Continuing to Litigate after You Have Won: Courts Defy Article III to Avoid Mooting TCPA Class Actions, Despite Defendants’ Rule 68 Offers of Complete Relief
74 Pages Posted: 29 Jun 2016
Date Written: January 1, 2016
Every day, thousands of ordinary Americans receive unwelcome faxes, text messages, and prerecorded telephone calls (frequently referred to as “robocalls”). The proliferation of these unwelcome messages has increased at an astronomical rate. In 2015, the Federal Trade Commission (FTC) reported that it received approximately 150,000 complaints each month. This dramatic increase occurred despite Congress’s enactment of the Telephone Consumer Protection Act (TCPA) in 1991, which was meant to restrict dramatically such unwelcome calls, texts, and faxes, and to protect the privacy interests of consumers. Because the recovery under the TCPA is limited to $500 per violation, many consumer suits under the TCPA are filed as class actions under Federal Rule of Civil Procedure 23. The Rule 23 class action mechanism appears to be tailored to such small regulatory actions. However, defense counsel, confronted by the increasing number of class actions filed against their clients, searched for an effective response to fend off these class actions aggressively and advocate for their clients. Defense counsels’ “weapon of choice” appears to be Federal Rule of Civil Procedure 68. Rule 68 permits defense counsel to serve an offer of judgment on the opposing party. The rule is a procedural one, intended to encourage settlement and avoid litigation. The rule achieves these goals by shifting costs: “If the judgment that the offeree finally obtains is not more favorable than the unaccepted offer, the offeree must pay costs incurred after the offer was made.” One thing not addressed by the language of Rule 68 is the effect, if any, of an unaccepted offer on the justiciability of the plaintiff’s claim under the Constitution’s Case or Controversy Clause. In TCPA class actions, one strategy used by defense counsel to fend off suits has been to make a Rule 68 offer of judgment to the named class representative for the statutory maximum that a plaintiff could recover on his individual claim, prior to plaintiff’s filing of a motion for class certification, in order to moot the named representative’s individual claim and the entire class action. In other words, defense counsels’ position is that when the named plaintiff is offered all that he could possibly receive from suit and has not yet moved to certify a class, there is no longer a case or controversy under Article III, and the case is moot. In Gomez v. Campbell-Ewald Co., the Supreme Court attempted to resolve a Circuit Court split as to whether a Rule 68 offer of judgment, made before a plaintiff moves to certify the class, moots the named plaintiff’s claim and the entire class action. However, rather than resolving the split, the Court’s opinion only provided a temporary solution, and the Court postponed a definitive resolution of the matter for another day. The Gomez majority noted: “[w]e need not, and do not, now 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.” This Article takes the position that both Article III and the Supreme Court’s precedent compel the conclusion that a defendant’s Rule 68 offer of complete relief, when made before the plaintiff moves for class certification, moots not only the plaintiff’s individual claim, but also the entire action. The article maintains a contrary conclusion would run afoul of Article III and undermine the “personal stake” requirement set forth in the Supreme Court’s Article III jurisprudence. Because this Article was in final production at the time the Supreme Court issued its recent decision in Gomez, the Court’s decision is addressed in the Author’s Addendum, provided at the end of the Article.
Keywords: FTC, Consumer Protection, Class Action, Rule 68
JEL Classification: K00, K1, K23, K41
Suggested Citation: Suggested Citation