Supreme Court rules against business in class-action case

But a class-action against Campbell-Ewald could potentially cost the company millions. Today, in Campbell-Ewald Co. v. Gomez (pdf), the Supreme Court held that a defendant’s unaccepted offer to satisfy the claims of a named plaintiff in a putative class-action lawsuit is not sufficient to render the suit moot.

The underlying case involves a contract the U.S. Navy entered into with Campbell-Ewald Co.to develop a multimedia recruiting campaign that included the sending of text messages to young adults. “Absent Gomez’s acceptance, Campbell’s settlement offer remained only a proposal, binding neither Campbell nor Gomez”, the opinion said.

Trying to get the first-named plaintiffs in a class action to settle early has always been a defense tactic. He is not satisfied with the conservatives’ somewhat Legal Realist approach (if one may call it that) as to when a case or controversy has ceased, but is equally wary of the liberals’ resort to contract principles (laying a legal controversy to rest is not quite the same thing as contract-making, even if they have much in common.) Instead, he would look to the early common law of tenders, which preceded (and led up to) what is now Federal Rule 68 on offers of settlement.

Campbell’s subcontractor, Mindmatics LLC, generated a list of cellular phone numbers for consenting 18- to 24-year-olds and then sent messages to over 100,000 recipients, including Gomez, who at 40 years old, argued that he was not in the company’s target demographic and had not consented to receiving messages. Allowing the defendant companies to pick off plaintiffs and short cut these cases would severely limit their viability as a tool for consumer relief. Justices Antonin Scalia, Samuel Alito, and Chief Justice John Roberts voted in dissent. As the Supreme Court recently explained in Genesis HealthCare Corp. v. Symczyk, a lawsuit does not present an Article III case or controversy and “must be dismissed as moot” when “an intervening circumstance deprives the plaintiff of a ‘personal stake in the outcome of the lawsuit, ‘ at any point during the litigation”.

On the issue of sovereign immunity, the Court held that federal contractors do not “share the Government’s unqualified immunity from liability and litigation”. “Campbell has offered to pay Gomez that amount, but it turns out he wants more”.

Campbell-Ewald sought to resolve the case by offering to pay Gomez $1,503 for each message he received. “It’s the plaintiff’s prerogative to decide whether to accept a settlement offer, and the defendant can’t impose a settlement against the plaintiff’s will”, said Jonathan Mitchell, Gomez’s attorney. That question is appropriately reserved for a case in which it is not hypothetical. “The court today takes that important responsibility away from the federal courts and hands it to the plaintiff”, he wrote. “The good news is that this case is limited to its facts”.

But there’s a catch – and it could end up undermining the class action bar’s victory.