Supreme Court Holds Offer of Settlement/Judgment Does Not Moot Claims Under Certain Circumstances

Campbell-Ewald Co. v. Gomez, No. 14-857, 2016 WL 228345 (U.S. Jan. 20, 2016) In a much anticipated decision, a majority of the United States Supreme Court held that unaccepted offers of full judgment and settlement do not moot claims. By way of background, Plaintiff filed a TCPA class action. Defendant made an a settlement offer and offer of judgment for the amount of relief the named plaintiff could obtain, then moved to dismiss the case for lack of subject matter jurisdiction when Plaintiff rejected the offers. The Majority (Justices Ginsberg, Kennedy, Breyer, Sotomayor and Kagan) Writing for the majority, and joined by Justices Kennedy, Breyer, Sotomayor and Kagan, Justice Ginsberg stated that under basic principles of contract law, Campbell's settlement bid and Rule 68 offer of judgment, once rejected, had no continuing efficacy. Absent Gomez's acceptance, Campbell's settlement offer remained only a proposal, binding neither Campbell nor Gomez. Having rejected Campbell's settlement bid, and given Campbell's continuing denial of liability, Gomez gained no entitlement to the relief Campbell previously offered. In short, with no settlement offer still operative, the parties remained adverse; both retained the same stake in the litigation they had at the outset. The majority did, however, conclude its discussion of the issue stating "[w]e need not, and do not, now decide 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. That case is appropriately reserved for a case in which it is not hypothetical." The Concurrence (Justice Thomas) Concurring in the majority's conclusion that an offer of complete relief does not render claims moot, Justice Thomas could not join the majority opinion because its conclusion rested on modern contract law principles and a recent decent authored by Justice Kagan regarding Rule 68 offers of Judgment. Justice Thomas rested his opinion on the common law history of tenders demonstrating that a mere offer of a sum owed is insufficient to eliminate a court's jurisdiction to decide a case. After discussing the history of tenders and Rule 68 offers of judgment, Justice Thomas wrote that "[i]n light of the history discussed above, a rejected offer does not end the case. And this consistent historical practice demonstrates why Campbell-Ewald's offers do not divest a federal court of jurisdiction to entertain Gomez's suit. Campbell-Ewald made two settlement offers after Gomez sued - one filed with the District Court under Rule 68 and one freestanding settlement offer. But with neither of these offers did the company make payment; it only declared its intent to pay. Because Campbell-Ewald only offered to pay Gomez's claim but took no further steps, the court was not deprived of jurisdiction." The Dissent (Chief Justice Roberts and Justices Scalia and Alito) Chief Justice Roberts, joined by Justices Scalia and Alito, with Justice Alito writing separately,, dissented. Focusing on the "case or controversy" requirement of a the Federal Judiciary, Chief Justice Roberts wrote that: The case or controversy requirement serves an essential purpose: It ensures that federal courts expound the law "only in the last resort, and as necessity [. . .] There is no such necessity here. As the District Court found, Campbell offered Gomez full relief. Although Gomez nonetheless wants to continue litigating, the issue is not what the plaintiff wants, but what the federal courts may do. It is up to those courts to decide whether each party continues to have the requisite personal stake in the lawsuit, and if not, to dismiss the case as moot. The Court today takes that important responsibility away from the federal courts and hands it to the plaintiff. The good news is that this case is limited to its facts. The majority holds that an offer of complete relief is insufficient to moot a case. The majority does not say that payment of complete relief leads to the same result. For aught that appears, the majority's analysis may have come out differently if Campbell had deposited the offered funds with the District Court. This Court leaves that question for another day - assuming there are other plaintiffs out there who, like Gomez, won't take 'yes' for an answer." Justice Alito wrote separately emphasizing what he saw as the linchpin for finding mootness - There is no real dispute that Campbell would "make good on [its] promise" to pay Gomez the money it offered him if the case were dismissed. Justice Alito presented situations wherein an offer of complete relief was disingenuous or a defendant's assets were "so shaky that it cannot produce the necessary funds," noting that if those cases were dismissed as moot, the defendant's failure to follow through on its promise to pay would leave the plaintiff forever empty handed and the case would not be moot. How then, Justice Alito wrote, can a defendant make "absolutely clear" that it will pay the relief it has offered, suggesting that the most straightforward way is simply to pay the money. The defendant might hand the plaintiff a certified check or deposit the requisite funds in a bank account in the plaintiff's name. Alternatively a defendant might deposit the money with the district court (or another trusted intermediary) on the condition that the money be released to the plaintiff when the court dismisses the case as moot. In these situations, there will rarely be any serious doubt that the plaintiff can obtain the money offered. While Justice Alito noted that outright payment is the surest way for a defendant to make the requisite mootness showing, he would not foreclose other means of doing so. "The question is whether it is certain the defendant will pay, not whether the defendant has already paid."

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