SCOTUS Decides Class-Action Settlement Offer Issue
The U.S. Supreme Court has held that a class action can continue after
the defendant offers the lead plaintiff everything requested and the
plaintiff rejects the offer. Campbell-Ewald Co. v. Jose Gomez, No. 14-857
(U.S., order entered January 20, 2016). The claim at issue stemmed
from an alleged violation of the Telephone Consumer Protection Act
by Campbell-Ewald Co. after the U.S. Navy contracted the company
to create a multimedia recruiting campaign. Campbell-Ewald offered
the plaintiff costs plus $1,503 per unwanted text message received,
but the plaintiff let the settlement offer expire without response. The
company then moved to dismiss the case on the grounds that no case or
controversy existed because its offer had mooted the plaintiff’s claim by
providing him with complete relief. The district court denied the motion’s
argument and the Ninth Circuit later agreed, but other federal appeals
courts had decided the issue differently.
The Supreme Court sided with the Ninth Circuit’s decision, finding that
“an unaccepted settlement offer has no force. Like other unaccepted
contract offers, it creates no lasting right or obligation. With the offer
off the table, and the defendant’s continuing denial of liability, adversity
between the parties persists.”
Shook, Hardy & Bacon Partner Victor Schwartz spoke to Law360 about
the decision, suggesting the issue as a whole remains to be decided.
“The significance of this decision is that it postpones for a later day the
key question of whether a defendant’s complete offer and payment to a
plaintiff can moot a case so that it is no longer a ‘case’ or ‘controversy’
under Article III of the U.S. Constitution. Neither the majority nor
dissent directly addresses the issue of whether a full offer and tender to a
lead plaintiff can moot a class action,” he said. Schwartz found persuasive
Chief Justice John Roberts’ observation in his dissent that “the majority’s
holding will allow future plaintiffs to have a day in court when there is no
reason to do so.”
Issue 591
