By Gerald L. Maatman, Jr. and Jennifer Riley

On January 23, 2014, the U.S. Court of Appeals for the Seventh Circuit issued its decision in Scott v. Westlake Services LLC, No. 13-2699 (7th Cir. Jan. 23, 2014) and reversed a district court’s conclusion that an offer of judgment rendered Plaintiff’s claims moot in a class action lawsuit.

In so doing, the Seventh Circuit provided useful guidance for companies considering use of an offer of judgment as a defense tactic to moot the claims of a potential class representative. In short, Scott demonstrates that a defendant must calibrate an offer to completely satisfy a plaintiff’s claims, even if it disagrees with or does not know the value of those claims.

Factual Background

Scott filed suit on behalf of herself and a putative class alleging that Westlake repeatedly called her cell phone using an autodialer in violation of the Telephone Consumer Protection Act (“TCPA”). Scott sought statutory damages, injunctive relief, and attorneys’ fees. 

Before Scott moved to certify a class, Westlake sent Scott a settlement offer. Westlake offered to pay Scott $1,500 (the statutory maximum) for “each and every dialer-generated telephone call made to plaintiff.” Id. at 2. Westlake stated that, while Scott had identified 20 in her complaint, Westlake believed that it only had made six calls and suggested further discussion to “resolve the discrepancy.” Id. Westlake also offered to pay Scott’s costs and offered to agree to entry of an injunction prohibiting the company from calling her again without express permission. Id. The following day, Scott declined the settlement offer and moved for class certification. 

Westlake subsequently filed a motion to dismiss Scott’s suit as moot. The district court granted the motion, finding that Westlake had offered Scott everything that she sought in her complaint and, therefore, deprived the court of subject matter jurisdiction. Id. at 3. The district court directed the parties to conduct discovery to determine just how many dialer-generated calls Westlake had generated. Id.

The Seventh Circuit’s Opinion

On appeal, the Seventh Circuit reversed and remanded. The Seventh Circuit noted that an unaccepted offer can render a plaintiff’s case moot if it gives the plaintiff everything that he or she requested.  However, if a defendant only offers to pay what it “thinks might be due,” the offer does not render the plaintiff’s case moot. Id. at 4. The plaintiff’s stake in the case is negated only if “no additional relief is possible.” Id. at 4-5.

The Seventh Circuit ruled that Westlake did not moot plaintiff’s claims because it did not offer to satisfy Scott’s entire demand. Westlake offered to pay only for “dialer-generated” calls and acknowledged only six such calls.  Scott identified 20 or more calls in her complaint. “That is not an unconditional offer to pay the plaintiff the entirety of her demand.” Id. at 5.

The Seventh Circuit distinguished Damasco v. Clearwire Corp., 662 F.3d 891 (7th Cir. 2011).  In that case, the defendant had offered to pay the plaintiff maximum statutory damages “for each text message received from Clearwire.” That offer gave the plaintiff everything he requested — all that remained to be done was to count the number of calls and write the plaintiff a check. Id. at 5-6.

The Seventh Circuit noted that the district court’s order to conduct post-judgment discovery to determine the number of “qualifying calls” that Scott received bolstered its conclusion. “The idea of post-judgment discovery into a disputed issue on the merits of the case to figure out how to apply an unaccepted offer of judgment that supposedly rendered the case moot is difficult to grasp.” Id. at 6. 

Implications For Employers

Though not a workplace class action, the opinion in Scott demonstrates that the offer of judgment remains a useful tool in the Seventh Circuit for eliminating a plaintiff’s claims at the outset of litigation – particularly where the value of a plaintiff’s individual claims is comparatively modest. As Scott demonstrates, however, offering the actual value of a plaintiff’s claims is not sufficient if the actual value is less than a plaintiff seeks in his or her complaint. Accordingly, employers must take care to calibrate offers of judgment to completely satisfy plaintiffs’ claims if they plan to assert mootness down the road.