By Gerald L. Maatman, Jr., and Alexis P. Robertson
On December 1, 2014, in Stein v. Buccaneers Limited Partnership, No.13-15417 (11th Cir. Dec. 1, 2014), the Eleventh Circuit held that an unaccepted offer of judgment, made pursuant to Rule 68 of the Federal Rules of Civil Procedure, does not serve to moot a class action. Although not a workplace class action, the Eleventh Circuit’s decision is notable for all sorts of class action litigation.
Six named plaintiffs filed a proposed class action against Buccaneer Limited Partnership (“BLP”). The complaint alleged that, in violation of the Telephone Consumer Protection Act, BLP sent unsolicited faxes to the named plaintiffs and more than 100,00 others.
The named plaintiffs sought to represent a nationwide class of recipients of the unsolicited faxes. The complaint demanded statutory damages of $500 per violation, trebled to $1,500 based on BLP’s willfulness, and an injunction against further violation.
BLP subsequently served each named plaintiff an offer of judgment under Rule 68. The offer provided payment for full relief to each plaintiff. After serving the offers of judgment, BLP moved to dismiss the complaint for lack of jurisdiction, asserting that the unaccepted Rule 68 offers rendered the case moot. A day after BLP filed their motion, plaintiffs moved to certify a class. Plaintiffs’ motion was long before the deadline for filing such a motion. The District Court denied the motion to certify as premature.
The named plaintiffs did not accept the offers, and the deadline passed. The District Court subsequently entered an order ruling that the action was moot, granting the motion to dismiss, and directing the clerk to close the case. The named plaintiffs then filed an appeal.
The Decision Of The Eleventh Circuit
Applying a de novo standard of review, the Eleventh Circuit considered two questions – first, whether a plaintiff’s claim becomes moot when the plaintiff does not accept a Rule 68 offer judgment, that offered all the relief the plaintiff seeks; and second, if the answer to the prior question is yes, may the named plaintiff act as a class representative.
Effect On The Named Plaintiffs’ Claims
Regarding the survival of the plaintiffs’ claims after the offer of judgment, the Eleventh Circuit found that dismissing a case based on an unaccepted offer was inconsistent with Rule 68. The Eleventh Circuit reasoned that the offers had no effect on the Plaintiffs’ claims. After the expiration of the 14 days, the named plaintiffs could no longer accept the offers. Therefore, they still had their claims and BLP still had it defenses. As the Eleventh Circuit opined, “BLP had not paid the plaintiffs, was not obligated to pay the plaintiffs, and had not been enjoined from sending out more faxes. The named plaintiffs’ individual claims were not moot.” Id.at 5.
The Eleventh Circuit pointed out that this reasoning was consistent with the opinion of the dissent from the U.S. Supreme Court case of Genesis Healthcare Corp., v. Symcsyk, 133 S.Ct. 1523 (2012). In Symczvk, a collective action under the Fair Labor Standards Act, the parties stipulated that an unaccepted Rule 68 offer mooted the individual plaintiff’s claim. The majority accepted the stipulation without addressing the issues, but the four dissenters – the only four who have weighed in on the Rule 68 issue – remarked that an unaccepted offer of judgment could not moot a case. The dissent in Symczvk explained that, like any other unaccepted offer, an unaccepted settlement offer is a legal nullity with no operative affect.
The Eleventh Circuit concluded that this reasoning was further supported by the language contained in the offer itself, which made clear that it would have no effect unless accepted or in a proceeding to determine costs. Therefore, after the offer lapsed, the “legal relationship between BLP and the named plaintiffs was precisely the same as before the offers were made…The individual claims were not moot.” Id. at 10.
Effect On The Class Claims
The Eleventh Circuit next explained an alternative basis for its holding, which was that even if the individual claims were somehow deemed moot, the class claims remained live and the named plaintiffs retained the ability to pursue them.
Based on its precedent, the Eleventh Circuit reasoned that the case still presented a live controversy because a personal stake can be present even when the plaintiff’s own individual claim has become moot. This was exemplified in the various Supreme Court opinion addressing situations that were “capable of repetition, yet evading review.” Id. at 13. The Eleventh Circuit found it immaterial that the offers were made prior to moving for class certification, explaining that if the individual claims become moot before the court can reasonably be expected to rule on a certification motion, the class certification relates back to the filing of the complaint, and not to the date of when the plaintiff moved to certify the class. “The relation-back doctrine allows a named plaintiff whose individual claims are moot to represent class members not because the named plaintiff has moved to certify a class but because the named plaintiff will adequately present the class claims and unless the named plaintiff is allowed to do so the class claims will be “capable of repetition, yet evading review.” Id. at 17.
Implications For Employers
Rule 68 offers of judgment are an important part of a class action defense tool box. They offer a method of short circuiting a class action at an early stage. Yet, as illustrated by this ruling, the efficacy of the Rule 68 offer is heavily dependent on whether such offer will serve to moot a class. With this ruling the Eleventh Circuit has joined the Third, Fifth, Ninth, and Tenth Circuits in holding that Rule 68 offers of full relief to the named plaintiff do not moot a class action. Employers and corporate counsel must remain aware of exactly when and where such an offer will be effective.