Campbell-Ewald’s Offer of Judgment Revisited by District Court

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Earlier this year, the United States Supreme Court decided Campbell-Ewald Co. v. Gomez, No. 14-857 (U.S. Sup. Ct. Jan. 20, 2016) (previously covered on the ILJ here). The Court, in a majority opinion authored by Justice Ginsburg, focused on traditional contract law principles and concluded that a class action plaintiff’s case is not mooted where the plaintiff rejects an offer to settle his or her individual claim. The case was sent back to the district court for adjudication. However, the Court’s decision in Campbell-Ewald provided arguably more questions than answers in the debate over the Article III consequences of plaintiffs’ unaccepted offers of individual relief in class actions. In particular, the Supreme Court left it to the lower courts to reconcile the suggestion that an individual claim may be moot where “a defendant deposits the full amount of the plaintiff’s individual claim in an account payable to the plaintiff, and the court then enters judgment for the plaintiff in that amount” while emphasizing that “a would-be class representative with a live claim of her own must be accorded a fair opportunity to show that certification is warranted.” Campbell-Ewald Co. v. Gomez, slip op. at 11.

The Ninth Circuit has since attempted to address the ambiguities left by the Court in Campbell-Ewald. In Chen v. Allstate Insurance Co., a class action alleging violations of the Telephone Consumer Protection Act, the defendant deposited the full amount of the named plaintiff’s individual claim in an escrow account payable to the plaintiff and agreed to an injunction to satisfy the plaintiff’s individual claims. No. 13-16816 (9th Cir. April 12, 2016) (previously covered on the ILJ here). However, the Ninth Circuit in Chen concluded that the defendant’s actions were insufficient to moot the plaintiff’s claim based on its interpretation of Campbell-Ewald. The appeals court in Chen concluded that the escrow account did not equate to actual receipt of the complete relief available to plaintiff and entering judgment on the plaintiff’s individual claims before he had a fair opportunity to move for class certification contradicts the Court’s reasoning in Campbell-Ewald.

On June 3, 2016, Judge Dolly M. Gee of the Central District of California, now equipped with guidance from the U.S. Supreme Court and Ninth Circuit, turned to Campbell-Ewald’s motion to dismiss for lack of jurisdiction, or, in the alternative, the defendant’s motion for entry of judgment for the plaintiff and a motion for leave to deposit funds with the court, which were filed in March 2016. See Order re: Defendant’s Motion to Dismiss, Gomez v. Campbell-Ewald Co., No. CV-10-2007 DMG (slip op. available here). Following the Supreme Court’s decision, Campbell-Ewald sent the plaintiff’s counsel a certified check for $10,000 and asked the district court to accept a payment in the same amount. The defendant argued that the certified check to the plaintiff’s counsel constituted an “unconditional, irrevocable” payment and, as such, had been actually received and accepted by the plaintiff, and therefore rendered the plaintiff’s claims moot. Id. at 3. However, the court disagreed, stating that the defendant may not “force Gomez to accept a settlement which has not been negotiated for or accepted merely by sending his counsel an unsolicited check and deeming it ‘unconditional’ and ‘irrevocable.’” Id. Further, the court followed Chen, finding that a judgment of complete relief on a plaintiff’s individual claim is inappropriate in a class action where the plaintiff has not yet been afforded a “fair opportunity to show that certification is warranted.” Id. (quoting Chen, internal citations omitted).

Ultimately, the district court denied Campbell-Ewald’s motions to dismiss and for leave to deposit funds with the court, and did not enter judgment in the plaintiff’s favor. By preserving Gomez’s claims and narrowing the types of transactions that may constitute acceptance of an individual settlement offer in a class action, the district court further limited the ability of a defendant in a class action to unilaterally moot a case via an unaccepted offer of judgment. Additionally, the district court, as in Chen, highlighted the Supreme Court’s emphasis on providing plaintiffs with a fair opportunity to move for certification in class actions.

Authored by: 
Trisha Monesi, Associate