Superman’s weakness is kryptonite, Dracula’s holy water, and the Wolfman’s silver bullets. What about class-action plaintiffs? On May 18, 2015, the U.S. Supreme Court agreed to hear a case that, depending on its result, could allow companies to defeat nearly every type of class action out there. The idea would be for a business to offer full payment (presumably a small sum) to the individual trying to create a class action. That offer would then “moot” the plaintiff’s lawsuit and cut off her ability to seek class liability. The process would be repeated for any other would-be class representative, and in theory the paltry recoveries would discourage crusading attorneys from pursuing the case. Will it work?
That question has divided courts around the country. Some federal courts of appeals have approved this sort of “pick off” strategy, while others have flatly rejected it. And two years ago, in the case of Genesis Healthcare Corporation v. Symczyk, the U.S. Supreme Court came close to resolving the debate. But Symczyk was technically not a class action, but rather it was a collective action under the federal Fair Labor Standards Act (FLSA). Although the high court allowed the pick-off maneuver to work in that case, the tribunal’s language implied that the same outcome would not necessarily occur in a garden-variety class action. Since then, lower courts have seized on that language as grounds for spurning pick-offs outside the context of FLSA actions.
Indeed, that is precisely what the Ninth Circuit Court of Appeals did in the current case before the Supreme Court, Campbell-Ewald Company v. Gomez. There, the U.S. Navy had hired Campbell-Ewald to develop and execute a marketing campaign directed to potential recruits. Part of the campaign involved sending text messages to cell-phone users who had agreed to receive advertisements. Jose Gomez received one of the text messages, but had never consented to the marketing. He then sued Campbell-Ewald under the Telephone Consumer Protection Act (TCPA)—which authorizes $1,500 in statutory penalties for each offending text—on behalf of himself and other non-consenting text recipients.
Campbell-Ewald offered Gomez $1,503 to settle his individual case, which he rejected. The company then argued that the offer fully satisfied Gomez’s individual demand and left him nothing to recover. The Ninth Circuit, focusing on its prior precedent, disagreed. The appellate court noted, that although Symczyk called into question some of the underlying rationales in its earlier precedent, no change was warranted because the Supreme Court’s decision applied only to FLSA cases.
How will Gomez turn out? We won’t know until next fall, at the earliest. But, in Symczyk, Justice Elena Kagan, joined by the other members of the Court’s liberal wing (Ginsburg, Breyer, and Sotomayor), wrote a scathing dissent, denying that any sort of mootness would follow from an unaccepted settlement offer. The majority consisted of all four conservative justices (Roberts, Thomas, Scalia, and Alito) and the ever-vital swing vote of Justice Kennedy. The only votes potentially at play are those of Justice Kennedy and Chief Justice Roberts. I don’t see either of those gentlemen as being willing to cause the extinction of class actions. So my prediction is that Gomez will echo the dissent from Symczyk.