SAN FRANCISCO — The class action defense bar learned Wednesday that it won’t be getting everything it asked for this term from the U.S. Supreme Court.
Ruling 6-3 in Campbell-Ewald v. Gomez, the high court held that a defendant can’t kill a class action simply by offering to pay named plaintiffs in full.
The decision, which affirms a ruling from the U.S. Court of Appeals for the Ninth Circuit, drew cheers from plaintiffs lawyers who hope that it signals that the court may go their way in the term’s other blockbuster class action cases. Meanwhile both sides acknowledge that the ruling leaves the door open to other defense tactics meant to pick off lead plaintiffs.
Specifically, the majority declined to address whether a case could be mooted if a defendant goes beyond offering a settlement and actually deposits funds with the court.
“I foresee us going back to the Supreme Court on these exact issues in three to four years,” said plaintiffs lawyer Abbas Kazerounian from the Kazerouni Law Group in Costa Mesa.
In the case decided Wednesday, Jose Gomez sued the Detroit-based advertising firm Campbell-Ewald Co. after receiving an unwanted text message promoting career opportunities in the U.S. Navy. Gomez sued the company under the Telephone Consumer Protection Act on behalf of himself and similarly situated individuals. Prior to a hearing on class certification, lawyers for Campbell-Ewald sought to resolve the case by offering Gomez $1,500, the full amount of statutory damages he could claim under the TCPA.
In the majority opinion, Justice Ruth Bader Ginsburg wrote that the settlement offer had the effect of any other unaccepted contract and once the offer had lapsed, Gomez remained “emptyhanded.”
“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,” she wrote.
Ruling otherwise, Ginsburg wrote, would “place the defendant in the driver’s seat.”
The decision is a win for visiting Stanford Law School professor Jonathan Mitchell, a former solicitor general of Texas. Gregory Garre of Latham & Watkins, a former U.S. solicitor general, argued for Campbell-Ewald.
Defense lawyers had hoped for a different outcome that would allow them to dismantle class actions by offering to make lead plaintiffs whole. In an interview with The National Law Journal, a Recorder affiliate, Dorsey & Whitney partner Ryan Mick said corporate defendants “may have lost an opportunity to head off potentially massive class actions.”
Despite the apparent setback, some defense lawyers said that the opinion left their clients with options.
Severson & Werson’s Eric Troutman, who often defends clients in TCPA cases, said he doesn’t see signs that the court is shifting toward a more class action-friendly posture. Troutman called the majority’s approach “pretty narrow.” The court didn’t address what would follow if a defendant fully paid out the potential damages to a lead plaintiff, he noted.
Morrison & Foerster’s Sylvia Rivera agreed. “I think this will cause practitioners and defendants to consider whether it might make sense to not only make an offer of settlement but actually tender the funds, and deposit them in an account in the plaintiffs name,” Rivera said.
Plaintiffs lawyer Kazerounian said that he expects some defendants to take that approach. But, he added, “I think it works under exactly the same theory: Just because you’ve sent me a check doesn’t mean I’ve accepted it.”
Four justices joined Ginsburg’s opinion with Justice Clarence Thomas writing a concurring opinion. Thomas wrote that he agreed with the outcome of the majority but not its contract-based reasoning. His seven-page concurrence offered a brief history of “the common-law history of tenders,” on which he based his decision.
In a dissent joined by Justices Antonin Scalia and Samuel Alito, Chief Justice John Roberts called Gomez a plaintiff who “won’t take ‘yes’ for an answer.” Gomez’s case became moot as soon as Campbell made its offer, Roberts wrote.
“If the defendant is willing to give the plaintiff everything he asks for, there is no case or controversy to adjudicate,” he stated.
Ben Feuer of the California Appellate Law Group said that it was hard to read Wednesday’s opinion as an indicator of how the court may decide the other class action cases heard earlier this term.
“This is a pro-business court. This is a court that is not friendly to class action plaintiffs,” Feuer said. “The fact that this was a 6-3 decision really does indicate that this was not an especially strong challenge to class action law as it exists.”
Kazerounian said that although the Campbell case had potentially “eviscerating” consequences for consumer class actions, he thinks that another case now pending at the court, Spokeo v. Robbins, “is the far more dangerous case,” especially to his own TCPA practice.
Spokeo, which was argued in November, challenges whether plaintiffs have standing to sue in federal court for statutory damages absent tangible injury. Fenwick & West partner Tyler Newby said that he agrees that the Spokeo outcome could prove more important, especially for lawyers who handle privacy cases. But, he added, “I don’t think that you can read much from this opinion that is going to guide how [Spokeo] is going to come out.”
Kazerounian, however, was willing to read the tea leaves. He’s more optimistic for a plaintiff-friendly ruling in Spokeo after reading the opinions by Ginsburg and Roberts, both of which open by describing the TCPA as a statute that allows for statutory damages.
“How are you going to rule against standing in Spokeo if that’s your opening?” Kazerounian said.
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