The Supreme Court yesterday denied an attempt by a defendant to moot a class action under the Telephone Consumer Protection Act (TCPA), 48 Stat. 1064, Pub. L. 102–243 (Dec. 20, 1991) (codified at 47 U.S.C. § 227), on the basis of an unaccepted settlement offer to the named plaintiff. The case, Campbell-Ewald Co. v. Gomez, No. 14–857, was decided on a 6–3 vote, with Justice Ginsburg writing for the majority, joined by a concurrence from Justice Thomas.
Campbell-Ewald Co. was working under a contract for the U.S. Navy to provide marketing services in connection with recruiting. The company proposed to send a text message to young adults aged 18 to 24 encouraging them to learn more about the Navy. The Navy approved the campaign, conditioned on sending solicitations only to persons who had opted in to receiving messages. The text of the message was:
Destined for something big? Do it in the Navy. Get a career. An education. And a chance to serve a greater cause. For a FREE Navy video call [phone number].
Jose Gomez received the message, and alleges that he never consented to receiving messages, and that he was outside the relevant age range at the time (he was nearly 40). He sued in federal court in California and sought class certification. Campbell-Ewald offered to pay him the maximum for his personal damages, excluding attorney’s fees, and filed an offer of judgment pursuant to Federal Rule of Civil Procedure 68. He rejected the settlement, and after the district court dismissed the case and the Ninth Circuit Court of Appeals reversed the dismissal, the Supreme Court granted certiorari.
There, Campbell-Ewald argued that the unaccepted settlement offer rendered the named plaintiff’s complaint moot, because the offer would have fully satisfied his personal claims. The Court held that Campbell-Edward’s settlement bid and Federal Rule of Civil Procedure 68 offer of judgment, once rejected, had no continuing efficacy, based on basic principles of contract law. With no settlement offer continuing to operate, the parties remained adverse – each retained the same stake in the litigation they had at the outset. The district court thus retained jurisdiction to decide the case.
Separately, Campbell-Edward, as a contractor for the U.S. Navy, sought derivative sovereign immunity, but the Court rejected this claim. The Court acknowledged that the U.S. and its agencies are not subject to the TCPA. Because sovereign immunity must be lifted by statute, however, and because neither the TCPA nor any other statute does so with respect to TCPA claims, the federal government is not subject to TCPA claims. This governmental immunity does not transfer in whole to contractors; they obtain some immunity, but “[t]hat immunity, … unlike the sovereign’s, is not absolute.” Where a contractor violates both federal law and the contracting authority’s instructions, no derivative immunity shields the contractor from suits based on the violation.
Justice Thomas’s concurrence was based on the common-law history of tenders, arguing that “a mere offer of relief was insufficient to deprive a court of jurisdiction” at the time of the founding. Chief Justice Roberts, writing the lead dissent, argued that the offer of full satisfaction of Gomez’s claims mooted the case, eliminating a federal court’s jurisdictional minimum requirement of an actual case or controversy; this, he argued, deprived the district court of jurisdiction. Justice Alito, who joined the principal dissent, wrote separately to emphasize that his vote was premised on the absence of any dispute that the company would make good on its promise to pay plaintiff the money offered (“Absent this fact, I would be compelled to find that the case is not moot.”).
The decision not to moot the claims is not just a boost to TCPA plaintiffs, it is a boost to class action plaintiffs generally. TCPA plaintiffs, and those similarly situated, are not out of the woods yet, however. An important case with somewhat similar arguments, but under the Fair Credit Reporting Act (FCRA), 84 Stat. 1127, Pub. L. 91–508 (Oct. 26, 1970) rather than the TCPA, has already been heard at the Court: Spokeo, Inc. v. Robins, No. 13–1339. (We wrote about that case previously here, after the Court granted certiorari.) In that case, the Court will address whether Congress can confer Article III standing on a plaintiff who suffers no independent, concrete harm, by making a bare violation of a statute liable in a suit brought by a private plaintiff. If the Court decides that case against the plaintiff, then consumer claims under a range of federal statutes could be restricted, including under the TCPA.
Consumer class actions, a subject of several important Court cases in recent years, continue to be in the legal spotlight, and thus feature among the top concerns of in-house counsel everywhere.