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11th Cir.: Defendant May Not Moot an Individual or Class Claim By Serving Offer of Judgment on Named Plaintiffs

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Stein v. Buccaneers Ltd. Partnership

This case presented the issue of whether a defendant may moot a class action through an unaccepted Federal Rule of Civil Procedure 68 offer of complete relief to the named plaintiffs—but not to class members—before the named plaintiffs move to certify the class. Joining the majority of circuits that have addressed the issue, the Eleventh Circuit held that it may not.

The Eleventh Circuit described the following relevant procedural history at the court below:

Six named plaintiffs filed this proposed class action in Florida state court against the defendant Buccaneers Limited Partnership (“BLP”). The complaint alleged that BLP sent unsolicited faxes to the named plaintiffs and more than 100,000 others, that the faxes advertised tickets to National Football League games involving the Tampa Bay Buccaneers, and that sending the unsolicited faxes violated the Telephone Consumer Protection Act, see 47 U.S.C. § 227(b)(1)(C), and its implementing regulations, see 47 C.F.R. § 64.1200 & 68.318(d) (2013).

The named plaintiffs sought to represent a nationwide class of recipients of the unsolicited faxes. The complaint demanded statutory damages of $500 per violation, trebled to $1,500 based on BLP’s willfulness, and an injunction against further violations.

The plaintiffs served process on BLP on August 1, 2013. BLP removed the action to federal court on August 16. Three days later, on August 19, BLP served on each named plaintiff an offer of judgment under Federal Rule of Civil Procedure 68. The offer to the first named plaintiff, who alleged in the complaint that he had received three faxes, provided in full.

Pursuant to Rule 68 of the Federal Rules of Civil Procedure, Defendant, BUCCANEERS LIMITED PARTNERSHIP, hereby offers to allow Judgment to be entered against it in this action in the amount of $4,500.00 as well as all reasonable costs incurred to date by JEFFREY M. STEIN, D.D.S., M.S.D., P.A. to be decided by the Court, and an entry of a stipulated injunction enjoining the Defendant from any future violations of 47 U.S.C. § 227, 47 C.F.R. 64.1200, and 47 C.F.R. 68.318(d). The offer extended herein is intended to fully satisfy the individual claims of JEFFREY M. STEIN, D.D.S., M.S.D., P.A. made in this action or which could have been made in this action, and to the extent the offer extended does not do so, BUCCANEERS LIMITED PARTNERSHIP hereby offers to provide JEFFREY M. STEIN, D.D.S., M.S.D., *701 P.A. with any other relief which is determined by the Court to be necessary to fully satisfy all of the individual claims of JEFFREY M. STEIN, D.D.S., M.S.D., P.A. in the action. This offer of judgment is made for the purposes specified in Federal Rule of Civil Procedure 68, and is not to be construed as either an admission that Defendant, BUCCANEERS LIMITED PARTNERSHIP is liable in this action, or that the Plaintiff, JEFFREY M. STEIN, D.D.S., M.S.D., P.A., has suffered any damage. This Offer of Judgment shall not be filed with the Court unless (a) accepted or (b) in a proceeding to determine costs. The Plaintiff must serve written acceptance of this offer within fourteen (14) days, or this offer will be deemed rejected.

The offers to the other named plaintiffs were identical except for the names of the offerees and amounts of the offers; one was for $7,500, one was for $3,000, and three were for $1,500 each, based on the number of faxes the complaint alleged the offeree had received.

Two days later, on August 21, BLP moved to dismiss for lack of jurisdiction, asserting that the unaccepted Rule 68 offers rendered the case moot.

The motion stirred the plaintiffs to action. On August 22, the plaintiffs moved to certify a class. This was long before the deadline under the Local Rules for filing such a motion. On August 28, the district court denied the motion to certify, saying it was “terse” and “admittedly (in fact, purposefully) premature.”

The Rule 68 offers set the deadline for acceptance as 14 days after service of the offers. The applicable counting rules, see Fed.R.Civ.P. 6, extended the deadline 3 days because the offers were served electronically, and further extended the deadline to the next business day. So the deadline for acceptance was September 9. The plaintiffs did not accept the offers, and the deadline passed.

On October 24, the district court entered an order concluding the action was indeed moot, granting the motion to dismiss, and directing the clerk to close the case. The named plaintiffs received no money, no injunction, and no judgment.

Following the order granting the motion to dismiss the plaintiffs appealed. Noting that the case presented an issue of first impression in the Eleventh Circuit, the panel went through great detail providing the reasoning for its holding.

The Eleventh Circuit began by addressing the procedural mechanics of an unaccepted offer of judgment:

Rule 68 provides: “An unaccepted offer is considered withdrawn, but it does not preclude a later offer. Evidence of an unaccepted offer is not admissible except in a proceeding to determine costs.” An unaccepted offer is admissible in a proceeding to determine costs because of Rule 68(d): “If the judgment that the offeree finally obtains is not more favorable than the unaccepted offer, the offeree must pay the costs incurred after the offer was made.” That is the whole point of Rule 68: a party who rejects an offer, litigates, and does not get a better result must pay the other side’s costs. A defendant who wishes to offer complete relief need not invoke Rule 68; the defendant can simply offer complete relief, including the entry of judgment. See, e.g., Doyle v. Midland Credit Mgmt., Inc., 722 F.3d 78, 80–81 (2d Cir.2013). BLP did not do that.

The Court then explained that dismissing a case based an unaccepted offer of judgment is “flatly inconsistent with the rule.” The Court found support for its decision in this regard in the strong decent from the recent Supreme Court case of Symczyk:

Four justices of the United States Supreme Court—the only four who have weighed in on this issue—have adopted precisely this analysis. In Genesis Healthcare Corp. v. Symczyk, ––– U.S. ––––, 133 S.Ct. 1523, 185 L.Ed.2d 636 (2013), a collective action under the Fair Labor Standards Act, the parties stipulated that an unaccepted Rule 68 offer mooted the individual plaintiff’s claim. The majority accepted the stipulation without addressing the issue. Id. at 1528–29. But Justice Kagan, writing for four dissenters, said this:

That thrice-asserted view [that the defendant’s offer mooted the plaintiff’s individual claims] is wrong, wrong, and wrong again. We made clear earlier this Term that “[a]s long as the parties have a concrete interest, however small, in the outcome of the litigation, the case *703 is not moot.” Chafin v. Chafin, 568 U.S. ––––, ––––, 133 S.Ct. 1017, 1023, 185 L.Ed.2d 1 (2012) (internal quotation marks omitted). “[A] case becomes moot only when it is impossible for a court to grant any effectual relief whatever to the prevailing party.” Ibid. (internal quotation marks omitted). By those measures, an unaccepted offer of judgment cannot moot a case. When a plaintiff rejects such an offer—however good the terms—her interest in the lawsuit remains just what it was before. And so too does the court’s ability to grant her relief. An unaccepted settlement offer—like any unaccepted contract offer—is a legal nullity, with no operative effect. As every first-year law student learns, the recipient’s rejection of an offer “leaves the matter as if no offer had ever been made.” Minneapolis & St. Louis R. Co. v. Columbus Rolling Mill, 119 U.S. 149, 151, 7 S.Ct. 168, 30 L.Ed. 376 (1886). Nothing in Rule 68 alters that basic principle; to the contrary, that rule specifies that “[a]n unaccepted offer is considered withdrawn.” Fed. Rule Civ. Proc. 68(b). So assuming the case was live before—because the plaintiff had a stake and the court could grant relief—the litigation carries on, unmooted.

For this reason, Symczyk’s individual claim was alive and well when the District Court dismissed her suit. Recall: Genesis made a settlement offer under Rule 68; Symczyk decided not to accept it; after 10 days [the rule now says 14], it expired and the suit went forward. Symczyk’s individual stake in the lawsuit thus remained what it had always been, and ditto the court’s capacity to grant her relief. After the offer lapsed, just as before, Symczyk possessed an unsatisfied claim, which the court could redress by awarding her damages. As long as that remained true, Symczyk’s claim was not moot, and the District Court could not send her away empty-handed. So a friendly suggestion to the Third Circuit: Rethink your mootness-by-unaccepted-offer theory. And a note to all other courts of appeals: Don’t try this at home. Symczyk, 133 S.Ct. at 1533–34 (Kagan, J., dissenting). BLP invites us to try this at home. We decline.

At least one circuit has explicitly adopted the position set out in the Symczyk dissent. See Diaz v. First Am. Home Buyers Prot. Corp., 732 F.3d 948, 954–55 (9th Cir.2013). Before Symczyk, at least two other circuits took a different approach, holding that an unaccepted Rule 68 offer for full relief moots an individual claim. See O’Brien v. Ed Donnelly Enters., Inc., 575 F.3d 567, 575 (6th Cir.2009); McCauley v. Trans Union, L.L.C., 402 F.3d 340 (2d Cir.2005). But even those decisions said a plaintiff’s claims could not just be dismissed as was done here; the proper approach, the courts said, was to enter judgment for the plaintiff in the amount of the unaccepted offer.

We agree with the Symczyk dissent. But even if we did not, we would be unable to affirm the dismissal of the plaintiffs’ claims without the entry of judgment for the amount of the Rule 68 offers.

The court also reasoned that the language in the individual offers of judgment at issue, stating that the offers were withdrawn if not accepted within 14 days, also supported its decision.

Although not discussed in great detail here, in a second/alternative holding, the Court also adopted the majority view that a motion for class certification can “relate back” to avoid allowing a defendant to “pick off” a class action by attempting to tender an offer of judgment to the named plaintiffs alone.

Of note, on the same day that it issued this decision, the Eleventh Circuit issued two decisions in similar cases in which they reversed the respective trial court’s dismissals based on mootness grounds. Although none of the three decisions discussed claims brought pursuant to the FLSA and the opt-in mechanism of 29 U.S.C. § 216(b), at least one district court applied the now binding authority to an FLSA case less than a week after the decision, in a case pending in the Southern District of Florida, Collado v. J. & G. Transport, Inc.

With this trifecta of cases and the cases that have already followed suit in the less than one month since the cases were decided, hopefully this illogical defense tactic will now finally be put to bed.

Click Stein v. Buccaneers Ltd. Partnership to read the entire decision, and Collado v. J. & G. Transport, Inc. to read that decision.

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