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January 25th, 2016

SCOTUS Rules Class Actions Can Survive Defendants’ Offers to Individual Plaintiffs

On January 21 the U.S. Supreme Court ruled 6-3 that an offer of full payment for an individual claim, prior to the deadline for filing a motion for class certification, does not end the claim or prevent class certification.

The defendant, Campbell-Ewald, Inc., a marketing firm, sent unauthorized marketing text messages to Jose Gomez in violation of federal law. Gomez filed suit with the intention of moving the court for class certification. Campbell-Ewald, realizing that it could be liable for up to $1,500 per text message sent, offered Gomez $1,503 per text. Gomez let the offer expire with the intent of moving forward with class certification. Campbell-Ewald moved to dismiss, arguing that Gomez’s refusal of full payment meant that he could not pursue his claim in federal court. The district court disagreed, the court of appeals affirmed, and the Supreme Court accepted the case, leading to last week’s ruling.

Chief Justice John Roberts in his dissent identifies the problem with allowing plaintiffs to continue their case after an offer of full payment has been made – particularly with statutory rights. “The problem for Gomez is that the federal courts exist to resolve real disputes, not to rule on a plaintiff ’s entitlement to relief already there for the taking,” wrote Chief Justice Roberts.

A close read of the majority opinion suggests that defendants may be able to forestall class actions before the deadline if they actually execute, as opposed to merely offer, full payments to plaintiffs in such cases.

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