Class Counsel Blog

"Picking Off Class Representatives" - Using a Rule 68 Offer of Judgment to "Moot" Potential Class Claims

Is there a way to end putative class action litigation before it gets started?  Maybe.  Genesis Healthcare Corp. v. Symczyk, 133 S.Ct. 1523 (2013).  In appropriate cases, and after a risk assessment, a defendant facing a putative class action suit may seek to “pick off” a potential class representative with an Offer of Judgment under Fed.R.Civ.P. 68 in full satisfaction of his or her claims.  In doing so, the class action defendant ups the stakes on protracted litigation by threatening the plaintiff with the prospect of Rule 68’s cost-shifting provision.  That is, if the judgment ultimately obtained by the plaintiff is not more favorable than the unaccepted offer of judgment, the plaintiff might be required to pay post-offer costs incurred by the defendant.  A Rule 68 offer packs an additional punch in the context of class action litigation. Class action defendants in some jurisdictions can argue that an offer of judgment in full satisfaction of the class representative’s claims operates to deprive the court of an active case or controversy, thereby mooting the plaintiff’s individual claims, and, in some cases, the claims of the putative class.   

Circuit Courts have taken divergent positions on the permissibility of this strategy.  At one extreme, the Ninth Circuit has wholly rejected this approach, holding that a Rule 68 offer of judgment for the full amount of a putative class representative’s individual monetary claim does not moot that representative’s class action complaint.  Pitts v. Terrible Herbst, Inc., 653 F.3d 1081, 1086 (9th Cir. 2011).   Nor does an unaccepted Rule 68 offer that would have fully satisfied a plaintiff’s claim render the plaintiff’s individual claim moot in the Ninth Circuit. Diaz v. First American Home Buyers Protection Corp., 732 F.3d 948 (9th Cir. 2013).  Other circuits offer a more flexible approach under which a plaintiff may, absent undue delay, move to certify a class and avoid mootness even after an offer of complete relief.  See Lucero v. Bureau of Collection Recovery, Inc., 639 F.3d 1239, 1249–50 (10th Cir.2011); Sandoz v. Cingular Wireless LLC, 553 F.3d 913, 920–21 (5th Cir.2008); Weiss v. Regal Collections, 385 F.3d 337, 348 (3d Cir.2004).

In contrast, the Seventh Circuit has held that a defendant can render moot a possible class action by offering to settle for the full amount of the plaintiff’s demands before the plaintiff files a motion for class certification.  Damasco v. Clearwire Corp., 662 F.3d 891 (7th Cir. 2011).  In response to concerns about “buying off” class representatives, the Damasco Court identified a simple solution: class action plaintiffs should move to certify the class at the same time that they file their complaint.  Id. at 896. 

 The Sixth Circuit has not yet addressed whether a Rule 68 offer of judgment made before a motion to certify renders a plaintiff’s claims moot.  This Circuit has held, however, that once a motion for class certification is pending, a defendant may not subsequently divest a court of subject matter jurisdiction through a Rule 68 offer of judgment.  See Carroll v. United Compucred Collections, Inc., 399 F.3d 620, 625 (6th Cir. 2005).  It is clear, then, that there are at least some circumstances under which it is appropriate to “conceive of the named plaintiff as a part of an indivisible class and not merely a single adverse party even before the class certification question has been decided.” Weiss v. Regal Collections, 385 F.3d 337, 347 (3d Cir. 2004); see Tallon v. Lloyd & McDaniel, 497 F.Supp.2d 847, 852 (W.D.Ky.2007) (“The Sixth Circuit acknowledged that sometimes a case does not become moot when a defendant ‘picks off’ the claims of named plaintiffs with settlement offers in an attempt to avoid a class action.”).

The Supreme Court’s 5-4 decision in Genesis Healthcare Corp. v. Symczyk, 133 S.Ct. 1523(2013) may put these precedents in flux.  In Genesis, the district court concluded that a defendant’s “complete” offer of judgment under Rule 68 mooted a FLSA plaintiff’s case as well as the claims of “other employees similarly situated.”  The Genesis majority noted the circuit split on whether an unaccepted Rule 68 offer that fully satisfies a plaintiff’s individual claim is sufficient to render that claim moot, but assumed, without deciding, that the unaccepted offer mooted the plaintiff’s individual claim.  The Supreme Court also made a point to distinguish cases arising in the context of Rule 23 class actions, which, it said, are “fundamentally different” from FLSA collective actions.

 In dissent, Justice Kagan argued that the premise on which the majority based its decision—that the plaintiff’s individual claim was moot—was incorrect.  Justice Kagan noted that “[a]s long as the parties have a concrete interest, however small, in the outcome of the litigation, the case is not moot . . . . [A] case becomes moot only when it is impossible for a court to grant any effectual relief whatever to the prevailing party.  By those measures, an unaccepted offer of judgment cannot moot a case.  When a plaintiff rejects such an offer—however good the terms—her interest in the lawsuit remains just what it was before.  And so too does the court’s ability to grant her relief.” 1536 (internal citations omitted). 

Based on these decisions, it is possible in some jurisdictions to end class litigation with a “complete” offer of judgment under Rule 68.  Of course, such an offer would present other litigation risks for defendants to consider in advance of a Rule 68 offer.

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Stephen E. Embry is a member of the Firm's class action, privacy and mass tort groups. He frequently defends participants in consumer class actions and mass tort litigation. Stephen is a national litigator and advisor who is experienced in developing solutions to complex litigation and corporate problems.