Offer of Judgment Coupled with Deposit of Funds Does not Moot Claims

A district court in Illinois has slammed the door on an attempt to moot a class action by coupling an offer of judgment with a motion under Rule 67 to deposit funds with the court.  In Wendell H. Stone Co. v. Metal Partners Rebar, LLC, the plaintiff filed a putative class action seeking damages for violations of the Junk Fax Prevention Act.  Wendell H. Stone Co. v. Metal Partners Rebar, LLC, 2016 U.S. Dist. LEXIS 167574 (N.D. Ill. Dec. 5, 2016). Before the plaintiff could file its motion to certify the class, the defendant moved to deposit funds with the court which defendant claimed would fully satisfy the named plaintiff’s individual claims and requested the court enter judgment in favor of the plaintiff.  On the same day, the defendant made an offer of judgment in the same amount plus accrued costs.  The issue before the court was whether the defendant’s deposit of funds could render moot both the individual claims and the plaintiff’s attempt to pursue a class action. 

The case comes on the heels of the Supreme Court’s ruling this year in Campbell-Ewald v. Gomez, __ U.S. __, 136 S.Ct. 663 (2016).  In Campbell-Ewald, the Supreme Court held that a Rule 68 offer of full statutory relief does not moot a class action.  See Campbell-Ewald v. Gomez, __ U.S. __, 136 S. Ct. 663 (2016).  In Campbell, the majority held that a case becomes moot only “when it is impossible for a court to grant any effectual relief whatever to the prevailing party.” Id., 136 S. Ct. at 670.  The court continued its rationale by noting that since the defendant’s offer lapsed without acceptance, they retained the same stake in the litigation they had at the outset. In other words, “[a]n unaccepted settlement offer-like any unaccepted contract offer – is a legal nullity, with no operative effect.” Genesis Healthcare Corp. v. Symczyk, __ U.S. __, 133 S. Ct. 1523, 1534 (2013) (Kagan, J., dissenting). 

A glimmer of hope, however, arose for defendants in the dissenting opinions of Chief Justice Roberts and Justice Alito. Both noted that the majority in Campbell-Ewald did not say that payment of complete relief would lead to the same conclusion.  In fact, Justice Alito’s dissent went so far as to suggest that a defendant could moot a case by paying over the money sought by plaintiff either by handing them a certified check or by depositing the funds in an account in plaintiff’s name or with the court. Campbell-Ewald, 136 S.Ct. 663, 684.

The defendant in Stone attempted to do as Justice Alito suggested; however, the district court gave little credence to Alito's dissent.  Instead, the court held that the defendant cannot render moot either the plaintiff’s individual or class claims by its motion to deposit funds. In doing so, the court relied upon Supreme Court's majority opinion in in Campbell-Ewald as well as existing Seventh Circuit authority. "If submitting an offer immediately rendered a case moot, the court would have no authority to enter a decree, enforce the offer or ensure that the plaintiff receives the relief provided for in the offer.  Therefore a plaintiff's claim cannot be rendered moot- based on the premise that he has received full relief- before the Court actually exercises its authority to grant the relief." Stone at * 8-9. "The court concluded, therefore that the only time plaintiff's claims could become moot would be after the defendant has made the deposit and the court has entered judgment in plaintiff's favor. 

The court continued by noting that it would not render judgment in favor of the plaintiff because doing so would undermine the purposes of the class action device.  Additionally, the court noted that doing so would circumvent the purpose of Rule 68 which authorizes offers not deposits. 

Finally, the court noted that even if the deposit of funds could render a plaintiff’s claim moot, the offer in this case would not have that effect because the parties disputed whether or not the offer would make the plaintiff whole.  Because the court could not determine whether the offer would provide complete relief on the individual claim, the deposit would not render either the individual of class claims moot.

Defendants contemplating using Rule 67 as a vehicle to moot class actions should take note that, in this case, while the court denied the request that judgment be entered, it  did grant the defendant's motion to deposit funds.  Defendants therefore should be aware therefore of the risk that the court may grant the Rule 67 motion to deposit funds while denying the remainder of the relief sought.