Monday, July 4, 2016

FYI: Minn Dist Ct Holds Even Complete Tender Does Not Moot Individual or Putative Class Claims

Interpreting the Supreme Court of the United States's ruling in Campbell-Ewald Co. v. Gomez, _ U.S. _, 136 S. Ct. 663 (2016), the U.S. District Court for the District of Minnesota recently held that a defendant cannot moot a putative class action against it, even by tendering the full amount claimed to the named plaintiff and before a motion for class certification is filed. 


A copy of the opinion is available at:  Link to Opinion


Beginning in June 2014, an auto finance company allegedly repeatedly called the plaintiff's cell phone in an attempt to reach an individual who allegedly listed the plaintiff as a credit reference.


The plaintiff had no relationship with the auto finance company, and allegedly did not consent to being contacted on his cell phone. The plaintiff allegedly requested that the auto finance company stop contacting him, but the calls allegedly continued. Some of the calls to the plaintiff's cell phone were supposedly made using an automated telephone dialing system.


The plaintiff filed suit in January 2015, alleging both negligent and willful violations of the TCPA for allegedly calling his cell phone using an auto-dialer and without his prior express consent. 


Before the plaintiff moved for class certification, the auto finance company tendered a check to the plaintiff and offered to stipulate to an award of costs and an injunction prohibiting future calls to the plaintiff's cell phone. The auto finance company asserted that the amount of the check represented the most the plaintiff could recover in an individual action, thus rendering the plaintiff's claim moot.


As you may recall, Fed. R. Civ. Pro. 68 governs offers of judgment. It states, in pertinent part:


(a) Making an Offer; Judgment on an Accepted Offer. At least 14 days before the date set for trial, a party defending against a claim may serve on an opposing party an offer to allow judgment on specified terms, with the costs then accrued. If, within 14 days after being served, the opposing party 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….


(d) Paying Costs After an Unaccepted Offer. If the judgment that the offeree finally obtains is not more favorable than the unaccepted offer, the offeree must pay the costs incurred after the offer was made.


The Court looked to the recent Supreme Court of the United States (SCOTUS) ruling in Campbell-Ewald Co. v. Gomez to address the alleged mootness of the plaintiff's claim.


As you may recall, in Campbell-Ewald, the district court rejected the defendant's argument that its offer of judgment mooted the plaintiff's claim, and the Ninth Circuit affirmed. The SCOTUS affirmed, noting that a case becomes moot only when it is impossible for a court to grant any effectual relief whatever to the prevailing party.  The SCOTUS held that, because the defendant's Rule 68 offer had lapsed without acceptance, the parties remained adverse.


In the instant case, the auto finance company actually tendered complete relief, not just offering it as occurred in Campbell-Ewald. 


Nevertheless, the District Court held that because the plaintiff rejected the tender, the parties remained adverse.  In addition, the Court found there was no difference between a plaintiff rejecting a tender of payment and an offer of payment.  Once rejected, the Court held, the two do not differ in any way.


The Court looked to common law of contract, under which a rejected tender allows a claim to remain live, and the court to retain jurisdiction to decide it.  The District Court held that a rejected tender works in the same way as a rejected offer under Rule 68, pursuant to which the plaintiff becomes liable for defense costs if he does not recover more than the amount offered. Thus, the Court again ruled that there is no reason to treat a rejected tender differently from a rejected offer.


Moreover, the Court noted that the plaintiff requested injunctive relief. The Court found that if this case had been rendered moot by the auto finance company's tender of payment and an offer of a stipulated injunction, the Court would have been unable order equitable relief, as the Court cannot enter a judgment in a moot case.


The Court also found it critical that the plaintiff brought this case as a putative class action.


The District Court held that a putative class action plaintiff must be afforded a reasonable opportunity to demonstrate that class certification is warranted, even if his individual claim has been rendered moot.  Although the Court had not yet addressed class certification, the Court noted that the plaintiff timely filed his motion by the deadline set by the judge.


The Court rejected the auto finance company's argument that there was an Article III limitation on jurisdiction that could not be overcome by styling a case as a class action.


The Court rejected this argument as well, holding that an action becomes moot in the Article III sense only if an individual seeking to proceed as a class representative is required to accept a tender of only his individual claims, which in this case he is not.   The Court held that accepting the auto finance company's argument would take away the plaintiff's control in the putative class action and give all of the power to the defendant.


Accordingly, the District Court denied the auto finance company's motion to dismiss on the grounds of mootness.




Ralph T. Wutscher
Maurice Wutscher LLP
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