Special thanks to Jeff Brecher for material from his recent web article relied on for this post.

If an employee brings a class action lawsuit, the employer offers the representative employee more than he could possibly recover individually in the lawsuit and the employee rejects the offer, does the offer “moot” the individual’s claims and, more importantly, require dismissal of the class claims as well? That’s the issue currently before the U.S. Supreme Court. On October 14th, the Court heard oral argument in Campbell-Ewald Company v. Gomez, a case that could significantly affect the viability of class action litigation, particularly wage and hour class actions. In Campbell-Ewald, the U.S. Navy hired marketing company Campbell-Ewald to assist with its recruiting. Campbell-Ewald’s marketing program included sending text messages by “robo-call” to potential recruits. Plaintiff Gomez was such a recipient and filed a class action suit seeking to represent the more than 100,000 other individuals who received the same non-consensual text message. Because the Telephone Consumer Protection Act (TCPA) prohibits sending such text messages without the individual recipient’s consent and provides for maximum damages of $1500 per violation, the potential liability could be in the hundreds of millions of dollars. In an effort to foreclose the class action, Campbell-Ewald offered Gomez $1501 and then moved to dismiss the case as “moot.” The district court denied the motion to dismiss, finding the unaccepted offer did not terminate the case, and the U.S. Court of Appeals for the Ninth Circuit agreed.

The Supreme Court accepted the case, presumably to answer two questions: First, if an individual plaintiff rejects an offer including complete relief, whether by a formal Rule 68 offer of judgment or otherwise, may he nonetheless proceed with the case or does such an offer render the case “moot”? Second, assuming the unaccepted offer does moot the individual claim, does the offer likewise moot a putative Rule 23 class action, particularly where the offer is made before the case has been certified? In accepting the case, the Supreme Court is revisiting an issue left undecided in a sharply divided opinion in Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523 (2013), where it held in an FLSA case that, assuming a plaintiff’s failure to accept an offer of full satisfaction of her claim moots her individual claim, such a failure did not preclude the entire case from likewise becoming moot. In a vigorous dissent, Justice Kagan argued that the issue the Court decided was an “imaginary question,” because the Court’s assumption was premised on an issue that it had never decided, and warned lower courts, “don’t try this at home.”

At the October 14th oral argument, the Court once again appeared divided. However, one issue raised at oral argument that may avoid a decision on the questions at issue is whether Mr. Gomez had in fact been offered “complete relief” because the offer did not provide for attorneys’ fees, a point on which Justice Kagan seemed to agree. The company responded that because attorney’s fees are not recoverable under the TCPA, the case is moot despite the request for fees and a plaintiff cannot avoid dismissal simply by seeking relief that is unavailable. Justice Scalia echoed this argument, noting that otherwise a plaintiff could keep his claim alive by asking for the “key to Fort Knox” or a “unicorn.” Based on the questions and comments of several Justices, the Court may conclude that while an unaccepted offer alone might not result in rendering a case moot, a different result might follow if the trial court enters judgment against the defendant for the amount in the offer, a view currently adopted by two courts of appeal. However, the conservative Justices, including Chief Justice John Roberts, clearly were uncomfortable with the proposition that a plaintiff, having been offered full relief, should be permitted to continue simply because, as Roberts stated, the plaintiff “won’t take ‘yes’ for an answer.” Even Justice Breyer seemed frustrated with the concept of an obstinate plaintiff who has been given all the relief sought, noting that where the defendant has paid the amount owed, “the judge at that point should say, [the plaintiff] has all he wants. The case is over. Good-bye.”

As to whether the existence of a putative class action is enough to prevent a case from becoming moot even if the plaintiff is given complete relief individually, the Justices also appeared split, with the liberal Justices distinguishing Genesis because it involved permissive joinder rather than Rule 23 class certification. However, the focus of the oral argument centered on the individual mootness issue, so it remains unclear where the Court will land on the remaining viability of the class/collective action if it ultimately determines that an offer of undisputedly complete relief does indeed moot the representative plaintiff’s claims. Obviously, a holding that both the individual and class action claims are mooted under such circumstances would deal a significant blow to the viability of large class or collective action lawsuits that rely on the aggregation of a large number of small individual claims. Accordingly, employers and employment attorneys alike are anxiously awaiting the Court’s ruling, which may come as early as January, and no later than June, of next year.