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Class Action Defendant’s Tender Offer of Judgment Fails to Moot Plaintiff’s Claims

In Ung v. Universal Acceptance Corporation, a Minnesota U.S. District Court ruled that a Telephone Consumer Protection Act (TCPA) class-action defendant’s tendered Offer of Judgment under Federal Rule 68 that included the maximum amount of available statutory damages, a stipulated injunction, and an award of costs to a plaintiff before a class certification motion was filed did not “moot” the action in defendant’s favor. The ruling applied the same reasoning found in a recent U.S. Supreme Court TCPA class action in which the Supreme Court noted a case becomes moot only when it is impossible for a court to grant any effectual relief to a prevailing party.

Here, the putative class action plaintiff sued under the TCPA alleging negligent and willful violations of the Act based on defendant’s repeated, unauthorized calls to his cell phone using an “autodialer.” The plaintiff sought statutory damages based upon each unauthorized call, plus an injunction requiring the defendant to cease all communications in violation of the Act.

The defendant’s Rule 68 Offer of Judgment included a check made out to plaintiff and his counsel for $18,000, which was the maximum statutory damages claimed based on the number of calls plaintiff received.  The tender offer also included a stipulation to an injunction against future calls to plaintiff’s phone and an award of costs.  Plaintiff rejected the offer, returned the check and moved to certify the class. Subsequently, in moving for entry of judgment, the defendant argued the plaintiff was afforded complete relief by the Offer of Judgment, and his claims and those of the class were mooted.

Recently, the U.S. Supreme Court held, in Campbell-Ewald Co. v. Gomez (2016), that an unaccepted Rule 68 Offer of Judgment meant the parties remained adverse because a case becomes moot only when it is “impossible for a court to grant any effectual relief whatever to the prevailing party.” In the instant case, the defendant seized on Justice Roberts’ dissenting opinion in Campbell-Ewald, which noted that while an offer of complete relief may be insufficient to moot a case, the payment of complete relief may produce a different result. The defendant argued they afforded complete relief to the plaintiff by tendering, rather than merely offering, payment for the maximum amount of plaintiff’s statutory claims, and stipulating to an injunction and an award of costs.

The District Court rejected this argument for two reasons.

First, plaintiff’s claims were not mooted by the tender because plaintiff rejected it. The court, rejecting the reasoning in Justice Roberts’ dissent in Campbell, found no discernible difference between a plaintiff’s rejection of a tender of payment and rejection of an offer of payment. The court pointed out that at common law, when a plaintiff rejects a tender, his claim remains live and the court retains jurisdiction to decide it. The instant plaintiff’s TCPA claims also requested injunctive relief, and defendant’s tender included a proposed stipulated injunction, requiring the court to take further action to enter the stipulated injunction. However, if this case had been rendered moot because of defendant’s tender of payment and offer of stipulated injunction, the court would have been powerless to order the equitable relief because it would have lacked jurisdiction to do so.

Second, because this is a class action case, the plaintiff assumed responsibilities to members of the class by filing his complaint on behalf of a putative class. Even if all of his claims were satisfied, he would still have a stake in securing class-wide relief in the form of moving for and obtaining class certification. At the time of defendant’s tender, plaintiff had not yet moved for class certification. The court found it important to afford plaintiff a reasonable opportunity to demonstrate the class litigation should survive defendant’s tender and plaintiff’s rejection of payment, which offered no class-wide relief, and therefore, the case is not moot.

Weiner Brodsky Kider represents clients in state and federal courts throughout the United States.