What Companies Can Expect After Campbell-Ewald

May defendants moot a putative class action by merely offering complete relief to the putative class representative? The U.S. Supreme Court says no, and the decision may have profound implications on class actions for years to come. Some options may remain, however, if more than a mere offer can be given.

In Campbell-Ewald Co. v. Gomez, No. 14-857 (Jan. 20, 2016), the Supreme Court held that a mere unaccepted offer of judgment does not moot an individual class action. The decision rejects one of many important defenses commonly thought to be available to companies facing potentially massive litigation costs in cases in which theoretical statutory damages are astronomical. Prior to the decision, many courts concluded that by making an offer of judgment for complete relief under Rule 68 of the Federal Rules of Civil Procedure, a defendant mooted a plaintiff’s claim even if rejected. After the Supreme Court’s 6-3 ruling, that is (mostly) no longer the law in any of our federal courts.

The ruling is a significant one for companies facing consumer protection statutes lacking statutory damages caps, or any other actions where offers of judgment were often made, such as those brought under the Fair Labor Standards Act. Perhaps the best example of the problem is the much-criticized federal Telephone Consumer Protection Act, which was the statute at issue in Campbell-Ewald.

Even though today’s consumers are less likely to maintain landlines for their own use, and instead rely solely upon their mobile phones, the TCPA imposes draconian penalties on companies that even inadvertently contact mobile phone users without their prior and express written consent. New and evolving rules and regulations, scrutinizing regulators and aggressive plaintiffs have combined to create a complex web of risks ready to ensnare even the most careful institutions. The TCPA has posed one of the greatest litigation and compliance risks these institutions have faced in recent years. Indeed, companies with valid business reasons for contacting customers have been swept up in the wave of  TCPA class actions, often paying out multimillion-dollar settlements just to resolve claims that often amount to minimal or no actual customer harm.

Originally published in Law360; reprinted with permission.