Consumer Finance Litigation

The Eleventh Circuit Court of Appeals recently held that unaccepted Federal Rule of Civil Procedure 68 offers of judgment to the named plaintiffs that, if accepted, would have provided all relief that plaintiffs sought, neither moots the individual plaintiff's claims or the putative class action. Thus, the strategy to make an offer of judgment to render the case moot and prevent class certification may no longer be viable strategy in the Eleventh Circuit. In Stein v. Buccaneers Limited Partnership, --- F.3d ---, 2014 WL 6734819 (11th Cir. 2014), six named plaintiffs filed suit against Buccaneers Limited Partnership ("BLP") alleging violations of the Telephone Consumer Protection Act ("TCPA") after BLP sent unsolicited faxes. Shortly after the lawsuit commenced, BLP served a Rule 68 offer of judgment on each of the named plaintiffs and moved to dismiss for lack of jurisdiction on the grounds that the Rule 68 offers mooted the case. In response, plaintiffs filed a motion to certify a class, which the district court denied as premature. Plaintiffs allowed the deadline to accept the Rule 68 offer to pass, and the district court granted the motion to dismiss on the grounds that the action was moot and directed the clerk to close the case. The named plaintiffs received no money, no injunction and no judgment. The plaintiffs appealed. Plaintiffs' appeal presented two issues of first impression in the Eleventh Circuit: (1) whether an individual plaintiff's claim becomes moot when the plaintiff does not accept a Rule 68 offer of judgment that would otherwise provide the plaintiff full relief; and, if so, (2) whether the named plaintiffs may go forward as class representatives with the class action if the Rule 68 offer is made to all named plaintiffs before the motion to certify the class is filed. Addressing the first issue, the court looked to Rule 68, which provides in part that "[a]n unaccepted offer is considered withdrawn, but it does not preclude a later offer. Evidence of an unaccepted offer is not admissible except in a proceeding to determine costs." Based on the language of Rule 68, the court found that an unaccepted offer is considered withdrawn and, therefore, does not affect the parties' claims or defenses, or render the claims moot. The court stated that "[t]he plaintiffs could no longer accept the offers or require the court to enter judgment. In short, the plaintiffs still had their claims, and BLP still had its defenses. BLP had not paid the plaintiffs, was not obligated to pay the plaintiffs, and had not been enjoined from sending more faxes. The named plaintiffs' individual claims were not moot." The Eleventh Circuit relied on the dissent in Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523 (2013), an FLSA action, and said that when a plaintiff rejects an offer of judgment, her interest in the lawsuit is the same as it was before the offer and the offer has no operative effect. As such, the plaintiff still has a concrete interest in the litigation, and the unaccepted offer does not moot the claims. While the court noted that the Second and Sixth Circuits held that an unaccepted offer of judgment moots an individual claim, it pointed out those decisions held that a plaintiff's claims could not be dismissed as was done in the present case; that the proper approach set forth in those circuits was to enter a judgment for plaintiff in the amount of the unaccepted offer. The Eleventh Circuit stated that it agreed with the Symczyk dissent and stated that even if it did not, it would not affirm the dismissal of the individual plaintiff's claims without the entry of judgment for the amount of the Rule 68 offers. The court also looked to the language of BLP's Rule 68 offers. Specifically, the Rule 68 offers said that they would be "deemed rejected," if not accepted. The court said that BLP could not now argue that the offers must be treated as having been accepted - as having obligated BLP to pay the offered amounts and to comply with an injunction that was never issue. The court found that the terms of the offers did not support that conclusion. Thus, the court reversed the district court's decision to dismiss the individual plaintiffs' claims as moot. Turning to the Rule 68 offers' effect on the class claims, the Eleventh Circuit found that even if the individual claims are somehow deemed moot, the class claims remain live, and the named plaintiffs retain the ability to pursue them. The court relied on Sosna v. Iowa, 419 U.S. 393 (1975), which held that the personal stake in a live class action controversy requirement is satisfied even if the named plaintiff's claim is moot. Although the class was certified before the plaintiff's claims became moot, the Court in Sonsa acknowledged in dictum that there may be instances where a court cannot reasonably rule on a motion for class certification before the plaintiff's individual claims are moot and, in such cases, the certification may relate back to the filing of the complaint, depending on the circumstances of the case. Thus, the court stated that if the individual claims become moot before the court can reasonably be expected to rule on a class certification motion, the relation back is to the filing of the complaint rather than the filing of the certification motion. The court found that the Supreme Court adopted the relation-back language in Sonsa as holding in subsequent cases where the claims where capable of repetition, yet evading review, because the passage of time mooted the claims. While the court said that the TCPA claims at issue were distinguishable, the court relied on Zeidman v. J. Ray McDermott & Co., 651 F.2d 1030 (5th Cir. 1981), to find that "the result should be no different when the defendants have the ability by tender to each named plaintiff effectively to prevent any plaintiff in the class from procuring a decision on class certification." The court acknowledged that Zeidman did not involve a rejected Rule 68 offer and that the plaintiffs moved to certify the class before the individual claims became moot. However, the court found that a motion to certify had no effect on the issue. Instead, "what matters is that the named plaintiff acts diligently to pursue the class claims" because it suggests that a named plaintiff has a personal stake in the outcome of the controversy. Finding that the named plaintiffs did not fail to act diligently, the court held that they could proceed with the class claims. The court also acknowledged the fact that the Third, Fifth, Ninth, and Tenth Circuits have held that a Rule 68 offer to the named plaintiff does not moot a class action, so long as the named plaintiff has not failed to diligently pursue class certification. The court declined to follow Damasco v. Clearwire Corp., 662 F.3d 891 (7th Cir. 2011), which held that if the offer to the named plaintiff is made before the plaintiff moves to certify the class, the named plaintiff cannot go forward with the class action. In sum, the court held that: (1) a plaintiff's individual claims are not mooted by an unaccepted Rule 68 offer of judgment; and (2) a Rule 68 offer that moots a named plaintiff's individual claim does not moot a class action based on the facts in this case, even if the Rule 68 offer comes before the plaintiff has moved to certify a class. Accordingly, the court reversed district court's order dismissing the action.