Can you get your client out of a putative class action lawsuit
by offering the individual plaintiff a full recovery? The
courts of appeals have split on this question, and it is undecided
in the First Circuit. (See the cases listed at the end of
this post). The Supreme Court granted certiorari to weigh in
on this issue next term in Genesis Health Care Corp. v. Symczyk,
No. 11-1059. The issue can profoundly affect the economics of class
litigation. With an individual settlement, a defendant may
avoid protracted class discovery and litigation that is expensive
even when it is successful. For plaintiffs, an individual
settlement means there will be no common fund for paying attorney
Generally speaking, a plaintiff can sue on only a claim that
affects her personally. And the plaintiff ordinarily has to
maintain that personal stake throughout the case. If at any
point the plaintiff loses such a stake in the outcome, the suit is
dismissed as moot. Defendants have said the same requirements
apply not only when a person sues in her own name but also when she
purports to sue on behalf of a class. Some courts have
agreed. Others have not.
So far, the courts agree on one point: after a motion for
class certification has been filed, an offer of full relief on an
individual basis does not moot the lawsuit. Once a motion for
class certification is filed, an offer that does not include relief
for the class does not offer the full relief sought in the lawsuit
and therefore does not moot the case. Where courts disagree
is over the effects of offers made before a motion for
certification has been filed.
As much as anything, differing emphasis on practical
considerations seems to lead the courts to their differing
outcomes. The Seventh Circuit especially has been willing to
dismiss a putative class case based on an individual offer of full
relief because there is no practical need to depart from the
principles that apply to ordinary individual cases. Courts on
the other side of this issue have been especially moved by their
distaste for what they perceive as defendants' efforts to
"pick off" class representatives, and by the prospect of
giving defendants the de facto ability to turn any class litigation
into a multiplicity of individual lawsuits by simply offering
individual settlements in every case brought forward.
So, where you stand on this issue seems to depend on a broader
issue that divides courts and others – attitudes about
class litigation in general. The Roberts Court is showing a
keen interest in class litigation and some concern to rein it
in. So stay tuned for next term.
In the meantime, with the issue undecided in the First Circuit
and teed up for definitive ruling next term, settlement offers or
offers of judgment before motions for certification may cause a
temporary stay of class proceedings in cases currently pending in
the courts in this Circuit pending the Supreme Court's
decision. Defendants will want to think carefully before
making such offers.
Symczyk v. Genesis Health Care Corp. 656 F.3d 189 (3d Cir.
Weiss v. Regal Collections, 385 F.3d 337 (3d Cir.2004)
Just over a year ago, I authored a Product Liability Advocate blog entry and a Law360 article explaining appropriate methods for asserting objections under Federal Rule of Civil Procedure 34, as amended on December 1, 2015
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