In Chen v. Allstate Insurance Co., the Ninth Circuit became one of the first courts to address a significant question left open by the Supreme Court’s recent decision in Campbell-Ewald.  Specifically, the Ninth Circuit considered whether a defendant could moot a plaintiff’s class claims by making an offer of judgment for complete relief, and depositing the funds in an escrow account for the plaintiff’s benefit, even if the plaintiff does not accept the offer.  Although the Supreme Court left this door open in Campbell-Ewald, the Chen decision effectively closes it in the Ninth Circuit. 

In Chen, the defendant made an offer of judgment to the named plaintiff, Pacleb, before he had moved for class certification.  Because Pacleb did not accept the offer, the defendant moved to dismiss his class claims as moot.  The district court denied the defendant’s request and the defendant immediately appealed.   

While the appeal was pending, the Supreme Court decided Campbell-Ewald, where it held that an unaccepted offer of judgment does not moot the plaintiff’s claim.  The Supreme Court declined to decide, however, whether the result would have been different “if a defendant deposits the full amount of the plaintiff’s individual claim in an account payable to the plaintiff, and the court then enters judgment for the plaintiff in that amount.”  Seizing on that language, the defendant in Chen deposited the offered funds into an account for the plaintiff’s benefit during the pendency of the appeal.  The Ninth Circuit held, however, that this action still did not moot the plaintiff’s class claims. 

On appeal, the defendant in Chen argued that: (1) its offer of judgment afforded Pacleb complete relief; (2) the district court should be required to enter judgment on the offer’s terms, which would moot Pacleb’s claims; and (3) once the individual claims have been mooted, Pacleb can no longer maintain a class action.  Although the Ninth Circuit found that the defendant had offered Pacleb complete relief, it rejected the defendant’s second and third contentions.

According to the Ninth Circuit, even if “the district court were to enter judgment providing complete relief on Pacleb’s individual claims for damages and injunctive relief before class certification, fully satisfying those individual claims, Pacleb still would be entitled to seek certification.”  In the Ninth Circuit’s view, an unaccepted offer of judgment to a named plaintiff that affords complete relief does not moot the plaintiff’s class action claims.  To hold otherwise, according to the Court, would allow a defendant to “pick off” a named plaintiff and, thereby, evade review. 

The Ninth Circuit was not swayed by the defendant’s act of depositing funds in escrow for the plaintiff.  According to the Ninth Circuit, a claim becomes moot “once the plaintiff actually receives all of the relief to which he or she is entitled on the claim.”  In the Court’s view, because the named plaintiff had not actually accepted the tendered funds, he had not “actually received” the relief to which he was entitled.  As a result, his class claims were not moot.   

The Ninth Circuit concluded that this outcome was consistent with Campbell-Ewald, which according to the Ninth Circuit, stands for the proposition that a named plaintiff is entitled to a “fair opportunity to move for class certification.”  Under this reasoning, the Ninth Circuit ultimately held that “a district court should decline to enter a judgment affording complete relief on a named plaintiff’s individual claims, over the plaintiff’s objection, before the plaintiff has had a fair opportunity to move for class certification.”