Daily Blast April 14, 2016

On Tuesday, the Ninth Circuit Court of Appeals issued an opinion in Chen v. Allstate (Apr. 12, 2016, No. 13-16816) __ F.3d __, analyzing issues relating to class action lawsuits and a defendant’s ability to undercut a class action by trying to provide a named plaintiff an offer for full settlement. The court held that a class action under the Telephone Consumer Protection Act was not mooted by the defendant’s offer of judgment. The case provides an interesting peek into defensive strategy in class action matters.

Plaintiffs Chen (and Pacleb who was later added) filed a class action complaint against Allstate, alleging that Allstate solicited them with automated telephone calls without their consent. (Slip opn., p. 4.) Chen and Pacleb sought statutory damages for each alleged call as well as injunctive relief against future calls. (Id. at p. 7.) Prior to class certification, Allstate made an offer of judgment, pursuant to Federal Rule 68, to Chen and Pacleb, offering both plaintiffs more monetary damages than they sought in their complaint with fees and costs, as well as a stop to all calls to their numbers in the future. (Id. at pp. 7-8.) Chen accepted, but Pacleb did not. (Id. at p. 8.)

Allstate moved to dismiss for lack of subject matter jurisdiction, claiming that its offer to satisfy Pacleb’s entire demand mooted his claim because he no longer had a stake in the litigation and because class certification had not yet been filed. (Slip opn., p. 8.) The district court denied the motion finding that Pacleb’s class claim still presented a justiciable controversy, and granted Allstate’s order for interlocutory appeal. (Id. at p. 9.)

The Ninth Circuit affirmed the district court’s decision holding that while Allstate’s offer would afford Pacleb complete relief, his claim was not moot because he had not received any actual relief. (Slip opn., pp. 14, 17-18.) In reaching this conclusion, the court reasoned that it was bound by its decision in Pitts v. Terrible Herbst, Inc. (9th Cir. 2011) 653 F.3d 1081, which held that “an unaccepted Rule 68 offer of judgment . . . does not moot a class action.” (Slip opn., p. 16.) The court also answered a hypothetical posed in Campbell-Ewald Co. v. Gomez (2016) 136 S.Ct. 663, holding that the money Allstate placed in an escrow account payable to Pacleb upon final judgment or order of the district court did not constitute actual relief. (Id. at pp. 17-18.) Lastly, the court declined to direct the district court to enter judgment on Pacleb’s individual claims because “a would-be class representative with a live claim . . . must be accorded a fair opportunity to show that certification is warranted.” (Id. at p. 26.)