In the wake of the U.S. Supreme Court’s May 18 announcement that it may decide whether a Rule 68 offer of judgment for complete relief moots potential class claims, the Second Circuit issued an amended ruling on May 21 that partially answered that question in the negative, further compounding a split among the federal circuit courts of appeal. The Second Circuit, in Tanasi v. New Alliance Bank, No. 14-1389, held that an unaccepted Rule 68 offer of judgment that provides complete relief does not, by itself, moot the claims of the named plaintiff. Instead, the named plaintiff’s claims become moot for purposes of Article III’s case or controversy requirement when the court enters judgment in the named plaintiff’s favor in accordance with the offer. In other words, it held that only an accepted offer with a judgment against the defendants will moot claims under Rule 68. The Second Circuit court noted that the other circuits also go in different directions on the issue with the Ninth and Eleventh Circuits aligning with the Second, and the Third, Fourth, Fifth, Seventh, Tenth, and Federal Circuits saying that an offer of complete relief renders an individual’s case moot whether or not judgment is entered against the defendant.
Under Rule 68 of the Federal Rules of Civil Procedure, a defendant can settle a case by offering complete relief of the plaintiff’s claims until up to two weeks before trial. If the plaintiff accepts the offer, judgment is entered in the plaintiff’s favor and the case ends. However, if the plaintiff does not accept, it is unclear whether the offer alone settles the controversy, thereby rendering the case moot.
“In light of this confusion, we find it necessary to the resolution of this case to clarify and reiterate that it remains the established law of this circuit that a ‘rejected settlement offer [under Rule 68], by itself, [cannot render] moot [a] case,’” Chief Circuit Judge Robert Katzmann said for the three-judge panel.
The Tanasi court also ruled that district courts are not required to enter judgment in favor of the named plaintiff who refuses to accept an offer of complete relief. Instead, the court suggested that district courts have discretion to do so, noting that the purpose of Rule 68 is “to encourage settlement and avoid litigation,” and that entry of judgment is appropriate if the parties so agree, or if a defendant “unconditionally surrenders” and “only the plaintiff’s obstinacy or madness prevents her from accepting total victory.”
The Tanasi court expressly reserved the question of what happens to the putative class claims after a named plaintiff’s individual claims are rendered moot. That question may soon be put to rest. The Supreme Court granted certiorari in a TCPA class action that involves the issue of whether the entire case is rendered moot for purposes of Article III when the named plaintiff receives an offer of complete relief. See Gomez v. Campbell-Ewald Co., 768 F.3d 871 (9th Cir. 2014), cert. granted sub nom. Campbell-Ewald Co. v. Gomez, 2015 WL 246885 (U.S. May 18, 2015) (No. 14-857).