Supreme Court hears arguments on when settlement offer moots an issue

Supreme Court hears arguments on when settlement offer moots an issue

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[JURIST] The US Supreme Court [official website] heard arguments [day call, PDF] in two cases [JURIST report] Monday. The first case, Genesis HealthCare Corp. v. Symczyk [transcript, PDF], concerned whether an issue at the center of a lawsuit is moot if an offer is made to settle with the potential plaintiff. Federal Rule of Civil Procedure (FRCP) 68 [text] encourages settling suits in Federal court 14 days before they go to trial and allows offers to stand for 14 days before they are considered “withdrawn.” Some courts have interpreted this rule, coupled with Article III [text] of the Constitution, to mean that if a defendant makes an offer that fully covers the damages the plaintiff was suing for, even if the plaintiff does not accept the offer, the issue in the suit is moot. However, in this case, the plaintiff, Laura Symczyk, did not accept because she was joined by a group of plaintiffs in the suit, and the defendant, Genesis Healthcare Corp. [corporate website] moved for a mootness determination before she could certify her group as a class. The attorney for Genesis argued that the defendant is allowed to make this effort to settle the claim, and as the offer included a liability judgment, the other plaintiffs would be free to make claims that would then be decided on the merits of their individual cases. Symczyk’s counsel argued that not only did FRCP 68 not require mootness if a complete offer was made, a full offer to satisfy her injury was never made. He conceded, in agreement with the Solicitor General, that a full acceptance of an offer could require summary judgment.

We think that, just like the Solicitor General, we think that in that circumstance it is possible for the court to enter a default judgment and force relief upon the plaintiff. […] I think it could work either way so long as the forcing happened within the time period of Rule 68. I don’t think the court can, like Lazarus, raise this after it has already been withdrawn. The text of Rule 68 says the offer is now dead. If they had, I imagine, moved for the court to enforce that order, enforce that offer and enter a default judgment within the 14-day period, then I think that would have been something that might have been possible to do.

The Solicitor General argued briefly in support of Symczyk: “Respondent has never been compensated for her individual damage claim, nor has she received a court judgment favorably adjudicating that claim. It follows that her individual claim remains live, as does this collective action. More generally, a settlement offer does not moot a claim if it is not accepted. Individual freedom of contract is basic to our legal system, and mutual assent is always a necessary element for any settlement. Rule 68 embodies those principles.”

The court also heard arguments [transcript, PDF] on the Clean Water Act (CWA) [materials], in the consolidated cases Decker v. Northwest Environmental Defense Center and Georgia-Pacific West v. Northwest Environmental Defense Center. The Northwest Environmental Defense Center (NEDC) [advocacy website] sued several logging companies under the CWA’s citizen-suit provision, alleging that man-made logging roads were channeling discharge and stormwater into open waters. Whereas they described these as “point sources,” which the CWA prohibits, the logging companies, joined by the government, argued that they were natural runoff. The US Court of Appeals for the Ninth Circuit agreed with the NEDC, and the Oregon Department of Forestry [official website] and Georgia-Pacific West [corporate website] appealed to the Supreme Court. They argued that the Environmental Protection Agency (EPA) [official website] and its treatment of storm waters allows a clear reversal. Chief Justice Roberts began arguments by congratulating the counsel for petitioners on “getting almost all the relief they’re looking for under the new rule issued on Friday.” Congress has prepared several pieces of legislation [SCOTUSblog backgrounder] to support the logging industry and the EPA distributed a new rule [press release] clarifying the issue. The NEDC asked that the court dismiss the case as improvidently granted, in light of congressional and EPA reaction. Justice Stephen Breyer recused himself from considering the case.