Source: https://www.mmmlaw.com/media/hassetts-objections-the-end-of-the-class-action/
Timestamp: 2019-04-18 11:24:14+00:00

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HASSETT’S OBJECTIONS: The End of the Class Action?
The United States Supreme Court is hearing a case this term that could allow businesses to kill putative class actions when they are filed. See Campbell-Ewald Co. v. Gomez, Case No. 14-857 (cert. granted May 18, 2015.) The issue to be decided is whether a class action defendant may “pick off” the named plaintiff in a putative class action by offering judgment of the full relief available for the named plaintiff’s individual claim. The Supreme Court will determine whether it is possible to render class claims moot through this strategy.
The pick-off strategy arises out of the intersection of the Federal Rule of Civil Procedure authorizing class actions (Rule 23) and the Rule authorizing offers of judgment (Rule 68.) The strategy is based upon two controversial legal principles that have generated disagreement among the federal circuit courts. The first principle is that a defendant can moot a plaintiff’s individual claim by making a Rule 68 offer of judgment for all of the relief sought by the individual plaintiff. The second controversial principle is that uncertified Rule 23 class action claims become moot as soon as the named plaintiff’s individual claim is satisfied.
Turning to the first principle, (i.e. whether a full offer of judgment may moot the individual plaintiff’s claim,) the first step is the purposes of Rule 68 itself. According to the Supreme Court, Rule 68 was adopted “to encourage settlement” by penalizing plaintiffs who reject reasonable settlement offers. Marek v. Chesny, 473 U.S. 1, 5 (1985.) If a plaintiff rejects the defendant’s Rule 68 settlement offer and subsequently recovers less than the sum offered, the plaintiff must pay the defendant’s costs incurred after the offer was made. Id. When executing a pick-off strategy, in contrast, the proffer of a Rule 68 offer of judgment is not intended to initiate settlement discussions, but instead is to concede defeat immediately.
Federal circuit courts disagree about whether it is possible to eliminate the plaintiff’s ongoing “case or controversy” via a Rule 68 offer of complete relief. In the Second, Third, Fourth, Fifth, Sixth, Tenth, and Federal Circuits, the courts hold that a Rule 68 offer of complete relief will either render the plaintiff’s claim automatically moot, or else prompt the court to enter judgment in favor of the plaintiff, which has the same effect as mootness. Cabala v. Crowley, 736 F.3d 226, 228 n.2 (2d Cir. 2013;) Weiss v. Regal Collections, 385 F.3d 337, 342 (3d Cir. 2004;) Warren v. Sessoms & Rogers, P.A., 676 F.3d 365, 371 (4th Cir. 2012;) Krim v. pcOrder.com, Inc., 402 F.3d 489, 502 (5th Cir. 2005;) O’Brien v. Ed Donnelly Enters., Inc., 575 F.3d 567, 574-75 (6th Cir. 2009;) Lucero v. Bureau of Collection Recovery, Inc., 639 F.3d 1239, 1243 (10th Cir. 2011;) Samsung Elecs. Co. v. Rambus, Inc., 523 F.3d 1374, 1379 (Fed. Cir. 2008.) In contrast, recent decisions from the Seventh, Ninth, and Eleventh Circuits have held that an unaccepted offer will not moot the plaintiff’s claims. Chapman v. First Index, Inc., 796 F.3d 783, 787 (7th Cir. 2015;) Diaz v. First Am. Home Buyers Prot. Corp., 732 F.3d 948, 954–55 (9th Cir. 2013;) Stein v. Buccaneers Ltd. P’ship, 772 F.3d 698, 703 (11th Cir. 2014.) These decisions have relied on Justice Kagan’s dissent in Genesis Healthcare Corp. v. Symczyk, ––– U.S. ––––, 133 S. Ct. 1523, 1533 (2013,) which argued that an unaccepted offer of judgment does not satisfy the Court’s definition of mootness. While Justice Kagan’s dissent was joined by three other justices, the five-justice majority in Symczyk deliberately avoided this issue. When the Court hears Campbell-Ewald Co. v. Gomez, its analysis should resolve the current circuit split.
If the Supreme Court rejects the pick-off strategy in Campbell-Ewald Co. v. Gomez, defense counsel will continue exploring other ways in which to pick off a named plaintiff. One circuit court of appeals has suggested that a defendant facing a putative class action might replicate the pick-off strategy by simply defaulting instead of making a Rule 68 offer. Bais Yaakov of Spring Valley v. ACT, Inc., 798 F.3d 46, 54 (1st Cir. 2015.) It remains to be seen whether this alternative pick-off strategy will have any traction in court or whether any defendant wants to be the test case.
Associate Sam van Volkenburgh made significant contributions to this article.

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