United States: Judge Easterbrook Holds Unaccepted Offer Of Judgment Does Not Moot An Individual TCPA Claim

As we covered here, the U.S. Supreme Court accepted certiorari in Campbell-Eward Co. v. Gomez, 768 F.3d 871 (9th Cir. 2014), to decide the question of whether a full-relief offer of judgment under Federal Rule of Civil Procedure 68, made prior to the plaintiff's moving for class certification, would moot a TCPA class action. The Seventh Circuit earlier this month, however, answered a slightly different question in Chapman v. First Index, Inc., Case Nos. 14-2773 & 14-2775 – namely, can a full-relief offer of judgment moot an individual's TCPA claim if it is made after class certification is denied?

In Chapman, the plaintiff filed suit in 2009 and sought to certify a class of persons who had received faxes from First Index, the defendant, despite not having given consent. The district court declined to certify this class, holding that the difficulty in determining who had given consent (the defendant claimed that consent was sometimes given orally) made it infeasible to determine who was in the class. Five years after the case was filed, the plaintiff then tried to certify a different class: one of individuals who received faxes that did not contain a proper opt-out notice. The district court declined to certify this class, finding the motion untimely given how long the case had been pending.

While the plaintiff's original class certification motion was pending, the defendant made a full-offer judgment consisting of an injunction, $3,002, and costs. The offer, by the defendant's terms, expired 14 days after the district court ruled on the class certification motion. So, once the class certification motions were denied and the 14-day period expired, the defendant moved for the dismissal of the case on mootness grounds based on the rejected full-relief offer of judgment. The district court granted the motion and entered a take-nothing judgment.

Judge Easterbrook, writing for the panel, held that a rejected offer of judgment, whether or not it offered full relief, could not moot an individual claim. In so doing, he expressly adopted Justice Kagan's dissent in Genesis Healthcare v. Symczyk, 133 S. Ct. 1523 (2013). Easterbrook explained that mootness cannot be an appropriate remedy for a rejected offer of judgment because otherwise an offer of judgment would "self-destruct."

Rule 68 is captioned "Offers of Judgment." But a district court cannot enter judgment in a moot case. All it can do is dismiss for lack of a case or controversy. So if the $3,002 offer made this case moot, then even if Chapman had accepted it, the district court could not have ordered First Index to pay.

(Slip op. at 6.) Instead, Easterbrook held, the consequence for a plaintiff who rejects an offer of judgment as prescribed in Rule 68(d) – namely, that "if the judgment that the offeree finally obtains is not more favorable than the unaccepted offer, the offeree must pay the costs incurred after the offer was made." Easterbrook also suggested that a defendant whose full-relief offer of judgment was rejected may have an affirmative defense to the plaintiff's case in the nature of a waiver or estoppel. (Id. at 7.)

This issue will ultimately be decided by the Supreme Court in the next term. In the interim, we will continue to monitor developments in this important area of the law.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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