Yesterday, the Supreme Court held in Campbell-Ewald Co. v. Gomez, No. 14-857 (U.S. Jan. 20, 2016), that when a defendant makes an offer to resolve the named plaintiff’s claim for full value, but the plaintiff turns it down, the case is not moot, and simply proceeds. Campbell-Ewald had argued that since it had offered to pay everything the plaintiff demanded, there was no longer any live controversy for the court to adjudicate, and the case should be dismissed. The Supreme Court disagreed, in a 6-3 decision authored by Justice Ginsburg.

In 2013, in a case called Genesis HealthCare Corp. v. Symczyk, 133 S. Ct. 1523, the Court had decided a related issue but left open the question decided today, and had raised the hopes of some class action defense practitioners that perhaps they could defeat class actions by mooting the case early in its lifespan by offering full relief to the named plaintiff. In Symczyk, the defendant made an offer of full relief to the named plaintiff, and she conceded that the offer mooted her personal claim, but sought to continue as a class representative. The Court said that, lacking any remaining claim of her own, she could not serve as a class representative.

Class action defenders took heart that perhaps they could knock out class actions in exchange for the usually trivial expense of satisfying the named plaintiff’s claim. To use the Symczyk decision to full advantage, though, the defense bar needed the answer to the question that wasn’t decided — whether the offer of full relief really did moot the named plaintiff’s claim in the first place. Campbell-Ewald forecloses that possibility, by holding directly that the plaintiff effectively controls mootness: if the plaintiff accepts an offer of full relief, the case will indeed be moot and the defendant won’t face a class action (at least until the plaintiff’s lawyer finds some other individual plaintiff to be the representative). But if the plaintiff turns down the offer, the case continues.

Some in the defense bar are decrying Campbell-Ewald as depriving the defense bar of an important tool, but it was not a tool that we ever really had. Efforts to build a mootness argument on top of Symczyk were not really working anyway; most courts were reluctant to hold that an unaccepted offer moots the claim, and the Supreme Court confirmed yesterday that that skepticism was justified.

So what happens now? For the most part, Rule 68 — the rule of civil procedure that underlies these cases — goes back to being the moribund, frequently useless tool that it has always been. It is still true, as the Rule provides, that if the plaintiff turns down an offer, and eventually recovers less than the amount of the offer, the plaintiff must pay the costs incurred after the date of the offer. But “costs” in most cases excludes all of the significant costs, such as attorneys’ fees, and so the risk that the plaintiff takes on by rejecting a Rule 68 offer is minimal.

The Court yesterday did leave one other odd trap door open, but its applicability seems quite limited. The majority opinion said the Court was declining to reach a situation in which the defendant went beyond making an offer, and actually deposited the amount in a bank account payable to the plaintiff, after which “the court then enters judgment for the plaintiff in that amount.” How, exactly, that might come to pass, the Court did not say. The idea came from some old railroad tax cases cited by Campbell-Ewald, in which a California statute provided that certain tax obligations were automatically “extinguished” by a taxpayer’s deposit of the amount due in a California account in the name of the state. There is no comparable mechanism in most class litigation, of course, and little reason to think that a court would dismiss a pending case merely because the defendant made a deposit to a bank account instead of a written offer. The Court’s exception does technically leave some discretion in the district courts on this subject, at least for now, but defense efforts in most cases are probably better directed at defeating class certification rather than trying to devise a way to moot the case over the plaintiff’s objection.

Print:
Email this postTweet this postLike this postShare this post on LinkedIn
Photo of Elise M. Bloom Elise M. Bloom

Elise M. Bloom is widely hailed as one of the nation’s top employment lawyers and one of the most creative and effective discrimination wage and hour, class/collective action trial lawyers. She is particularly well-known for handling high profile, bet-the-company matters on behalf of…

Elise M. Bloom is widely hailed as one of the nation’s top employment lawyers and one of the most creative and effective discrimination wage and hour, class/collective action trial lawyers. She is particularly well-known for handling high profile, bet-the-company matters on behalf of significant national employers.

Elise is the former co-chair of Proskauer’s Labor & Employment Department, co-head of the Class & Collective Actions Group and previously served as a member of Proskauer’s elected Executive Committee for two terms.

With 30+ years in practice, Elise possesses extensive pre-trial and jury trial experience as well as conducting high-profile investigations. She has represented more companies in class actions challenging interns, trainees and volunteers than most others; this includes her precedent-setting win for Fox Searchlight Pictures in the “Black Swan” case. She also addresses a wider range of general employment issues through counseling and employer training programs.

A noted author and speaker on employment-related topics, Elise spearheads Proskauer’s annual Value Insights: Delivering Value in Labor and Employment Law survey. Elise has been recognized as one of the leading employment lawyers by several leading publications such as Chambers USA, Legal 500, New York Law Journal and Employment Law360, to name a few. She was recently recognized as “Labor & Employment Management Attorney of the Year” at Benchmark Litigation’s 2020 US Awards EAST. She has also been named “Best in Labor & Employment” at Euromoney’s Women in Business Law Awards Americas in 2018, 2017, 2016 and 2014. A client recently told Chambers USA, “She’s incredible. She has an intensity about her work and she knows how corporations work. To watch her in litigation is magic.”

Photo of Mark W. Batten Mark W. Batten

Mark W. Batten is a partner in the Labor & Employment Law Department and co-head of the Class & Collective Actions Group.

Mark represents employers nationwide at all stages of complex employment litigation, including class and collective actions on wage and hour matters…

Mark W. Batten is a partner in the Labor & Employment Law Department and co-head of the Class & Collective Actions Group.

Mark represents employers nationwide at all stages of complex employment litigation, including class and collective actions on wage and hour matters and discrimination claims. Ranked by Chambers USA, Mark is hailed as “a fabulous lawyer, handling interesting and complex cases.” Clients “highly recommend him to anyone seeking litigation counsel in the Boston area,” as well as note “he is responsive, pragmatic and team-oriented, and offers excellent legal advice.”

He assists clients with all aspects of employment policies and practices, including hiring, termination, leaves, accommodation of disabilities, and other matters. Mark also handles diverse civil litigation, including litigation of noncompetition agreements, ERISA matters, discrimination and wrongful termination litigation in federal and state courts; proceedings before the Massachusetts Commission Against Discrimination; wage and hour matters; and labor arbitrations. He is also an experienced appellate attorney both in employment cases and other civil litigation, handling appeals at all levels in the state courts and in the United States Courts of Appeals.

Mark also has substantial experience with traditional labor matters. He regularly represents employers in a variety of industries, including a number of newspaper and media companies, in collective bargaining, practice before the NLRB, labor arbitrations, union organizing campaigns, and day-to-day advice on administration of collective bargaining agreements. He regularly advises clients in both union and non-union settings on diligence matters in corporate acquisitions and financings. He also has experience on behalf of securities firms in arbitrations before the NASD and NYSE of customer and employee complaints.

Mark also practices on behalf of newspapers and other media in newsroom litigation, including libel defense and representation of reporters under subpoena, and has substantial experience in litigation involving access to sealed records and judicial proceedings on behalf of media companies.

Before joining Proskauer, Mark was a trial attorney in the Civil Division of the U.S. Department of Justice in Washington, where he was lead counsel in major litigation for over two dozen federal agencies, ranging from the U.S. Air Force, the CIA, and the U.S. Secret Service to the Department of Housing and Urban Development and the National Endowment for the Arts.

Mark regularly writes and lectures on employment-related matters, including, for instance, MCLE’s Representing Clients Before the Massachusetts Commission Against Discrimination.

In his spare time, Mark is an experienced computer programmer, conversant in C, C++, and other languages. He has ported software between computer operating systems and has published several commercial computer games.