For years, litigants have battled over whether a defendant's offer of judgment, which completely satisfies the plaintiff's individual claim, can moot a class action. In Campbell-Ewald v. Gomez, 136 S. Ct. 663 (2016), the U.S. Supreme Court recently held that no case is mooted when a plaintiff refuses to accept an offer of judgment. The Supreme Court, however, left open the question of what happens when a defendant follows through with its offer by tendering complete individual relief, depositing the monetary relief with the court, and moving for entry of judgment.
The Southern District of New York recently addressed this precise issue in Leyse v. Lifetime Entertainment Services, LLC, Case No. 13-civ-5794 (S.D.N.Y. March 17, 2016). In that case, the plaintiff sued on a class action basis for alleged violation of the Telephone Consumer Protection Act ("TCPA"), the same claim at issue in Campbell. After the trial court denied the plaintiff's motion for class certification, the defendant offered full monetary relief of $1,503, a stipulated injunction to never call the plaintiff again, and costs. When the plaintiff refused this offer, the defendant moved for entry of judgment based on the offer.
The plaintiff argued that the defendant's motion should be denied based on Campbell. The court disagreed, finding: "Campbell-Ewald expressly did not reach the question of whether the district court had authority to enter a judgment for the plaintiff over the plaintiff's objections and dismiss the action, if the full amount in controversy were actually paid." The court found that it would enter judgment, once the defendant paid the Clerk of the Court the $1,503 offered, plus $400 to cover costs. This, plus the defendant's offer of injunctive relief in the form of an order not to call the plaintiff again, would "eliminate the live controversy before the court." The trial court noted that its decision is consistent with law in the Second Circuit.
Because it had previously denied class certification, the trial court in Leyse did not address what effect an individual judgment would have on class claims prior to a ruling on class certification. Indeed, this remains an open question in the Second Circuit and elsewhere. See Tanasi v. New All. Bank, 786 F.3d 195, 201 (2d Cir. 2015) (leaving "for another day the question of whether putative class action claims under Rule 23 generally provide an independent basis for justiciability after a plaintiff's individual claims are rendered moot"). The trial court in Leyse did comment that the judgment in plaintiff's favor "would not necessarily preclude plaintiff's subsequent appeal on the class certification issue." How this will play out on appeal and remand, however, also remains to be seen.
What is certain is that class action litigants will continue to battle over these issues for the foreseeable future.
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.