/>iLast March, the United States Supreme Court held that a putative class action is not mooted when a defendant offers the named plaintiff complete relief but the plaintiff does not accept the offer. Campbell-Ewald Company v. Gomez, 136 S. Ct. 663 (2016). That decision left open the question of whether a settlement offer—coupled with an actual tender of complete relief—would moot the action. The Ninth Circuit has now answered: it does not.
In Chen v. Allstate Insurance Co.,[1] the Ninth Circuit held that the named plaintiff’s individual claims were not mooted even though the defendant had offered complete relief and placed the funds in escrow for the plaintiff pending entry of final judgment. The Ninth Circuit held that a plaintiff’s individual claims are not mooted unless the plaintiff “actually receives” complete relief. The Ninth Circuit further held that even if a named plaintiff’s individual claims were mooted by a judgment affording complete relief, the plaintiff would still be entitled to a “fair opportunity” to seek class certification.
Chen is an important development because it rejects one possible technique to dismiss class actions by “picking off” class representatives. Class defendants outside the Ninth Circuit will likely test the limits of Campbell-Ewald by tendering offers of complete relief to named plaintiffs. In fact, some defendants have successfully employed the technique noted in Campbell-Ewald.[2] Class defendants in the Ninth Circuit, on the other hand, face an even greater challenge post-Chen.
Background
In Chen, the named plaintiffs alleged that Allstate had violated the Telephone Consumer Protection Act[3]—the same statute at issue in Campbell-Ewald—by making several unsolicited automated calls to them. Before the plaintiffs moved for class certification, Allstate made an offer of judgment under Rule 68 for complete monetary and injunctive relief. One plaintiff accepted the offer; the other did not. After the unaccepted offer lapsed, Allstate moved to dismiss for lack of subject matter jurisdiction. The district court denied the motion, and Allstate appealed.
While Allstate’s interlocutory appeal was pending in the Ninth Circuit, the Supreme Court decided Campbell-Ewald. Although the Supreme Court rejected the defendant’s pick-off attempt in that case, the Court left open the possibility that a case could be mooted if the settlement funds are deposited into an account for the plaintiff, and judgment entered for the plaintiff in that amount.
Testing the hypothetical posed by Campbell-Ewald, Allstate deposited $20,000 in a bank escrow account pending entry of a final judgment that would direct payment to the plaintiff and enter the injunction.
The Ninth Circuit’s Decision
Allstate argued that (1) the proposed judgment afforded the plaintiff complete relief on his individual claims; (2) the district court should be required to enter judgment on those terms, and after final judgment is entered, the plaintiff’s claims would become moot; and (3) once the individual claims are moot, the existence of class allegations alone would not preserve a live controversy, and the entire action should be dismissed. The Ninth Circuit agreed with Allstate on the first point, but rejected Allstate’s other arguments.
First, the Ninth Circuit agreed that Allstate’s offer of judgment would provide complete relief. The plaintiff argued that the offer did not provide complete relief because it did not include an admission of liability. The Ninth Circuit rejected that argument, reasoning that the complaint sought only damages and injunctive relief, not an admission or declaration of liability. The court also rejected the plaintiff’s argument that only nationwide injunctive relief would be sufficient to address the alleged harms. The court held that the plaintiff had not demonstrated that the proffered injunctive relief would be inadequate, or that he could obtain broader relief after a trial on the merits.
Nevertheless, the Ninth Circuit held that Allstate’s offer of complete relief did not moot the plaintiff’s individual claims. The court interpreted Campbell-Ewald and prior Ninth Circuit decisions as holding that an individual claim becomes moot only when a plaintiff “actually receives” the relief sought. In this case, the court determined that the named plaintiff did not actually receive the relief, because the district court did not enter a final judgment requiring Allstate to relinquish its interest in the deposited funds.
The Ninth Circuit also refused to require the district court to enter such a judgment. The Ninth Circuit held that even if a district court in theory could enter judgment, over the plaintiff’s objections, that provided complete relief on the plaintiff’s individual claims, that action was not appropriate here, because the plaintiff did not have a “fair opportunity” to pursue class certification. As support, the court cited Campbell-Ewald’s statement that “[w]hile a class lacks independent status until certified, a would-be class representative with a live claim of her own must be accorded a fair opportunity to show that certification is warranted.”
Finally, the Ninth Circuit held that even if the district court had entered a final judgment providing complete relief to the named plaintiff, the case would not be moot because, under Ninth Circuit precedent, the plaintiff would still be entitled to pursue certification on behalf of the putative class. The court relied on its earlier decision in Pitts v. Terrible Herbst, Inc.,[4] which allowed named plaintiffs to pursue class certification—even after a defendant’s attempted “pick off”—under an exception to the mootness doctrine. The court in Pitts reasoned that, because of these pick-off attempts, named plaintiffs’ claims were “inherently transitory” and can “evade review”: a plaintiff’s personal stake in obtaining class certification may expire before a court can rule on a class certification motion. Pitts requires the court to decide the class certification issue: if a class is certified, the certification relates back to the filing of the complaint; if a class is not certified, the named plaintiff may appeal that decision, and the case is not moot until there is a final decision denying class certification. But under Pitts, the class action itself cannot be mooted unless the defendant satisfies the demands of the entire class, not simply those of the named plaintiffs.
[1] Chen v. Allstate Ins. Co., No. 13-16816, 2016 WL 1425869, at *1 (9th Cir. Apr. 12, 2016).
[2] See, e.g., Leyse v. Lifetime Entm’t Servs., LLC, No. 13 Civ. 5794 (AKH), 2016 WL 1253607, at *1 (S.D.N.Y. Mar. 17, 2016) (TCPA class action dismissed over plaintiff’s objections: “[O]nce the defendant has furnished full relief, there is no basis for the plaintiff to object to the entry of judgment in its favor. . . . As here, a defendant’s deposit of a full settlement with the court, and consent to entry of judgment against it, will eliminate the live controversy before a court.”).
[3] 47 U.S.C. § 227(b)(1)(A)(iii).
[4] 653 F.3d 1081 (9th Cir. 2011).
