The latest attempt at “picking off” a lead plaintiff in a class action got shot down on Tuesday — and by the same circuit that rejected a similar move earlier this summer.
“The idea of a theme and variations is a common one in music. It should be in law, too,” wrote Diane Wood, chief judge of the U.S. Court of Appeals for the Seventh Circuit, in a class action against Volvo Cars of North America LLC. But numerous efforts by defendants to find loopholes to the U.S. Supreme Court’s 2016 decision in Campbell-Ewald v. Gomez haven’t been successful. That ruling found that an unaccepted offer of judgment made to a lead plaintiff did not moot his class action.
“Several variations on that theme have been tried and have failed,” wrote Wood, who also wrote a June 20 decision in Fulton Dental v. Bisco, which found that a defendant’s $3,600 deposit into a court account that compensated the lead plaintiff did not moot the entire class action. “Undeterred, the defendant in the case now before us asserts that an unaccepted offer of relief before a putative plaintiff files a lawsuit deprives that plaintiff of standing. We see no reason why the timing of the offer has such a powerful effect.”
Plaintiffs attorney Todd McLawhorn of Siprut PC in Chicago lauded the decision.
“We are pleased that the Seventh Circuit recognized Volvo’s offer, and other similar pick-off attempts, for what they are — procedural mechanisms to avoid addressing the merits of plaintiffs’ case,” McLawhorn said in a statement. “Volvo promised one thing and delivered another; it would be perverse that having been called out on its misrepresentations, Volvo would then get to decide the appropriate remedy by deciding the terms of its offer. The Seventh Circuit decision recognizes that plaintiffs cannot be forced to accept such offers, and are free to seek the relief of their choosing for corporate wrongdoing. The judge and jury will decide the remedy for Volvo’s misrepresentations, not Volvo.”
Jennifer Ilkka, a Chicago partner at Reed Smith who represented Volvo, did not immediately respond to a request for comment.
The case was brought by Xavier and Khadija Laurens, who purchased a Volvo T8 plug-in hybrid for $83,475 with the understanding that they would get 25 miles on the SUV’s battery. Instead, they got closer to 10 miles.
Initially, Xavier Laurens was the only named plaintiff in the class action, which alleged misleading advertising against Volvo. But his wife, Khadija Laurens, who was the car’s titleholder, got a letter from Volvo months later offering a “full refund” if she returned the vehicle. Instead of accepting the offer, she joined the complaint as a second lead plaintiff.
Volvo moved to dismiss, arguing that both lacked standing — Xavier Laurens because he didn’t have title to the car, and Khadija Laurens because of the offer she got before joining the suit. U.S. District Judge Harry Leinenweber of the Northern District of Illinois agreed, dismissing the case.
The Seventh Circuit reversed as to Khadija Laurens, finding that Campbell-Ewald applied, even though that case dealt with mootness, not standing — a distinction raised by Volvo in its appeal brief. The panel also acknowledged that the case before it involved a generic letter, rather than an offer of judgment under Federal Rule of Civil Procedure 68. But those differences didn’t matter, the panel concluded, noting that it brushed aside a similar distinction in Fulton Dental, which dealt with deposits with the court made under Federal Rule of Civil Procedure 67.
“If forcing a contract on an unwilling party is unacceptable under the judicially supervised procedures of Rule 68 and Rule 67, we see no reason why an impersonal note offering a refund should have such a powerful effect,” Wood wrote. “Nor does it matter that Volvo’s offer preceded Khadija’s lawsuit.”
In fact, she noted, the case even survives the Campbell-Ewald dissent by Chief Justice John Roberts, who noted that the result could be different if a defendant could ensure it would make good on its offer. That couldn’t happen in Khadija Laurens’ case, Wood wrote.
“Here, if Khadija had accepted Volvo’s offer and then Volvo had failed to pay, she would be right back where she started, with a new breach of contract claim,” she wrote.