Allstate Fails to Moot TCPA Class Action

In an important decision, the Ninth Circuit has rejected defendant Allstate’s attempt to moot a putative class action under the Telephone Consumer Protection Act, by depositing, in an escrow account, sufficient funds to satisfy the named plaintiff’s individual monetary and injunctive relief claims.

The Ninth Circuit’s ruling in Chen v. Allstate Insurance Co. follows closely on the heels of the Supreme Court’s decision in Campbell-Ewald Co. v. Gomez,  136 S. Ct. 663 (2016), which reserved for another day the question whether a defendant could render a case moot if it “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.” Id. at 672. About a week after the Supreme Court issued its decision in Campbell-Ewald, Allstate sought to “pick off” the named plaintiff in the Chen case. It deposited $20,000 into an escrow account pending entry of a final order by the district court ordering the escrow agent to pay the money to the plaintiff. The issuance of this order, as well as entry of judgment for the plaintiff, Allstate maintained, would require dismissal of the putative class claims as moot.

The Ninth Circuit rejected this gambit. Relying on prior circuit precedent, it found that, “[e]ven if, as Allstate proposes, the district court were to enter judgment providing complete relief on [the plaintiff’s] individual claims for damages and injunctive relief before class certification, fully satisfying those individual claims, [the plaintiff] still would be entitled to seek certification.” Slip op. at 15-16 (citing Pitts v. Terrible Herbst, Inc., 653 F.3d 1081 (9th Cir. 2011)).

In addition, the Ninth Circuit concluded that, even if Pitts were not controlling, the plaintiff would nonetheless be entitled to “a fair opportunity to seek certification.” Id. at 17. The court of appeals thus declined to direct the district court to enter judgment in favor of the plaintiff on his individual claims before he could move for class certification. The court reasoned, in part, that the plaintiff had not actually received any relief–the amount deposited was in escrow, not in plaintiff’s possession. More importantly, the court read “Campbell-Ewald [as] clearly suggest[ing] it would be inappropriate to enter judgment under these circumstances.” Slip op. at 22.

As Campbell-Ewald explained, “[w]hile 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.” Campbell-Ewald, 136 S. Ct. at 672 (emphasis added) (citation omitted) (citing Sosna, 419 U.S. at 399). Accordingly, when a defendant consents to judgment affording complete relief on a named plaintiff’s individual claims before certification, but fails to offer complete relief on the plaintiff’s class claims, a court should not enter judgment on the individual claims, over the plaintiff’s objection, before the plaintiff has had a fair opportunity to move for class certification.

Id. at 22-23.

One disappointing aspect of the Ninth Circuit’s decision is its conclusion that Allstate’s offer of relief was “complete” even though Allstate did not admit liability. The court reached this conclusion because the “complaint sought only statutory damages and injunctive relief, not an admission of liability or a declaration that Allstate violated [plaintiff’s] rights.”  Slip op. at 12. Given this reasoning, it may be prudent in certain cases to seek a declaration that defendant’s actions violated plaintiff’s rights.

Congratulations to plaintiff’s counsel, including Paul Bland of Public Justice who argued this appeal.