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Supreme Court hears argument on whether unaccepted offer of judgment moots claims

By Lisa Milam-Perez, J.D.

Does an unaccepted offer of judgment to a named plaintiff moot that plaintiff’s claims? That was the question before the Justices as the Supreme Court heard oral argument in Campbell-Ewald Co. v. Gomez, Dkt No. 14-857. The putative class action suit was brought under the Telephone Consumer Protection Act against a national marketing firm, and it arose out of a text message sent on behalf of the Navy to recruit new sailors But the case is of great interest to employers in that it impacts their ability to head-off both individual and class claims by way of an offer of judgment prior to a request for Rule 23 class certification.

The Ninth Circuit had found that the plaintiff’s individual and class claims were not rendered moot by his rejection of a settlement offer that was tendered before he moved to certify the class. (Apparently, the defendant had made a Rule 68 offer of judgment as well as a separate, freestanding settlement offer.)

Key questions. The two key questions presented: (1) Whether a case becomes moot, and thus beyond the judicial power of Article III, when the plaintiff receives an offer of complete relief on his claim; and (2) Whether the answer to the first question changes if the plaintiff has asserted a class claim under Rule 23 but receives an offer of complete relief before any class is certified.

As a practical matter, the latter question matters most. But the considerable bulk of the argument focused on the former.

To affirm the Ninth Circuit’s holding, according to Gregory G. Garre of Latham & Watkins, arguing on behalf of petitioner Campbell-Ewald Company, the Justices would have to agree that a plaintiff “can force the Court to adjudicate the merits of his claim simply by refusing the defendant’s offer of capitulation and complete relief.” The Justices also would have to accept the proposition, Garre argued, that a plaintiff has “what amounts to a substantive right to class litigation that applies as soon as the complaint is filed and that entitles the case to proceed, even if his individual claim drops out before.”

“Necessary not to decide.” “The Court is not empowered to decide moot questions or declare rules of law which cannot affect the result as to the thing in issue in the case before it,” Garre urged, “and that’s exactly what’s at issue in the case before the Court today. The point is that when the defendant has offered everything, the courts can’t go ahead and expound on the law. Now, this Court has repeatedly said, when it’s not necessary to decide, it’s necessary not to decide. And that’s the fundamental principle at stake here.”

Complete relief? However, the Justices were unwilling to assume for the sake of argument that the offer made by the defendant actually amounted to complete relief. They turned quickly to this threshold question and whether, in order to constitute “complete relief,” a judicial finding of liability was necessary.

But the plaintiff wasn’t entitled to a finding of liability, Garre replied. “If a litigant was always entitled to a finding of liability, then essentially no case could become moot. If you take the voluntary cessation context, a litigant could always insist that he’s still entitled to the finding of liability.”

Moot the case on the defense’s terms. The alternative, Justice Sotomayor countered, is that “You get to say on your own, unilaterally, ‘I offered you complete relief’? Even though, right or wrong, the plaintiff is asking for a particular injunction and a particular attorney’s fee? You, without any judicial interpretation, intervention, get to moot the case on your terms?”

Garre proposed an alternative solution is the approach adopted by the Sixth Circuit, which is to dispose of the case by entering judgment for the plaintiff based on the terms of the offer. “That’s not a judgment on the merits because it’s not adjudicating the claim on the merits. That’s an appropriate way of disposing of this case. And no one can argue that there’s an Article III interest in in proceeding with the litigation once they have a judgment disposing of the case.”

What about the class action? The problem, though, is the class issue. As Chief Justice Roberts pointedly said to Stanford University Law School’s Jonathan F. Mitchell, arguing for the underlying plaintiffs: “This is all about class certification.” Garre framed the issue in similar terms, contending that the plaintiffs were asking the High Court “to recognize a substantive right to class adjudication. At the end of the day, that’s what they’re insisting on.”

“Here the question is when the individual claim drops out, is there any basis for the action to proceed?” Justice Ginsburg noted, however, that the named plaintiff still retained a personal stake in the outcome: A class resolution would enable the lead plaintiff to spread the costs of attorneys’ fees, and he could be entitled to an incentive award as class representative. And, at bottom, “he filed a class action,” she said. “That’s what he wanted to do, and he was stopped very early on by this offer of judgment.”

“It’s hard to feel too sorry about the plaintiffs who have everything that they could possibly ask for,” Garre replied. “What we’re talking about asking people, as a practical matter in these sorts of class actions, what they get is pennies on the dollars of their claim. The big money goes to the class action lawyers here.”

Focus on procedural question. Justice Kagan quickly steered the discussion back to the finer points of the mootness question, however, admonishing that it was important not to let the policy arguments for and against class actions drive the procedural question at issue here.

At bottom, Garre said, “Article III’s case and controversy requirement requires that the plaintiff have a personal stake, a live personal stake in the outcome of the case at all stages of the proceeding. And on the first question, our point is that once you’ve been offered everything you could receive and again, that’s how the case comes here, and he has been offered everything that he could get through a favorable judgment on his individual claim, there’s no longer a personal stake in litigating that case to the outcome.”

Plaintiff’s case isn’t moot. “Campbell-Ewald’s mootness argument fails because an offer of complete relief cannot render a case moot,” Mitchell asserted on behalf of the plaintiff. “At most, the offer might justify a forced entry of judgment, but not a jurisdictional dismissal.”

“If you’re getting everything you want, what is the case or controversy?” Roberts asked. “What is the live dispute in which you have a personal stake to the terms we use under Article III?”

“The live dispute is in obtaining a court judgment that incorporates that relief that’s been offered,” Mitchell replied. “The mere offer of complete relief does not have anything to do with mootness. Even if the plaintiff and the defendant agree on what the proper judicial relief should be, the only question in that situation is whether the Court should enter judgment for the plaintiff, not dismiss the case for lack of jurisdiction.”

Justice Alito, seemingly impatient with this line of discourse, sought to cut to the chase: “Suppose Mr. Garre right now were to take a big stash of cash out of his briefcase, or a certified check and present that to you,” he posed. “Would there be any case left then? “

“He shouldn’t get anything in addition to what he’s already received, but that goes to the merits, not to whether an Article III case or controversy exists,” Mitchell responded.

Interest in judgment vs. relief. “You’re saying that the plaintiff has an interest in the judgment quite separate from obtaining all the relief that he requests,” Justice Kennedy clarified.

“Yes,” said Mitchell. “The concrete injury is the past injury that he’s already suffered. That the injury has already been remedied is a defense that goes to the merits. It doesn’t go to Article III.”

“I think when there has been a settlement and the parties have agreed to a settlement, the court can enter a judgment. Even though the case is moot,” Justice Scalia interjected.

Government’s view. “No, the case is not moot,” said Anthony A. Yang, Assistant to the Solicitor General, arguing for the federal government as amicus for the underlying plaintiff. “If the court is entering a judgment, by definition the case is not moot. Mootness requires a jurisdictional dismissal. Mootness forbids the entry of any type of judgment.” Yang proposed the court in such cases can resolve the matter by entering a judgment, not dismissing for mootness. “Now it’s backed up with the force of the court. It can be enforced with contempt citations, which a mere offer of complete relief can’t. In fact, an unaccepted offer has no legal effect at all.”

Give them whatever they want? Now it was the Chief Justice’s turn to pose the hypothetical. “If, Mr. Garre, as you’re leaving the court courtroom today says, here, we will accept an entry of judgment. One, we’ll make sure you get whatever attorneys’ fees you want and we will accept an entry of judgment. Then the case would be over?”

“If he wants to accept an entry of judgment on everything that we’ve asked for, which includes the attorneys’ fees; a real injunction, not a vague ‘obey the law’ injunction that’s in his [current] offer; and class certification and class relief,” Yang answered.

Aha, so we’re back to the class claims.

Article III or Rule 23. “Is there any concern,” Roberts queried, “that a plaintiff who has received or has been offered all relief that he could receive is an appropriate representative plaintiff of parties who have not gotten all the relief?”

“That might be something for a court to consider under Rule 23, whether this person is an adequate representative,” Mitchell suggested. “This is not an Article III question but a Rule 23 question.”