UNITED STATES – The United States Supreme Court recently granted certiorari in Campbell-Ewald v. Gomez, and one of the questions certified on appeal, if decided, will resolve a circuit split on the question of whether a defendant’s early settlement offer of complete relief moots a representative plaintiff’s individual claim by destroying standing to sue. The Court is also set to address the related issue of whether a settlement offer of complete relief before class certification moots a representative plaintiff’s class claim under Federal Rule of Civil Procedure 23.
In 2000, Campbell-Ewald entered into a contract with the Navy to perform all advertising-related services. As a part of that contract, Campbell-Ewald launched a text message recruiting campaign in 2006, and Campbell-Ewald’s subcontractor Mindmatics, LLC sent over 100,000 naval recruitment text messages. Plaintiff Jose Gomez received one of those text messages.
In 2010, Gomez filed a lawsuit against Campbell-Ewald in the Federal District Court in the Central District of California, alleging violations of the Telephone Consumer Protection Act (“TCPA”). After its motion to dismiss was denied, Campbell-Ewald offered to settle the case before it was certified as a class action. Campbell-Ewald offered $1503.00 per violation of the TCPA, which is three times the statutory amount of $500 per violation, plus reasonable costs. Gomez rejected the offer by allowing it to lapse. Later, the district court granted Campbell-Ewald’s motion for summary judgment after finding that the Navy contractor was protected by derivative sovereign immunity. The district court held that Campbell-Ewald was acting on behalf of the government and immune from suit, because ultimate approval of the contents of any text messages rested with the Navy Recruiting Command, and because Congress has not consented to TCPA claims being brought against the government.
When Gomez appealed, Campbell-Ewald filed a motion to dismiss for lack of jurisdiction arguing that both the personal action and putative class action had been mooted by Gomez’s refusal to accept Campbell-Ewald’s settlement offer. The Ninth Circuit denied the motion, noting that it was bound by circuit precedents holding that a settlement offer of the full amount of the named plaintiff’s individual claim made before the named plaintiff files a motion for class certification does not moot a class action.
On March 18, 2015, the Supreme Court granted certiorari to resolve a circuit split. The majority view, held by the Third, Fifth, Ninth, Tenth and Eleventh Circuits, is that an offer of full relief to the class representative does not moot the class action, as long as a motion for class certification is filed without undue delay after the offer is made. The Fourth, Seventh, and Eight Circuits, on the other hand, have held that a complete offer of relief made to the named plaintiff before a motion for class certification is filed moots the case. In those minority jurisdictions where a complete offer of relief moots the class action, defendants have been successful in “picking off” putative class representatives by offering complete relief, thereby mooting the case by destroying standing. The Supreme Court’s decision in Campbell-Ewald will likely either increase or eliminate the availability of the “pick off” strategy.
It should be noted that the potential impact of the Supreme Court’s decision here extends beyond future TCPA class action claims. Indeed, the Supreme Court’s decision regarding whether an offer of complete relief to the named plaintiff moots class certification under Rule 23 has the potential to affect other class action claims involving small individual damages, such as most consumer fraud and data breach/privacy claims, where defendants are typically able and willing to offer settlement amounts that provide complete relief.