SCOTUS Issues Landmark Decision Regarding Class Action Lawsuits
In a case decided for the October term, the United States Supreme Court has ruled that companies facing class action lawsuits cannot offer to settle with the initial litigant before formation of a class. In Campbell-Ewald Co. v. Gomez, 577 U.S. (2016), Gomez sued Campbell for sending an unsolicited text message intended to recruit for the U.S. Navy. Gomez, nearly 40, had not consented to the messages and sued Campbell for $1,500, the maximum allowed damages for unsolicited telephone calls.
Gomez then initiated a class action lawsuit against Campbell. After the suit was filed but before Gomez filed his motion for class certification, Campbell offered to pay Gomez the $1,500 and filed an offer of judgment, which Gomez declined and allowed the offer to lapse. Campbell filed a Motion to Dismiss, arguing that its offer rendered the lawsuit moot and that, since Gomez had not yet moved to certify a class, any class certification would become moot as well.
The Supreme Court ruled against Campbell in a 6-3 decision. In her opinion, Justice Ginsberg opined that a rejected settlement offer does not void a plaintiff’s legal claim, even if the offer is in an amount requested by the plaintiff. Justice Ginsberg wrote, “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.”