In Campbell-Ewald Co. v. Gomez, 136 S.Ct. 663 (2016), the Supreme Court held that an unaccepted offer of full relief under Rule 68 to a named plaintiff was insufficient to moot class claims. However, the Supreme Court expressly left open the possibility of a “different result if a defendant deposits the full amount of the plaintiff’s individual claim in an account payable to the plaintiff,” such as tender of a money judgment under Rule 67. Despite the Supreme Court’s promising dicta, the Seventh Circuit’s recent decision in Fulton Dental, LLC v. Bisco, Inc., No. 16-3574 (7th Cir. June 20, 2017), demonstrates that the result is no different even if a defendant avails itself of Rule 67.
In Fulton Dental, defendant Bisco faxed to Fulton an advertisement for its dental products. Fulton filed class claims for violations of the Telephone Consumer Protection Act, and Bisco responded with an offer of judgment for the full relief sought, including monetary compensation and consent to an injunction from sending similar faxes in the future. Fulton rejected Bisco’s offer on the grounds that it did not provide relief to the rest of the class. Bisco tried a different approach to settlement by moving for leave to deposit the maximum possible damages, as well as fees and costs, pursuant to Rule 67, and asking the district court to dismiss Fulton’s claims as moot. The district Court granted Bisco’s motion and Fulton appealed.
In reviewing the district court’s decision, the Seventh Circuit took a closer look at both Campbell-Ewald and the language of Rule 67. With respect to Campbell-Ewald, the Seventh Circuit concluded that tender of a money judgment was just another form of an unaccepted offer, and the Supreme Court “drew no distinction between unaccepted Rule 68 settlement offers and other unaccepted settlement or contract offers.” According to the Court, the text of Rule 67 also makes clear that “it is just a procedural mechanism that allows a party to use the court as an escrow agent,” relieving a party who holds a contested fund from potential liability to those claiming some entitlement to it. “From a broader perspective, we see no principled distinction between attempting to force a settlement on an unwilling party through Rule 68, as in Campbell-Ewald, and attempting to force a settlement on an unwilling party through Rule 67,” concluded the Court.
Despite its ultimate holding, the Court went on to make “not an important point,” in the Court’s own words. Specifically, “if it turns out that the named plaintiff really has no personal stake in the litigation, the district judge might well question whether it is the appropriate champion for the class.” Put differently, even though a Rule 68 offer of judgment, along with a Rule 67 tender of full proceeds, may not automatically moot the individual plaintiff’s claims, both of those mechanisms may still help to establish that an individual plaintiff is not an adequate class representative because he no longer has a “personal stake in the litigation.” At least this is what the Court seemed to suggest, except for an entirely contradictory statement in the last sentence of the opinion: “[W]e cannot say as a matter of law that the unaccepted offer was sufficient to compensate the [named plaintiff] for its loss of the opportunity to represent the putative class.” If that is the case, then a named plaintiff will always have a “personal stake” in litigation, and nothing short of offering plaintiff to continue representing the class will ever be enough.
It remains to be seen how other circuits resolve the Rule 67 issue left open by Campbell-Ewald. However, at least in the Seventh Circuit, Rule 67 tender of full relief is no longer a viable option to resolve a class action early on. We will continue to monitor this issue and report on further developments.