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Offers of Judgment in Employment Litigation After Campbell-Ewald Co. v. Gomez

Leveraging Rule 68 as a Strategic Tool to Minimize Damages, Identifying Remaining Opportunities to Moot Claims

Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific WEDNESDAY, MARCH 30, 2016

Presenting a live 90-minute webinar with interactive Q&A James N. Boudreau, Shareholder, Greenberg Traurig, Philadelphia Glenn S. Grindlinger, Partner, Fox Rothschild, New York

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Offers of Judgment in Employment Litigation After Campbell-Ewald Co. v. Gomez

Offers of Judgment After Campbell-Ewald v. Gomez

Federal Rule of Civil Procedure 68: Offer of Judgment (continued)

(b) Unaccepted Offer. An unaccepted offer is considered withdrawn, but it does not preclude a later offer. Evidence

• f an unaccepted offer is not admissible except in a

proceeding to determine costs.

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Offers of Judgment After Campbell-Ewald v. Gomez

Federal Rule of Civil Procedure 68: Offer of Judgment (continued)

(c) Offer After Liability Is Determined. When one party’s liability to another has been determined but the extent of liability remains to be determined by further proceedings, the party held liable may make an

• ffer of judgment. It must be served within a reasonable time – but at

least 14 days – before the date set for a hearing to determine the extent

• f liability.

(d) Paying Costs After an Unaccepted Offer. If the judgment that the

• fferee finally obtains is not more favorable than the unaccepted offer,

the offeree must pay the costs incurred after the offer was made.

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Offers of Judgment After Campbell-Ewald v. Gomez

Rule 68 Offers of Judgment

– If there is any ambiguity in the offer of judgment it will be construed against the party that made the offer. – If accepted judgment is entered against the offeror. – If not accepted within the 14 day period, it is deemed withdrawn.

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Offers of Judgment After Campbell-Ewald v. Gomez

Rule 68 Offers of Judgment

– Unaccepted Offers

• Cannot be used against the party that makes the offer.
• If the party that rejects the offer does not obtain a more

favorable judgment, then the party that made the offer is entitled to costs accrued after the offer was made.

• In employment cases, if ultimate judgment is less than offer,

Generally, Plaintiff’s attorneys’ fees and costs are cut off at the time the offer is rejected.

– Will depend on whether attorneys’ fees are defined as “costs”.

• If Defendant wins the case, offer has no effect.

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Offers of Judgment After Campbell-Ewald v. Gomez

Part 2: Campbell-Ewald v. Gomez

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Offers of Judgment After Campbell-Ewald Greenberg Traurig, LLP | gtlaw.com

STRATEGIC CONSIDERATIONS WHEN MAKING RULE 68 OFFERS

>

In What Cases Do Offers Make the Most Sense?

– Where there is real potential exposure? – Frivolous cases? – Class Actions?

• Adequacy? See Chapman v. First Index Inc., 796 F.3d 783 (7th Cir. 2015)

(suggesting “[f]ailure to accept a fully compensatory offer . . . may suggest that the plaintiff is a bad representative of the class.” Such a plaintiff “has nothing to gain (implying poor incentives to monitor counsel) and may have given up something the class values (here, an injunction that would have stopped any further improper faxing).”)

• Estoppel/Waiver Defenses? See Williams v. Amazon, Inc., 2015 WL

8013501 (N.D. Ill. Dec. 7, 2015) (denying defendant summary judgment

• n estoppel/waiver affirmative defense in Fair Credit Reporting Act

putative class action because defendant did not offer complete relief).

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Offers of Judgment After Campbell-Ewald Greenberg Traurig, LLP | gtlaw.com

STRATEGIC CONSIDERATIONS WHEN MAKING RULE 68 OFFERS (cont’d)

> Is There A Best Time to Make an Offer?

– Depends on the Precise Claim at Issue and the Goal

• Shift Fees for Leverage?
• What’s the underlying statute?
• If fee-shifting, the earlier the better

> What If You Are Trying To Moot A Class Claim?

– As soon as you can quantify the claim

• May have to wait for discovery
• Before class certification motion is on file

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Offers of Judgment After Campbell-Ewald Greenberg Traurig, LLP | gtlaw.com

STRATEGIC CONSIDERATIONS WHEN MAKING RULE 68 OFFERS (cont’d)

> Potential Impact on Future Litigation If It Is Accepted?

– In Insured Actions, Can Pose Conflicts – think it through

> Growing Concern that Won’t Moot Class Claim – Be Ready

– Mavris v. RSI Enterprises Inc., 303 F.R.D. 561 (D. Az. 2014) (positing named plaintiff could continue to pursue class action even after accepting Rule 68 offer)

> Removed Actions – Be Careful!

– 28 U.S.C. §1447(c) (“If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.”)

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Offers of Judgment After Campbell-Ewald v. Gomez

Part 3: Campbell-Ewald v. Gomez

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Offers of Judgment After Campbell-Ewald v. Gomez Campbell-Ewald v. Gomez

Background

• The Telephone Consumer Protection Act (TCPA) prohibits any

person, absent prior consent, to “make any call. . .[u]sing any automatic telephone dialing system. . .to any telephone number assigned to a paging service [or] cellular telephone service.” – Includes sending text messages. – Aggrieved individuals can recover actual damages or $500 (whichever is greater) for each violation. – Damages are trebled if the defendant willfully or knowingly violated the TCPA.

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Offers of Judgment After Campbell-Ewald v. Gomez Campbell-Ewald v. Gomez

Background

• In 2000, the U.S. Navy engaged Campbell-Ewald, a national

advertising/marketing firm to assist its recruitment efforts.

• In 2005, Campbell-Ewald proposed that text messages be sent to

young adults (18-24 year olds).

• The Navy approved the campaign provided that the text messages

were only sent to those who had “opted in” to receipt of marketing solicitations on topics that included service in the Navy.

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Offers of Judgment After Campbell-Ewald v. Gomez Campbell-Ewald v. Gomez Background

• Jose Gomez received one text message as part of the Navy’s

recruitment campaign.

• Gomez claimed that he had never consented to receipt of marketing

solicitations on topics that included service in the Navy.

• Gomez filed a putative class action complaint in federal court in

California claiming that Campbell-Ewald willfully violated the TCPA.

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Offers of Judgment After Campbell-Ewald v. Gomez Campbell-Ewald v. Gomez

Background

• After answering Campbell-Ewald made a Rule 68 Offer of Judgment

in which it offered to pay Gomez $1,503 per text message that he received plus his costs to date.

• Gomez did not respond within 14 days.
• Campbell-Ewald then moved to dismiss the complaint arguing the

case was now moot and the court lacked subject matter jurisdiction. – Campbell-Ewald offered Gomez all the individual relief he could

• btain under TCPA and thus there was no longer any case or

controversy under Article III of the Constitution.

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Offers of Judgment After Campbell-Ewald v. Gomez Campbell-Ewald v. Gomez Background

– District Court rejected Campbell-Ewald’s argument. – Ninth Circuit affirmed the District Court. – Supreme Court granted cert. to decide the following issue:

• Is an unaccepted offer to satisfy the named plaintiff’s

individual claim sufficient to render a case moot when the complaint seeks relief on behalf of the plaintiff and a class of persons similarly situated.

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Offers of Judgment After Campbell-Ewald v. Gomez Campbell-Ewald v. Gomez Supreme Court Opinion

– Issue left open by Genesis HealthCare Corp. v. Symczyk, 569 U.S. __ (2013)

• Plaintiff brought putative collective action under the Fair Labor

Standards Act.

• Defendant made an offer of judgment that Plaintiff conceded

mooted her individual claim.

• Supreme Court held that once named plaintiff’s claims were

mooted, the court lacked jurisdiction as there was no longer a case or controversy.

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Offers of Judgment After Campbell-Ewald v. Gomez Campbell-Ewald v. Gomez Supreme Court Opinion

– 5-1-3 Opinion. – Justice Ginsberg wrote the majority opinion. – Justice Thomas concurred in judgment only. – Chief Justice Roberts dissented for himself and Justices Scalia and Alito.

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Offers of Judgment After Campbell-Ewald v. Gomez Campbell-Ewald v. Gomez Majority Opinion

• Article III limits federal court jurisdiction to cases or

controversies.

• In order for there to be a case or controversy both parties

must have a “personal stake in the outcome of the litigation.”

• If at any point during the litigation one side does not have

a personal stake, there is no case or controversy and the Court no longer has jurisdiction.

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Offers of Judgment After Campbell-Ewald v. Gomez Campbell-Ewald v. Gomez Majority Opinion

• Majority looked to contract law.

– An unaccepted offer has no legal meaning.

• Therefore, an unaccepted offer of judgment is a legal

nullity.

• Because an unaccepted offer of judgment is a legal

nullity, both parties still have an interest in the case and the Court therefore has jurisdiction.

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Offers of Judgment After Campbell-Ewald v. Gomez Campbell-Ewald v. Gomez Majority Opinion

• Majority left open the issue of whether the Court has

jurisdiction when the defendant makes an offer of judgment providing the plaintiff with complete relief and deposits the money in the plaintiff’s account or with the Court.

• The Dissent notes that this open issue is the likely the

next issue to be decided by the Court in this area of the law.

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Offers of Judgment After Campbell-Ewald v. Gomez Campbell-Ewald v. Gomez The Dissent

• Case is about jurisdiction not contract law.
• For there to be jurisdiction, at all times, all parties must

have a personal stake in the litigation.

• If there is no personal stake, there is no case or

controversy, and therefore the Court loses jurisdiction.

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Offers of Judgment After Campbell-Ewald v. Gomez

Campbell-Ewald v. Gomez The Dissent

• Campbell-Ewald’s offer of judgment “would have personally satisfied

the individual claims asserted or that could have been asserted” by Gomez.

• Gomez, therefore, no longer had a personal stake in the litigation and

therefore the Court no longer had jurisdiction.

• “If the defendant is willing to give the plaintiff everything he asks for,

there is no case or controversy to adjudicate, and the lawsuit is moot.”

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Offers of Judgment After Campbell-Ewald v. Gomez

Part 4: Campbell-Ewald v. Gomez

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Offers of Judgment After Campbell-Ewald Greenberg Traurig, LLP | gtlaw.com

WHAT ARE COURTS SAYING POST-CAMPBELL-EWALD RE: DEFENSE EFFORTS TO MOOT CLAIMS?

>

No Doubt Unaccepted Offer of Judgment Does Not Moot Claim

– Family Health Chiropractic, Inc. v. MD On-Line Solutions, Inc., 2016 WL 384823 (6th Cir. Feb. 2, 2016) (applying Campbell-Ewald to conclude that plaintiff’s claims not mooted by virtue of rejected settlement offer, even on that offered “complete relief.”) – In re Michaels Stores, Inc., 2016 WL 947150 (D. N.J. Mar. 14, 2016) (same) – Compressor Engineering Corp. v. Thomas, 2016 WL 438963 (E.D. Mich. Feb. 3, 1026) (pointing to Campbell-Ewald as dictating rejection of defendant’s argument that an unaccepted Rule 68 offer of judgment mooted plaintiff’s individual claim or claims of putative class members) – Gray v. Kern, 2016 WL 429914 (D. Md. Feb. 4, 2016) (holding Campbell-Ewald precluded court from dismissing case where plaintiff rejected admittedly complete offer of relief) – Fitzhenry v. Career Education Corp., 2016 WL 792312 (N.D. Ill. Mar. 1, 2016) (“An unaccepted settlement offer or offer of judgment does not moot a would-be class representative plaintiff’s case and that plaintiff must be afforded a fair opportunity to show that class certification is warranted.”) – Payne v River Rocks, LLC, 2016 WL 492378 (M.D. Fla. Jan. 21, 2016) (rejecting mootness in light of Campbell-Ewald) – Western Wayne Urgent Care, P.C. v. Fenster-Martens Holding Company, 2016 WL 704962 (E.D. Mich.

• Feb. 23, 2016) (same).

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Offers of Judgment After Campbell-Ewald Greenberg Traurig, LLP | gtlaw.com

WHAT ARE COURTS SAYING AFTER CAMPBELL-EWALD RE: DEFENSE EFFORTS TO MOOT CLAIMS > Attempts to Track Campbell-Ewald Dissent:

– Deposit Funds Into Court Generally Not Working

• Brady v. Basic Research, LLC, __ F.R.D. __, 2016 WL 462916 (E.D.N.Y. Feb. 3, 2016) (“As

Defendants seek Rule 67(a) permission to deposit funds into court to moot this case and not to relieve themselves of the burden of administering an asset, and give the Supreme Court’s directive 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,’ Gomez at 672 (emphasis added), the Court find that granting Defendants’ Rule 67(a) Motion is not warranted.”)

• Bais Yaakov of Spring Valley v. Graduation Source, LLC, __ F. Supp. 3d __, 2016 WL 872914 (S.D.

N.Y. Mar. 7, 2016) (“Although Defendants sought to avail themselves of the hypothetical proposed in Campbell-Ewald by depositing the full amount of statutory damages in the Court’s Finance Unit and assenting to the injunctive relief requested by Plaintiff in the Complaint, Plaintiff’s individual claims remain live – this Court has not entered judgment in favor of Plaintiff and has not, by ‘express, written order’ released the funds to Plaintiff.”)

• Bais Yaakov of Spring Valley v. Varitronics, LLC, 2016 WL 806703 (D. Minn. Mar. 1, 2016) (“As

there is no purpose to the deposit defendant seeks to make other than to moot the case, and as Plaintiff has not yet had a fair opportunity to show that class certification is warranted, for the reason set forth in Brady, the motion [to dismiss on mootness grounds] should be denied.”)

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Offers of Judgment After Campbell-Ewald Greenberg Traurig, LLP | gtlaw.com

WHAT ARE COURTS SAYING AFTER CAMPBELL-EWALD RE: DEFENSE EFFORTS TO MOOT CLAIMS (cont’d) > Attempts to Track Campbell-Ewald Dissent: > But See:

– Leyse v. Lifetime Entertainment Services, LLC, Case No. 13-5794 (AKH) (S.D.N.Y. Mar. 17, 2016) (dismissing case where defendant presented plaintiff with offer of full relief and moved for entry of judgment in favor of plaintiff even though plaintiff rejected offer)

• Case distinguishable because court already denied plaintiff’s motion for class

certification (thus only presented individual claim)

• States that Campbell-Ewald expressly did not reach question of whether district

court had authority to enter judgment for plaintiff over plaintiff’s objections and dismiss the case, if the full amount in controversy was actually paid.

• Did not read Campbell-Ewald as disrupting Second Circuit precedent allowing for

entry of judgment for plaintiff over plaintiff’s objection.

• “But once the defendant has furnished full relief, there is no basis for the plaintiff

to object to the entry of judgment in its favor. A plaintiff has no entitlement to an admission of liability, as a party can always incur a default judgment and liability without any factual findings.”

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Offers of Judgment After Campbell-Ewald Greenberg Traurig, LLP | gtlaw.com

WHAT ARE COURTS SAYING AFTER CAMPBELL-EWALD RE: DEFENSE EFFORTS TO MOOT CLAIMS (cont’d)

>

But See: – Price v. Berman’s Automotive, Inc., 2016 WL 1089417 (D. Md. Mar. 21, 2016) (addressing mootness in context of Truth in Lending Act claim where defendant sent plaintiff a cashier’s check)

• Distinguished Campbell-Ewald . Defendant in this case did not make an
• ffer of settlement or judgment, but instead tendered a cashier’s check.
• Plaintiff argued that tender was not full relief because no judgment
• ffered. Court rejected the argument in context of a tender of a

cashier’s check where issuing bank guaranteed funds. Court acknowledged that some courts have found that a judgment itself provides a form of additional relief but “[a] judgment in this case would thus be of no additional value to Plaintiffs, because there is no legitimate risk of non-payment and no other foreseeable circumstance under which the Court might need to enforce the judgment.”

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Offers of Judgment After Campbell-Ewald Greenberg Traurig, LLP | gtlaw.com

WHAT ARE COURTS SAYING AFTER CAMPBELL-EWALD RE: DEFENSE EFFORTS TO MOOT CLAIMS (cont’d)

>

Price v. Berman’s Automotive, Inc., 2016 WL 1089417 (D. Md. Mar. 21, 2016) (cont’d) – Plaintiff also argued ongoing stake in case based on TILA’s attorney’s’ fees and costs

• provision. Court rejected the argument.
• First, Supreme Court has made clear that claim for attorney’s fees and costs is

insufficient to sustain an otherwise moot case. Lewis v. Cont’l Bank Corp. 292 U.S. 472 (1990).

• Second, dismissal on mootness grounds did not preclude seeking fees and costs

because:

• such matters are ancillary to underlying action; and
• Absence of judgment did not prevent court from finding plaintiff prevailing

party entitled to fees and costs under statute. – Court ultimately hit a snag; because the plaintiff had returned check, could not find the case moot. As a result, invited defendant to re-issue cashier’s check, and re-file its motion to dismiss with proof of payment and proof of delivery, at which point the court would dismiss the case.

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Offers of Judgment After Campbell-Ewald Greenberg Traurig, LLP | gtlaw.com

BEST PRACTICES & CONSIDERATIONS AFTER CAMPBELL-EWALD

>

How Might One Moot A Claim After Campbell-Ewald?

– Ensure Claim Can Be Quantified

• Compensatory Damages
• Punitive Damages
• Attorneys’ fees & Costs

– Ensure Offer Is For Complete Relief

• Include every possible legally cognizable recovery
• Better include judgment in plaintiff’s favor

– Leave Offer Open (expires after 14 days per Rule 68) – Don’t Just Offer Judgment – Take an Extra Step

• Move for Entry – See Leyse?
• Confession of Judgment? Default?

>

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Offers of Judgment After Campbell-Ewald Greenberg Traurig, LLP | gtlaw.com

BEST PRACTICES & CONSIDERATIONS AFTER CAMPBELL-EWALD (cont’d)

>

EVALUATE BEST MEANS TO MAKE PAYMENT

– Deposit funds in Court (Fed. R. Civ. P. 67)

• Avoid if you can (not working to date and lose control over funds)

– Direct deposit to Plaintiff’s account – Deliver a certified check to Plaintiff or his/her/its counsel (control when certified funds expire)

>

If injunctive relief, follow Nike v Already LLC

>

MAKE IT AN ARTICLE III FIGHT

– Make sure the Plaintiff can declare complete victory – you can’t persist after you have won – The Supreme Court did NOT direct that a class plaintiff must be accorded a fair opportunity to show that certification is warranted.

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Glenn S. Grindlinger, Esq. FOX ROTHSCHILD LLP 212.878.7900 ggrindlinger@foxrothschild.com

Offers of Judgment After Campbell-Ewald Greenberg Traurig, LLP | gtlaw.com

James N. Boudreau, Esq.

GREENBERG TRAURIG LLP 215.988.7833 boudreauj@gtlaw.com

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