Supreme Court Holds Unaccepted Settlement Offer to Satisfy Named Plaintiff's Individual Claim Does Not Moot Case
The writing was on the wall following Justice Elena Kagan's dissent in Genesis Healthcare Corp. v. v. Symczyk, 133 S. Ct. 1523 (2013), wherein Justice Kagan blasted the view that an unaccepted offer of complete relief made to a named plaintiff pursuant to Fed. R. Civ. P. 68 is capable of mooting the plaintiff's individual (and putative class) claims as "wrong, wrong, and wrong again," id. at 1533 (Kagan, J., dissenting) - a position that every Court of Appeals to rule on the issue after Genesis Healthcare had adopted - and on January 20, 2016, the Supreme Court made it official. In a 6-3 split decision, Justice Ruth Bader Ginsburg explained in the majority opinion for Campbell-Ewald Co. v. Gomez that "[u]nder basic principles of contract law," an unaccepted settlement offer or Rule 68 offer of judgment "has no force" and "creates no lasting right or obligation," and, as a result, "does not moot a plaintiff's case." No. 14-857, 2016 WL 228345, at 3, 6-8 (U.S. Jan. 20, 2016). In Gomez, the named plaintiff received an unsolicited text message from Campbell-Ewald Company, a national advertising and marketing communications agency hired by the United States Navy to oversee a recruiting campaign on its behalf, which encouraged the plaintiff "to learn more about the Navy." Id. at 3-4. Rather than enlist and "see the world," see About the Navy, (last visited Jan. 20, 2016), the plaintiff filed a class action lawsuit against the agency, asserting a claim on behalf of himself and a nationwide class under the Telephone Consumer Protection Act, 47 U.S.C. § 227 (the "TCPA"). Gomez, 2016 WL 228345, at 4. After determining that the plaintiff had only received a single actionable text message under the TCPA, the advertising agency attempted to settle the plaintiff's individual TCPA claim by offering to pay him his costs of the action plus $1,503 for the text - an amount that exceeded the $1,500 maximum statutory damage recovery for a willful or knowing violation of the TCPA, see 47 U.S.C. § 227(b)(3) - and to enter a stipulated injunction barring the agency from sending text messages in violation of the TCPA. See Gomez, 2016 WL 228345, at 4. In addition to the freestanding settlement offer, the advertising agency also itemized its proposal in an offer of judgment filed pursuant to Federal Rule of Civil Procedure 68. Id. When the plaintiff did not accept the freestanding offer and allowed the offer of judgment to lapse, the advertising agency moved to dismiss the case for lack of subject-matter jurisdiction. Id. The district court denied the defendant's motion and the Ninth Circuit affirmed. Id. On certiorari, the Supreme Court affirmed. Id. at 5, 10. In deciding the issue, the Court expressly adopted Justice Kagan's dissent in Genesis Healthcare, and held that the plaintiff's action "was not effaced by Campbell's unaccepted offer to satisfy his individual claim." Id. at 6. Instead, the Court found that "[u]nder basic principles of contract law, Campbell's settlement bid and Rule 68 offer of judgment, once rejected, had no continued efficacy." Id. at 7. Absent the plaintiff's acceptance of the offer, the Court reasoned, the plaintiff "gained no entitlement to the relief Campbell previously offered" and, as a result, both the plaintiff and the defendant "retained the same stake in the litigation they had at the outset." Id. Accordingly, after reiterating that under Rule 68, an offer of judgment "'is considered withdrawn' if not accepted within 14 days of its service," the Court held that "an unaccepted settlement offer or offer of judgment does not moot a plaintiff's case," and therefore affirmed the Ninth Circuit's decision and remanded the action for further proceedings. Id. at 8, 10. Notably, in rendering its decision in Gomez, the majority refused to consider "whether the result would be different if a defendant deposits the full amount of the plaintiff's individual claim in an account payable to the plaintiff, and the court then enters judgment for the plaintiff in that amount." Id. at 8. In fact, not only did the majority decline to address this issue, the Court expressly relied upon it in distinguishing several cases cited by both the defendant and Chief Justice Roberts in his dissent. Specifically, the Court explained that unlike the defendants in these cases - such as the railroad company in California v. San Pablo & Tulare Railroad Co., 149 U.S. 308 (1893), which mooted the plaintiff's claims by offering to pay the plaintiff the entire sum at issue and by depositing that amount in a bank account opened in the plaintiff's name, see id. at 313-14 - in the instant case, the defendant never actually made payment to Plaintiff, who instead "remained emptyhanded" following the expiration of the defendant's offer. See Gomez, 2016 WL 228345, at 7. This caveat is critical, because while "[t]he majority holds that an offer of complete relief is insufficient to moot a case," "[t]he majority does not say that payment of complete relief leads to the same result." Id. at 18 (Roberts, C.J., dissenting). In other words, as Chief Justice Roberts explained in his dissent, despite the Court's decision in Gomez, a defendant may still have the ability the moot the individual claims of plaintiffs "who, like Gomez, won't take 'yes' for an answer." Id.
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