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Supreme Court Rules Plaintiff’s Rejection of Settlement Offer Does Not Moot Class Claims

Legal News GavelThe United States Supreme Court has handed down a key ruling in Campbell-Edwald Co. v. Gomez, holding that a defendant’s offer of settlement to a lead plaintiff in a class action lawsuit does not render the remaining claims of the class members moot. In the lawsuit, the plaintiff brought a class action under the Telephone Consumer Protection Act, requesting damages for unwanted text messages that the defendant delivered to him and the other class members. Prior to seeking class certification, the defendant sent a settlement offer to the plaintiff under Federal Rule of Civil Procedure 68.

After a defendant makes an offer of settlement under FRCP 68, the plaintiff has 10 days to either reject the offer or provide acceptance in writing. If the plaintiff does not respond, the offer is considered rejected. If the plaintiff rejects the settlement, a series of mechanisms kick in that affect trial and the payment of legal fees.

Following trial, if the plaintiff obtains a judgment that is less than the amount offered in the defendant’s settlement, the defendant is entitled to receive costs incurred after the plaintiff rejected the defendant’s settlement offer. In some cases, the court has also concluded that attorney’s fees are recoverable, such as when a party is entitled to fees pursuant to a statute.

In the lawsuit at hand, the plaintiff rejected the FRCP 68 offer of settlement, and the defendant filed a motion to dismiss the action, alleging that no controversy existed in the litigation because the offer constituted complete relief. Both the trial court and the Ninth Circut Court of Appeals rejected the defendant’s argument and denied the motion to dismiss.

On certiorari to the Supreme Court, the justices stated that a lapsed settlement offer under FRCP 68 is deemed withdrawn and has no continuing operative effect on the dispute once a withdrawal occurs. After an FRCP offer is rejected, the parties are in the same position that they were prior to the offer of settlement. The court rejected the defendant’s assertion that the rejection of the offer rendered the plaintiff whole, stating that the plaintiff remained empty-handed following the rejection of the settlement and that the claim continued to exist.

The court included a critical discussion of a situation in which a settlement offer may void a plaintiff’s claims. If a defendant substantiates its offer by providing actual payment of settlement monies, such as payment of funds into an account payable to the plaintiff or the court, the claim may be deemed moot.

If you or someone you know has suffered injuries due to a dangerous product or medical device, you may be entitled to compensation. At Moll Law Group, our dedicated attorneys have helped numerous victims across the country seek the settlement or judgment that they deserve. We proudly represent clients across the country, including in Texas, New York, California, and Illinois. Call us now at 312 -562-1700 or contact us online for a free consultation to learn about the rights and remedies available to you and your family.

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