en i en ce o f

th e read er.D I A Z V

. F I R S T A M E R I C A N 3

OP INION

F I SHER, Circuit J udg e :
Emily Diaz
, the owner of a home warranty p lan from F irst American H ome B uy e r s Protection Corporation, filed a class action complaint alleg ing that F irst American refused to make timely repairs, u sed substandard contractors and wrong f ully denied cl a i ms. She asserted state law claims for unfair competition, misrepresentation, concea lment, breach o f
contract and breach of the implied covenant of g ood f aith a nd fair d ealing

. The district cou r t dismissed Diaz ’s unfair competition and conce al m e n t claims under F ederal Rule o f Civil Pr o cedure 12(b)(6). F ollowing denial of class certification, F irst American made an offer o f j udg ment on Diaz ’ s remaining individual claims pursuant to F ederal Rule of Civil Procedure 68. W hen Diaz did not accept the offer, F irst American moved to dismiss these claims for lack o f subject matter jurisdiction. Ag reeing that F ir s t American’s unaccepted Rule 68 o ffer rendered Diaz ’s remaining c laims moot, the district c ourt d ismissed t h e c laims u nder F ederal Rule of Civil Procedure 12(b)(1), e ntering judg ment in favor of neither party . Diaz appealed.

W e vacate the district cour t’s dismissal of D iaz ’s

rema i n i n g individual c laims. W e hold that an u naccepted R u l e 68 offer that would fully satisfy a plaintiff’s claim i s insufficient to r ender the claim moot. See McCauley v

. Trans Union, L.L.C.
, 4 0 2 F .3d 340, 342 (2d Cir. 2 005). D iaz ’s remaining c laims
, t h e r e fore, were not made moot by her refusal to accept F irst A m e r ican’s Rule 68 offer, even assuming that the offer would h ave fully satisfied h er claims. According ly
, we vacate the Rule 12(b)(1) dismissal of D iaz ’sD I A Z V

. F I R S T A M E R I C A N 4

claims f or misrepresentation, breach of contract and breach of the implied covenant of g o od faith and fair dealing

. 1

BACK G ROUND

Emily Diaz broug ht this class action ag ain s t Fi rst American Home B uy ers Protection Corporation on behalf o f

a putative n ationwide class c o nsisting of all persons w ho made a claim under a home warranty plan obtained from F irst American after March 2003. After F irst American removed the action to federal c ourt, the d istrict c ourt issued a series o f orders dismissing Diaz ’s c laims for concealment, fal s e p r o mise, unfair c ompetition and violation of the California Consumer L e g al Remedies Act under Rule 12(b)(6). I n September 2011, the district court entered a n order d e n y i ng Diaz ’ s motion for class certification.

A short time thereafter, F irst American made an offer o f judg ment to Diaz on her remaining indi v i d ual claims – for misrepresentation, breach of contract and breac h o f the implied covenant of g ood faith and f air d ealing – p ursuant to Rule 68. F irst American offered to allow judg me n t to be entered ag ainst it and in favor of Diaz in the total amount of $7,019.32, plus costs a llowed unde r R ule 54. 2 The offer

1 W e ad d ress th e p arties’ rem ain in g co n ten t io n s in a co n cu rren tly

f iled

m em o ran d u m

d isp o s itio n

.

2 T h e o f f er o f j u d g m en t

p ro v id ed :

First A m erican h as o f

f ered to allo w j u d g m en t to b e

e n t ered ag ain st it an d in f av o r o f P lain tif

f in f u ll

reso lu ti o n o f h er rem ain i n g in d iv id u al claim s asserted
ag ain st First A m erican in th is actio n

. First A m e r i c a n h as o f f ered P lain tif

f j u d g m en t i n t h e t o tal am o u n t ofD I A Z V

. F I R S T A M E R I C A N 5

further p rovided that, “ [ i] f this Offer is not accepted

. . . , this Offer shall have no effect, be nul l a nd void, and be deemed withdrawn, and shall not be presented, admitted, o r used for
any purpose in any case or proce e d ing ag ainst F irst American.” Diaz had unt il O ctober 17, 2011 to accept the offer. She did not do so.

F irst A m erican then filed a motion to dismiss the action for lack o f subject matter jurisdiction. F irst A merican a rg u ed that the district court “should dismiss this action pursuant to Rule[ ] 12(b)(1) of the F ederal Rules of Civil Procedure because the action is moot in lig ht of Pla i n tiff’s refusal to accept a Rule 68 Offer of J u dg ment f o r full satisfaction of the
amount she could possibly recover at trial.” Citing decisions by the Seventh and F ourth Circuits, see Thorogood v. Sears, Roebuck & Co.
, 595 F

. 3d 7 50, 753 (7th Cir. 2010); Greisz v

. Household Bank (

Illinois)

, N.A.
, 1 76 F. 3 d 1012, 1015 (7th

$ 7 ,0 19 .3 2
, p lu s co sts allo w ed u n d er R u le 5 4 an d n o w

accru ed th at m ay b e t ax ed by th e Co u r t , w h ich
, p u r su an t to R

u le 5 4, d o n o t in clu d e atto rn ey s’ f ee s

. T h e to tal am o u n t o f $ 7 ,0 1 9 .3 2 in clu d es all d am ag es an d relief th at co u ld b e aw ard ed p u rsu an t to f in al j u d g m en t

o n P lain tif

f ’ s claim s , i n clu d in g : (a) P lain tif f ’ s claim ed d am ag es, in th e am o u n t o f $ 1 ,6 4 9

. 0 0 (calcu lated to in clu d e th e claim ed p u rch ase p rice o f th e h o m e

w arran t y co n t racts ($ 6 60 .0 0 an d $ 7 5 0 .0 0
, resp ectiv ely
, fo r $ 1 ,4 10 .0 0 to tal), P l ain t if f ’ s claim ed o u t- o f

- p o ck e t

ex p en ses f

o r a rep air in Decem

b er 2 0 0 8 ($ 1 2 9.0 0 ), an d P lain tif f ’s claim ed p ay

m en ts f o r s erv ice f

ees (tw o p ay m e nt s o f $ 5 5 .0 0
, f o r $ 1 1 0 .0 0 to tal); (b )
p re- j u d g m en t in tere s t i n th e t o tal am o u n t o f $ 4 2 3 .3 2
, calcu lat e d p u rsu an t t o Cal. Civ

. Co d e § 3 2 8 7 et seq

. ;

an d (c) an ad d itio n al am o u n t o f co n sid eratio n of $ 4 ,9 47 .0 0 (th ree tim es P lain tif f ’ s claim ed d am ag es) f

or

an y o th er d am ag es o r relief

so u g h t b y

P lain tif f

.D I A Z V

. F I R S T A M E R I C A N 6

Cir. 1999); Rand v

. Monsanto Co.
, 926 F .2 d 596, 598 (7th C i r

. 1 9 91); Zimmerman v. Bell
, 800 F .2d 386, 3 90 (4th Ci r. 1986), F irst A merican arg ued that “[ w] here, as h ere, a plaintiff rejects a Rule 6 8 Offer of J udg ment for the full
amount of relief, the di s t r i c t court loses subject matter jurisdiction and must dis m i s s the action with prejudice.” Under these decisions, “[ o] nce the defendant offers to satisfy the plain t i ff ’ s entire demand, there is no dispute over which
to litig ate, a

nd a plaintiff who refu s es to acknowledg e this loses o utrig ht, under F ed. R. Civ. P. 12(b)(1), because he has

no remaining stake.” Rand
, 926 F .2 d a t 598 (citation omitted).

I n r u ling on F irst A meri ca n ’ s motion, the district court ag reed with F irst American that the Rule 68 offer w ould have fully satisfied Diaz ’s remaining in dividual claims. W ith respect to monetary r elief, F irst American’s off e r provided “the full a mount of relief she is entitled to individually .” The
court recog niz ed that the Rule 68 offer di d n o t provide for injunctive or declaratory relief, each o f w h ich Diaz h ad
soug h t in her complaint. B ut the c o u r t f o u n d that Diaz was not e ntitled to either o f these f o rm s of relief. The court deemed Diaz ’s request for a n injunction “n o t appropriate” because “she has been offered, and declined, an adequate remedy at law” an d “ s he no long er holds a home warranty plan with F irst Ameri c a n .” Similarly
, the court found that Diaz ’ s c laim for d ec l aratory relief was “duplicative of her breach of contract and breach of the implied c ovenant claims” and “superfluous” g iven that she no lo n g er had a home warranty plan with F irst American.

Having determined that F irst American’s o ffer would h a v e p rovided Diaz complete relief on her remaining individual claims, the court w ent on to hold that theD I A Z V

. F I R S T A M E R I C A N 7

unaccepted offer was sufficient to render those claims moot. L ike F irst American, in the absence of N inth Circuit authority the cou r t reached this c o n clusion by r e ly ing on decisions o f the Seventh a

nd F ourth Circuits, citing Thorogood
, 595 F .3d
at 753, Greisz
, 176 F .3d at 1 015, Zimmerman
, 800 F .2d at 390, and Rand
, 926 F .2d at 598. Having determined that the claims were moot, the court g ranted F irst American’s motion and dismissed the claims for lack o f s u b ject matter jurisdiction. T he court initially entered judg ment ag ainst Diaz
, but subsequently vacated that judg ment and declined to enter judg ment or award costs for e i t h e r p arty

. Diaz appealed.

STANDARD OF REVIEW

“W e apply a de novo standard for reviewing a district court’s decision on subject matter j u r i sdiction, and, concomitantly apply that standard in r eviewin g q u e stions o f mootness.” Sample v. Johnson
, 771 F .2d 1335, 1338 (9th Cir. 1985) (citation omitted).

D ISCUSSION

Diaz arg ues that the district court erred by dismissing her remaining individual claims for lac k o f subject matter jurisdiction following her refusal to accept F irst American’s Rule 6 8 offer o f j u d gm e n t

. She maintains that these c laims

were not moot, because: (1) a n unaccepted Rule 68 offer does
not render a c laim moot, e ven if the offer would have f ully satisfied the pl a i ntiff’s claim; (2) e v en if such an offer does
moot a claim, F irst American’s offer di d n o t provide complete relief; and ( 3) her remaining c laims were not moot because she retained a personal stake in appealing the denialD I A Z V

. F I R S T A M E R I C A N 8

of class c ertific a t i o n

. W e ag ree with D iaz ’s first arg ument and therefore do not reach her second and third contentions.

Diaz ’ s f irst arg ument requires us to decide whethe r an unaccepted Rule 68 offer that would h a ve fully satisf i e d a p l aintiff’s claim is sufficient to render the claim moot

. T h e Supreme Court has y et to a d d ress this issue. See Genesis Healthca r e Corp. v. Symczyk
, 133 S. Ct. 1523, 1528–29 (2013) (“ W h ile the Courts of Appeals disag ree w hether an unaccepted offer that fully sati s f i e s a plaintiff’s claim is sufficient to render the claim moot, we do not reach this question, or r esolve the split, because the issue is not properly befor e u s

. ” (footnote omitted)). Nor have we squarely addressed the issue. I n Pitts v. Terrible Herbst, Inc.
, 653 F .3d 1081, 1 091–92 (9th Cir. 2011), we held “that an unaccepted Rule 68 o ffer of judg ment – for the f ull amount of the named plaintiff’s individual claim and m a d e before the named plaintiff files a motion for class certification – does not moot

a class action ” ( emphasis added), b ut w e did not squarely address whether the offer mooted the pl a i n t iff’s individual claim. W e assumed that an unaccepted offer f o r c o mplete relief will moot a claim, but w e n e ither held that to be the

case nor analy

z ed the issue. See id. at 1 0 9 0

– 9 2

. I n GCB C o mmunications, Inc. v. U.S. South Communications, Inc

. , 650 F

. 3d 1 257, 1267 (9th Cir. 2011), we noted that a c ase will “become moot ” w h e n “an opposing p arty has ag r eed to every th i n g the other party has demanded,” but we did not ad d r e s s t he effects of a

n unaccepted Rule 68 offer, a n issue
not presented in that case. W e therefore treat this as an open question in this circuit.

Other circuits are div i ded on the question. The Seventh C i r c u it holds that an unaccepted Rule 68 offer for complete relief will moot a plaintiff’s claim and that the plaintiff losesD I A Z V

. F I R S T A M E R I C A N 9

outrig ht. See Rand v. Monsanto Co.
, 926 F .2d 5 9 6, 598 (7th Cir. 19 9 1) (“Once the defendant o ffers to satisfy the plainti ff ’ s entire demand, there is no dispute over which to litig ate, and a plaintiff w ho refuses to acknowledg e this loses outrig ht, u nder F ed. R. C i v

. P

. 12(b)(1), because he has no remaining stake.” (citation omitted)). 3

The Six th Circuit ag rees w ith the Seventh Circuit that “an offer o f judg ment that satisfies a pl a i n t i ff’s entire demand
moots the case,” b ut disag rees “with the Seventh C i r c u it’s view that a plaintiff loses outrig ht when h e refuses an offer o f judgm en t that would satisfy his entire demand.” O’Brien v

. Ed Donnelly Enters., Inc.
, 575 F.3d 567, 574–75 (6th Cir. 2009). The Six th Circuit holds that “the better approach is to enter j u d gm ent in favor of the plaintiffs in accordance with the defendants’ Rule 68 offer of judg ment.” Id. at 575.

F inally
, the Second Circuit disag rees with the Six th a nd Seventh Circuit that an u naccepted Rule 68 o ffer for complete relief moots a plaintiff’s c laim, see McCauley v. Trans Union, L.L.C.
, 402 F .3d 340, 342 (2d Cir. 2005) (“I n the absence o f

an oblig ation to p ay [ the plaintiff] the $240 in c l aimed damag es, the controversy between [ the plai n t i f f ] and [ the defendant] is still alive.”), but a g rees with the Six th Circuit that w hen such an offer has b e e n made, the “ better resolution” is to enter judg ment ag ainst the defendant, althoug h the Second Circuit may require as a precondition to entering such a judg ment that t he d efendant ex pressly
consents to its entry

. See id. (“At o ral arg ument, both parties
ag reed that entry of a default judg ment would satisfactorily

3 In t h e ab sen ce o f c o n t r o l l i n g Nin t h Circu it p reced en t o n p o in t , th e d istrict co u rt h ere f

o llo w ed th e Sev en th

Circu it’ s ap p ro ach

.D I A Z V

. F I R S T A M E R I C A N 10

resolve this case.”). “Such a judg ment w o u l d r e move any live controversy

from this case and render it moot.” Id. 4

Althoug h the majority of courts and c ommentators appear to a g r ee w ith the Seventh Circuit that an unaccepted offer will
moot a plaintiff’s claim, 5 f our justices of the United States

4 Still o th er circu its, in clu d in g th is o n e, h av e y et to ad d ress w h eth er an

u n accep ted o f

f er o f j u d g m en t ren d ers a claim m o o t. See, e.g

. , Z in n i v. ER S o lu tio n s, In c. , 6 9 2 F.3 d 1 1 6 2
, 1 16 7 n

. 8 ( 11 th Cir. 2 0 1 2 ) (d eclin i n g to d ecid e “ w h eth er an o f

f er f o r f u ll relief
, ev en if rej ected
, w o u ld b e en o u g h
to m o o t a p lain tif

f ’ s claim s”).

5 S ee, e.g

. , W

a rren v. S esso ms & Ro g ers, P.A. , 6 7 6 F.3 d 3 65 , 3 7 1 (4 th Cir. 2 0 1 2 ) (“ W h en a Ru le 6 8 o f f er u n eq u iv ocally o f

f ers a p l ain tif

f all of th e relief ‘ sh e so u g h t to o b tain ,’ t h e o f f er ren d ers th e p lain tif

f ’ s actio n

m o o t.” (citatio n o m i tted )); Lu cero v. Bu rea u o f Co llectio n Reco very, In c. , 6 3 9 F.3 d 1 2 3 9, 1 2 4 3 (1 0 th Cir. 2 0 1 1 ) (“ A s Ru le 6 8 o p erates, if an o f f er is m ad e f o r a p lain tif

f’s m ax im

u m reco v ery , h is actio n m ay b e ren dered

m o o t.”); Th o ro g o o d v. S

ea rs, Ro eb u ck & Co

. , 5 9 5 F.3 d 7 5 0
, 7 5 2 (7 th Cir. 2 0 1 0 ) (“ T h e of

f er ex ceed ed th e am o u

n t in co n t ro v ersy an d so th e case w as

m o o t.”); Sa msu n g Elecs. Co

. v. Ra m b u s, In c. , 5 2 3 F.3 d 1 3 7 4
, 1 3 7 9 (Fed

. Cir. 20 0 8 ) (“ A

n o f f er f o r f u ll relief m o o ts a claim fo r a t t o rn ey f ees.”); Krim v. p cOrd

er.co m , In c. , 4 02 F.3 d 4 89
, 5 0 2 (5 th Cir. 2 0 0 5 ) (“ [A ] f u l l settlem en t o f

f er, ev e n i f ref

u sed
, w o u l d d isp o se o f [th e p lain tif f ’ s] in d iv i d u a l claim s .”); W

eiss v. Reg a l Co llectio n s , 3 8 5 F.3 d 3 3 7
, 34 2 (3 d Cir. 2 0 04 ) (“ [U]n d e r trad itio n al m o o tn ess p rin cip les, an o f f er f o r th e

en tirety o f a p lain tif

f ’ s claim w i ll g en erally m o o t th e c l a i m

. ” ) ; Greisz v. Ho u seh o l d Ba n k ( Illin ois)

, N.A.
, 1 7 6 F.3 d 10 1 2
, 1 0 1 5 (7 t h Cir. 19 9 9) (h o ld i n g th at an o f

f er o f j u d g m en t t

h at en co m

p asses th e relief claim ed

“ elim i n ates a leg al d isp u te u p on w h ich f ed eral j u risd ictio n can b e b ased ,” b ecau se “ [y ]o u can n o t p ersist in su in g af ter y o u ’ v e w o n ”); 1 3 B Ch arles A lan W rig h t & A rth u r R. Miller, Fed era l Pra cti c e a n d Pro ced ure § 3 5 3 3 .2 (3 d ed

. 2 0 1 3 ) (“ Ev en w h en on e party w ish es to p e r sist to j u d g m en t, an o f

f er to acco rd all o f th e relief d em an d ed m ay m o ot th e case.”); Sch w arzer, T ash im a & W ag staf f e, Fed era l Civil Pro ce d u re Befo re Tria l ¶ 1 5:1 5 6 .5 (9 th ed

. 2 0 1 3 ) (“ If a d ef en d an t o f f ers j u d g m en t in

co m plete satisf

actio n o f p lain t if

f ’ s claim s, p l ain t if

f ’ s claim s g en erally are

ren d ered m o o t b ecau se p lain tif f lack s an y rem ain in g in terest in th eD I A Z V

. F I R S T A M E R I C A N 11

Supreme Court, as well as the Solicitor General of the United States, embraced a contrary p ositi o n in Genesis Healthcare

. As noted, the majority in G enesis H ealthcare did n ot reach whether an unaccepted offer that fully satisfies a plaintiff’s claim is sufficient to render the claim moot. S e e Ge n e sis Healthcare
, 133 S. Ct. at 1 528–29. I n a dissenting o p i n i o n, however, J ustice Kag an, wr i t i n g for all four justices w ho reached the question, ag reed with the Second Circuit that “an unaccepted offer of judg ment c annot moot a case.” Id. at 1533 (Kag an, J
., dissenting ); accord B rief for the United States as Amicus Curiae Supporting Affirmance
, G e nesis Healthcare Corp. v

. S

ymczyk
, 133 S. Ct. 1523 (2013) (No. 11-1059), 2012 W L 4960359, at *10–15.

J ustice Kag an ex plained:

W e made clear e a

rlier this Term t h a t “[ a] s long as t h e parties have a c oncrete interest, however small, in the o u t c o me of the litig ation, t h e c ase is n ot moot.” Chafin v

. Chafin
, 133 S. Ct. 1017, 1023 (2012) (internal quotation marks o mitted). “[ A] case becomes
moot o nly w hen it is impossible for a court to

o u tco m e o f case.”); 1 J o sep h M. M cL au g h l in
, McLa u g h lin o n Cla ss Actio ns § 4 :2 8 (9 th ed

. 2 0 1 2 ) (“ T r ad itio n al m o o tn ess p rin cip l es p ro v id e th at an o f f er o f j u d g m en t u n d er Fed eral R u l e o f Civ il P ro ce d u r e 6 8 th at satisf ies a p lain t if

f ’ s en tire d em an d m o o ts t

h e claim

. T h e m ere o f

f er of f u ll relief elim in ates an y co n crete a d v ersity b etw een th e plain tif f an d d ef en d an t , an d ren ders th e u n d erly in g d isp u te m o o t b y n eg atin g th e p lain tif f ’ s p erso n al stak e i n th e d isp u te.” (f o o tn o te o m itted )); 1 Ru

b en stein & Co n te, Newb erg o n C la ss Actio n s § 2:1 5 (5 th ed

. 20 1 3 ) (“ If th e d ef en d an t m ak es a f

u ll of f er o f j u d g m en t p u rsu an t to Ru le 6 8
, co m p letely satisf y in g all o f th e n a m e d p l ain tif f ’ s i n d iv id u al claim s, th en t h e n am ed
p lain tif f ’ s in d iv i d u al case n ecessarily b eco m es m o o t.”).D I A Z V

. F I R S T A M E R I C A N 12

g rant any effectual relief whatever to the prevailing p a r ty .” Ibid. (internal quotation marks omitted). B y those measures, an unaccepted off

e r of judg ment cannot moot a

case. W hen a plaintiff rejects such an offer

– however g ood the terms

– h er interest in the lawsuit remains just what it was before. And

so too does the c o urt’s ability to grant her

r elief. An unaccepted settlement offer – lik e any unaccepted contract offer – is a leg al nullity
, with no operative effect. A s every first-y ear law student l e arns, the recipient’s rejection of an offer “leaves the matter as if no offer had ever been made.” Minneapolis & St. Louis R. Co

. v. Columbus Rolling Mill
, 119 U.S. 149, 151 (1886). Nothing in Rule 68 alters that basic principle; to the c ontrary , that rule sp e c i fies that “[ a] n unaccepted offer is considered withdrawn.” F ed. Rule Civ. Proc. 68(b). So assuming the case was live before

– because the plaintiff had a sta k e a nd the
court could g rant relief – the litig ation carries on, unmooted.

F or this reason, [ the plaintiff’s] individual claim was alive and well when the District Court dismissed her su i t

. Recall: [ the defendant] made a settlement offer under Rule 68; [ the pla i n t i ff] decided not to accept it; after 10 day s, it ex p ired and the suit w ent forward. [ The plaintiff’s] individual stake in the lawsuit thus remai n ed what it had alway s been, and d itto the co u r t ’s c apacity to g rant her relief. After the offer lap s e d
, just a sD I A Z V

. F I R S T A M E R I C A N 13

before, [ the plaintiff] possessed an unsatisfied claim, which the c ourt could redr e s s b y

a warding her d amag es. As long as tha t remained true, [the pl a i n tiff’s] claim was not

m o o t, and the District Court could n ot sen d her a way empty -hande d

. S o a friendly suggestion to the Third Circuit: Rethink your mootness-by-unaccepted-offer theory. And a
note to all other courts o

f appeals: Don’t tr

y this at home

.

Genesis Healthcare
, 1 33 S. Ct. at 1533–34 (K a ga n , J
., dissenting ) (some alterations in orig inal) (emphasis added).

J ustice Kag an also e m p h a siz ed that nothing in Rule 68 authoriz es a court to enter judg ment in ac cordance with an unaccepted offer:

Rule 68 pre cludes a court f r om imposing judg me n t for a plaintiff

. . . based on an unaccepted settlement o ffer made pursuant to its terms. The t e x t o f the Rule contemplates
t hat a court will enter judg ment only when a plaintiff a ccepts an offer. See Rule 68(a) (“I f

. . . the [ plaintiff

] serves written notice accepting the offer, either party

may then file the offer and notice of acceptance, p lus proof of service. The clerk must then enter judg men t ”). And the Rule prohibits a court from considering

an unaccepted offer for any
p u rpose other than allocating litig ation cost s

– including f

or the purpose of entering judg ment for either party

. See R ule 68(b) (“Evidence of an unaccepted offe r is notD I A Z V

. F I R S T A M E R I C A N 14

admis s i b le ex cept in a proceeding to determine costs”). That injunction accor ds with Rule 6 8’s ex clusive purpose: to promote voluntary cessati on of litig ation by imposing
costs on plainti f

f s who spurn c ertain settlement o f

f e rs. See Marek v. Chesny
, 473 U.S. 1, 5 ( 1 9 8 5 )

. The Rule provides no appropriate mechan i s m f or a court to terminate a lawsuit without t h e plaintiff’s
consent.

Id. at 1536 (alterations in orig inal).

W e are persuaded t h a t J ustice Kag an has a rticulated the
correct approach. W e therefore hold that an unaccepted Rule 68 o f f e r that would have fully satisfied a plaintiff’s claim does not r ender that claim moot. This holding is consist e nt with the lang uag e, structure and purposes of Rule 68 and with f u n d a m e n t al principles g overning mootness. The s e p r i n c i p l e s provide that “[ a] case becomes moot only when it is impossible for a court to g r ant ‘any effectual relief whatever
to the prevailing party .’” Knox v. S erv. Employees I

nt’l Union
, 132 S. Ct. 2277, 2 287 (2012) ( quoting City of Erie v

. Pap’s A.M.
, 529 U.S. 277, 287 (2000)). Here, o nce F ir s t American’s offer lapsed, i t w a s , by its o wn terms a nd under Rule 68, a leg al nullity . Diaz ’s

individual stake in the lawsuit thus remained what it had alway s been, and ditto the court’s capacity to g rant her r e l i e f. A fter the offer lapsed, just a s before, [ she] possessed an

un s a tisfied claim, which the court could redress by awarding her damag es. As long a s that remained true, [ h er] claim was not moot,D I A Z V

. F I R S T A M E R I C A N 15

and the District Court c ould not send her away empty -handed.

Genesis Heal t h c are , 133 S. Ct. at 1534 (Kag an, J
., dissenting ). W e recog niz e that a court may have “discretion
to halt a lawsuit by en t e r ing judg ment for the plaintiff when
t he defendant unconditionally surrenders and only th e plaintiff’s obstinacy or madness prevents her from accepting total victory .” Id. at 1536; cf. McC auley
, 402 F .3d at 342; Chathas v. Local 134 Int’l Bhd. of Elec. W orkers
, 2 33 F .3d 508, 512–13 (7th Cir. 2000). That did not oc c u r h e re, however. According ly
, we vacate the Rule 12(b)(1) d ismissal of Diaz ’s claims for misrepresentation, breach of contract a nd breach of the implied c ovenant of g ood faith and fair dealing and remand for further proceeding s.

CONCLUSION

W e hold that the district c o u rt erred by dismissing D iaz ’s

r e m a i ning individual claims for lack of subject matter jurisdiction. W e v acate the dismissa l o f t h ose claims a nd remand to the district court. Fo r t he reasons stated in the concurrently filed memorandum disposition, w e also vacate dismissal of Diaz ’ s concealm e nt and unfair competition claims a nd lack jurisdic t i on to review the district court’s order deny ing Diaz ’s motion to correct o r modify the record. Each party

shall bear its own costs of appeal.

VACATED AND REMANDED.