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Supreme Court ruling in lawsuit against U.S. Navy marketer for alleged solicitation via text messages without consent a victory for consumers

The U.S. Supreme Court gave consumers a win this week in Campbell-Ewald v. Gomez (Jan. 20, 2016), which held that an unaccepted settlement offer or offer of judgment by the defendant does not moot a plaintiff’s case and, as a result, that the federal trial court properly maintained jurisdiction over the plaintiff’s class action under the Telephone Consumer Protection Act (“TCPA”).

The defendant in Campbell-Ewald—a marketing agency—was hired by the U.S. Navy to execute a multimedia recruiting campaign, through which it transmitted over 100,000 Navy recruitment ads via text message to a target demographic (cellphone users age 18 to 24 who had consented to receiving solicitations by text).  After receiving one of those texts, the plaintiff—claiming he had not consented to receipt—filed a class action suit under the TCPA on behalf of himself and others who also received these texts without consent.

The trial court rejected the defendant’s motion to dismiss the class action as moot, which was based on the notion that the defendant’s attempts to resolve the plaintiff’s individual claims (through unsuccessful offers of case costs, individual damages, and an injunction) left the court with nothing to decide.  The U.S. Court of Appeals for the Ninth Circuit and ultimately the Supreme Court agreed with the trial court’s refusal to dismiss the case on mootness grounds.

The Supreme Court’s opinion, written by Justice Ruth Bader Ginsburg, explained that the question of whether an unaccepted offer of settlement or judgment moots the plaintiff’s case was previously avoided by the Court in Genesis HealthCare Corp. v. Symczyk (April 16, 2013), because there the plaintiff conceded the point.  Genesis, however, featured a blistering dissent from Justice Elena Kagan (“The majority’s decision is fit for nothing: Aside from getting this case wrong, it serves only to address a make-believe problem.”), in which she argued in favor of squarely holding that “an unaccepted settlement offer — like any unaccepted contract offer — is a legal nullity, with no operative effect.”

Georgetown law professor David Cole has commented that “[a] dissent’s only influence . . . depends on its ability to articulate a more appealing vision of what the law should be.”  Justice Kagan’s Genesis dissent undoubtedly generated sufficient appeal.  In Campbell-Ewald, the Court adopted her mootness analysis lock, stock and barrel, as had “every Court of Appeals ruling on the issue post Genesis HealthCare.”

Campbell-Ewald is an important victory in the fight to prevent corporations from letting themselves off the hook for systemic violations of consumer protection laws.  Scott Nelson, an attorney with Public Citizen Litigation Group and plaintiff’s co-counsel in Campbell-Ewald, explained the significance of the ruling thus:  “After Campbell-Ewald, defendants will no longer be able to argue that an unaccepted offer of judgment or other settlement offer moots a case. A decision the other way would have made class actions very difficult to maintain in statutory damages cases and severely damaged their utility as a means of redressing wrongdoing that inflicts small losses on many people—exactly the kinds of cases to which class actions are most suited.”

As Nelson cautions, however, Campbell-Ewald may leave room for class action defendants to use alternative tactics to “pick off” named plaintiffs, perhaps relying on comments made in the dissenting opinions of Chief Justice Roberts (“The majority’s analysis may have come out differently if Campbell had deposited the offered funds with the District Court.”) and Justice Alito (“Today’s decision thus does not prevent a defendant who actually pays complete relief—either directly to the plaintiff or to a trusted intermediary—from seeking dismissal on mootness grounds.”).  But efforts to actually or constructively tender the full amount of damages to a plaintiff present more complications than a mere offer of relief.  For instance, because the vast majority of consumer protection statutes provide attorney fees for successful plaintiffs, it may be difficult for a class action defendant to tender to a named plaintiff an amount that satisfies a claim for “reasonable attorney’s fees.”  Thus, although Campbell-Ewald may not stop a big corporation from trying to short-circuit a class action, the decision at least makes it more difficult and potentially risky to do so.

by Christopher Markos, Esq.