Seventh Circuit: Offers of Judgment Do Not Always Moot a Class Action

Last month, the U.S. Court of Appeal for the Seventh Circuit held that an offer of judgment does not moot a plaintiff’s individual or class claims, where the amount needed to satisfy the plaintiff’s claims is disputed. Scott v. Westlake Services LLC, No. 13-2699 (7th Cir. Jan. 23, 2014) (slip opinion available here). The holding expands upon previous decisions in which the court held that, while an unaccepted settlement offer for all the relief requested by a plaintiff renders the case moot (see Damasco v. Clearwire Corp., 662 F.3d 891 (7th Cir. 2011)), if the defendant offers to pay only what it thinks is owed, a plaintiff’s case is not mooted. Gates v. Towery, 430 F.3d 429, 431–32 (7th Cir. 2005). Only if no additional relief is possible is the plaintiff’s claim mooted. Id.

In Scott, the plaintiff filed a class action alleging that the defendant had called her using an automated dialer, in violation of the Telephone Consumer Protection Act, 47 U.S.C. § 227. Before the plaintiff moved to certify the class, the defendant offered to settle and pay the plaintiff $1,500 for “each and every dialer-generated telephone call made to plaintiff.” Slip op. at 2. The offer noted that the parties did not agree on the number of “dialer-generated” calls, but suggested that they meet to further discuss the issue of the number of calls. The plaintiff refused the offer and moved for class certification, but the lower court dismissed the case, finding that the offer had rendered the plaintiff’s case moot.

The Seventh Circuit reversed and remanded, holding that the offer failed to satisfy the plaintiff’s entire demand because the defendant had only offered to pay for some, but not all, of the calls that the plaintiff had alleged occurred. The court reasoned that the defendant’s mootness argument was inconsistent with the fact that the district court had ordered post-judgment discovery concerning the number of qualifying calls the plaintiff received. This discovery would determine the plaintiff’s damages, a disputed issue on the merits. As noted by the Scott court, the circuit courts are currently split on whether an unaccepted settlement offer can render a plaintiff’s case moot; the Supreme Court granted certiorari to resolve this split in Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523 (2013), but eventually decided that case on narrower grounds. Slip op. at 4, fn 1.