Michigan district court weighs in on Rule 68 offers

We’ve previously discussed Rule 68 offers — also called a “pick-off play” — in the context of class action proceedings. The essence of a Rule 68 offer is this: a prospective class action defendant settles the case with a named plaintiff, potentially mooting the rest of the class action from going forward.

A recent federal district court decision out of Michigan weighed in on the issue. In Compressor Engineering Corp. v. Charles J. Thomas, Jr., the plaintiffs brought suit under the Telephone Consumer Protection Act (TCPA) for alleged unsolicited advertisements sent via fax machine. The defendant offered the named plaintiff a judgment pursuant to Federal Rule of Civil Procedure 68. When the plaintiff didn’t respond within 14 days, the defendant moved to dismiss the case for lack of subject matter jurisdiction. As the defendant saw it, the claims were moot given the unaccepted offer of judgment.

The district court disagreed. First, it distinguished its case from Genesis Healthcare Corp. v. Symczyk, a Supreme Court decision that, according to the district court, “assumed without deciding that a named plaintiff’s individual claims in a collective action pursuant to the Fair Labor Standards Act (‘FLSA’) were mooted by an unaccepted offer of judgment pursuant to Rule 68.” In the district court’s view, the “Supreme Court limited its holding in Genesis Healthcare to collective actions pursuant to the FLSA and explained that Rule 23 class actions were ‘fundamentally different from collective actions under the FLSA . . .’.”

Next, the court addressed Sixth Circuit precedent on the effect of Rule 68 offers in the Rule 23 context: “when ‘the named plaintiff’s claim becomes moot before certification, dismissal of the action is required.’” The court went on to note that Sixth Circuit precedent requires this result only when the “unaccepted offer of judgment” under Rule 68 “satisfies a plaintiff’s entire demand.” Here, it did not. While the unaccepted monetary offer took care of the plaintiffs’ financial demands, it did not address the plaintiffs’ additional request for injunctive relief namely injunctive relief against “further violations” of the TCPA.

Other Jurisdictions , Sixth Circuit Class Action Law, Telephone Consumer Protection Act