JURIST Guest Columnists Evan M. Meyers and Paul Geske of McGuire Law, PC discuss the US Supreme Court’s recent decision in Campbell-Ewald Co. v. Gomez and the implications of this decision…
The US Supreme Court’s recent January 20, 2016 decision in Campbell-Ewald Co. v. Gomez is a landmark for class action practice. The Supreme Court held that a defendant’s offer to provide complete relief to the plaintiff does not render the case moot. Gomez, a putative class action, was originally filed in 2010 in California. The mootness issue arose in the case after the defendant, Campbell-Ewald, made an individual “pick-off” offer to the putative class’s representative, Jose Gomez. Had Campbell-Ewald’s attempted pick-off been successful, it would have mooted the case and avoided any potential liability to the putative class that Mr. Gomez sought to represent. Mr. Gomez rejected the offer, however, as it only included a payment for him individually, while failing to provide any injunctive or monetary relief for the tens of thousands of other putative class members.
Although the Gomez holding clarified that a mere offer cannot moot a plaintiff’s claims, some have argued that the case leaves open the possibility for a defendant to moot a case by going one step further, and actually transferring money to the plaintiff in the full amount of his claims. Proponents of this view cite the dissenting opinions and the majority’s statement that it was declining to reach the issue of “whether the result would be different if 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.” It is foreseeable that defendants will seize on this statement, and the even stronger statements in the dissents, and attempt to repackage the pick-off offer tactic in the form of an actual transfer of money. Indeed, in the few months immediately following Gomez, lower courts have already confronted this issue as defendants have begun testing this strategy.
It is misguided, however, to think that Gomez authorizes or approves of a forced entry of judgment in a class action. In fact, the Gomez opinion strongly suggests that the opposite is true. Specifically, the court states that a putative class representative with a viable claim is entitled to see the case through to certification. The court observed 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.” This is because Rule 23 bestows on the class representative a procedural right to have the issue of certification adjudicated. Although the court did not go so far as to define this right’s extent or attributes, it would likely violate the class representative’s right if the court forced him to accept a payment in satisfaction of his claims, over his objection, and then dismissed the case for lack of jurisdiction.
In addition to the procedural right to certification, a class representative also has a strong interest in obtaining certification, and this interest remains intact even in the event that his individual claim is paid. First, certification is the only way for the class representative to hold a defendant liable for all of its wrongdoing and to adequately deter similar wrongdoing in the future. Second, certification creates economic interests. If a class is certified, class representatives usually receive an incentive award, which compensates them for all of their time and effort spent working on the case and representing the absent class members. Certification also promotes administrative efficiency by spreading the costs and expenses of the litigation among the class, who will share in the eventual recovery. Importantly, these interests keep the case live, and prevent it from becoming moot.
Some lower courts have observed that a forced entry of judgment is inappropriate in the class action context for the additional reason that it upsets the incentive structure created under Rule 23. Rule 23 imposes a duty on the named plaintiff to be an adequate representative of the absent class members and to champion their interests. This duty arises as soon as the class action complaint is filed. The class representative thus serves in a quasi-fiduciary role in relation to the class even prior to certification. It would therefore be contrary to the adequacy requirement and the class representative’s obligations to the class to force him to take an individual payoff at the expense of the other class members, who would then be left without a representative or any relief.
Even in a case where the defendant successfully effects payment, there will still be disagreement over whether that payment actually satisfies the plaintiff’s prayer for relief. In other words, questions will remain as to what the plaintiff is entitled to recover on his claims, and whether the defendant’s payment constitutes complete relief. For example, the plaintiff may be requesting injunctive relief, even though the defendant is only willing to pay money. Or the plaintiff may be seeking class-wide relief, but the defendant may only want to make an individual deal. In such situations, the plaintiff is asking for one thing, but the defendant is only willing to provide something else. Since these issues will be in dispute, they will need to be decided by a court. And because there is a dispute that needs to be adjudicated, and the court is capable of granting relief to the plaintiff, there will still be a “controversy” for purposes of Article III, and the court will necessarily retain jurisdiction over the case.
Finally, the court’s reasoning in Gomez is supported by fundamental policy considerations as well. If courts allowed defendants to moot a case at will, and thereby eliminate jurisdiction or otherwise justify a forced entry of judgment, they would essentially be handing the keys to the courthouse doors to defendants. As Justice Ginsburg observes, the Gomez dissenters’ opinions would have put defendants “in the driver’s seat” of a case, allowing them to impose a settlement against a plaintiff’s will. Taken to its logical extreme, this strategy could be used to cripple virtually any type of class action, from consumer privacy and product defect actions, to environmental and civil rights cases. This would give defendants an extremely powerful tool that hinders access to the courts and frustrates the purposes of Rule 23.
The primary goal of Rule 23, and of class actions generally, is to give people who are similarly situated, who have been injured in the same way, a mechanism to join together and resolve their issues in a fair and efficient way in a single proceeding. This is especially so where it is economically infeasible for each individual class member to bring a separate suit, or each individual lacks the resources to hire an attorney. Closing the courthouse doors to a large proportion of class actions not only frustrates these goals, it also harms the public, because it allows entities to escape liability for activities that injure a large number of people, as long as the injury to each individual is relatively small. By avoiding this outcome, the court preserved the viability of class actions as a mechanism for aggregating the claims of members of the public who have been injured at the hands of a single party. The legacy of Gomez is an assurance that class actions are an essential means of promoting the public’s access to justice, and courts should be wary of any attempt to curtail that legacy.
Evan M. Meyers is a partner, and Paul Geske is an associate, at McGuire Law, PC, a consumer class action litigation firm based in Chicago that handles the prosecution of civil claims in federal and state courts throughout the country. McGuire Law, PC represented Mr. Gomez as lead counsel in the US Supreme Court. For more information, please visit here.
Suggested Citation: Evan M. Meyers and Paul Geske, Class Actions Back from the Brink: The Future of Mootness and “Pick-Offs” in Class Action Litigation Following Campbell-Ewald Co. v. Gomez, JURIST – Professional Commentary, Mar. 14, 2016, http://jurist.org/hotline/2016/03/meyers-geske-class-action-litigation.php.
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