Antitrust Law Daily Wrap Up, PRIVACY—1st Cir.: ACT’s unaccepted judgment offer did not moot TCPA claim, (Aug 24, 2015)

By Greg Hammond, J.D.

An unaccepted and withdrawn Federal Rule of Civil Procedure 68 offer of judgment did not constitute “complete relief” in a suit alleging that ACT, Inc. violated the Telephone Consumer Protection Act (TCPA), the U.S. Court of Appeals in Boston has concluded. A private religious high school’s TCPA claims were therefore not moot, and an order denying ACT’s motion to dismiss for lack of jurisdiction was affirmed (Bais Yaakov of Spring Valley v. ACT, Inc., August 21, 2015, Kayatta, W.).

Private religious high school Bais Yaakov of Spring Valley allegedly received three unsolicited faxes, reminding the school of the ACT exam’s registration deadline and encouraging Bais Yaakov to volunteer as a test site. The faxes did not contain notice of certain rights of the recipient, as required by the TCPA and analogous New York state law. Bais Yaakov consequently filed a class action suit against ACT, seeking damages and injunctive relief under the TCPA.

ACT tendered an offer for judgment, offering to pay Bais Yaakov $1,600 for each fax, offering to be enjoined from sending any additional unsolicited fax to the school, and offering to pay Bais Yaakov’s attorney fees and costs if the court determined such fees were in order. Yaakov did not respond to the offer, which was “withdrawn” by operation under Rule 68 after 14 days. The district court denied ACT’s motion to dismiss, finding that an unaccepted offer of judgment did not moot Bais Yaakov’s claim.

Continuing economic interest. On appeal, the court was required to determine whether an unaccepted Rule 68 offer for individual relief in a putative class action moots the action. Bais Yaakov argued that, pursuant to the Supreme Court decision in Deposit Guaranty National Bank v. Roper, 445 U.S. 326, 340 (1980), it has an interest in sharing attorney fees with other class members and in a possible incentive award for serving as a lead plaintiff, representing a continuing economic interest in the controversy. The appellate court, however, noted that the holding in Roper has been expressly called into question by the Court in Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523, 1532 (2013). Specifically, the Genesis Healthcare Court questioned whether the holding of Roper remains valid in light of a subsequent decision stating that the interest in attorney fees is insufficient to create an Article III case or controversy where none exists on the merits of the underlying claim. The appellate court noted that uncertainty will reign until the Supreme Court addresses the 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.

Incomplete relief. The court nevertheless affirmed the lower court’s denial of ACT’s motion to dismiss for lack of jurisdiction, finding that ACT’s unaccepted and withdrawn Rule 68 offer did not moot this litigation because Bais Yaakov has not received complete relief. Specifically, 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 sought a statutory award for each required element of the notice that was not sent. The offer consequently equaled far less than what Bais Yaakov claims a right to recover.

The case is No. 14-1789.

Attorneys: Jonathan S. Franklin (Fulbright & Jaworski L.L.P.) and Robert L. Leonard (Doherty, Wallace, Pillsbury & Murphy, P.C.) for ACT, Inc. Aytan Y. Bellin (Bellin & Associates LLC) for Bais Yaakov of Spring Valley.

Companies: Bais Yaakov of Spring Valley; ACT, Inc.

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