Sunday, December 4, 2011

FYI: 7th Cir Breaks From Other Circuits, Holds Full Settlement Offer Prior to Motion for Class Cert Moots Putative Class Action

The U.S. Court of Appeal for the Seventh Circuit recently confirmed that a
complete offer of settlement made prior to a plaintiff's filing for class
certification moots that plaintiff's claim. A copy of the opinion is

Plaintiff-consumer brought a putative class-action claim against Clearwire
Corporation ("Clearwire"), alleging that Clearwire sent unsolicited text
messages to cellphone users in violation of the Telephone Consumer
Protection Act. Before the plaintiff moved for class certification,
Clearwire offered him the full relief he requested, removed the case to
federal court, and moved to dismiss on the grounds that the case was moot.
The lower court granted Clearwire's motion, and plaintiff appealed.

As you may recall, in the Seventh Circuit, "[o]nce the defendant offers to
satisfy the plaintiff's entire demand, there is no dispute over which to
litigate." Rand v. Monsanto Co., 926 F.2d 596, 598 (7th Cir. 1991).
However, if a plaintiff moves for class certification prior to receiving
such an offer, the action may continue.

The plaintiff noted that both the Supreme Court and the Seventh Circuit
have emphasized the importance of preventing individual "buy-offs" from
mooting class actions. Therefore, he argued that the Seventh Circuit
should create an exception to mootness where an offer is made prior to the
plaintiff moving for class certification.

The Seventh Circuit acknowledged that the approach urged by the plaintiff
has been adopted by four other circuits. The four other circuits have
fashioned a new rule that, "absent undue delay, a plaintiff may move to
certify a class and avoid mootness even after being offered complete

However, the Seventh Circuit declined to join them. The Court explained
that concerns regarding "buy-offs" mooting class actions could be
addressed by class action plaintiffs moving "to certify the class at the
same time that they file their complaint."

The plaintiff argued that the Seventh Circuit's approach could cause
plaintiffs to file for class certification prematurely, without having
developed the facts necessary to obtain certification. The Seventh
Circuit did not find this argument convincing, noting that in such a
circumstance plaintiffs could simply ask a court to "delay its ruling to
provide time for additional discovery or investigation."

Therefore, the Seventh Circuit affirmed the decision of the lower court.

Ralph T. Wutscher
McGinnis Tessitore Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874

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