Unaccepted Settlement Offer Cannot Moot Consumer Lawsuits

By Cicely Lubben and Julie Scheipeter

On Wednesday, January 20, in a 6-3 ruling, the U.S. Supreme Court held that an unaccepted settlement offer, or offer of judgment pursuant to Federal Rule of Civil Procedure 68, cannot moot a plaintiff's case. The ruling resolves a disagreement between the Courts of Appeal over whether companies can dispose of large class actions by making an offer of full relief to individual plaintiffs.

The Supreme Court rejected defendant Campbell-Ewald Co.'s argument that plaintiff Jose Gomez's case brought under the Telephone Consumer Protection Act (TCPA) was mooted because it offered Gomez $1,503 for each unsolicited text message sent to Gomez – more than the full amount of statutory damages Gomez is entitled under the TCPA. The Court reasoned that "under basic principles of contract law, Campbell’s settlement bid and Rule 68 offer of judgment, once rejected, had no continuing efficacy." With no settlement offer operative, the parties remained adverse and thus the case could not be dismissed as moot.
Because Gomez's claim was not mooted by Campbell's settlement offer, his claim would remain live during the time involved in determining whether the case could proceed as a class action. The Court noted that "while a class lacks independent status until certified, a would-be class representative with a live claim of her own must be accorded a fair opportunity to show that certification is warranted."

 The TCPA impacts any business that contacts consumers by phone, text or fax. Among other things, the TCPA places restrictions on calls and texts made using an automatic telephone dialing system or an artificial or prerecorded voice. Heading into 2016, we anticipate another Supreme Court opinion that will impact lawsuits for violation of the TCPA. In the case of Spokeo, Inc. v. Robins, the Supreme Court will determine whether Congress can confer Article III standing upon a plaintiff who suffers no concrete harm, by authorizing a private right of action based on a bare violation of a federal statute like the TCPA. 

For more information regarding the TCPA or the Supreme Court's opinion, please contact Julie Scheipeter or the usual Stinson Leonard Street attorney with whom you regularly work.

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