Antitrust Law Daily Wrap Up, CONSUMER PROTECTION—S.D. Ohio: Offer of judgment to lead plaintiff in TCPA case did not moot class action claims , (Sep 10, 2015)

By Michael Menzhuber, J.D., LL.M.

A motion to dismiss for lack of jurisdiction a claim that a debt collector violated the Telephone Consumer Protection Act (TCPA) by making artificial voice or prerecorded calls to an individual, and others similarly situated, with obtaining prior consent, was denied by the federal district court in Columbus, Ohio. The court determined that the debt collector’s Federal Rule of Civil Procedure 68 offer of judgment did not moot the individual’s claims and, consequently, deprive the court of subject matter jurisdiction. Based on this determination, the court granted the individual’s motion to strike the debt collector’s offer of judgment. It also denied the debt collector’s motion for reconsideration and its motion to stay (Peters v. Credit Protection Association LP, September 8, 2015, Marbley, A.).

Background. Michael Peters filed a class action complaint against Credit Protection Association, LP (CPA), a debt collector, which alleged that CPA violated the TCPA by making artificial voice or prerecorded calls to him, and others similarly situated, with obtaining prior consent. Based on these allegations, Peters’ complaint demanded the following relief: (1) certification and maintenance of the putative class pursuant to Federal Rule of Civil Procedure 23, with Peters as the representative for the class; (2) injunctive relief; (3) a declaration that CPA’s alleged conduct constituted unlawful violations of the TCPA and its rules; and (4) statutory damages in the amount of $1,500 for each call CPA made to Peters and the putative class in violation of the TCPA and/or its rules.

After a series of status conference had been held, the magistrate judge ordered Peters to make a settlement demand and ordered the parties to make a good faith effort to reach a resolution. CPA, in a letter to Peters, stated that it would not agree to a class settlement. The letter also made an offer of judgment to Peters, individually, pursuant Rule 68. The offer provided everything that Peters requested individually except that it did not include declaratory relief.

Peters rejected the individual offer. CPA then filed a motion for entry of judgment and to dismiss the case as moot on the basis that its Rule 68 offer of judgment mooted Peters’ individual claims. Peters responded by filing a motion to strike CPA’s offer of judgment.

Motion to Dismiss. CPA argued that its Rule 68 offer of judgment provided Peters with everything he possibly could win individually. Consequently, the offer mooted his individual claims and, because his individual claims were rendered moot, the claims of the uncertified class should be found moot. According, CPA urged the court to dismiss the case in its entirety for lack of jurisdiction.

Peters argued that dismissal for lack of jurisdiction was inappropriate, as a matter of law, because: (1) he was not offered everything he sought because CPA’s offer did not include declaratory relief; and (2) so long as a plaintiff is not dilatory in filing, defendants may not put an end to class actions, before any class certifications have been filed, merely by tendering Rule 68 offers of judgment that satisfy the putative class representative’s individual claims.

The court noted that it was unsettled in the Sixth Circuit whether an unaccepted Rule 68 offer of complete relief to the lead plaintiff, tendered prior to class certification, would also moot putative class claims prior certification of the class. Consequently, it found that even if CPA had tendered an offer of complete relief, such a holding would not necessarily lead to a dismissal of the putative class’ claims.

The court further noted that, in a similar Sixth Circuit case, Hrivnak v. NCO Portfolio Mgmt., Inc., 719 F.3d 564 (2013), the court divided its inquiry into two steps: (1) whether CPA had in fact offered Peters everything he possibly could win as an individual and, once that was found to be the case; (2) whether Peters’ and the uncertified class claims must both be dismissed as moot.

With respect to CPA’s Rule 68 offer, the court determined that it did not tender Peters all the relief that he requested because it did not provide him with declaratory relief. CPA argued that Peters was not entitled to declaratory relief under the TCPA. However, the court found that neither the Sixth Circuit nor the Supreme Court had held that the TCPA does not permit declaratory relief.

CPA also argued that Peters lacked standing to pursue declaratory relief because: (1) he only alleged past harm arising from the practices that he challenged in the complaint; and (2) that its Rule 68 offer included relief enjoining CPA from engaging in any of the alleged unlawful practices Peters alleged in his complaint. The court, however, declined to look at the facts alleged in the complaint and to entertain a motion to dismiss for failure to state a claim for declaratory judgment.

The court also determined that, even if CPA’s Rule 68 offer mooted Peters’ individual claims, the class claims remained alive and Peters would retain the ability to pursue them. The court noted that in a prior decision, it had put forth four separate reasons why a Rule 68 offer made before a motion for class certification does not moot class claims: (1) if it were otherwise, each side would endeavor to “beat the other to the punch” leading a to an unreasonable race between a plaintiff to file a motion before completing discovery on a case and to a defendant to make a settlement offer before filing; (2) “treating pre-certification settlement offers as mooting the named plaintiffs’ claim would have the disastrous effect of enabling defendants ‘to essentially opt-out of Rule 23’”; (3) “with Rule 23 cast aside, those who have been harmed would be forced to file individual suits to obtain redress”, which would likely prevent them from ever coming about due to economic infeasibility; and (4) “Rule 68 offers of judgment prior to class certification pit the interests of the named plaintiffs against the interests of the class”. Stewart v. Cheek & Zeehandelar, LLP, 252 F.R.D. 384 (2008).

CPA argued that the Supreme Court’s decision in Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523 (2013), which held that the mere presence of collective-action allegations in the complaint cannot save the suit from mootness once the individual claim is satisfied. The court, however, distinguished Genesis from the present case because it applied to a collective action, which although similar, is not a class action.

The court, therefore, held that CPA’s unaccepted Rule 68 offer made before Peters filed a motion for class certification, even it had offered complete relief, did not moot the class action claims. According, it denied CPA’s motion to dismiss for lack of jurisdiction, granted Peters’ motion to strike CPA’s offer of judgment, and denied CPA’s motion for reconsideration.

The court also denied CPA’s motion to stay the proceedings pending the outcome of the Supreme Court’s decision in a factually similar case. Gomez v. Campbell-Ewald Co., 768 F.3d 871 (2014) cert granted, 135 S. Ct. 2311 (2015). The court distinguished Gomez because, unlike in the present case, it was presumed that the Rule 68 offer made to the plaintiff included all the individual relief which the plaintiff requested. The court further determined that, even assuming that the presence case was “on all fours” with Gomez, the Supreme Court’s decision in that case was unlikely to affect its jurisdiction over the present case. For this reason, and because Peters had a right to determination of its rights without delay, the court denied CPA’s motion to stay.

The case is No. 2:13-CV-0767.

Attorneys: Daniel Robert Freytag (Meyer Wilson Co. LPA) for Michael R. Peters. Jeffrey Charles Turner (Surdk Dowd & Turner Co., LPA) for Credit Protection

Companies: Credit Protection Association LP

Cases: ConsumerProtection OhioNews