Bais Yaakov of Spring Valley v. ACT, Inc. , 798 F.3d 46 ( 2015 )

United States Court of Appeals
For the First Circuit
No. 14-1789
BAIS YAAKOV OF SPRING VALLEY,
Plaintiff, Appellee,
v.
ACT, INC.,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Timothy S. Hillman, U.S. District Judge]
Before
Howard, Chief Judge,
Torruella and Kayatta, Circuit Judges.
Jonathan S. Franklin, with whom Robert A. Burgoyne, Mark
Emery, Fulbright & Jaworski L.L.P., Robert L. Leonard, Michael K.
Callan, and Doherty, Wallace, Pillsbury & Murphy, P.C., were on
brief, for appellant.
Aytan Y. Bellin, with whom Bellin & Associates LLC, was on
brief, for appellee.
August 21, 2015
KAYATTA, Circuit Judge. On certified interlocutory
review under 28 U.S.C. § 1292(b), we hold that a rejected and
withdrawn offer of settlement of the named plaintiff's individual
claims in a putative class action made before the named plaintiff
moved to certify a class did not divest the court of subject matter
jurisdiction by mooting the named plaintiff's claims.
I. Background
ACT, Inc., is a nonprofit Iowa corporation known for
developing and administering an eponymous college-entrance
examination. Bais Yaakov of Spring Valley is a private religious
high school located outside New York City. ACT sent Bais Yaakov
three unsolicited facsimiles reminding Bais Yaakov of the exam's
registration deadline and encouraging Bais Yaakov to volunteer as
a test site. The messages did not provide notice of certain rights
of the recipient as required by the federal Telephone Consumer
Protection Act ("TCPA"), 47 U.S.C. § 227, and an analogous New York
state law, New York General Business Law § 396-aa ("section 396-
aa"). In response, Bais Yaakov filed claims individually and on
behalf of three putative classes seeking damages and injunctive
relief under the TCPA and section 396-aa.
Several months into the litigation, the parties mutually
agreed on a deadline for the class certification motion that Bais
Yaakov's complaint announced it would pursue. Prior to that
deadline, ACT tendered to Bais Yaakov an offer for judgment under
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Federal Rule of Civil Procedure 68. ACT offered to pay Bais Yaakov
$1,600 for each fax ($1,500 for violating the TCPA and $100 for
violating section 396-aa), stating that the figure represented the
maximum amount Bais Yaakov could be awarded as damages under each
statute. ACT also offered to be enjoined from sending any
additional unsolicited facsimiles to Bais Yaakov, and offered to
pay Bais Yaakov's attorneys' fees and costs if the court determined
such fees were in order.1 ACT's offer concluded by stating that it
looked forward to a response "within the time limits established by
Rule 68."
Four days after receiving the offer, Bais Yaakov moved
for class certification. Bais Yaakov did not otherwise respond to
the offer within fourteen days after it was served, which meant
that the unaccepted offer was "withdrawn" by operation of Rules
68(a) and (b). See Fed. R. Civ. P. 68(a), (b). ACT never renewed
the withdrawn Rule 68 offer. Instead, a few weeks later, ACT moved
to dismiss this lawsuit for lack of subject matter jurisdiction,
arguing that its unaccepted and withdrawn Rule 68 offer fully
resolved any case or controversy between the parties, rendering
Bais Yaakov's claims moot. U.S. Const. art. III, § 2.
The district court denied ACT's motion to dismiss,
holding that an unaccepted offer of judgment did not moot Bais
Yaakov's claim. Bais Yaakov of Spring Valley v. ACT, Inc., 987 F.
1
Neither pertinent statute contains a fee-shifting provision.
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Supp. 2d 124, 128-29 (D. Mass. 2014). Pursuant to 28 U.S.C.
§ 1292(b), the district court also certified, and we agreed to
review, the question of "[w]hether an unaccepted offer of judgment
under Rule 68 in a putative class action, when the offer is made
before the Plaintiff files a motion to certify the class, moots the
Plaintiff's entire action and thereby deprives a court of federal
subject matter jurisdiction[.]" In determining that the question
to be certified was sufficiently determinative of the outcome to
warrant interlocutory review, the district court accepted ACT's
contention that the offer, had it been accepted before it was
withdrawn, would have provided Bais Yaakov with everything to which
it would have been entitled on its individual claim, had it
prevailed. The question of whether an unaccepted offer for
individual relief in a putative class action moots the action is a
question of law that we review de novo. See Mangual v. Rotger-
Sabat, 317 F.3d 45, 56 (1st Cir. 2003).
II. Analysis
State and federal substantive law determine whether a
person acquires a cause of action for which damages may be sought
in a civil suit. Here, for example, in enacting the TCPA, Congress
created a cause of action against ACT for each person to whom ACT
sent a fax in violation of the TCPA. See 47 U.S.C. § 227(b)(3).
One customarily assumes that the person who acquires a cause of
action must bring a lawsuit on his or her own behalf in order to
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obtain judicial relief. In fact, though, the Federal Rules of
Civil Procedure provide a variety of procedural vehicles by which
a third party may sometimes pursue, on behalf of another person,
the judicial relief to which that other person is entitled under
applicable substantive law. Rule 17, for example, provides a
vehicle by which various persons or entities may have claims
brought for their benefit by others. See Fed. R. Civ. P. 17(a)(1)
(allowing executors, administrators, guardians, bailees, trustees,
and others to sue in their own names without joining the person for
whose benefit the action is brought).
Rule 23, under which Bais Yaakov seeks to proceed in this
case, is another such rule that creates a procedural mechanism for
one person's cause of action to be brought by another. The person
who actually brings such a suit does not claim to be an executor,
administrator, guardian, bailee, trustee, or the like. Rather, the
named plaintiff files a complaint that announces a willingness to
sue in a representative capacity, and alleges satisfaction of
Rule 23's requirements aimed at determining whether the plaintiff
is a proper class representative and whether allowing a
representative action would be fair. See Fed. R. Civ. P. 23(b)(3).
The principal intended beneficiaries of this procedural device are
persons who have suffered small but similar losses as a result of
wrongful conduct by the same defendant or defendants. See Smilow
v. Sw. Bell Mobile Sys., Inc., 323 F.3d 32, 41 (1st Cir. 2003)
-5-
("The core purpose of Rule 23(b)(3) is to vindicate the claims of
consumers and other groups of people whose individual claims would
be too small to warrant litigation." (citing Amchem Prods., Inc.,
v. Windsor, 521 U.S. 591, 617 (1997))). For such persons, it will
often make little practical sense for any one of them to bring a
claim only for herself because, as has been noted in a related
context, "only a lunatic or a fanatic sues for" small-dollar
claims, AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740, 1761
(2011) (Breyer, J., concurring) (quoting Carnegie v. Household
Int'l, Inc., 376 F.3d 656, 661 (7th Cir. 2004)), particularly when
there is no fee-shifting statute that might cover litigation costs
that would otherwise dwarf any recovery. But for the existence of
Rule 23, or the possibility of action by the government itself, a
person or company who wrongfully causes a small amount of damage to
each of a large number of persons will likely retain the fruits of
that wrongful action.
Plaintiffs seeking to pursue a lawsuit brought in a
representative capacity must prove their authorization to bring the
lawsuit. For example, a person who is not a guardian cannot sue as
such, and so on. Unlike most other representative plaintiffs,
however, plaintiffs seeking to proceed as representatives of a
class under Rule 23 must show both that they are members of the
class and that they adequately represent the class. Fed. R. Civ.
P. 23(a).
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Against this background, ACT advances a nifty stratagem
for defeating motions for class certification: offer only the
named plaintiff full payment for its individual claims, and then
move to dismiss the suit as moot before the court has a chance to
consider whether the plaintiff should be allowed to represent the
putative class. In recent years, this stratagem has become a
popular way to try to thwart class actions, as evidenced by the
cases discussed in this opinion that have grappled with various
aspects of the questions presented in this appeal. This stratagem
is most readily employed in precisely those cases where Congress
has chosen to empower citizens as private attorneys general to
pursue claims for well-defined statutory damages, because it is in
such cases that defendants can most easily offer an individual
plaintiff relief on her personal claim in an amount that
indisputably equals the highest amount that the individual
plaintiff could recover on her own claim.
In this particular case, ACT's mootness gambit seems to
run against the grain of the Supreme Court's holding in Deposit
Guaranty National Bank v. Roper, 445 U.S. 326, 340 (1980). In
Roper, the Court held that the entry of judgment, over the putative
class plaintiffs' objections, of full payment on their individual
claims after a motion for class certification had been denied "did
not moot their private case or controversy," and that they could
still appeal the denial of the certification motion. Id. The
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Court gave several possible reasons for its holding. It spoke of
the fact that allowing the claims of putative class representatives
to be "picked off" would frustrate the objectives of class actions.
Id. at 339. The opinion also noted the plaintiffs' "desire to
shift part of the costs of litigation to those who will share in
its benefits if the class is certified and ultimately prevails."
Id. at 327; see also id. at 338 n.9. More recently, the Supreme
Court has instructed us that the actual holding in Roper turned not
on policy concerns regarding the use of pick-off attempts to snuff
out possible class actions, but rather on the plaintiffs' "ongoing,
personal economic stake in the substantive controversy--namely, to
shift a portion of attorney's fees and expenses to successful class
litigants." Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523,
1532 (2013).
Bais Yaakov argues that it, too, has a continuing
economic interest in the controversy: the interest in sharing
attorney's fees with other class members, and the interest in a
possible incentive award for serving as a lead plaintiff. As for
attorney's fees, ACT's offer of judgment called for paying Bais
Yaakov's attorney's fees only if "the Court determines Plaintiff
would be entitled to recover reasonable attorney' [sic] fees if it
prevailed on any of its claims." Bais Yaakov notes that neither
the TCPA nor section 396-aa provide for attorney's fees, meaning
that no court will make the determination that ACT imposed as a
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condition to paying fees, and that Bais Yaakov accordingly retains
an interest in spreading attorney's fees among putative class
members. The district court resolved this question against Bais
Yaakov on legal grounds that we find unconvincing.2 On the other
hand, as a factual matter, the record does not disclose the terms
of Bais Yaakov's agreement with its counsel, so we do not know
whether the amount of fees Bais Yaakov must pay would be less if a
class were to achieve a recovery. Of course, neither is it clear
whether we even need to engage in such a factual inquiry to answer
the "continuing economic interest" inquiry under Roper.3 Our
uncertainty does not stop there: we also question whether the
possibility of an incentive award is a "continuing economic
2
The district court distinguished Roper on the grounds that Roper
involved the appeal of a certification motion that had been denied
prior to entry of judgment for the plaintiffs, whereas here no
motion had been made at the time of the unaccepted offer. While
the timing of the offer may make a difference in this circuit on
the question of when a class interest comes into existence, see
Cruz v. Farquharson, 252 F.3d 530, 533-34 (1st Cir. 2001), Roper
gave no indication that it matters to the inquiry of whether an
individual interest is preserved through a plaintiff's continuing
economic interest in class certification and litigation. Likewise,
Cruz did not run afoul of Roper's holding on the continuing
interest in attorney's fees: that argument was not presented in
Cruz, likely because the plaintiffs sought only equitable relief,
id. at 532-33, and would not have recovered money from which fees
might be paid.
3
While it is not clear from Roper the specificity with which the
plaintiffs made their argument for attorney's fees, the Court did
indicate that the plaintiffs in their briefs "assert[ed] a
continuing obligation" for certain fees and costs already incurred.
445 U.S. at 334 n.6. Here, Bais Yaakov has not actually specified
what fees, if any, it would be accountable for if the litigation
were to end at this juncture.
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interest" under Roper, particularly given that this circuit has
never ruled on when, if ever, such awards are valid.4
We further note that the precise holding in Roper on
which Bais Yaakov relies for this argument has been expressly
called into question by the Court in Genesis Healthcare. 133 S.
Ct. at 1532 n.5 (questioning whether the holding of Roper remains
valid in light of the subsequent decision in Lewis v. Contintental
Bank Corp., 494 U.S. 472, 480 (1990) (stating that an "interest in
attorney's fees is . . . insufficient to create an Article III case
or controversy where none exists on the merits of the underlying
claim.")). The Supreme Court's questioning of Roper's continuing
vitality does not grant us the prerogative of declaring Roper
overruled. See Rodriguez de Quijas v. Shearson/Am. Express, Inc.,
490 U.S. 477, 484 (1989) ("If a precedent of this Court has direct
application in a case, yet appears to rest on reasons rejected in
some other line of decisions, the Court of Appeals should follow
the case which directly controls . . . ."); see also United States
v. Jiménez-Banegas, No. 13-1980, 2015 WL 3876556, at *5 (1st Cir.
June 24, 2015).5 Nevertheless, it is clear that Bais Yaakov's
4
At least two circuits have held that such arrangements can be
appropriate under at least some circumstances. See Cook v.
Niedert, 142 F.3d 1004, 1016 (7th Cir. 1998); Staton v. Boeing Co.,
327 F.3d 938, 977 (9th Cir. 2003).
5
ACT argues that we have nevertheless seized for ourselves the
prerogative to overrule Roper by stating that "a party's interest
in recouping attorney's fees does not create a stake in the outcome
sufficient to resuscitate an otherwise moot controversy."
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reliance on Roper stands on shaky ground in light of both Roper's
uncertain future and our uncertainty as to whether Roper "directly
controls" these facts, Rodriguez de Quijas, 490 U.S. at 484. We
therefore continue our analysis to determine whether we would reach
the same outcome even if Roper cannot be relied on. The question
thus posed is whether, disregarding Bais Yaakov's claimed interest
in shifting fees and a possible incentive award, ACT's tender of a
Rule 68 offer mooted Bais Yaakov's case.
Our own decision in Cruz v. Farquharson, 252 F.3d 530
(1st Cir. 2001), narrows the scope of this inquiry by precluding
Bais Yaakov from arguing that its interest in having a class
certified is enough to defeat ACT's mootness argument. Cruz held
that "a putative class action . . . ordinarily must be dismissed as
moot if no decision on class certification has occurred by the time
that the individual claims of all named plaintiffs have been fully
resolved." Id. at 533. Although Cruz also left open the
possibility that a putative class action may not be moot if a
motion for certification was pending when the plaintiff's
individual claims became moot, id. at 534 n.3, no such motion was
Diffenderfer v. Gomez-Colon, 587 F.3d 445, 452-53 (1st Cir. 2009)
(citing Lewis, 494 U.S. at 480). That statement in Diffenderfer
was dictum. The actual holding in that case concerned an interest
in fees that could be sustained even when the substantive claim was
dismissed as moot. Here, by contrast, the interest in fees can be
sustained only if the class action is not dismissed as moot. In
any event, until the Supreme Court overrules Roper, we follow
Roper.
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pending in this case when ACT tendered its Rule 68 offer. In the
absence of en banc review, Cruz thus limits this panel's inquiry to
determining whether the named plaintiff's individual claim was
indeed "fully resolved"--and therefore mooted--by the tendering of
the Rule 68 offer.
On this question, Cruz is silent. The Cruz plaintiffs
sought to compel the Boston office of the Immigration and
Naturalization Service ("INS"), as it was then called, to act on
long-delayed visa applications. Id. at 532. When the plaintiffs
filed suit, the agency snapped into action and granted all of the
applications within ten weeks. Id. In other words, the plaintiffs
sought (in their individual claims) only injunctive relief to
compel actions that the INS had indisputably already taken by the
time the plaintiffs moved for class certification. There was no
Rule 68 offer (accepted or otherwise) at issue, and the Cruz court
could say with confidence (and accuracy) that the named plaintiffs
had "received complete relief" on their individual claims. Id. at
533.
In order to decide whether an unaccepted Rule 68 offer
triggers mootness under Cruz, we must therefore first decide that
a plaintiff who has refused such an offer has "received complete
relief," such that there remains no individual case or controversy
sufficient to satisfy Article III. All five circuit courts to have
considered such an argument post-Genesis Healthcare have rejected
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it. See Hooks v. Landmark Indus., Inc., No. 14-20496, 2015 WL
4760253, at *3-4 (5th Cir. Aug. 12, 2015); Chapman v. First Index,
Inc., Nos. 14-2773 & 14-2775, 2015 WL 4652878, at *2-3 (7th Cir.
Aug. 6, 2015); Tanasi v. New Alliance Bank, 786 F.3d 195, 199-200
(2d Cir. 2015), Stein v. Buccaneers Ltd. P'ship, 772 F.3d 698, 704-
05 (11th Cir. 2014), Diaz v. First Am. Home Buyers Prot. Corp., 732
F.3d 948, 954-55 (9th Cir. 2013). Six other circuits have either
held,6 assumed,7 or expressly avoided deciding8 that a Rule 68 offer
of all relief requested can, at least sometimes, moot an individual
6
O'Brien v. Ed Donnelly Enters., Inc., 575 F.3d 567, 574-75 (6th
Cir. 2009); Samsung Elec. Co., Ltd. v. Rambus, Inc., 523 F.3d 1374,
1379-80 (Fed. Cir. 2008).
7
Warren v. Sessoms & Rogers, P.A., 676 F.3d 365, 371 (4th Cir.
2012) (stating that an offer of full relief moots a claim, but
holding that the defendants' Rule 68 offer did not offer full
relief because the plaintiff sought actual damages in an amount
that had not been determined); Hartis v. Chicago Title Ins. Co.,
694 F.3d 935, 949 (8th Cir. 2012) (stating that, in a case
involving the correction of a clerical error in a docket entry that
dismissed the plaintiffs' claims as moot following the denial of
class certification and a subsequent Rule 68 offer for full relief,
judgment should be entered for a putative class representative upon
a defendant's offer of full payment where class certification has
been properly denied (citing Alpern v. Utilicorp United, Inc., 84
F.3d 1525, 1539 (8th Cir. 1996))); Weiss v. Regal Collections, 385
F.3d 337, 342 (3d Cir. 2004) (stating that a Rule 68 offer for full
relief is generally sufficient to moot a plaintiff's individual
claim, but holding that the case was not moot because the class
claim survived through the relation back doctrine).
8
Lucero v. Bureau of Collection Recovery, Inc., 639 F.3d 1239,
1242-43, 1249-50 (10th Cir. 2011) (noting that a Rule 68 offer of
full individual judgment "may" moot a case that is not a putative
class action, but holding that the case it was deciding was not
moot because an unaccepted Rule 68 offer cannot moot a putative
class action before the court has had an opportunity to rule on the
class certification motion).
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claim. In none of those circuits, however, did such a holding
result in a putative class action being mooted.
Looking further at Genesis Healthcare, we see that the
four dissenting justices expanded on the reasoning of Justice
Rehnquist in his concurrence in Roper, 445 U.S. at 341-42
(Rehnquist, J., concurring), opining that a rejected Rule 68 offer
does not moot a claim because the rule itself provides that an
unaccepted offer is "considered withdrawn." 133 S. Ct. at 1534
(Kagan, J., dissenting) (quoting Fed. R. Civ. P. 68(b)). Because
the parties had agreed below that the individual claim was moot,
the Genesis Healthcare majority expressly eschewed deciding whether
an unaccepted Rule 68 offer moots a claim.9 Id. at 1528-29, 1532.
It remains to be seen whether a fifth justice will accept
the reasoning of Justice Rehnquist and the Genesis Healthcare
dissenters when the issue actually reaches the Court. We may have
an answer in less than a year. See Campbell-Ewald Co. v. Gomez,
135 S. Ct. 2311, 2311 (2015) (No. 14-857) (granting petition for
certiorari seeking review of the questions of whether a case
becomes moot when a plaintiff receives an offer of complete relief
on his claim, and whether the answer to that question differs in a
9
The Genesis Healthcare majority then went on to hold that if an
individual plaintiff's claim in a Fair Labor Standards Act (FLSA)
collective action becomes moot before any other employees have
joined the collective action, the case becomes moot. 133 S. Ct. at
1533. In so holding, the Court distinguished FLSA collective
actions from class actions brought under Rule 23. Id. at 1532.
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putative class action); see also Petition for Writ of Certiorari,
Campbell-Ewald, ___ U.S. ___, (No. 14-859), 2015 WL 241891, at *i
(filed Jan. 16, 2015). In the interim, we agree with the Second,
Fifth, Seventh, Ninth, and Eleventh Circuits that an unaccepted
Rule 68 offer cannot, by itself, moot a plaintiff's claim. See
Hooks, 2015 WL 4760253, at *3-4; Chapman, 2015 WL 4652878, at *2-3;
Tanasi, 785 F.3d at 199-200; Stein, 772 F.3d at 704-05; Diaz, 732
F.3d at 954-55. We take this position because, when employed as
ACT hopes to employ it here, an unaccepted Rule 68 offer is a red
herring: it does not, in itself, provide any relief. And nothing
in Rule 68--or any other rule--contemplates use of a rejected offer
to secure dismissal of a case. To the contrary, Rule 68 expressly
specifies what happens to a rejected offer: it is deemed to be
"withdrawn," and it is "not admissible except in a proceeding to
determine costs." Fed. R. Civ. P. 68(b).
Recognizing this hole in its Rule 68 argument, ACT
suggests that the district court could close this hole by entering
judgment for Bais Yaakov just as it would have had Bais Yaakov
accepted the offer. ACT points to no rule that authorizes--much
less requires--such a result. Certainly Rule 68 does not. Rather,
the entire structure of the rule leaves it to the plaintiff to
decide whether to accept the offer or risk having to pay "the costs
incurred after the offer was made," even if the plaintiff wins the
case. Fed. R. Civ. P. 68(d). The court's determination of "costs
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incurred" requires no qualitative assessment of the claims,
defenses, or evidence--it simply requires the court to compare the
amount of the Rule 68 offer to the judgment the plaintiff actually
obtained and determine which is more favorable. Id. ("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."). Under ACT's view of Rule 68, however,
a court will often have to make what in effect are qualitative
assessments of the legal and factual merits of the claims,
defenses, and evidence.
This very case provides a good illustration of the manner
in which ACT's view of Rule 68 easily invites the qualitative
assessment of the maximum available relief when a plaintiff rejects
an offer, yet the defendant cites the making of the offer as proof
of mootness. Bais Yaakov claims that ACT's offer was too small
because it provided for only a single statutory award for each
missing notice while Bais Yaakov seeks a statutory award for each
required element of the notice that was not sent.10 The offer
therefore equaled far less than what Bais Yaakov claims a right to
recover.
The rules make clear how a court resolves such a
disagreement about the measure of damages under the applicable
10
Bais Yaakov also claims that the offer did not fully satisfy its
demand for class-wide injunctive relief and for relief under
section 396-aa.
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statutes: a defendant could move to dismiss (or for partial
summary judgment, or for judgment on the pleadings) on any claim
for recovery above a single award for each missing notice. See
Fed. R. Civ. P. 12(b)(6), 12(c), 56. In this case, ACT never filed
such a motion. Nor did it amend its offer, asserting on appeal
(and after Bais Yaakov moved for class certification) only a
willingness to re-extend it. Instead, latching onto Rule 12(b)(1),
ACT asked the court to find that it lacked subject matter
jurisdiction by first finding that Bais Yaakov was wrong on the
merits of its damage theory. Were we to bless this approach,
courts would find themselves ruling on the merits of claims under
the guise of determining whether cases are moot.11 See Scott v.
Westlake Servs. LLC, 740 F.3d 1124, 1127 (2014); Payne, 748 F.3d at
607-09; Hrivnak v. NCO Portfolio Mgmt., Inc., 719 F.3d 564, 567-70
(6th Cir. 2013); see also Town of Barnstable v. O'Connor, 786 F.3d
130, 142-43 (1st Cir. 2015).
The Supreme Court's analysis in Lewis, irrespective of
what it means for Roper's holding concerning attorney's fees, is
not to the contrary on the issue of the effect of a Rule 68 offer.
To assess whether a claim is moot, a court need first determine
11
ACT argues that whether or not such questions are merits
determinations, Bais Yaakov has already lost on them and this court
should simply review whether the district court's determination was
correct. We decline to do so because the parties' disagreement on
this issue simply underscores the correctness of the district
court's ruling that Bais Yaakov's case was not moot.
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what the claimant seeks. In Lewis, the court did this by
construing the complaint, over the claimant's objection, as seeking
only a license for an FDIC-insured bank. 494 U.S. at 478-79. Once
that construction was made, mootness followed because the plaintiff
conceded that the law requiring the issuance of such a license had
been reversed by amendment. Id. at 478. In short, the plaintiff
conceded that it could not obtain that which the Court held the
complaint sought. Here, by contrast, ACT asks that we find
mootness by first engaging in a merits determination so as to
construe the law to entitle Bais Yaakov to less than its pleadings
seek to recover. And this would be a merits determination that
post-dates the motion for class certification.
Nor does the Court's decision in Already, LLC v. Nike,
Inc., 133 S. Ct. 721 (2013), aid ACT in arguing that we should
address the merits of Bais Yaakov's damages theory under the guise
of adjudicating mootness. ACT points to Already as an example of
the Court declaring a suit moot when the plaintiff wanted to keep
litigating. However, in that case the Court simply held that any
dispute concerning Already's current products was mooted by a
covenant that Already agreed immunized those products from future
trademark infringement claims, and that Already lacked standing to
continue litigating to secure a declaratory judgment protecting
future products because the need for such protection was
speculative to the point of being fanciful. Id. at 729-30. Here,
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there is no doubt that Bais Yaakov has standing as a fax recipient
to seek statutory damages. The dispute concerning the sufficiency
of the offer concerns, instead, the merits issue of the controlling
measure of damages.
ACT also points to Overseas Military Sales Corp., Ltd. v.
Giralt-Armada, 503 F.3d 12 (1st Cir. 2007), for the premise that a
claim may be moot in this circuit despite the plaintiff's desire to
keep litigating. That case, however, presented us with a binding,
non-revoked admission of full liability for everything the
plaintiff sought, plus the agreement of the plaintiff that its
position of the merits was no broader than that which was conceded.
There was thus no need for us to say anything at all about the
merits of the parties' agreed upon position. Here, by contrast, we
have a withdrawn offer and an argument about whether the offer
covered all that was sought.
Of course, in rejecting ACT's stratagem we cannot claim
to have achieved any lasting equilibrium insulating class actions
from pick-off attempts. Other versions of the strategem will be
employed. Cf. Chathas v. Local 134 IBEW, 233 F.3d 508, 512 (7th
Cir. 2000) ("[I]t is always open to a defendant to default and
suffer judgment to be entered against him . . . ."). In many cases
involving damages in a certain amount as the only remedy, delivery
of a bank check might get around the infirmities in using a Rule 68
offer. To parry these possible gambits, knowledgeable plaintiffs'
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counsel will simply file motions for class certification with the
complaint. See, e.g., Damasco v. Clearwire Corp., 662 F.3d 891,
896 (7th Cir. 2011), overruled by Chapman, 2015 WL 4652878, at *3.
In such a circumstance, however, it may be hard to see why a motion
for class certification will save the day for class plaintiffs (a
possibility Cruz expressly left open, see 252 F.3d at 534 n.3) if
an express and detailed request for class certification in the
complaint does not.12 It may be, in sum, that if substance is to
prevail over form, and consumer class actions are not to be largely
eviscerated, the Supreme Court will need to decide that a
plaintiff's request to proceed as a class representative pressing
the real claims of those to be represented is a claim for relief
that precludes a finding of mootness.13 See Stein, 772 F.3d at 707.
12
The Third Circuit has held that an offer of judgment to the
named plaintiff cannot moot a class action because any eventual
certification "relates back" to the date of the complaint. Weiss,
385 F.3d at 347. The Fifth Circuit, prior to its recent opinion in
Hook, 2015 WL 4760253, held that a plaintiff must have actually
moved for class certification by the time a mooting event occurs.
Fontenot v. McGraw, 777 F.3d 741, 751 (5th Cir. 2015). In doing
so, it expressly noted that putative class representatives can
prevent defendants from picking them off by simply filing a motion
for class certification along with the complaint. Id. at 751.
13
Certainly there are many abuses of Rule 23. Indeed the author
of this opinion has expressed concerns about allowing such an
action to proceed when not all class members have been injured. In
re Nexium Antitrust Litig., 777 F.3d 9, 32-37 (1st Cir. 2015)
(Kayatta, J., dissenting). But as the Court suggested in Roper,
445 U.S. at 339, there are other ways to address concerns regarding
inappropriate uses of Rule 23.
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III. Conclusion
Until the Supreme Court addresses the whole issue of
class action pick-offs more comprehensively, resolving Roper's
continuing validity and the correctness of the Rule 68 analysis by
the dissenters in Genesis Healthcare, uncertainty will reign. In
the meantime, we hold that ACT's unaccepted and withdrawn Rule 68
offer did not moot this litigation because Bais Yaakov has not
"received complete relief." We therefore affirm the district
court's denial of ACT's motion to dismiss for lack of jurisdiction.
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