With Justice Ginsberg delivering the Opinion, consumers walk away with a decisive victory. For those that practice class actions, you have probably fell victim to or at a minimum had to brief the pants off of the Defenses “pick-off” move. In an effort not to oversimplify the “pick-off” move, it is basically occurs before the class action is certified as a class, but generally the Defendant offers the Plaintiff a larger amount of money to walk away and not pursue their case. The theory goes that if Plaintiff accepts the offer, he/she will recover more individually than if they rejected the offer and proceeded on behalf of the class.
How does this moot the case? Well, Art. III of the Constitution vests courts with jurisdiction only if there is a “case” or “controversy” at issue. So by making the Plaintiff whole (more than whole) then the Defendant has effectively eliminated the “case” or “controversy” and eliminated jurisdiction. Sound unfair? Well prior to Campbell-Ewald Company. v. Gomez there was a split in the Federal Appellate Courts across the land as to whether the move effectively mooted a Plaintiff’s case.
Well, that is not the case any longer. The SCOTUS held:
1.An unaccepted settlement offer or offer of judgment does not moot a plaintiff’s case, so the District Court retained jurisdiction to adjudicate Gomez’s complaint. Article III’s “cases” and “controversies” limitation requires that “an actual controversy . . . be extant at all stages of review, not merely at the time the complaint is filed.” Arizonans for Official English v. Arizona, 520 U.S. 43, 67 but a case does not become moot as “long as the parties have a concrete interest, however small,” in the litigation’s outcome, Chafin v. Chafin, 568 U.S. , . Gomez’ complaint was not effaced by Campbell’s unaccepted offer to satisfy his individual claim. 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; both retained the same stake in the litigation they had at the outset. Neither Rule 68 nor the 19th-century railroad tax cases California v. San Pablo & Tulare R. Co., 149 U.S. 308, Little v. Bowers, 134 U.S. 547, and San Mateo County v. Southern Pacific R. Co., 116 U.S. 138, support the argument that an unaccepted settlement offer can moot a complaint. Pp. 6-12.
Ginsberg was joined by Kennedy, Breyer, Sotomayor, and Kagan. Justice Thomas filed an opinion concurring in the judgment only. Roberts, Scalia, and Alito dissented with Roberts and Alito filing dissenting opinions.
Justice Thomas’ arrived at a concurring vote not on basic contract principles, but through common law settlement jurisprudence of tenders. (Now I am really out of my bailiwick)
What does this mean? Functionally, for consumers, nothing! But for consumer attorney’s it means that class actions just became slightly more streamlined, potentially less complex, which translates to lower costs and lowers fees. And that means more of the recovery proceeds go back to the CONSUMER. AND THAT IS THE BIG WIN.
Steven S. Wolfe, Esq.