WBK Industry News - Litigation Developments

Supreme Court Rejects Rule 68 “Pick-off” Attempt for Consumer Class Action But Leaves Door Open for Different Result in Future Cases

In a highly-watched consumer class action, the U.S. Supreme Court concluded that an unaccepted offer of judgment made to a named plaintiff does not moot the plaintiff’s claim. The Court, however, left unanswered the question whether a defendant’s tender (as opposed to offer) of the full amount to satisfy a plaintiff’s claim would yield the same result.

In Campbell-Ewald v. Gomez, the plaintiff Jose Gomez brought a putative class action against the marketing firm Campbell-Ewald (Campbell) in connection with text messages allegedly sent to him without his permission in violation of the Telephone Consumer Protection Act (TCPA). Prior to Gomez’s deadline for filing a motion for class certification, Campbell offered to pay him $1,503 per text message, plus his costs, which is the maximum amount Gomez could recover under the TCPA.

Campbell’s offer to settle came in the form of both a settlement offer as well as a Rule 68 offer of judgment.  Under Rule 68 of the Federal Rules of Civil Procedure, a defendant can make an “offer of judgment” to a plaintiff who then has 14 days to accept the offer.  If the plaintiff rejects the offer of judgment (or does nothing), but then later obtains a judgment which is less favorable than the unaccepted offer, the plaintiff is liable for paying the court costs incurred after the date the offer was made, which can sometimes include the opposing party’s attorneys’ fees.  The Rule specifies that an “unaccepted offer is considered withdrawn.”  Gomez refused the settlement offer and took no action in response to the Rule 68 offer of judgment.

According to the 6-3 decision authored by Justice Ginsburg:  “We hold today, in accord with Rule 68 of the Federal Rules of Civil Procedure, that an unaccepted settlement offer has no force.  Like other unaccepted contract offers, it creates no lasting right or obligation.  With the offer off the table, and the defendant’s continuing denial of liability, adversity between the parties persists.”  The Court further explained that, pursuant to basic contract law principles, “Campbell’s settlement bid and Rule 68 offer of judgment, once rejected, had no continuing efficacy.  Absent Gomez’s acceptance, Campbell’s settlement offer remained only a proposal, binding neither Campbell nor Gomez.” Notably, the Court left open the question whether the outcome would have been different if Campbell had actually paid Gomez, for example, by depositing the money with the court, rather than merely offering to pay:  “That question is appropriately reserved for a case in which it is not hypothetical.”

In a dissenting opinion, Chief Justice Roberts concluded that Campbell’s offer to fully satisfy Gomez’s claim rendered the case moot despite Gomez’s refusal to accept the offer.  “Although Gomez nonetheless wants to continue litigating, the issue is not what the plaintiff wants, but what the federal courts may do.  It is up to those courts to decide whether each party continues to have the requisite personal stake in the lawsuit, and if not, to dismiss the case as moot.  The Court today takes that important responsibility away from the federal courts and hands it to the plaintiff.”

Weiner Brodsky Kider PC regularly defends consumer class action cases on behalf of clients around the country.