Article III of the United States Constitution limits federal court jurisdiction to "cases" and "controversies." If an intervening circumstance deprives the plaintiff of a personal stake in the outcome of a lawsuit, the action must be dismissed as moot because there is no longer a case or controversy. So can a class action defendant avoid exposure to class relief by paying a pittance to pick off a plaintiff class representative? Stated differently, if a defendant offers to pay the plaintiff everything a plaintiff could get, must the plaintiff take "yes" for an answer?
In Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523 (2013), the Supreme Court considered a collective action brought by an employee on behalf of similarly situated employees for a violation of the Fair Labor Standards Act. The defendant served the plaintiff with an offer of judgment pursuant to Rule 68 that would have satisfied the plaintiff's individual damages claim. The plaintiff allowed the offer to lapse by failing to respond, but did not dispute in the lower courts that the offer mooted her individual claim. Because of that failure, the majority assumed without deciding that an offer of complete relief pursuant to Rule 68, even if unaccepted, moots the plaintiff's claim, and held that a representative action cannot survive mootness of the named plaintiff's claim.
The issue was squarely presented in Campbell-Ewald Co. v. Gomez, 136 S.Ct. 8663 (2016). There, an advertising agency retained by the U.S. Navy sent text messages to over 100,000 recipients as part of its recruiting campaign. Gomez alleged that the marketing firm sent him text messages without his permission and filed a class action under the Telephone Consumer Protection Act. That Statute permits consumers to recover statutory damages of $500 per text for unauthorized text messages. Before the deadline for filing a motion for class certification, Campbell made a Rule 68 offer of judgment to settle Gomez's individual claim for the maximum amount he could recover under the Act, plus costs of filing suit. Gomez did not accept the offer. Campbell then moved to dismiss the case pursuant to Rule 12(b)(1) for lack of subject matter jurisdiction. Campbell argued that its offer mooted Gomez's individual claim by providing him with complete relief. The district court denied the motion, and the Ninth Circuit agreed. The Supreme Court granted certiorari to resolve a disagreement among the courts of appeal over whether an unaccepted offer can moot a plaintiff's claim, thereby depriving federal courts of Article III jurisdiction.
In an opinion by Justice Ginsberg, the court held that an unaccepted settlement offer under Rule 68 cannot moot the named plaintiff's individual claims or those of a putative class. The majority analyzed the issue under basic principles of contract law, holding that an unaccepted offer was a nullity. Justice Thomas concurred with the result, but not the reasoning, resting his analysis on the common law of tenders. Chief Justice Roberts, joined by Justices Scalia and Alito dissented, reasoning that when a defendant unilaterally remedies the injury of the plaintiff, the case is moot—even if the plaintiff disagrees and refuses to settle the dispute, and even if the defendant continues to deny liability.
The opinion left open the issue of whether the result would be different if a defendant deposited the full amount of plaintiff's individual claim in an account in the plaintiff's name, or in the district court on the condition that the money be released to the plaintiff when the court dismisses the case as moot.
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