Pitts v. Terrible Herbst: Pre-Certification Settlement Offer to Named Plaintiff Does Not Moot Class Claims
In Pitts v. Terrible Herbst, a Ninth Circuit panel has taken up the familiar circumstance whereby a defendant offers a “pick-off” settlement to the named plaintiff before a class certification motion has been filed. The court held that “an unaccepted . . . offer of judgment that fully satisfies a named plaintiff’s individual claim before the named plaintiff files a motion for class certification . . . does not moot the case.” Pitts v. Terrible Herbst, Inc., No. 10-15965, 2011 U.S. App. LEXIS 16368, at *36 (9th Cir. Aug. 9, 2011) (available here).
This action arose in Nevada state court, where the plaintiff filed a class action complaint against his employer, Terrible Herbst (a prominent Las Vegas-area convenience store), for unpaid overtime and minimum wage violations under the federal Fair Labor Standards Act (FLSA), as well as Nevada workplace-protection statutes and breach of contract. While a motion to compel production of the prospective class members’ names and contact information was pending, Terrible Herbst made a settlement offer to Pitts, offering to pay him $900 plus reasonable attorney fees and costs, when Pitts had alleged his own damages to be only $88.
Terrible Herbst then moved to dismiss the action for lack of subject matter jurisdiction, arguing that since its offer would have “fully compensated Pitts for his individual monetary claim,” the offer had therefore “rendered the entire case moot.” Id. at *3. The district court rejected the defendant’s theory that the settlement offer had mooted the class action, and the Ninth Circuit agreed.
The question before the Ninth Circuit was essentially “whether a putative class action becomes moot when the named plaintiff receives an offer of settlement that fully satisfies his individual claim before he files a motion for class certification.” Id. at *17. With considerable reference to and reliance on the two leading Supreme Court cases—Deposit Guaranty Nat’l Bank v. Roper, 445 U.S. 326 (1980) and United States Parole Comm’n v. Geraghty, 445 U.S. 388 (1980)—the panel struck a pragmatic note concerning class actions:
Where the class claims are so economically insignificant that no single plaintiff can afford to maintain the lawsuit on his own, Rule 23 affords the plaintiffs a “realistic day in court” by allowing them to pool their claims. . . . A rule allowing a class action to become moot “simply because the defendant has sought to ‘buy off’ the individual private claims of the named plaintiffs” before the named plaintiffs have a chance to file a motion for class certification would thus contravene Rule 23’s core concern: the aggregation of similar, small, but otherwise doomed claims.
Id. at *21-22 (citing Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 809 (1985); Deposit Guaranty Nat’l Bank v. Roper, 445 U.S. 326, 339 (1980).