Just two months before the U.S. Supreme Court hears argument in Campbell-Ewald Co. v. Gomez, two federal circuit court panels have ruled on jurisdictional issues presented in the case. Both the Seventh Circuit in Chapman v. First Index, Inc., and the Fifth Circuit in Hooks v. Landmark Industries, Inc., rejected the argument that a plaintiff’s claims are rendered moot when the plaintiff declines a Rule 68 offer of judgment by the defendant that would fully satisfy his demands. 

In Gomez, which will be argued on October 14, 2015, the Supreme Court granted certiorari to review a similar ruling by the Ninth Circuit. The Court has agreed to decide, inter alia, whether a case becomes moot, and thus beyond the judicial power of Article III of the Constitution, when the plaintiff receives an offer of complete relief on his claim, and whether the answer to the first question is any different when the plaintiff has asserted a class claim under Federal Rule of Civil Procedure 23, but receives an offer of complete relief before any class is certified.

The Seventh Circuit in Chapman expressed a desire to “clean up the law of this circuit promptly” before Gomez is decided. In so doing, it overruled prior circuit case law which had held that the plaintiff’s claims are rendered moot by a fully sufficient offer of judgment from the defendant, even if the plaintiff rejects the offer. In Hooks, the Fifth Circuit acknowledged that “the Supreme Court recently granted certiorari [in Gomez] to resolve the issue presented in this case,” but noted that the parties did not request a stay pending the Supreme Court’s ruling.

Both Chapman (a Telephone Consumer Protection Act case) and Hooks (an Electronic Funds Transfer Act case) relied heavily on Justice Elena Kagan’s dissenting opinion in Genesis HealthCare Corp. v. Symczyk. In that opinion, Justice Kagan argued that an expired and unaccepted offer of judgment does not render the case moot.

The reasoning of these decisions is highly questionable on several grounds, among which is the Seventh Circuit’s insistence that “[n]one of the other justices in Genesis HealthCare disagreed with Justice Kagan’s analysis.” In fact, the majority in Genesis HealthCare sharply disagreed with Justice Kagan’s dissent, observing that “[w]hile we do not resolve the question whether a Rule 68 offer that fully satisfies the plaintiff’s claims is sufficient by itself to moot the action …, we note that Courts of Appeals on both sides of that issue have recognized that a plaintiff’s claim may be satisfied even without the plaintiff’s consent.”

The Chapman panel itself acknowledged that “the conclusion that a particular doctrine is not ‘jurisdictional’ does not make it vanish.” It suggested that “a spurned offer of complete compensation should be deemed an affirmative defense, perhaps in the nature of an estoppel or a waiver.” The panel also appeared to rhetorically question its own decision, asking “why should a court supply a subsidized dispute-resolution service when the defendant’s offer means that there’s no need for judicial assistance, and when other litigants, who do need the court’s aid, are waiting in a queue?” It further emphatically observed, “Ordering a defendant to do what it is willing to do has no legitimate claim on judicial time. Why should a judge do legal research and write an opinion on what may be a complex issue when the plaintiff can have relief for the asking? Opinions are supposed to be the by-products of real disputes.” These arguments are what previously led the Seventh Circuit to hold, prior to Chapman, that claims such as Chapman’s were rendered moot by the unaccepted offer of complete relief. Because the defendant did not make these arguments, the Chapman court left them “for another day.” That day may come when the Supreme Court issues its decision in Gomez.

Even after Chapman and Hooks, the circuit courts remain deeply divided on this issue. At least five circuit courts disagree with Chapman and Hooks and hold that an offer of complete relief by the defendant does indeed render moot the plaintiff’s claims. Therefore, the circuit split underlying the grant of certiorari in Gomez remains intact. 

Ballard Spahr’s Consumer Financial Services Group is nationally recognized for its guidance in structuring and documenting new consumer financial services products, its experience with the full range of federal and state consumer credit laws throughout the country, and its skill in litigation defense and avoidance (including pioneering work in pre-dispute arbitration programs). In addition to having vast experience in defending TCPA lawsuits, the Group has counseled a number of clients on establishing autodialing and monitoring protocols.

Copyright © 2015 by Ballard Spahr LLP.
(No claim to original U.S. government material.)

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, including electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the author and publisher.

This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.










Related Practices

Consumer Financial Services


Visit CFPB Monitor, our blog on the Consumer Financial Protection Bureau >

Subscribe to the blog via e-mail >