United States: A Twist On Campbell-Ewald: Seventh Circuit Rejects Effort To Moot Class Action Claims Under F.R.C.P. 67

In Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (2016), the United States Supreme Court held that a defendant's unaccepted offer of complete relief under Federal Rule of Civil Procedure 68 did not moot a class plaintiff's claim or require dismissal of the action.  However, the Supreme Court expressly left open the question of whether an unaccepted offer plus a tender of payment of the full amount of the plaintiff's individual claim could moot a class plaintiff's claim or require dismissal of the action.  (See our client alert on Campbell-Ewald here.)

Testing an Issue Left Open By Campbell-Ewald, Defendant Tries to Moot Plaintiff's Claim

On June 20, 2017, the Seventh Circuit became the latest court to weigh in on the question left open by Campbell-Ewald.  In Fulton Dental, LLC v. Bisco, Inc., No. 15 C 11038 (EEC) (7th Cir. June 20, 2017), the Court considered whether an unaccepted offer of judgment and tender of payment under Federal Rule of Civil Procedure 67 to fully settle—and thereby moot—a plaintiff's individual claims would also moot putative class action claims.  Relying on Campbell-Ewald, the Court held that an unaccepted offer of judgment could not be forced on an unwilling party under Rule 67 or 68, even if the offer was accompanied by a tender of payment.

On December 8, 2015, plaintiff Fulton Dental, LLC filed a class action complaint against defendant Bisco, Inc., alleging it received an unsolicited fax from Bisco in violation of the Telephone Consumer Protection Act (TCPA).  On January 18, 2016, two days before the Campbell-Ewald decision, Bisco made a Rule 68 offer of judgment to plaintiff to settle its individual claims, plus injunctive relief, fees, and costs.  Relying on the Supreme Court's ruling that "an unaccepted settlement offer or offer of judgment does not moot a plaintiff's case," plaintiff rejected the offer.  Seeking to test the issue left open by Campbell-Ewald, Bisco then moved for leave to deposit $3,600—the maximum possible damages plaintiff could receive, plus fees and costs—with the district court, and then argued that plaintiff's claim was moot.

Expanding on Campbell-Ewald, Court Finds Settlement Cannot Be Forced on Unwilling Party under Rule 67

The Seventh Circuit rejected Bisco's argument that Campbell-Ewald's express reservation of the issue of whether a tender of payment would moot a class plaintiff's claim "meant to say that a proposed settlement structured this way could be forced on a plaintiff."  The Court found this to be "a risky assumption," and decided in favor of the plaintiff, holding that under Campbell-Ewald, "an unaccepted offer is not binding on the offeree," even if a tender of payment is offered.  The Court found Bisco's offer under Rule 67, not Rule 68, was no reason to diverge from the Supreme Court's holding. Instead, the Court noted that Campbell-Ewald "drew no distinction between unaccepted Rule 68 settlement offers and other unaccepted settlement or contract offers."  Thus, the Court saw "no principled distinction between attempting to force a settlement on an unwilling party through Rule 68, as in Campbell-Ewald, and attempting to force a settlement on an unwilling party through Rule 67."

Takeaway

Fulton is one of several post-Campbell-Ewald cases rejecting defendants' attempts to moot a putative class action by mooting the named plaintiff's individual claims.  See, e.g., Weitzner v. Sanofi Pasteur, Inc., No. 14-3423, 2016 WL 1359220 (3d Cir. Apr. 6, 2016) (see our Weitzner post here); Bais Yaakov of Spring Valley v. Graduation Source, LLC, No. 14-cv-3232 (NSR), 2016 WL 872914, at *1 (S.D.N.Y. Mar. 7, 2016); Brady v. Basic Research, L.L.C., 312 F.R.D. 304, 306 (E.D.N.Y. 2016)  (see our Brady post here).

However, a judge in the Southern District of New York saw things differently in Leyse v. Lifetime Entertainment Services, LLC, No. 13 Civ. 574 (AKH), 2016 WL 1253607 (S.D.N.Y. Mar. 17, 2016), holding that a defendant's payment of plaintiff's individual claims plus court costs required entry of judgment.  (For more information on Leyse, see our post here).

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

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