Chief Judge Saris and Judge Sorokin of the District of Massachusetts recently tackled questions left unanswered by the Supreme Court’s opinion earlier this year in Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (2016) (see Don Frederico’s prior post for a full discussion of Campbell-Ewald).
In South Orange Chiropractic Center, LLC v. Cayan LLC, 2016 WL 1441791, No. 15-13069 (D. Mass. April 12, 2016), the defendant, seeking to slip through the door left ajar by Campbell-Ewald, sought to deposit $7,500 with the court, providing the named plaintiff in a putative Telephone Consumer Protection Act (TCPA) class action with full relief. In addition, the defendant agreed to have judgment entered against it for allegedly sending plaintiff an unsolicited fax in violation of the TCPA, to pay for costs, to be enjoined from future conduct as to plaintiff or others, and to preserve evidence, and presented the plaintiff with a stand-alone settlement agreement, all of which the plaintiff rejected. The defendant then moved to dismiss the plaintiff’s individual claims and to strike the class allegations, arguing that the plaintiff’s individual claims were now moot and plaintiff could no longer serve as class representative.
Chief Judge Saris, noting that the facts in this case raised “cutting edge” questions concerning a defendant’s ability to pick off class representatives through Rule 68 offers of judgment, addressed the specific questions left unanswered by the court in Campbell-Ewald. First, if a defendant deposits the full amount of the plaintiff’s individual claim in an account payable to plaintiff (or here, with the court), are the plaintiff’s individual claims mooted? Second, if the plaintiff’s individual claims are mooted, does the class action remain justiciable?
The dissenting justices in Campbell-Ewald answered the first question reserved by the majority, stating that tendering a check or depositing one with the court moots a plaintiff’s individual claim. Noting the few decisions issued since Campbell-Ewald on this question, Chief Judge Saris explained how the district courts are split, and ultimately concluded that the plaintiff no longer had a live claim because the defendant had offered to deposit a check with the court, fully satisfying all of the plaintiff’s individual claims.
Addressing the “harder issue” of whether the “class action outlives the mooted individual claims,” the court relied on guidance from the First Circuit’s “inherently transitory” exception outlined in Cruz v. Farquharson, 252 F.3d 530 (1st Cir. 2001) and held that the exception applied because class issues would likely evade review, essentially eviscerating consumer class actions where there exists a “widespread whack-a-mole practice aimed at picking off a named plaintiff before class certification.” In holding that the class action may proceed as a case or controversy, the court ordered the parties to consider whether immediate appeal to the First Circuit was appropriate under 28 U.S.C. § 1292(b).
In a subsequent related opinion, South Orange Chiropractic Center, LLC v. Cayan LLC 2016 WL 3064054, No. 15-13069 (D. Mass. May 31, 2016), the court denied the defendant’s motion to certify the April 12, 2016 order for interlocutory appeal. Explaining that “every attempt by a defendant to ‘pick-off’ the named plaintiff with hopes of mooting the proposed class action has been rebuffed” by courts in other circuits, at both the appellate and trial court levels, the court held there was no substantial ground for a difference of opinion warranting interlocutory appeal under § 1292(b).
A mere nine days later, Judge Sorokin issued an opinion in a non-TCPA case addressing these same issues but arriving at a different result. In Demmler v. ACH Food Companies, Inc., Civ. No. 15-13556-LTS (D. Mass. June 9, 2016), plaintiffs claimed defendant’s use of the phrase “all natural” on the labels of its barbecue sauces was unfair and deceptive, and brought claims against the defendant under the Massachusetts consumer protection statute, Mass. Gen. Laws ch. 93A, and under a theory of unjust enrichment. Accepting the holding of the South Orange opinions, but finding that key factual differences in the nature of the claims asserted compelled a different result, the court dismissed both the named plaintiff’s individual claims and the class claims.
Judge Sorokin explained that South Orange relied on “a flock of TCPA cases” demonstrating a practice aimed at picking off a named plaintiff before class certification,” causing class issues to evade review and making Cruz’s inherently transitory exception appropriate. He explained: “While Chief Judge Saris found a pattern of putative TCPA class action defendants tendering full relief to named plaintiffs before certification, no such record exists” for claims under Chapter 93A. This “key factual distinction” rendered the inherently transitory exception inapplicable.
While some defendants initially remained hopeful in the wake of Campbell-Ewald that certain pick-off attempts might still succeed in mooting class claims in narrow circumstances, perhaps by tendering a check to the named plaintiff, the courts in various jurisdictions have begun further limiting, or altogether shutting down this possibility. But just when the South Orange opinions seemingly slammed the door on Rule 68’s tactical utility in mooting class claims, Demmler has cracked it open again, suggesting that mootness will be determined on a case-by-case basis depending on the nature of the claims and the factual circumstances. These opinions collectively suggest that while defendants may not be able to moot class TCPA claims, they might succeed in doing so for more general consumer protection claims, and potentially others. A body of case law on this issue will surely continue to develop in this District and the First Circuit, as well as in other jurisdictions, and it will be interesting to see what inconsistencies arise.