In recent years, defendants facing a consumer class action have attempted to moot the class action by making an offer of judgment that would give complete relief to the individually-named plaintiffs. The Eleventh Circuit rejected that strategy in Jeffrey Stein, D.D.S., M.S.D., P.A. v. Buccaneers Ltd. Partnership, Case No. 13-15417 (decided Dec. 1, 2014).
In the Stein case, six plaintiffs filed a proposed class action alleging that they had received unsolicited faxes from the defendant in violation of the Telephone Consumer Protection Act. That statute imposes statutory damages of $500 per violation, which can be trebled. After removing the case to federal court, the defendant made offers of judgment to each of the six plaintiffs equal to the maximum amount of damages that each of those plaintiffs could have recovered for the faxes they allegedly received. The plaintiffs did not accept those offers of judgment, and district court subsequently dismissed the case on the grounds that it was moot. The plaintiffs appealed and the Eleventh Circuit reversed.
The Eleventh Circuit decided two issues. First, it held that the district court had improperly dismissed the claims of the individual plaintiffs because they had never accepted the offers. The Court noted that under Fed. R. Civ. P. 68, an offer of judgment that is not accepted is “considered withdrawn.” If the offer has not been accepted, the plaintiff retains all of his claims and the defendant retains all of its defenses. Opinion, pp. 9-10. Therefore, an unaccepted offer of judgment could have no effect on the plaintiff’s claims.
The Court offered an alternative holding. It held that even if the offers of judgment had somehow mooted the claims of the individually-named plaintiffs, the class claims remained alive. In reaching that holding, the Court followed the decisions of many other circuits that have also held that an offer of judgment to an individually-named plaintiff will not moot the class claims unless the individual plaintiff had failed to act diligently in pursuing the class claims. Opinion, pp. 17-18.
The strategy of employing offers of judgment has often been used by defendants in an effort to defeat consumer class actions. The holding in the Stein case suggests that the strategy will have limited utility in the Eleventh Circuit.
The opinion is available at http://media.ca11.uscourts.gov/opinions/pub/files/201315417.pdf
For more information on mooting a class action, contact your Appellate Counsel at Smith, Gambrell & Russell.