In a 6-3 decision issued today, the Supreme Court ruled that defendants cannot rely on a strategic offer of judgment to the named plaintiff to moot the claims of the putative class.
After an unfavorable Ninth Circuit decision, U.S. Navy contractor Campbell-Ewald asked the high court to consider, inter alia, whether defendants can strategically offer individual plaintiffs full relief at the outset of the litigation to avoid a long court battle or a potential multi-million dollar class settlement.
The opinion, delivered by Justice Ginsburg, held “in accord with Rule 68 of the Federal Rules of Civil Procedure, that an unaccepted settlement offer has no force. Like other unaccepted contract offers, it creates no lasting right or obligation. With the offer off the table, and the defendant’s continuing denial of liability, adversity between the parties persists.”
The Rule 68 strategy, which had been endorsed by the Seventh Circuit and certain district courts at various points in time, had been used by class action defendants to help combat the wave of TCPA litigation over the past few years. But the Court’s decision today is likely to have wide-reaching consequences in consumer class action cases, particularly cases that involve statutory penalties that can escalate quickly.