United States: U.S. Supreme Court Closes One Door To Mooting A Plaintiff's Claims, But Potentially Opens Another

On Wednesday, the United States Supreme Court issued its decision in Campbell-Ewald Company v. Gomez, No. 14–857 (Jan. 20, 2016), holding that a defendant cannot moot a plaintiff's claim under Article III of the U.S. Constitution by making a settlement offer that would provide the plaintiff complete relief, which the plaintiff refuses. Although the decision rejects one cost-effective way to resolve a plaintiff's claim without protracted litigation, it explicitly leaves open the possibility that the result would be different for a defendant that actually delivers payment to the plaintiff rather than merely offering to do so. The Court also left open the possibility that such a scenario would moot the plaintiff's ability to bring claims on behalf of a putative class of plaintiffs in addition to the plaintiff's individual claims, thus limiting a defendant's exposure to classwide liability.

BACKGROUND

In this Telephone Consumer Protection Act ("TCPA") case, the Navy engaged a marketing firm, defendant Campbell-Ewald Company ("Campbell"), to create and implement a multimedia recruiting campaign. The campaign involved the transmission of text messages to over 100,000 young adults who previously had consented to receiving solicitations related to service in the Navy. Plaintiff Jose Gomez received a text message, but claimed that he never "opted in" to receiving such messages. He filed a class action lawsuit for alleged violations of the TCPA, which entitles a plaintiff to statutory damages of $500 for each unsolicited "call [or text] . . . using any automatic telephone dialing system . . . to any telephone number assigned to a . . . cellular telephone service." 47 U.S.C. § 227(b)(1), (b)(3). Gomez sought treble statutory damages for allegedly willful or knowing violations, 47 U.S.C. § 227(b)(3), costs, and attorney's fees, as well as an injunction against future unsolicited text messaging.

Before Gomez moved for class certification, Campbell made two settlement offers to Gomez—one offer of judgment under Federal Rule of Civil Procedure 68 and one freestanding settlement offer—and each had identical terms. Campbell offered to pay Gomez his costs, excluding attorney's fees, and $1,503 per text message that he could show he received, along with a stipulated injunction that barred Campbell from sending text messages that violate the TCPA.

When Gomez failed to accept these offers, Campbell moved to dismiss the case for lack of subject-matter jurisdiction, arguing that its offers of complete relief mooted Gomez's individual claim along with the putative class claims. Despite finding that the "parties [did] not dispute" that Campbell's offer would have provided Gomez complete relief for his individual claims if Gomez had accepted the offer, the district court denied Campbell's motion. It later granted summary judgment to Campbell on unrelated grounds. On appeal, the Ninth Circuit reversed the grant of summary judgment, and affirmed the district court's denial of Campbell's motion to dismiss for lack of subject-matter jurisdiction. 768 F. 3d 871 (9th Cir. 2014). Campbell then sought review by the Supreme Court.

"BASIC PRINCIPLES OF CONTRACT LAW"

In the 6-3 decision (with Justice Thomas concurring in the judgment only) delivered by Justice Ginsburg, the majority had little trouble concluding that Campbell's unaccepted settlement offers "had no force" and did not moot Gomez's individual TCPA claim. Relying on "basic principles of contract law" and adopting Justice Kagan's dissent in Genesis HealthCare Corp. v. Symczyk, 569 U. S. ___ (2013), the majority held that Campbell's offers, like other unaccepted contract offers, had no "continuing efficacy" once they were rejected. Because the offer was not accepted, the parties retained the same stake in the litigation they had at the outset and remained adverse for Article III purposes.

Importantly, because it was only "hypothetical" in this case, the majority expressly declined to 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," instead of the defendant merely offering to do so. The majority also did not address the related issue of whether the claims he asserted on behalf of the putative class would have become moot if his individual claims had become moot (that is, whether an individual with no active claims could purport to represent a class of individuals with non-moot claims).1

In his concurrence, Justice Thomas agreed that an unaccepted offer does not moot a plaintiff's claim, but criticized the majority's reliance on contract law. He instead looked to the common law of tenders, which "demonstrates that a mere offer of the sum owed is insufficient to eliminate a court's jurisdiction to decide the case to which the offer related."

THE CHIEF JUSTICE'S DISSENT

Chief Justice Roberts authored a dissenting opinion, joined by Justices Scalia and Alito. The Chief Justice called the case a "straightforward" application of the Court's Article III jurisprudence, which limits federal courts' authority to actual cases and controversies between parties that, by "necessity," require redress from the courts. Because the district court found that Campbell offered to fully remedy Gomez's injury, Gomez could no longer demonstrate an injury in need of redress by the courts, rendering his claim moot. This was so despite the fact that he rejected Campbell's offers—it is up to the court, not the plaintiff, to decide whether the exercise of the court's authority is "necessary" to resolve an actual case or controversy.

IMPLICATIONS

While the decision resolved the specific issue being presented, the door remains open to continued litigation on the relationship between claims brought by a named plaintiff and the claims of the class as a whole.

First and foremost, it sets the stage for a defendant to attempt to moot a plaintiff's claims by not only merely offering the plaintiff complete relief in the form of a settlement, but actually depositing the funds in an account payable to plaintiff or with the court—or perhaps simply by delivering a certified check to the plaintiff. Given Justice Breyer's apparent endorsement of this approach during oral argument, and the seeming agreement among Justice Thomas and the three dissenting justices, it is possible that a majority of the justices would sanction this tactic should it reach the Court.

The decision also leaves unanswered the fundamental question of what constitutes "complete relief" in any given case. For example, in the foregoing scenario, must the defendant also agree to an injunction or admit liability in addition to making the monetary payment? The dissenting justices concluded that an admission of liability is not required, Justice Thomas suggested that it might be required, and the majority opinion did not weigh in. Finally, this decision leaves undisturbed the possibility that a defendant who successfully moots the plaintiff's individual claims simultaneously thwarts that plaintiff's ability to pursue claims on behalf of a putative class, warranting dismissal of the action in its entirety. Given that such a strategy, if successful, would nip a class action in the bud, it remains open to be tested—likely in cases where the named plaintiff's individual injury can be fully redressed for an easily calculable sum, such as cases where only statutory damages are at issue.

Footnotes

1 The majority also held that Campbell was not entitled to immunity from suit as a federal contractor because there was some evidence (that had to be credited at the summary judgment stage) that it had exceeded the authority given to it by the Navy to send text messages only to consenting recipients.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.