New York Law Journal "Does Settlement Offer to Named Plaintiff Moot Class Action" by Thoma
On Jan. 20, 2016, the U.S. Supreme Court handed down its decision in Campbell-Ewald Co. v. Gomez.1 The court effectively denied the defendant-petitioner, and other corporations seeking to avoid class action lawsuits, the ability to moot an entire class action case by making a settlement offer that satisfies the named plaintiff's claim.An opposite result would have significantly affected individuals' ability to gather and form a class action. Such a result would have provided defendants with the ability to approach the named plaintiff with a total settlement—potentially before the named plaintiff may have had the opportunity to move for class certification—and moot the entire action in one fell swoop, even if the plaintiff did not accept the offer. This is striking when the relatively small-scale facts of Campbell are considered: in Campbell, the court had to consider whether an offer to settle for the maximum statutory amount of $1,500 per unwanted text message (of which there was only one such text message sent to Gomez), plus court costs, meant that no "case" or "controversy" existed to satisfy the jurisdictional requirements of Article III of the Constitution.However, the result also comes with an unnerving suggestion for defendants that in certain such circumstances, and despite complete offers to settle, litigation may be unavoidable. As stated in the amicus brief from The Chamber of Commerce of the United States of America and Business Roundtable:
"Defendants often make full settlement offers because they believe that fully compensating the plaintiff will resolve the litigation. But if the plaintiff purports to represent a class, and the putative class claims continue to exist despite a full settlement with the putative representative, defendants have little incentive to make such offers, even if they would serve everyone's interest." Read more.