The U.S. Court of Appeals for the Eleventh Circuit recently held that a settlement offer for alleged violations of the federal Fair Debt Collection Practices Act does not deprive the district court of subject matter jurisdiction due to mootness, if the settlement offer does not also include an offer of judgment.
A copy of the opinion is available at: http://www.ca11.uscourts.gov/opinions/ops/201112413.pdf.
Three debtors (collectively, "Debtors") separately filed lawsuits in federal district court against debt collection agencies ("Debt Collectors"), claiming that Debt Collectors had violated the federal Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq., by making harassing, abusive, or annoying phone calls, failing to identify the purpose of the calls, or failing to meaningfully identify the caller or to state that the caller was a debt collector. In each complaint, as part of the request for relief, Debtors sought damages, attorneys fees, costs, as well as a judgment in their favor against Debt Collectors.
In response to the lawsuits, Debt Collectors sent settlement offers via e-mail to Debtors for $1,001 to resolve their claims. The amount offered in each case exceeded by $1 the maximum statutory damages available for individual plaintiffs under the FDCPA. The settlement offers also included attorneys fees and costs, but did not include an offer of judgment as Debtors had requested. None of the Debtors responded to the settlement offers.
Debt Collectors subsequently moved to dismiss for lack of subject matter jurisdiction, asserting that because they had offered Debtors everything that Debtors were entitled to under the FDCPA, Debtors' FDCPA claims were moot and should be dismissed with prejudice.
The district court granted the Debt Collectors' motions and dismissed the cases with prejudice, explaining in virtually identical orders that, because Debt Collectors had made offers more than adequate to satisfy all of Debtors' demands, Debtors had "no remaining stake" in the litigation and that the cases had thus become moot. Debtors appealed.
The Eleventh Circuit reversed and remanded, ruling that the failure to include an offer of judgment prevented mooting of the FDCPA claims, because the offered settlements were not for the "full relief" requested.
Rejecting Debt Collectors' assertion that the lack of an offer of judgment in these cases did not preclude a mootness finding, the appellate court noted that offers for the full relief requested may render a claim moot, but also pointed out that, although the settlement offers here were for the full amount of statutory damages requested under the FDCPA, they did not offer to have judgments entered against Debt Collectors and were thus not for the "full relief" requested. See, e.g., Simmons v. United Mortg. & Loan Inv., LLC, 634 F.3d 754, 764 (4th Cir. 2011)("Simmons")(ruling that a settlement offer purporting to offer "full relief" did not moot a Fair Labor Standards Act claim, because the offer did not include the requested judgment and was thus not for "full relief").
Quoting the Simmons opinion, the Eleventh Circuit stressed the importance of obtaining a judgment because district courts "have inherent power to compel defendants to satisfy judgments against them . . . but lack the power to enforce the terms of a settlement agreement absent jurisdiction over a breach of contract action for failure to comply with the settlement agreement." Id. at 765.
Agreeing with the analysis in Simmons, the court of appeals concluded that Debt Collectors' settlement did not moot the FDCPA claims, ruling that, because the offers had omitted the judgments that Debtors had sought, they were not for the full relief requested and left a live controversy over the issue of a judgment. As the court explained, "with no offer of judgment accompanying [the] settlement offers, [Debtors] were left with a mere promise to pay" and would have to file a second action for breach of contract to enforce the settlement agreement.
Accordingly, the appellate court reversed and remanded.
Ralph T. Wutscher
McGinnis Wutscher LLP
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Email: RWutscher@mtwllp.com
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