Sixth Circuit Again Rejects Pick-Off Attempt to End Class Action

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In a brief opinion, the Sixth Circuit has again rejected a defendant’s attempt to moot a class action by offering full monetary relief to the named plaintiff.

In Conway v. Portfolio Recovery Associates, the Sixth Circuit was faced with a procedural posture where a defendant in a suit brought under the Fair Debt Collection Practices Act offered the plaintiff judgment in his favor. Although the plaintiff decided against the offer, the district court dismissed the case for lack of subject matter jurisdiction and entered judgment in plaintiff’s favor, over his objections.

The Sixth Circuit reversed, explaining:

Because the intervening Supreme Court decision in Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (2016), squarely resolves the central issue of this appeal, and because we have jurisdiction to say so, the district court’s dismissal and judgment must be set aside.

The Supreme Court has now made clear that an unaccepted offer of settlement or judgment, like the one PRA made to Conway, generally does not moot a case, even if the offer would fully satisfy the plaintiff’s demands for relief. Campbell-Ewald, 136 S. Ct. at 672.

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3rd Circuit Continues to Recognize “Pick-Off” Exception to Mootness

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After the Supreme Court’s decision in Campbell-Ewald, courts around the country have been forced to reexamine not only when a plaintiff’s claims can be mooted, but also whether a defendant’s attempt to “pick off” the named plaintiff’s claim can moot the entire proposed class’s claims.

In Richardson v. Bledsoe, the Third Circuit became the most recent circuit court to hold that a defendant cannot moot class claims by picking off the named plaintiff — at least as long as the plaintiff did not unduly delay in bringing his or her motion for class certification:
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While Campbell-Ewald, as mentioned above, does not actually address the picking off exception, we see in it some support for the principles animating the exception in the Court’s discussion of class action standing. Specifically, the Court noted that while a class does not become an independent entity until certification, “a would-be class representative with a live claim of her own must be accorded a fair opportunity to show that certification is warranted.” This statement seems to suggest a corollary: when a would-be class representative is not given a “fair opportunity” to show that certification is warranted (perhaps because her individual claim became moot before she could reasonably have been expected to file for class certification), she should be permitted to continue seeking class certification for some period of time after her claim has become moot.
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District Court Conflict Over Campbell-Ewald “Pick Off” Attempts

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It has been about five months since the Supreme Court decided in Campbell-Ewald that unaccepted Rule 68 offers to proposed class representatives do not give rise to mootness.  As soon as that opinion issued, readers noted the question the decision expressly chose not to answer:

We need not, and do not, now decide whether the result would be different if a defendant 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.

As two recent opinions demonstrate, courts continue to grapple with the Supreme Court’s unanswered question.

In the first, Demmler v. ACH Food Companies, Judge Sorokin of the District of Massachusetts held that the distinction between an unaccepted Rule 68 offer, on the one hand, and a check sent without any preconditions, on the other hand, “makes all the difference.”  The court concluded it could not offer “any more relief” than what defendant had already tendered, and concluded both the individual and proposed class claims were moot.

In stark contrast, the Campbell-Ewald litigation has returned to the district court, where the defendant promptly paid $10,000 (in two separate ways) to the plaintiff, in an attempt to squeeze through the “opening” left by the Supreme Court.  … Read more

Sixth Circuit Interprets Campbell-Ewald

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The Sixth Circuit Court of Appeals recently became the latest circuit court to interpret the Supreme Court’s Campbell-Ewald opinion.  Campbell-Ewald, as most practitioners know by now, dealt with a defendant’s attempt to moot a proposed class action by making a Rule 68 offer of judgment to the class representative.

In Wilson v. Gordon, the Sixth Circuit reexamined its “picking off” exception to the mootness doctrine.  The court recounted how, dating back to even before the Supreme Court’s 1980 decision in Deposit Guaranty National Bank v. Roper, it has recognized that “the concern that the defendant … might strategically seek to avoid” class certification by offering to pay off the named plaintiff justifies an exception to the mootness doctrine.

Since Roper, we have recognized this line of reasoning under analogous circumstances. In Carroll v. United Compucred Collections, Inc., we held that a class action was not moot even though the named plaintiffs had been tendered a Rule 68 offer of judgment because a motion for class certification was then pending.

Turning to Campbell-Ewald, the court noted that while the “Supreme Court recently had the opportunity to address the ‘picking off’ exception … [t]he Supreme Court … grounded its holding in ‘basic principles of contract law’ instead.”  The court nevertheless noted that

Though Campbell–Ewald sheds little light on the “picking off” exception, the Court did observe that allowing an unaccepted offer to moot a case would place defendants like Campbell–Ewald “in the driver’s seat,” enabling them to avoid significant class-based liability.  

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How District Courts Are Interpreting Campbell-Ewald

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Earlier this year, the Supreme Court issued its opinion in Campbell-Ewald v. Gomez, and held that an unaccepted Rule 68 offer does not moot putative class action claims. Almost immediately afterward, the lower courts began grappling with the question the SCOTUS expressly held open: whether a furnished payment (as opposed to a mere offer) could suffice to moot putative class claims.  Most recently, we wrote about the Ninth Circuit’s ruling in Chen v. Allstate, in which the Ninth Circuit held that a furnished payment did not have the effect of mooting the claims in that case.

How have the district courts ruled on the issue outside the Ninth Circuit?  Most recently, Judge Elaine E. Bucklo of the Northern District of Illinois opted to follow the Ninth Circuit’s ruling, holding:

I agree with the Ninth Circuit and the several district courts that have concluded that the Campbell–Ewald Court’s admonition that “a would-be class representative with a live claim of her own must be accorded a fair opportunity to show that certification is warranted,” id. means that it is inappropriate to enter judgment on a named plaintiff’s individual claims, “over the plaintiff’s objection, before the plaintiff has had a fair opportunity to move for class certification.”

Fauley v.Read more

Allstate Fails to Moot TCPA Class Action

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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.… Read more

Third Circuit Becomes First Circuit Court to Analyze Campbell-Ewald

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The Third Circuit’s analysis is brief, but may shed light on whether the post-Cambell-Ewald tactic of “furnishing” full relief – rather than merely offering it – is a distinction with a difference.

The Supreme Court held in Campbell-Ewald that an an unaccepted settlement offer, made to a putative class representative, “has no force” and therefore does not moot the class action.  Since then, at least one court has distinguished Campbell-Ewald on the ground that when a settlement payment is furnished, rather than merely offered, the case may be mooted.  Leyse v. Lifetime Entertainment Servs., No. 13-cv-5794 (S.D.N.Y. Mar. 17, 2016).

The Third Circuit’s ruling Monday in Weitzner v. Sanofi Pasteur, does not directly address the issue, but its language can be read to suggest that the relevant question is not whether a settlement has been furnished, but whether the furnished payment has been accepted:

These holdings [in Campbell-Ewald] resolve the question presented to us on interlocutory review. Because an unaccepted settlement offer “has no force,” it moots neither Plaintiffs’ individual claims nor the case as a whole.

(emphasis added); see also Jacobson v. Credit Control Servs., Inc., 2016 WL 929427, at *1 (10th Cir.… Read more

Judgment Entered: Distinguishing Campbell-Ewald

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The Supreme Court ruled in Campbell-Ewald v. Gomez earlier this year that a defendant may not “pick off” the class representative by offering full individual relief under Rule 68. The holding was believed by many to be the end of the pick off defense.  Maybe not.

In Leyse v. Lifetime Entertainment Servs., No. 13-cv-5794 (S.D.N.Y. Mar. 17, 2016), a court yesterday entered judgment as a result of a defendant’s offer of full judgment.  From the opinion:

Only Leyse’s individual claim remains, for which he can recover $500 in statutory damages, or a maximum award of $1500 if the violation was willful or knowing. … Defendant Lifetime has offered to pay the plaintiff $1,503 .00 plus costs, and moved for entry of judgment in favor of plaintiff and to dismiss the complaint. Leyse has not accepted this offer. … Defendant’s motion to enter judgment on behalf of plaintiff Leyse will be granted upon payment to the Clerk of Court for credit to plaintiff, of the full offered amount and an additional amount of $400 to cover the costs estimated by the Clerk.

(citations omitted.)

How did the district court distinguish Campbell-Ewald?

I do not read Campbell-Ewald to disrupt the Second Circuit’s precedent allowing for the entry of judgment for the plaintiff over plaintiffs objections.

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