Supreme Court says class action lawsuits can survive compensation offers

By RICHARD WOLF | USA Today | Published: January 20, 2016

WASHINGTON (Tribune News Service) — The Supreme Court dealt a rare setback Wednesday to companies trying to avoid potentially expensive class-action lawsuits.

The justices ruled that offers of full compensation to the lead plaintiff in such a case do not automatically end the legal challenge. The 6-3 decision was written by Justice Ruth Bader Ginsburg.

"An unaccepted settlement offer, like other unaccepted contract offers, creates no lasting right or obligation," Ginsburg said. "Once unaccepted, the offer is off the table."

The case was among several on the court's docket this term that could lead to more or fewer class-action lawsuits. It involved an unsolicited text message sent by a Navy recruiting contractor in apparent violation of the Telephone Consumer Protection Act, which was meant to protect cellphone users from robocalls and mass solicitations.

Other cases argued in the fall test whether class action lawsuits can be based on violations of law rather than actual injuries, and whether those injuries can be based on statistical averages.

When 40-year-old José Gomez received the recruitment offer, he sued the contractor, Campbell-Ewald Co., personally and as the potential leader of a class action. Rather than face a potentially large group of cell phone users, the company offered Gomez $1,503 in damages for each unauthorized text, three times what the law requires.

That's the type of deal judges love and lawyers hate; it clears dockets but wipes potentially lucrative lawsuits from the books. In this case, Gomez didn't take the bait. A federal district judge ruled that the offer ended the case, but an appeals court reversed the judgment, sending the company to the Supreme Court for relief.

Five justices signed on to Ginsburg's ruling. A sixth, Justice Clarence Thomas, concurred but on different grounds; he said the lawsuit remains alive because the company merely offered to pay but never made payment. Ginsburg said that issue should be left for another day, in a case where payment has been made.

Chief Justice John Roberts wrote the main dissent, arguing that the company's offer to Gomez should end the lawsuit.

"The federal courts exist to resolve real disputes, not to rule on a plaintiff's entitlement to relief already there for the taking," Roberts said. "If there is no actual case or controversy, the lawsuit is moot, and the power of the federal courts to declare the law has come to an end."

The chief justice had taken the lead during oral arguments. "You won't take yes for an answer," he told Jonathan Mitchell, Gomez' lawyer.

The court's liberal wing took the opposite tack, challenging the assertion that the case became moot as soon as Gomez was offered full compensation for the unwanted text messages.

"You get to say on your own, unilaterally, 'I offered you complete relief,'" Justice Sonia Sotomayor said sarcastically. "You, without any judicial interpretation, intervention, get to moot the case on your terms."

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The Supreme Court building.


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