1st Circuit Says Rule 68 Offer Does Not Moot TCPA Class Action

In Bais Yaakov of Spring Valley v. ACT, Inc., 2015 WL 4979406, at *3 (C.A.1 (Mass.),2015), the First Circuit Court of Appeals held that a TCPA defendant can not moot a class action by picking off the named plaintiff through a Rule 68 offer.

Against this background, ACT advances a nifty stratagem for defeating motions for class certification: offer only the named plaintiff full payment for its individual claims, and then move to dismiss the suit as moot before the court has a chance to consider whether the plaintiff should be allowed to represent the putative class. In recent years, this stratagem has become a popular way to try to thwart class actions, as evidenced by the cases discussed in this opinion that have grappled with various aspects of the questions presented in this appeal. This stratagem is most readily employed in precisely those cases where Congress has chosen to empower citizens as private attorneys general to pursue claims for well-defined statutory damages, because it is in such cases that defendants can most easily offer an individual plaintiff relief on her personal claim in an amount that indisputably equals the highest amount that the individual plaintiff could recover on her own claim. In this particular case, ACT’s mootness gambit seems to run against the grain of the Supreme Court’s holding in Deposit Guaranty National Bank v. Roper, 445 U.S. 326, 340 (1980). In Roper, the Court held that the entry of judgment, over the putative class plaintiffs’ objections, of full payment on their individual claims after a motion for class certification had been denied “did not moot their private case or controversy,” and that they could still appeal the denial of the certification motion. Id. The Court gave several possible reasons for its holding. It spoke of the fact that allowing the claims of putative class representatives to be “picked off” would frustrate the objectives of class actions. Id. at 339. The opinion also noted the plaintiffs’ “desire to shift part of the costs of litigation to those who will share in its benefits if the class is certified and ultimately prevails.” Id. at 327; see also id. at 338 n. 9. More recently, the Supreme Court has instructed us that the actual holding in Roper turned not on policy concerns regarding the use of pick-off attempts to snuff out possible class actions, but rather on the plaintiffs’ “ongoing, personal economic stake in the substantive controversy—namely, to shift a portion of attorney’s fees and expenses to successful class litigants.” Genesis Healthcare Corp. v. Symczyk, 133 S.Ct. 1523, 1532 (2013). . . .Looking further at Genesis Healthcare, we see that the four dissenting justices expanded on the reasoning of Justice Rehnquist in his concurrence in Roper, 445 U.S. at 341–42 (Rehnquist, J., concurring), opining that a rejected Rule 68 offer does not moot a claim because the rule itself provides that an unaccepted offer is “considered withdrawn.” 133 S.Ct. at 1534 (Kagan, J., dissenting) (quoting Fed.R.Civ.P. 68(b)). Because the parties had agreed below that the individual claim was moot, the Genesis Healthcare majority expressly eschewed deciding whether an unaccepted Rule 68 offer moots a claim.9 Id. at 1528–29, 1532.  It remains to be seen whether a fifth justice will accept the reasoning of Justice Rehnquist and the Genesis Healthcare dissenters when the issue actually reaches the Court. We may have an answer in less than a year. See Campbell–Ewald Co. v. Gomez, 135 S.Ct. 2311, 2311 (2015) (No. 14–857) (granting petition for certiorari seeking review of the questions of whether a case becomes moot when a plaintiff receives an offer of complete relief on his claim, and whether the answer to that question differs in a putative class action); see also Petition for Writ of Certiorari, Campbell–Ewald, –––U.S. ––––, (No. 14–859), 2015 WL 241891, at *i (filed Jan. 16, 2015). In the interim, we agree with the Second, Fifth, Seventh, Ninth, and Eleventh Circuits that an unaccepted Rule 68 offer cannot, by itself, moot a plaintiff’s claim. See Hooks, 2015 WL 4760253, at *3–4; Chapman, 2015 WL 4652878, at *2–3; Tanasi, 785 F.3d at 199–200; Stein, 772 F.3d at 704–05; Diaz, 732 F.3d at 954–55. We take this position because, when employed as ACT hopes to employ it here, an unaccepted Rule 68 offer is a red herring: it does not, in itself, provide any relief. And nothing in Rule 68—or any other rule—contemplates use of a rejected offer to secure dismissal of a case. To the contrary, Rule 68 expressly specifies what happens to a rejected offer: it is deemed to be “withdrawn,” and it is “not admissible except in a proceeding to determine costs.” Fed.R.Civ.P. 68(b). . .Of course, in rejecting ACT’s stratagem we cannot claim to have achieved any lasting equilibrium insulating class actions from pick-off attempts. Other versions of the strategem will be employed. Cf. Chathas v. Local 134 IBEW, 233 F.3d 508, 512 (7th Cir.2000) (“[I]t is always open to a defendant to default and suffer judgment to be entered against him….”). In many cases involving damages in a certain amount as the only remedy, delivery of a bank check might get around the infirmities in using a Rule 68 offer. To parry these possible gambits, knowledgeable plaintiffs’ counsel will simply file motions for class certification with the complaint. See, e.g., Damasco v. Clearwire Corp., 662 F.3d 891, 896 (7th Cir.2011), overruled by Chapman, 2015 WL 4652878, at *3. In such a circumstance, however, it may be hard to see why a motion for class certification will save the day for class plaintiffs (a possibility Cruz expressly left open, see 252 F.3d at 534 n. 3) if an express and detailed request for class certification in the complaint does not.12 It may be, in sum, that if substance is to prevail over form, and consumer class actions are not to be largely eviscerated, the Supreme Court will need to decide that a plaintiff’s request to proceed as a class representative pressing the real claims of those to be represented is a claim for relief that precludes a finding of mootness.  See Stein, 772 F.3d at 707.  . . .Until the Supreme Court addresses the whole issue of class action pick-offs more comprehensively, resolving Roper ‘s continuing validity and the correctness of the Rule 68 analysis by the dissenters in Genesis Healthcare, uncertainty will reign. In the meantime, we hold that ACT’s unaccepted and withdrawn Rule 68 offer did not moot this litigation because Bais Yaakov has not “received complete relief.” We therefore affirm the district court’s denial of ACT’s motion to dismiss for lack of jurisdiction.