Western NY attorneys: Ruling maintains ‘status quo’ for class actions

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The U.S. Supreme Court’ decision in the Campbell-Ewald Co. v. Gomez case is remarkable, not for any change it brings to the viability of class-action lawsuits, but for what it leaves intact, western New York attorneys say.

“People who follow this are pretty surprised that the court had granted cert, and that’s why they were watching it,” said Christine Bartholomew, a professor at the University at Buffalo Law School where she specializes in civil procedure, litigation and anti-trust.

Experts considered many of the issues surrounding the use of a Rule 68 offer of judgement settled, so when the court agreed to hear the case it raised the question of whether it might signal a potential change in course.

But the 6-3 decision that upheld the lower court ruling for the plaintiff reinforced that status quo, she said.

“This isn’t going to increase class actions, but had it gone the other way it would have drastically decreased class actions. This is, in a strange way, one of the more tempered class action decisions from the Roberts court,” Bartholomew said.

The case involves text messages sent during a recruitment campaign for the Navy by the defendant, Campbell-Ewald Co. The texts were unsolicited and therefore a potential violation of the Telephone Consumer Protection Act (TCPA).  Under the act, Campbell-Ewald was liable for $1,500 per unsolicited text.

Jose Gomez, a California resident, filed a suit and Campbell-Ewald made a Rule 68 offer of judgement to settle for $1,503, far less than the company would be liable for in a class action involving all the potential recipients of the unsolicited texts.  Gomez declined the settlement.

On appeal, lawyers for the company argued the case should not have been able to go forward because the offer made the claim moot.  But the U.S. Court of Appeals, Ninth Circuit disagreed, affirming the trial court decision. Campbell-Ewald appealed to the Supreme Court, which upheld the Ninth Circuit.

Bartholomew called the decision “a big win for consumers.”

“People who are practitioners in this field assumed you’re not supposed to do that, you’re not supposed to buy off the class rep to avoid the class action. That was somewhat settled among the courts for a long time, which is why it was pretty surprising that it got up to the Supreme Court in the first place,” she said.

Alexander Douglas, a consumer protection lawyer at Gesund and Pailet, said the case will have broad implications for cases involving statute-defined damage limits. For example, it will affect cases involving the Fair Debt Collection Practices Act. In those cases, an individual could collect up to $1,000, plus attorney fees.

“That’s not a whole lot of money, but for a class action the damages are the lesser of $5000,000 or 1 percent of the net worth of the defendant,” Douglas said.

“So this Rule 68 offer of judgment technique was occurring a lot in that field as well because the companies just decided it’s going to be a lot easier to pay this one defendant $1,001 and however many attorneys’ fees, which probably aren’t that many at that time, and avoid a class action where you’re looking at, not just potentially a half million dollars, but also all of the attorneys’ fees,” Douglas said.

“Class action offered the only real incentive to comply with the FDCPA because otherwise, if you could just shut down a class action as soon as the individual comes forward, then most debt collectors would happily do that,” Douglas said.

The court’s decision did raise, but left unresolved, a rather glaring issue that could potentially have a significant impact on class action cases in the future.

“We need not, and do not, now decide whether the result would be 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. That question is appropriately reserved for a case in which it is not hypothetical,” the court said in the decision.