X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
PHILADELPHIA � Bad news for class action defense lawyers: Not only is Rule 68 not a silver bullet, it isn’t even a bulletproof vest. That’s the upshot of a recent 10-page decision by Chief U.S. District Judge Harvey Bartle III in Zeigenfuse v. Apex Asset Management in which he granted a motion by the plaintiff to strike the defendant’s Rule 68 offer. Bartle’s decision extends the logic of a 2004 decision by the Third Circuit U.S. Court of Appeals that said Rule 68 cannot be used by defendants to derail a class action by making an offer of maximum relief to the lead plaintiff prior to the filing of a motion for class certification and then demanding dismissal of the case as moot. In Weiss v. Regal Collections, the Third Circuit said it was resolving a tension between two rules of civil procedure � Rule 23, which governs class actions, and Rule 68, which allows for offers of judgment � and found that the tension should be resolved in favor of Rule 23. “Allowing defendants to ‘pick off’ putative lead plaintiffs contravenes one of the primary purposes of class actions � the aggregation of numerous similar (especially small) claims in a single action,” Chief Judge Anthony Scirica wrote. By reversing a New Jersey judge’s decision that said the Rule 68 offer of maximum relief had mooted the case, the Third Circuit foreclosed the notion that Rule 68 could be used as a silver bullet in some class actions. But the defense lawyer in Zeigenfuse thought that Rule 68 might still have some use. Plaintiff Rebecca Zeigenfuse had filed a proposed class action alleging violations of the Fair Debt Collections Practices Act. The suit accuses Apex Asset Management, a debt-collection agency, of violating the law by routinely failing to notify credit-reporting agencies that a debt is disputed. Apex’s lawyer, Andrew Schwartz of Marshall Dennehey Warner Coleman & Goggin made Zeigenfuse a Rule 68 offer of judgment of $1,001 plus reasonable costs and attorney fees � one dollar more than the statutory maximum for her individual claim. But plaintiff’s lawyers David Searles of Donovan Searles and James Francis of Francis & Mailman cried foul, claiming such a move violated the central holding in Weiss. In response, Schwartz argued that Weiss was inapplicable because Apex was not seeking to moot Zeigenfuse’s individual claim. Instead, he argued, the defense was simply seeking to shift the risk of costs to her in the event that her claim was unsuccessful. Schwartz was relying on the portion of Rule 68 that says: “If the judgment finally obtained by the offeree is not more favorable than the offer, the offeree must pay the costs incurred after making the offer.” Bartle found that “few cases have dealt with this type of clash between Rule 68 and Rule 23″ and that “no consensus has emerged” among the courts that have tackled the question. In Janikowski v. Lynch Ford, a judge in the Northern District of Illinois sided with the plaintiff and struck the defendant’s Rule 68 offer. But in McDowall v. Cogan, an Eastern District of New York judge refused to do so, saying there was “nothing to strike” because an offer of judgment is not filed with the court until it is accepted or until it is presented by the winning party seeking to collect its costs. But Bartle found that the Third Circuit’s Weiss decision provided significant guidance. Although the Weiss court did not specifically order that the Rule 68 offer of judgment should be stricken, Bartle concluded that the logic of the decision suggests that it should. “Here the defendant is attempting to apply Rule 68, which fits for individual actions, to undermine a putative class action,” Bartle wrote. “Instead of forcing the named representative to accept the carrot of full individual relief which cannot be done under Weiss, defendant is threatening the stick, that is, imposing costs against plaintiff if she is unsuccessful,” Bartle wrote. Either way, Bartle said, the tactic is an attempt to “pick off” the named representative in a proposed class action. “Whichever approach a defendant takes under Rule 68, the purpose is to dampen the efforts of the putative representative in pursuing the class action, if not to cause her to withdraw,” Bartle wrote. “It is an attempt to inject a conflict of interest between her and those she seeks to represent. The use of Rule 68 to shift the risk of costs is simply a more indirect and perhaps somewhat more subtle means to undermine Rule 23 and the procedural and substantive benefits it affords,” Bartle wrote. As a result, Bartle concluded that “Rule 68 cannot be invoked to shift costs where a plaintiff has filed a class action complaint unless the motion for class certification is unduly delayed.” Bartle concluded that Janikowski was correct in holding that the offer of judgment must be stricken to prevent it from undermining the use of the class action device. Following McDowall, Bartle said, “would allow the defendant to achieve what Weiss seems to forbid.” Shannon P. Duffy is a reporter with The Legal Intelligencer, a Recorder affiliate based in Philadelphia.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.