FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

EMILY DIAZ, on behalf of herself and

all others similarly situated,

Plaintiff-Appellant,

v.

FIRST AMERICAN HOME BUYERS

PROTECTION CORPORATION, a

California corporation,

Defendant-Appellee.

No. 11-57239

D.C. No.

3:09-cv-00775-

H-WMC

OPINION

Appeal from the United States District Court

for the Southern District of California

Marilyn L. Huff, District Judge, Presiding

Argued and Submitted

May 6, 2013—Pasadena, California

Filed October 4, 2013

Before: Harry Pregerson and Raymond C. Fisher, Circuit

Judges, and James S. Gwin, District Judge.*

Opinion by Judge Fisher

* The Honorable James S. Gwin, United States District Judge for the

Northern District of Ohio, sitting by designation.
2 DIAZ V. FIRST AMERICAN

SUMMARY**

Fed. R. Civ. P. 68 Offer of Judgment

The panel vacated the district court’s dismissal of

plaintiff’s individual claims, and held that an unaccepted

Fed. R. Civ. P. 68 offer of judgment made by the defendant

did not render moot plaintiff’s claims for misrepresentation,

breach of contract, and breach of the implied covenant of

good faith and fair dealing. 

The panel, acknowledging a circuit split on the issue, held

that an unaccepted Rule 68 offer that would fully satisfy a

plaintiff’s claim is insufficient to render the claim moot. 

COUNSEL

Edward D. Chapin and Francis A. Bottini (argued), Chapin

Fitzgerald & Bottini LLP, San Diego, California, for

Plaintiff-Appellant.

Joel D. Siegel (argued) and Paul M. Kakuske, SNR Denton

US LLP, Los Angeles, California; Charles A. Newman, SNR

Denton US LLP, St. Louis, Missouri; Edward Patrick Swan,

Jones Day, San Diego, California, for Defendant-Appellee.

** This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.
DIAZ V. FIRST AMERICAN 3

OPINION

FISHER, Circuit Judge:

Emily Diaz, the owner of a home warranty plan from First

American Home Buyers Protection Corporation, filed a class

action complaint alleging that First American refused to make

timely repairs, used substandard contractors and wrongfully

denied claims. She asserted state law claims for unfair

competition, misrepresentation, concealment, breach of

contract and breach of the implied covenant of good faith and

fair dealing. The district court dismissed Diaz’s unfair

competition and concealment claims under Federal Rule of

Civil Procedure 12(b)(6). Following denial of class

certification, First American made an offer of judgment on

Diaz’s remaining individual claims pursuant to Federal Rule

of Civil Procedure 68. When Diaz did not accept the offer,

First American moved to dismiss these claims for lack of

subject matter jurisdiction. Agreeing that First American’s

unaccepted Rule 68 offer rendered Diaz’s remaining claims

moot, the district court dismissed the claims under Federal

Rule of Civil Procedure 12(b)(1), entering judgment in favor

of neither party. Diaz appealed.

We vacate the district court’s dismissal of Diaz’s

remaining individual claims. We hold that an unaccepted

Rule 68 offer that would fully satisfy a plaintiff’s claim is

insufficient to render the claim moot. See McCauley v. Trans

Union, L.L.C., 402 F.3d 340, 342 (2d Cir. 2005). Diaz’s

remaining claims, therefore, were not made moot by her

refusal to accept First American’s Rule 68 offer, even

assuming that the offer would have fully satisfied her claims. 

Accordingly, we vacate the Rule 12(b)(1) dismissal of Diaz’s
4 DIAZ V. FIRST AMERICAN

claims for misrepresentation, breach of contract and breach

of the implied covenant of good faith and fair dealing.

1

BACKGROUND

Emily Diaz brought this class action against First

American Home Buyers Protection Corporation on behalf of

a putative nationwide class consisting of all persons who

made a claim under a home warranty plan obtained from First

American after March 2003. After First American removed

the action to federal court, the district court issued a series of

orders dismissing Diaz’s claims for concealment, false

promise, unfair competition and violation of the California

Consumer Legal Remedies Act under Rule 12(b)(6). In

September 2011, the district court entered an order denying

Diaz’s motion for class certification.

A short time thereafter, First American made an offer of

judgment to Diaz on her remaining individual claims – for

misrepresentation, breach of contract and breach of the

implied covenant of good faith and fair dealing – pursuant to

Rule 68. First American offered to allow judgment to be

entered against it and in favor of Diaz in the total amount of

$7,019.32, plus costs allowed under Rule 54.2 The offer

 

1

 We address the parties’ remaining contentions in a concurrently filed

memorandum disposition.

 

2

 The offer of judgment provided:

First American has offered to allow judgment to be

entered against it and in favor of Plaintiff in full

resolution of her remaining individual claims asserted

against First American in this action. First American

has offered Plaintiff judgment in the total amount of
DIAZ V. FIRST AMERICAN 5

further provided that, “[i]f this Offer is not accepted . . . , this

Offer shall have no effect, be null and void, and be deemed

withdrawn, and shall not be presented, admitted, or used for

any purpose in any case or proceeding against First

American.” Diaz had until October 17, 2011 to accept the

offer. She did not do so.

First American then filed a motion to dismiss the action

for lack of subject matter jurisdiction. First American argued

that the district court “should dismiss this action pursuant to

Rule[] 12(b)(1) of the Federal Rules of Civil Procedure

because the action is moot in light of Plaintiff’s refusal to

accept a Rule 68 Offer of Judgment for full satisfaction of the

amount she could possibly recover at trial.” Citing decisions

by the Seventh and Fourth Circuits, see Thorogood v. Sears,

Roebuck & Co., 595 F.3d 750, 753 (7th Cir. 2010); Greisz v.

Household Bank (Illinois), N.A., 176 F.3d 1012, 1015 (7th

$7,019.32, plus costs allowed under Rule 54 and now

accrued that may be taxed by the Court, which,

pursuant to Rule 54, do not include attorneys’ fees. 

The total amount of $7,019.32 includes all damages and

relief that could be awarded pursuant to final judgment

on Plaintiff’s claims, including: (a) Plaintiff’s claimed

damages, in the amount of $1,649.00 (calculated to

include the claimed purchase price of the home

warranty contracts ($660.00 and $750.00, respectively,

for $1,410.00 total), Plaintiff’s claimed out-of-pocket

expenses for a repair in December 2008 ($129.00), and

Plaintiff’s claimed payments for service fees (two

payments of $55.00, for $110.00 total); (b)

pre-judgment interest in the total amount of $423.32,

calculated pursuant to Cal. Civ. Code § 3287 et seq.;

and (c) an additional amount of consideration of

$4,947.00 (three times Plaintiff’s claimed damages) for

any other damages or relief sought by Plaintiff.
6 DIAZ V. FIRST AMERICAN

Cir. 1999); Rand v. Monsanto Co., 926 F.2d 596, 598 (7th

Cir. 1991); Zimmerman v. Bell, 800 F.2d 386, 390 (4th Cir.

1986), First American argued that “[w]here, as here, a

plaintiff rejects a Rule 68 Offer of Judgment for the full

amount of relief, the district court loses subject matter

jurisdiction and must dismiss the action with prejudice.” 

Under these decisions, “[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 he has

no remaining stake.” Rand, 926 F.2d at 598 (citation

omitted).

In ruling on First American’s motion, the district court

agreed with First American that the Rule 68 offer would have

fully satisfied Diaz’s remaining individual claims. With

respect to monetary relief, First American’s offer provided

“the full amount of relief she is entitled to individually.” The

court recognized that the Rule 68 offer did not provide for

injunctive or declaratory relief, each of which Diaz had

sought in her complaint. But the court found that Diaz was

not entitled to either of these forms of relief. The court

deemed Diaz’s request for an injunction “not appropriate”

because “she has been offered, and declined, an adequate

remedy at law” and “she no longer holds a home warranty

plan with First American.” Similarly, the court found that

Diaz’s claim for declaratory relief was “duplicative of her

breach of contract and breach of the implied covenant claims”

and “superfluous” given that she no longer had a home

warranty plan with First American.

Having determined that First American’s offer would

have provided Diaz complete relief on her remaining

individual claims, the court went on to hold that the
DIAZ V. FIRST AMERICAN 7

unaccepted offer was sufficient to render those claims moot. 

Like First American, in the absence of Ninth Circuit authority

the court reached this conclusion by relying on decisions of

the Seventh and Fourth Circuits, citing Thorogood, 595 F.3d

at 753, Greisz, 176 F.3d at 1015, Zimmerman, 800 F.2d at

390, and Rand, 926 F.2d at 598. Having determined that the

claims were moot, the court granted First American’s motion

and dismissed the claims for lack of subject matter

jurisdiction. The court initially entered judgment against

Diaz, but subsequently vacated that judgment and declined to

enter judgment or award costs for either party. Diaz

appealed.

STANDARD OF REVIEW

“We apply a de novo standard for reviewing a district

court’s decision on subject matter jurisdiction, and,

concomitantly apply that standard in reviewing questions of

mootness.” Sample v. Johnson, 771 F.2d 1335, 1338 (9th Cir.

1985) (citation omitted).

DISCUSSION

Diaz argues that the district court erred by dismissing her

remaining individual claims for lack of subject matter

jurisdiction following her refusal to accept First American’s

Rule 68 offer of judgment. She maintains that these claims

were not moot, because: (1) an unaccepted Rule 68 offer does

not render a claim moot, even if the offer would have fully

satisfied the plaintiff’s claim; (2) even if such an offer does

moot a claim, First American’s offer did not provide

complete relief; and (3) her remaining claims were not moot

because she retained a personal stake in appealing the denial
8 DIAZ V. FIRST AMERICAN

of class certification. We agree with Diaz’s first argument

and therefore do not reach her second and third contentions.

Diaz’s first argument requires us to decide whether an

unaccepted Rule 68 offer that would have fully satisfied a

plaintiff’s claim is sufficient to render the claim moot. The

Supreme Court has yet to address this issue. See Genesis

Healthcare Corp. v. Symczyk, 133 S. Ct. 1523, 1528–29

(2013) (“While the Courts of Appeals disagree whether an

unaccepted offer that fully satisfies a plaintiff’s claim is

sufficient to render the claim moot, we do not reach this

question, or resolve the split, because the issue is not properly

before us.” (footnote omitted)). Nor have we squarely

addressed the issue. In Pitts v. Terrible Herbst, Inc., 653 F.3d

1081, 1091–92 (9th Cir. 2011), we held “that an unaccepted

Rule 68 offer of judgment – for the full amount of the named

plaintiff’s individual claim and made before the named

plaintiff files a motion for class certification – does not moot

a class action” (emphasis added), but we did not squarely

address whether the offer mooted the plaintiff’s individual

claim. We assumed that an unaccepted offer for complete

relief will moot a claim, but we neither held that to be the

case nor analyzed the issue. See id. at 1090–92. In GCB

Communications, Inc. v. U.S. South Communications, Inc.,

650 F.3d 1257, 1267 (9th Cir. 2011), we noted that a case will

“become moot” when “an opposing party has agreed to

everything the other party has demanded,” but we did not

address the effects of an unaccepted Rule 68 offer, an issue

not presented in that case. We therefore treat this as an open

question in this circuit.

Other circuits are divided on the question. The Seventh

Circuit holds that an unaccepted Rule 68 offer for complete

relief will moot a plaintiff’s claim and that the plaintiff loses
DIAZ V. FIRST AMERICAN 9

outright. See Rand v. Monsanto Co., 926 F.2d 596, 598 (7th

Cir. 1991) (“Once 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 he has no

remaining stake.” (citation omitted)).3

The Sixth Circuit agrees with the Seventh Circuit that “an

offer of judgment that satisfies a plaintiff’s entire demand

moots the case,” but disagrees “with the Seventh Circuit’s

view that a plaintiff loses outright when he refuses an offer of

judgment that would satisfy his entire demand.” O’Brien v.

Ed Donnelly Enters., Inc., 575 F.3d 567, 574–75 (6th Cir.

2009). The Sixth Circuit holds that “the better approach is to

enter judgment in favor of the plaintiffs in accordance with

the defendants’ Rule 68 offer of judgment.” Id. at 575.

Finally, the Second Circuit disagrees with the Sixth and

Seventh Circuit that an unaccepted Rule 68 offer for complete

relief moots a plaintiff’s claim, see McCauley v. Trans Union,

L.L.C., 402 F.3d 340, 342 (2d Cir. 2005) (“In the absence of

an obligation to pay [the plaintiff] the $240 in claimed

damages, the controversy between [the plaintiff] and [the

defendant] is still alive.”), but agrees with the Sixth Circuit

that when such an offer has been made, the “better

resolution” is to enter judgment against the defendant,

although the Second Circuit may require as a precondition to

entering such a judgment that the defendant expressly

consents to its entry. See id. (“At oral argument, both parties

agreed that entry of a default judgment would satisfactorily

3

In the absence of controlling Ninth Circuit precedent on point, the

district court here followed the Seventh Circuit’s approach.
10 DIAZ V. FIRST AMERICAN

resolve this case.”). “Such a judgment would remove any

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

Although the majority of courts and commentators appear

to agree with the Seventh Circuit that an unaccepted offer will

moot a plaintiff’s claim,5four justices of the United States

 

4

 Still other circuits, including this one, have yet to address whether an

unaccepted offer of judgment renders a claim moot. See, e.g., Zinni v. ER

Solutions, Inc., 692 F.3d 1162, 1167 n.8 (11th Cir. 2012) (declining to

decide “whether an offer for full relief, even if rejected, would be enough

to moot a plaintiff’s claims”).

 

5

See, e.g., Warren v. Sessoms & Rogers, P.A., 676 F.3d 365, 371 (4th

Cir. 2012) (“When a Rule 68 offer unequivocally offers a plaintiff all of

the relief ‘she sought to obtain,’ the offer renders the plaintiff’s action

moot.” (citation omitted)); Lucero v. Bureau of Collection Recovery, Inc.,

639 F.3d 1239, 1243 (10th Cir. 2011) (“As Rule 68 operates, if an offer

is made for a plaintiff’s maximum recovery, his action may be rendered

moot.”); Thorogood v. Sears, Roebuck &Co., 595 F.3d 750, 752 (7th Cir.

2010) (“The offer exceeded the amount in controversy and so the case was

moot.”); Samsung Elecs. Co. v. Rambus, Inc., 523 F.3d 1374, 1379 (Fed.

Cir. 2008) (“An offer for full relief moots a claim for attorney fees.”);

Krim v. pcOrder.com, Inc., 402 F.3d 489, 502 (5th Cir. 2005) (“[A] full

settlement offer, even if refused, would dispose of [the plaintiff’s]

individual claims.”); Weiss v. Regal Collections, 385 F.3d 337, 342 (3d

Cir. 2004) (“[U]nder traditional mootness principles, an offer for the

entirety of a plaintiff’s claim will generally moot the claim.”); Greisz v.

Household Bank (Illinois), N.A., 176 F.3d 1012, 1015 (7th Cir. 1999)

(holding that an offer of judgment that encompasses the relief claimed

“eliminates a legal dispute upon which federal jurisdiction can be based,”

because “[y]ou cannot persist in suing after you’ve won”); 13B Charles

Alan Wright & Arthur R. Miller, Federal Practice and Procedure

§ 3533.2 (3d ed. 2013) (“Even when one party wishes to persist to

judgment, an offer to accord all of the relief demanded may moot the

case.”); Schwarzer, Tashima & Wagstaffe, Federal Civil Procedure

Before Trial ¶ 15:156.5 (9th ed. 2013) (“If a defendant offers judgment in

complete satisfaction of plaintiff’s claims, plaintiff’s claims generally are

rendered moot because plaintiff lacks any remaining interest in the
DIAZ V. FIRST AMERICAN 11

Supreme Court, as well as the Solicitor General of the United

States, embraced a contrary position in Genesis Healthcare. 

As noted, the majority in Genesis Healthcare did not reach

whether an unaccepted offer that fully satisfies a plaintiff’s

claim is sufficient to render the claim moot. See Genesis

Healthcare, 133 S. Ct. at 1528–29. In a dissenting opinion,

however, Justice Kagan, writing for all four justices who

reached the question, agreed with the Second Circuit that “an

unaccepted offer of judgment cannot moot a case.” Id. at

1533 (Kagan, J., dissenting); accord Brief for the United

States as Amicus Curiae Supporting Affirmance, Genesis

Healthcare Corp. v. Symczyk, 133 S. Ct. 1523 (2013) (No.

11-1059), 2012 WL 4960359, at *10–15.

Justice Kagan explained:

We made clear earlier this Term that “[a]s

long as the parties have a concrete interest,

however small, in the outcome of the

litigation, the case is not moot.” Chafin v.

Chafin, 133 S. Ct. 1017, 1023 (2012) (internal

quotation marks omitted). “[A] case becomes

moot only when it is impossible for a court to

outcome of case.”); 1 Joseph M. McLaughlin, McLaughlin on Class

Actions § 4:28 (9th ed. 2012) (“Traditional mootness principles provide

that an offer of judgment under Federal Rule of Civil Procedure 68 that

satisfies a plaintiff’s entire demand moots the claim. The mere offer of

full relief eliminates any concrete adversity between the plaintiff and

defendant, and renders the underlying dispute moot by negating the

plaintiff’s personal stake in the dispute.” (footnote omitted)); 1Rubenstein

& Conte, Newberg on Class Actions § 2:15 (5th ed. 2013) (“If the

defendant makes a full offer of judgment pursuant to Rule 68, completely

satisfying all of the named plaintiff’s individual claims, then the named

plaintiff’s individual case necessarily becomes moot.”).
12 DIAZ V. FIRST AMERICAN

grant any effectual relief whatever to the

prevailing party.” Ibid. (internal quotation

marks omitted). By those measures, an

unaccepted offer of judgment cannot moot a

case. When a plaintiff rejects such an offer –

however good the terms – her interest in the

lawsuit remains just what it was before. And

so too does the court’s ability to grant her

relief. An unaccepted settlement offer – like

any unaccepted contract offer – is a legal

nullity, with no operative effect. As every

first-year law student learns, 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 contrary, that

rule specifies that “[a]n unaccepted offer is

considered withdrawn.” Fed. Rule Civ. Proc.

68(b). So assuming the case was live before

– because the plaintiff had a stake and the

court could grant relief – the litigation carries

on, unmooted.

For this reason, [the plaintiff’s] individual

claim was alive and well when the District

Court dismissed her suit. Recall: [the

defendant]made a settlement offer under Rule

68; [the plaintiff] decided not to accept it;

after 10 days, it expired and the suit went

forward. [The plaintiff’s] individual stake in

the lawsuit thus remained what it had always

been, and ditto the court’s capacity to grant

her relief. After the offer lapsed, just as
DIAZ V. FIRST AMERICAN 13

before, [the plaintiff] possessed an unsatisfied

claim, which the court could redress by

awarding her damages. As long as that

remained true, [the plaintiff’s] claim was not

moot, and the District Court could not send

her away empty-handed. So a friendly

suggestion to the Third Circuit: Rethink your

mootness-by-unaccepted-offer theory. And a

note to all other courts of appeals: Don’t try

this at home.

Genesis Healthcare, 133 S. Ct. at 1533–34 (Kagan, J.,

dissenting) (some alterations in original) (emphasis added).

Justice Kagan also emphasized that nothing in Rule 68

authorizes a court to enter judgment in accordance with an

unaccepted offer:

Rule 68 precludes a court from imposing

judgment for a plaintiff . . . based on an

unaccepted settlement offer made pursuant to

its terms. The text of the Rule contemplates

that a court will enter judgment only when a

plaintiff accepts an offer. See Rule 68(a) (“If

. . . the [plaintiff] serves written notice

accepting the offer, either party may then file

the offer and notice of acceptance, plus proof

of service. The clerk must then enter

judgment”). And the Rule prohibits a court

from considering an unaccepted offer for any

purpose other than allocating litigation costs

– including for the purpose of entering

judgment for either party. See Rule 68(b)

(“Evidence of an unaccepted offer is not
14 DIAZ V. FIRST AMERICAN

admissible except in a proceeding to

determine costs”). That injunction accords

with Rule 68’s exclusive purpose: to promote

voluntary cessation of litigation by imposing

costs on plaintiffs who spurn certain

settlement offers. See Marek v. Chesny,

473 U.S. 1, 5 (1985). The Rule provides no

appropriate mechanism for a court to

terminate a lawsuit without the plaintiff’s

consent.

Id. at 1536 (alterations in original).

We are persuaded that Justice Kagan has articulated the

correct approach. We therefore hold that an unaccepted Rule

68 offer that would have fully satisfied a plaintiff’s claim

does not render that claim moot. This holding is consistent

with the language, structure and purposes of Rule 68 and with

fundamental principles governingmootness. These principles

provide that “[a] case becomes moot only when it is

impossible for a court to grant ‘any effectual relief whatever

to the prevailing party.’” Knox v. Serv. Employees Int’l

Union, 132 S. Ct. 2277, 2287 (2012) (quoting City of Erie v.

Pap’s A.M., 529 U.S. 277, 287 (2000)). Here, once First

American’s offer lapsed, it was, by its own terms and under

Rule 68, a legal nullity. Diaz’s

individual stake in the lawsuit thus remained

what it had always been, and ditto the court’s

capacity to grant her relief. After the offer

lapsed, just as before, [she] possessed an

unsatisfied claim, which the court could

redress by awarding her damages. As long as

that remained true, [her] claim was not moot,
DIAZ V. FIRST AMERICAN 15

and the District Court could not send her away

empty-handed.

Genesis Healthcare, 133 S. Ct. at 1534 (Kagan, J.,

dissenting). We recognize that a court may have “discretion

to halt a lawsuit by entering judgment for the plaintiff when

the defendant unconditionally surrenders and only the

plaintiff’s obstinacy or madness prevents her from accepting

total victory.” Id. at 1536; cf. McCauley, 402 F.3d at 342;

Chathas v. Local 134 Int’l Bhd. of Elec. Workers, 233 F.3d

508, 512–13 (7th Cir. 2000). That did not occur here,

however. Accordingly, we vacate the Rule 12(b)(1) dismissal

of Diaz’s claims for misrepresentation, breach of contract and

breach of the implied covenant of good faith and fair dealing

and remand for further proceedings.

CONCLUSION

We hold that the district court erred by dismissing Diaz’s

remaining individual claims for lack of subject matter

jurisdiction. We vacate the dismissal of those claims and

remand to the district court. For the reasons stated in the

concurrently filed memorandum disposition, we also vacate

dismissal of Diaz’s concealment and unfair competition

claims and lack jurisdiction to review the district court’s

order denying Diaz’s motion to correct or modify the record. 

Each party shall bear its own costs of appeal.

VACATED AND REMANDED.