Peters v. Credit Protection Association LP
Filing
55
ORDER denying 36 Motion to Dismiss; granting 41 Motion to Strike ; denying 48 Motion for Reconsideration ; denying 52 Motion to Stay. Signed by Judge Algenon L. Marbley on 9/8/2015. (cw)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
MICHAEL R. PETERS,
Plaintiff,
v.
CREDIT PROTECTION ASSOCIATION
LP,
Defendant.
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Case No. 2:13-CV-0767
JUDGE ALGENON L. MARBLEY
Magistrate Judge Kemp
OPINION & ORDER
This matter comes before the Court on the motion of Defendant Credit Protection
Association L.P. (“CPA”) to enter judgment and dismiss this case as moot. (Doc. 36). In
addition, Plaintiff Michael Peter’s related Motion to Strike Defendant’s Offer of Judgment is
before this Court, (Doc. 41), as well as Defendant’s related Motion for Reconsideration. (Doc.
48). Finally, this Court will consider Defendant’s Motion to Stay Litigation pending the United
States Supreme Court’s decision in Campbell-Ewald Co. v. Gomez. (Doc. 52).
For the reasons stated below, Defendant’s Motion to Dismiss for Lack of Jurisdiction is
DENIED, (Doc. 36); Plaintiff’s Motion to Strike Defendant’s Offer of Judgment is GRANTED,
(Doc. 41); Defendant’s Motion for Reconsideration is DENIED, (Doc. 48); and, Defendant’s
Motion to Stay is DENIED. (Doc. 52).
I.
BACKGROUND
On August 1, 2013, Michael Peters filed a complaint asserting class action claims against
CPA pursuant to the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. §227 et seq., and
the Federal Communication Commission (“FCC”) rules promulgated under that Act, 47 C.F.R. §
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64.1200. Peters alleges that CPA, a debt collector, violated the TCPA by making artificial voice
or prerecorded voice calls to him and others similarly situated without obtaining prior express
consent. In his complaint, Peters defines the putative class as all persons whose cellular
telephones having an Ohio area code were called by CPA using an automated telephone dialing
system (“ATDS”), artificial voice and/or prerecorded voice without that person’s consent during
a time period commencing four years prior to the filing of the class action complaint.
Based on these allegations, Peters asserts two claims: (1) CPA violated the TCPA, entitling
Peters and the putative class to statutory damages of $500 per unlawful call under 47 U.S.C. §
227(b)(3); and (2) CPA’s violations were knowing and willful, entitling Peters and the putative
class to statutory damages of $1,500 for each such willful or knowing violation. Finally, the
complaint demands the following relief: (1) certification and maintenance of the putative class
pursuant to Rule 23, with Peters designated as the representative of the class; (2) injunctive relief
under 47 U.S.C. § 227(b)(3); (3) a declaration that the Defendant’s alleged conduct constituted
unlawful violations of the TCPA and its rules; and (4) statutory damages under 47 U.S.C. §
227(b)(3) in the amount of $1,500 for each call Defendant made to Peters and the putative class
in violation of the TCPA and/or its rules.
On December 4, 2013, this Court entered a preliminary pretrial order setting a deadline of
June 15, 2014 for Peters to file any motion for class certification. On December 23, 2013, Peters
submitted written discovery seeking to obtain information about the number of potential class
members who were located by skip-trace methods and called by an autodialer. A number of
discovery disputes ensued. At a March 25, 2014 status conference before the Magistrate Judge,
the parties discussed settlement of class claims. At the conference, the Magistrate Judge noted
that Defendant had agreed to provide some discovery, and that, once provided, the Plaintiff
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would be given time to evaluate whether other discovery issues still needed to be addressed
before Plaintiff could formulate a settlement demand for the class claims. Accordingly, the
Court, with parties’ agreement, extended the cutoff date for class-related discovery to June 15,
2014.
On May 1, 2014, the Magistrate Judge convened another status conference. Although
Defendant had yet to produce the information necessary to formulate a class demand, it promised
the production of such information. Accordingly, the Magistrate Judge ordered all case deadlines
extended by thirty days, and ordered Defendant to produce the requested information regarding
the class by May 8, 2014.
On May 8, 2014, CPA’s attorneys disclosed to Peters via email that the potential class
consisted of 10,256 people whose numbers CPA received from a source other than the original
creditor. The total number of calls made to those cellphones amounted to 164,178. On June 2,
2014, the Magistrate Judge presided over another status conference. The Court vacated all case
deadlines, and ordered that, by June 16, 2014 or sooner, the Defendant provide Plaintiff with a
verified statement attesting to the accuracy of the information it produced previously regarding
the putative class. The Magistrate Judge then ordered the Plaintiff to make a settlement demand
within two weeks after the receipt of such information. Finally, the Court ordered that “the
parties shall make a good faith effort to reach a resolution, and shall contact the Court if they
believe that a Court-sponsored mediation conference [ ] would be productive, or if they reach an
impasse and want to have a case schedule re-imposed.” (Doc. 33).
In a July 14, 2014 letter to Plaintiff, Defendant stated that it would not agree to a class
settlement, and made the following offer of judgment to Peters, individually, pursuant to Federal
Rule of Civil Procedure Rule 68:
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(1) To allow judgment entered against it individually in a lump sum of $30,000
plus costs (to be agreed upon between the parties and if no agreement can be
had, to be determined by the Court), and (2) entry of an order permanently
enjoining CPA from using an ATDS, artificial voice, and/or a prerecorded
voice to make non-emergency debt collection calls to the plaintiff’s numbers
assigned to cellular telephone services where plaintiff has not previously
given CPA express consent to use an ATDS, an artificial voice, and/or
prerecorded voice to make the calls.
Peters rejected the individual offer on July 23, 2014. Since that date, no new case management
deadlines have been instituted in this case.
On September 5, 2014, Defendant filed a Motion for Entry of Judgment and to Dismiss
as Moot. (Doc. 36). In response, on September 30, 2014, Plaintiff filed a Motion to Strike
Defendant’s Offer of Judgment. (Doc. 41). Both matters have been fully briefed and are ripe for
review.
Also on September 5, 2014, Plaintiff filed a motion to compel discovery, seeking
information relating to the putative class. Then, on September 26, 2014, Defendant responded to
Plaintiff’s motion to compel, and cross-motioned to stay discovery pending this Court’s decision
in its Motion for Entry of Judgment and to Dismiss. (Doc. 40). Defendant argued that since the
case had been mooted by its Rule 68 offer, and Plaintiff’s requests were unnecessary, Plaintiff
was not entitled to the discovery requested. On November 26, 2011, the Magistrate Judge denied
Defendant’s cross-motion to stay discovery, reasoning that since the “stay does not raise an issue
such as immunity from suit, nor is it patent that the case lacks merit . . . a stay is unwarranted . . .
.” (Doc. 47, at 7). The Magistrate Judge also granted Plaintiff’s motion to compel, concluding
that since the requested discovery was relevant, and this Court had yet to dismiss the case, there
was no jurisdictional ban on allowing the discovery request to proceed. (Id. at 13). On December
10, 2014, Defendant objected to the Magistrate Judge’s November 26, 2014 Opinion & Order,
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and requested reconsideration of the same. (Doc. 48). That matter has similarly been fully
briefed as well.
II.
Motion to Dismiss
A. Standard
Article III of the United States Constitution limits the jurisdiction of federal courts to
“cases” and “controversies.” “A corollary to this case-or-controversy requirement is that an
actual controversy must be extant at all stages of review, not merely at the time the complaint is
filed.” Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523, 1528, 185 L. Ed. 2d 636 (2013)
(citations omitted). If follows that “[i]f an intervening circumstance deprives the plaintiff of a
‘personal stake in the outcome of the lawsuit,’ at any point during litigation, the action can no
longer proceed and must be dismissed as moot.” Id. (citations omitted). The exercise of judicial
power under Article III of the Constitution depends on the existence of a live case or
controversy, and, thus, mootness is a jurisdictional question. Demis v. Sniezek, 558 F.3d 508, 512
(6th Cir. 2009) (citing Lewis v. Cont'l Bank Corp., 494 U.S. 472, 477, 110 S.Ct. 1249, 108
L.Ed.2d 400 (1990)). A federal district court’s basis for subject matter jurisdiction over a dispute
may be challenged by filing a motion under Federal Rules of Civil Procedure 12(b)(1). See
Rogers v. Stratton Indus., 798 F.2d 913, 915 (6th Cir. 1986). The “heavy burden of
demonstrating mootness” lies with the party claiming that the case is moot. Cleveland Branch,
NAACP v. City of Parma, 263 F.3d 513, 530–31 (6th Cir. 2001).
B. Analysis
CPA argues that since its Federal Rule of Civil Procedure 68 offer of judgment provided
Plaintiff with everything he possibly could win individually, the offer mooted his individual
claims. Rule 68 provides:
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a party defending against a claim may serve on an opposing party an offer to
allow judgment on specified terms, with the costs then accrued.... If the [offer is
refused, and the] judgment that the offeree finally obtains is not more favorable
than the unaccepted offer, the offeree must pay the costs incurred after the offer
was made.
In addition, CPA contends that because the offer rendered moot Peters’ claims, the claims of the
uncertified class should be found moot, as well. Accordingly, Defendant urges this Court to
dismiss this case in its entirety for lack of jurisdiction.
Plaintiff responds that dismissal for lack of jurisdiction is inappropriate as a matter of law
for two reasons. First, Peters demanded declaratory relief, but he was not offered it in
Defendant’s Rule 68 offer of judgment, and thus his claims are not mooted because he was not
offered everything he sought. Second, Peters contends that this Court remains bound by its
holding in Stewart v. Cheek & Zeehandelar LLP that defendants may not put class actions to an
end before any class certification motions have been filed merely by tendering Rule 68 offers of
judgment that satisfy the putative class representative’s individual claims, so long as the Plaintiff
is not dilatory in filing. 252 F.R.D. 384 (S.D. Ohio 2008) (Marbley, J).
Circuits are split regarding whether an unaccepted Rule 68 offer of judgment that fully
satisfies a plaintiff’s claims is sufficient to render the claim moot because the party no longer
retains a personal stake in the outcome of the litigation. Genesis Healthcare Corp. v. Symczyk,
133 S. Ct. 1523, 1529, n. 4, 185 L. Ed. 2d 636 (2013) (not resolving the split because it assumed,
without deciding, that plaintiff voluntarily conceded its claims were mooted by the Rule 68
offer). Nonetheless, the Sixth Circuit has decided that in the face of an unaccepted offer of
complete relief under Rule 68, district courts may enter judgment in favor of the plaintiff because
an offer of judgment that satisfies a plaintiff’s entire demand moots the case. See O'Brien v.
Donnelly, 575 F.3d 567 (6th Cir. 2009); Hrivnak v. NCO Portfolio Mgmt., Inc., 719 F.3d 564,
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567 (6th Cir. 2013) (same; following O’Brien). Even if this Court finds that Defendant has
tendered an offer of complete relief, however, such a holding would not necessarily lead to a
dismissal of the putative class’s claims. This is because it remains unsettled in this Circuit
whether an unaccepted Rule 68 offer of complete relief to the lead plaintiff, tendered prior to
class certification, will also moot putative class claims prior to certification of the class.
In Hrivnak, a Federal Rule of Civil Procedure 23 class action case which arose under the
Fair Debt Collection Practices Act (“FDCPA”), the defendants moved for dismissal for lack of
jurisdiction after tendering a Rule 68 offer of judgment to the proposed class representative prior
to class certification. The plaintiff’s complaint requested class relief, statutory, compensatory and
punitive damages exceeding $25, 000, attorney’s fees, and injunctive and declaratory relief. 719
F.3d at 565. The defendant made a Rule 68 offer of $7,000 and reasonable attorney’s fees. Id. at
566. The defendants argued that the offer mooted the individual plaintiff’s claims, and thus, the
class claims, because it was all that the plaintiff was entitled to as a matter of law. Id. Plaintiff
filed a motion to strike the offer of judgment. Id. The Hrivnak Court divided the inquiry before it
into two steps: (1) Whether the defendants had in fact offered the class representative everything
he could possibly win as an individual and, once that is found to be the case; (2) whether the
individual and uncertified class claims must both be dismissed as moot. Id. at 567. The Hrivnak
Court found that since the defendants had not “cleared the first hurdle,” it did not need to reach
step two in the inquiry. Id. In line with Hrivnak, this Court will address each step in turn.
1. The Rule 68 Offer’s Effect on the Named Plaintiff
In Hrivnak, the Sixth Circuit clarified that in order “[t]o moot a case or controversy
between opposing parties, an offer of judgment must give the plaintiff everything he has asked
for as an individual. . . . An offer limited to the relief the defendant believes is appropriate does
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not suffice. The question is whether the defendant is willing to meet the plaintiff on his terms.”
Id. The Court explained further why Rule 68 demands that the defendant must offer everything
the plaintiff seeks in order to moot the plaintiff’s claims:
The point of Rule 68 is twofold: (1) to provide a process for making offers of
judgment and for accepting or denying them, Fed. R. Civ. P. 68(a)–(c), and (2) to
create an incentive for taking offers of judgment seriously by providing that, “[i]f
the judgment that the offeree finally obtains is not more favorable than the
unaccepted offer, the offeree must pay the costs incurred after the offer was
made.” Fed. R. Civ. P. 68(d). By declining the defendants' offer of judgment,
Hrivnak converted the defendants' proposal into a “withdrawn” offer and exposed
himself to the risk of being on the hook for costs incurred by the defendants “after
the offer was made.” Yet Rule 68 does not by itself tell us whether the defendants'
offer moots the case; mootness occurs only when the offer is accepted or the
defendant indeed offers to provide every form of individual relief the claimant
seeks in the complaint.
Id. at 567-68. The Court held that because the defendants’ Rule 68 offer did not satisfy all of the
plaintiff’s individual demands—but only those they believed had merit as a matter of law—it did
not deprive the court of jurisdiction because a live controversy still existed in the case. Id. at 569
(citing Moore v. Lafayette Life Ins. Co., 458 F.3d 416, 443–45 (6th Cir. 2006) (noting the
confusion that often ensues when “standing and merits questions converge” and stating that
unless a plaintiff’s claim is “so insubstantial that it fails to present a federal controversy,” courts
should properly reach the merits and retain jurisdiction)). The Court clarified that even if each of
defendants’ arguments as to why plaintiff was not entitled to relief surpassing $7,000 and
reasonable attorney’s fees was ultimately correct as a matter of law,
each argument goes to the merits of Hrivnak’s claims, and the merits of those
claims are not so insubstantial as to deprive the court of jurisdiction. To pick one
example, the defendants may be right that the FDCPA does not authorize
declaratory or injunctive relief. But neither our court nor the Supreme Court has
reached that conclusion, and it is surpassingly strange to think that this court and
the Supreme Court do not have jurisdiction to resolve this point of law. Plaintiffs
have the right to win—and lose—cases, and we have jurisdiction to make the call.
To rule on whether Hrivnak is entitled to a particular kind of relief is to decide the
merits of the case. Neither Civil Rule 68 nor any other Rule or tradition requires
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the district court to do that in response to a motion to dismiss for lack of subject
matter jurisdiction.
Id. at 570.
Like in Hrivnak, the Defendant has not tendered Peters all of the relief he has requested
because it has not provided him with declaratory relief. Defendant argues, instead, that Peters is
not entitled to declaratory relief under the TCPA, but only to statutory relief up to $1,500 per
violation, and injunctive relief. See 47 U.S.C. § 227(b)(3)1. Such is a merits-based argument
regarding the type of relief to which Peters is entitled. Just as the Hrivnak Court found with
regards to the FDCPA, neither the Sixth Circuit nor the Supreme Court has held that the TCPA
does not permit declaratory relief. Accordingly, because the claim for declaratory relief is not so
insubstantial that it fails to present a federal controversy, Defendant’s Rule 68 offer did not
provide Plaintiff with all the relief he requested, and thus did not deprive the court of subject
matter jurisdiction.
Defendant argues additionally that Peters lacks standing to pursue declaratory relief, and
thus the Rule 68 offer it tendered to Peters encompasses all of the relief he possibly could
1
47 U.S.C.A. § 227(b)(3) reads:
(3) Private right of action: A person or entity may, if otherwise permitted by the
laws or rules of court of a State, bring in an appropriate court of that State-(A) an action based on a violation of this subsection or the regulations prescribed
under this subsection to enjoin such violation,
(B) an action to recover for actual monetary loss from such a violation, or to
receive $500 in damages for each such violation, whichever is greater, or
(C) both such actions.
If the court finds that the defendant willfully or knowingly violated this
subsection or the regulations prescribed under this subsection, the court may, in
its discretion, increase the amount of the award to an amount equal to not more
than 3 times the amount available under subparagraph (B) of this paragraph.
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recover. It is well established that “[i]n the context of a declaratory judgment action, allegations
of past injury alone are not sufficient to confer standing. The plaintiff must allege and/or
‘demonstrate actual present harm or a significant possibility of future harm.’” Fieger v. Ferry,
471 F.3d 637, 643 (6th Cir. 2006) (citing Peoples Rights Org., Inc. v. City of Columbus, 152 F.3d
522, 527 (6th Cir. 1998); O'Shea v. Littleton, 414 U.S. 488, 495–96, 94 S.Ct. 669, 38 L.Ed.2d
674 (1974); (Golden v. Zwickler, 394 U.S. 103, 109–10, 89 S.Ct. 956, 22 L.Ed.2d 113 (1969)).
Defendant avers that Plaintiff alleges only past harm arising from the practices he challenges in
his complaint. Further, Defendant points out that its Rule 68 offer included relief enjoining CPA
from engaging in any of the alleged unlawful practices Peters alleges in the complaint, and thus
that Plaintiff cannot aver that there is a possibility of future harm. Defendant concludes,
therefore, that Peters lacks standing to pursue declaratory relief, and the offer of judgment
offered all of the relief he can recover, which it argues meets the standard of “complete relief”
mandated in O’Brien.
Defendant’s argument pursues a new line of reasoning but to the same end—he entreats
this Court to decide his merits argument regarding the availability of declaratory judgment under
the facts alleged in the complaint in order to determine whether a Rule 68 offer of judgment
moots all of his claims. This he cannot do. See Hrivnak, 719 F.3d at 570 (defendants are not
permitted to “require the district court to address their other merits arguments in order to
determine whether a Rule 68 offer of judgment as to some claims moots all claims”). A recent
district court case within this Circuit similarly implemented the rationale in Hrivnak and came to
an identical conclusion. See Compressor Eng'g Corp. v. Thomas, No. 10-10059, 2015 WL
730081, at *7 (E.D. Mich. Feb. 19, 2015). The Thomas Court assessed the defendant’s 12(b)(1)
motion seeking to moot plaintiff’s TCPA claims based on defendant’s unaccepted Rule 68 offer,
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which did not include the injunctive relief requested in the complaint. The defendant argued that
plaintiff had not shown that he would be subject again to the alleged offending activity and thus
that injunctive relief was unavailable, quoting the standard for injunctive relief. Id. at *5. The
Thomas Court denied defendant’s motion, concluding that defendant’s request to moot Plaintiff’s
claims based on its unaccepted Rule 68 offer, while simultaneously attempting to “have the
Court then separately address and assess Plaintiff's remaining claim[,] is at odds with the Sixth
Circuit’s treatment of Hrivnak.” Id. at * 7.
The Hrivnak Court clarified that “ample mechanisms exist to force the issue” of whether
some of a plaintiff’s claims lack merit, such as a motion to dismiss for failure to state a claim
under Fed. R. Civ. P. 12(b)(6), a motion for summary judgment under Fed. R. Civ. P. 56, or a
motion for judgment on the pleadings under Fed. R. Civ. P. 12(c). 719 F.3d at 570. This Court
will not look to the facts alleged in the complaint and entertain a motion to dismiss for failure to
state a claim for a declaratory judgment when such a motion is not before it. Further, as
explained supra, Defendant’s unaccepted Rule 68 offer has no force of law—it did not moot
Plaintiff’s claims because Defendant’s unaccepted offer was not one of “complete relief” under
Hrivnak and O’Brien, and thus this Court has declined to enter judgment pursuant to.
Accordingly, it would defy logic to treat Defendant’s offer of injunctive relief as having the force
of law, sufficient to render it impossible for Plaintiff to sustain a declaratory judgment claim.
The Court declines to follow Defendant down this circular path.
In summary, Defendant’s motion to dismiss based on lack of subject matter jurisdiction is
DENIED because Defendant’s offer of judgment failed to satisfy Plaintiff’s entire demand as
Hrivnak requires.
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2. The Rule 68 Offers’ Effect on the Putative Class Claims
Even if Defendant’s Rule 68 offer did moot Plaintiff’s individual claims, the class claims
remain alive, and the named plaintiff, Peters, retains the ability to pursue them. This Court held
in Stewart v. Cheek & Zeehandelar, LLP, that defendants “ought not be able to put class actions
to an end merely by tendering Rule 68 offers of judgment before the putative class
representatives have filed their certification motions,” so long as the class representatives do not
“unduly delay in bringing their certification motions.” 252 F.R.D. 384, 385 (S.D. Ohio 2008)
(Marbley, J). In Stewart this Court explained the interplay between Rule 68 and Rule 23. The
purpose of Rule 68 “is to encourage settlement and avoid litigation;” in contrast, Rule 23
establishes the procedural requirements for certifying a case as a class action, one of the purposes
of which is to pool the claims of those similarly injured so that it is viable to obtain relief for
relatively minor legal injuries, and achieve otherwise unfeasible vindication of constitutional and
statutory rights. Id. at 385 (citing See Deposit Guar. Nat'l Bank v. Roper, 445 U.S. 326, 339, 100
S.Ct. 1166, 63 L.Ed.2d 427 (1980); See e.g., Mace v. Van Ru Credit Corp., 109 F.3d 338, 344
(7th Cir. 1997)). Accordingly, this Court put forth four separate reasons why a defendant’s Rule
68 offer made before a motion for class certification does not moot class claims: (1) if it were
otherwise, each side would endeavor “to beat the other to the punch” leading to an unreasonable
race between plaintiffs to file a motion before completing discovery on the class, and defendant
to make a settlement offer before filing; (2) “treating pre-certification settlement offers as
mooting the named plaintiffs’ claims would have the disastrous effect of enabling defendants ‘to
essentially opt-out of Rule 23,’” (3) “with Rule 23 cast aside, those who have been harmed will
be forced to file individual suits to obtain redress[,]” which will likely prevent them from ever
coming about due to economic infeasibility; and (4) “Rule 68 offers of judgment prior to class
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certification pit the self interests of named plaintiffs against the interests of the class as a whole.”
Id. at 386. No controlling Sixth Circuit or Supreme Court case has yet to overturn Stewart, or
undermine its rationale, and this Court sees no reason to part with Stewart’s holding at this time.
In Stewart, this Court relied on the Third Circuit’s decision in Weiss v. Regal Collections,
385 F.3d 337, 342 (3d Cir. 2004), as amended (Oct. 22, 2004), which, at the time, was the only
Circuit to have addressed whether an offer that moots a class representative’s individual claims,
made before any motion has been filed to certify a class, will moot the putative class claims as
well. Defendant urges this Court to abandon its earlier reliance on Weiss, and rely instead on the
Seventh Circuit’s more recent decision in Damasco v. Clearwire Corp., 662 F.3d 891, 895-97
(7th Cir. 2011). Damasco declined to follow the four Circuits to have considered the issue—all
of which held that a defendant could not pick off a class representative and force the dismissal of
the entire class action before class certification via an unaccepted offer of complete relief—and
held, instead, that the Defendants’ offer, made before a motion to certify the class, mooted the
case in its entirety.
This Court is not inclined to reverse its position based on Damasco, nor is it bound to do
so. This is especially so considering all of the circuits to have considered the issue since Stewart,
save the Seventh Circuit in Damasco, have held that a Rule 68 offer tendered to the named
plaintiff in a putative class action does not moot a class action, even if it is made prior to the
filing of a class certification motion, so long as the named plaintiff has not failed to pursue
diligently class certification. See Stein v. Buccaneers Ltd. P'ship, 772 F.3d 698, 707 (11th Cir.
2014); Pitts v. Terrible Herbst, Inc., 653 F.3d 1081, 1091–92 (9th Cir. 2011); Lucero v. Bureau
of Collection Recovery, Inc., 639 F.3d 1239, 1249–50 (10th Cir. 2011); Sandoz v. Cingular
Wireless LLC, 553 F.3d 913, 920–21 (5th Cir. 2008).
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Finally, Defendant argues that the Supreme Court’s recent decision in Genesis
Healthcare Corp. v. Symczyk controls, as it rejected the “relation back” analysis on which the
Third, Fifth and Ninth Circuits relied to avoid mootness under circumstances where the putative
class representative moves for class certification without “undue delay.” 133 S. Ct. 1523, 185 L.
Ed. 2d 636. Defendant’s attempt to persuade this Court that Genesis is binding in the instant case
is unavailing.
Genesis was brought as a collective action pursuant to § 16(b) of the Fair Labor
Standards Act (“FLSA”). The question before the Supreme Court was whether a Rule 68 offer of
complete relief tendered to the plaintiff, prior to joinder of other plaintiffs, mooted the action as a
whole.2 The plaintiff contended the offer was an attempt to “pick off” the named plaintiff before
the collective-active process could unfold. The Supreme Court held that “[w]hile the FLSA
authorizes an aggrieved employee to bring an action on behalf of himself and ‘other employees
similarly situated,’ 29 U.S.C. § 216(b), the mere presence of collective-action allegations in the
complaint cannot save the suit from mootness once the individual claim is satisfied.” 133 S. Ct.
at 1529, 185 L. Ed. 2d 636. It then rejected all of plaintiff’s arguments which relied on cases
“that arose in the context of Federal Rule of Civil Procedure 23 class actions,” finding those
cases “inapposite, both because Rule 23 actions are fundamentally different from collective
actions under FLSA, and because these cases are, by their own terms, inapplicable to these
facts.” Id. at 1529; see also 1528, n. 1 (noting, without expressing an opinion on the practice of
the lower courts’ borrowing class action terminology to describe the process of joining coplaintiffs under FLSA, that “there are significant differences between certification under Federal
2
As explained supra, the Supreme Court assumed, without deciding, that the plaintiff’s claims
were moot.
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Rule of Civil Procedure 23 and the joinder process under § 216(b)”). Later in the opinion, when
distinguishing the case Deposit Guaranty Nat. Bank v. Roper, 445 U.S. 326, 100 S.Ct. 1166, 63
L.Ed.2d 427 (1980), the Court reiterated the inapplicability to the case at hand of Roper’s dicta
regarding the undesirable effects of allowing defendants to “pick off” party plaintiffs before a
Rule 23 class certification ruling. Id. at 1532. The Supreme Court clarified, once again, that
“Roper’s dictum was tethered to the unique significance of certification decisions in class-action
proceedings. 445 U.S., at 339, 100 S.Ct. 1166. Whatever significance ‘conditional certification’
may have in § 216(b) proceedings, it is not tantamount to class certification under Rule 23.” Id.
While Defendant may rightly predict that Genesis’ rationale may one day be extended to
the context of Rule 23 class certification, the Supreme Court spoke plainly that Genesis’ holding
and rationale binds only as to collective actions under FLSA, § 216(b). Defendant retorts that the
Supreme Court stated that the Rule 23 cases on with the defendant relied were distinguishable
“on their own terms,” and not only “because Rule 23 actions are fundamentally different from
collective actions under FLSA.” 133 S. Ct. at 1529, 185 L. Ed. 2d 636. Even so, the Supreme
Court’s repeated acts of distinguishing all cases that addressed mootness in the context of Rule
23, precisely because of the “unique significance” of Rule 23, as well as the Court’s failure to set
forth a more universal pre-joinder or certification mootness principle, sends a clear message to
this Court that it is not bound by Genesis in the instant case. Thus, this Court agrees with the
Ninth Circuit, and other lower courts, that “the Genesis discussion does not apply to class
actions.” Gomez v. Campbell-Ewald Co., 768 F.3d 871, 875, n. 2 (9th Cir. 2014) cert. granted,
135 S. Ct. 2311, 191 L. Ed. 2d 977 (U.S. May 18, 2015) (No. 14-857) (noting that “at least ten
courts had expressly stated that the Genesis analysis does not bind courts with respect to class
action claims,” and that it was unaware of any courts that held otherwise). But compare Hooks v.
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Landmark Indus., No. CIV.A. H-12-0173, 2014 WL 2981229, at *5 (S.D. Tex. July 1, 2014),
appeal docketed, No. 14-20496 (5th Cir. July 31, 2014) (extending the rationale in Genesis to a
Rule 23 context).3 Also notable is that the Supreme Court has granted certiorari in Gomez to
resolve the precise issue before this Court—(1) whether a case becomes moot when the plaintiff
receives an offer of complete relief on his claim; and (2) whether the answer to the first question
is any different when the plaintiff has asserted a class claim under Rule 23, but receives an offer
of complete relief before any class is certified—indicating that Genesis leaves the issue
unsettled. See Campbell-Ewald Co. v. Gomez, No. 14-857 (U.S. Jan. 16, 2015), 2015 WL
241891 (U.S.), i.
Further, Defendant makes no contention that Plaintiff has unduly delayed filing his
motion for class certification. Indeed, Plaintiff has not contravened any case management
deadline. According to the record, if any dilatory conduct is to be ascribed, it would be to the
Defendant, who delayed in providing discovery requests regarding the plaintiff class. At the time
Defendant filed the instant motion, the parties, according the Magistrate Judge’s order, were
supposed to be engaged in class settlement negotiations.
Thus, this Court holds that Defendant’s unaccepted Rule 68 offer made before Plaintiff
filed a motion for class certification, even if it had offered complete relief, did not moot the class
action claims. Accordingly, Defendant’s Motion to Dismiss for Lack of Jurisdiction is DENIED.
3
The remaining cases on which Defendant relies do not hold that the rationale in Genesis applies
directly to the issue of whether a Rule 68 offer tendered to the lead class-action plaintiff, premotion for certification, moots class claims. First, the Florida district court case to which
Defendant cites was overturned. See Keim v. ADF Midatlantic, LLC, 586 F. App'x 573, 574
(11th Cir. 2014). Second, in McMahon v. LVNV Funding, LLC, 744 F.3d 1010, 1016 (7th Cir.
2014), the court’s general statement that the “governing principles” in that case “come from the
Supreme Court's decisions in Genesis[,] ...[,]Geraghty, ...[,] and Roper[,]” was not a concession
that that the mootness principles outlined in Genesis are binding in a Rule 23 context; neither did
that case hold that according to Genesis the class-claims were mooted.
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(Doc. 36). It follows, that Plaintiff’s Motion to Strike Defendant’s Offer of Judgment is
GRANTED. (Doc. 41). In addition, pursuant to this Court’s denial of Defendant’s Motion to
Dismiss, this Court’s DENIES Defendant’s Motion for Reconsideration. (Doc. 48). All of
Defendant’s arguments in its motion for reconsideration pertain to the unresolved matter of this
case’s justiciability. That issue has now been resolved, and this case can proceed unhindered.
This Court directs the Magistrate Judge to institute a revised case management schedule in this
case that includes a date by which the Plaintiff must file a motion for class certification.
III. Motion to Stay
Defendant avers that the issues before this Court in Defendant’s Motion to Dismiss are
the exact issues currently pending before the Supreme Court in Gomez v. Campbell-Ewald Co.,
768 F.3d 871, 875, n. 2 (9th Cir. 2014) cert. granted, 135 S. Ct. 2311, 191 L. Ed. 2d 977 (U.S.
May 18, 2015) (No. 14-857). As explained supra, the Supreme Court granted certiorari in Gomez
to address the following issues in the similar context of a putative class action brought under the
TCPA:
1. Whether a case becomes moot, and thus beyond the judicial power of Article III,
when the plaintiff receives an offer of complete relief on his claim.
2. Whether the answer to the first question is any different when the plaintiff has
asserted a class claim under Federal Rule of Civil Procedure 23, but receives an
offer of complete relief before any class is certified.
Pet. For Writ of Cert., at i, Campbell-Ewald Co. v. Gomez, No. 14-857 (U.S. Jan. 16, 2015) 2015
WL 241891 (U.S.). Defendant argues that the Supreme Court’s decision in the Gomez appeal
could determine that Plaintiff’s claims and/or those of the putative class are no longer justiciable.
Accordingly, Defendant requests a stay of these proceedings pending the Supreme Court’s
decision on the above issues in Gomez.
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A. Standard
“A district court has the inherent power to stay proceedings based on its authority to
manage its docket efficiently.” Ferrell v. Wyeth–Ayerst Laboratories, Inc., 2005 WL 2709623,
*1 (S.D. Ohio Oct. 21, 2005) (citing In re Airline Pilots Ass’n. v. Miller, 523 U.S. 866, 880
(1998)); see also Landis v. North American Co., 299 U.S. 248, 254-255 (1936). A court,
however, “‘must tread carefully in granting a stay of proceedings since a party has a right to a
determination of its rights and liabilities without undue delay.’” Id. (quoting Ohio Envtl. Council
v. U.S. Dist. Ct. ., 565 F.2d 393, 396 (6th Cir. 1977)). The movant bears the burden of showing
both a need for delay and that “neither the other party nor the public will suffer harm from entry
of the order.” Ohio Envtl. Council, 565 F.2d at 396. The Supreme Court in Landis set forth the
movant’s burden as follows:
The suppliant for a stay must make out a clear case of hardship or inequity in
being required to go forward, if there is even a fair possibility that the stay for
which he prays will work damage to someone else. Only in rare circumstances
will a litigant in one cause be compelled to stand aside while a litigant in another
settles the rule of law that will define the rights of both.
299 U.S. at 255, 57 S.Ct. at 166. “The most important factor is the balance of the hardships, but
‘[t]he district court must also consider whether granting the stay will further the interest in
economical use of judicial time and resources.’” F.T.C. v. E.M.A. Nationwide, Inc., 767 F.3d
611, 627-28 (6th Cir. 2014) (citing Int'l Bhd. of Elec. Workers v. AT & T Network Sys., No. 88–
3895, 879 F.2d 864, 1989 WL 78212, at *8 (6th Cir. Jul. 17, 1989) (internal citations omitted)).
B. Analysis
First, this Court determined supra that Defendant did not tender an offer of complete
relief, and thus that the offer did not moot Plaintiff’s individual claims. In contrast, the Gomez
petition for certiorari presumes that the Rule 68 offer of judgment tendered to the plaintiff
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included all the individual relief which the plaintiff sought. Thus, the decision in Gomez likely
will not be controlling in the present case.
Assuming, however, that the Supreme Court ventures into the terrain of what constitutes
“complete relief” in the context of a Rule 68 offer that allegedly moots the lead plaintiff’s
individual claims, and the Gomez decision speaks clearly to the question of whether Defendant
tendered an offer of complete relief in the instant case, this Court agrees that the issues before the
Supreme Court in Gomez are the same as those in this case. Defendant argues, accordingly, that a
stay is necessary and appropriate because it will prevent the parties from spending time and
resources litigating this manner only for the Supreme Court to decide that Plaintiff and the
putative class lacked standing. Defendant contends that a stay will not prejudice either party, that
a stay is in the interest of judicial economy, and that a stay would prevent undue hardship to it in
litigating a case unnecessarily.
Plaintiff responds that even assuming “the case at bar were on all fours with Gomez” a
stay would still be inappropriate because Defendant has not carried its burden under Landis.
Specifically, Plaintiff urges this Court to find that Defendant’s generalizations regarding
prejudice, hardship and judicial economy are not sufficient under Landis. Plaintiff relies on
Siding & Insulation Co. v. Beachwood Hair Clinic, Inc., in which a defendant sought a stay in a
private TCPA action against it, pending a Supreme Court ruling on whether the federal court had
jurisdiction over private TCPA cases. No. 1:11-CV-01074, 2011 WL 4005396, at *2 (N.D. Ohio
Sept. 8, 2011). The district court denied the stay, noting that although the Supreme Court
decision could have a dispositive effect on the court’s jurisdiction, the case likely would be
refiled in state court anyway if the district court lost jurisdiction. Id. Further, the court
determined that the plaintiffs indeed could be prejudiced by the delay because “[p]hysical
19
evidence could be lost, and the memories of those with pertinent information will degrade while
the parties await a Supreme Court opinion.” Id. Lastly, the district court found dispositive that
under unchallenged Sixth Circuit precedent, the court still had jurisdiction. Id.
This Court adheres to the rationale in Beachwood. While in this case the issue pending
before the Supreme Court would moot the case entirely, whereas in Beachwood the case
theoretically could have been refiled in state court should the district court have lost jurisdiction,
this distinction is insignificant for a few reasons. First, an adverse Supreme Court ruling in
Beachwood still would have meant that any federal litigation—save some discovery which
theoretically could have carried over into any state litigation—would have been for naught. The
same would be true here. In this case, discovery is ongoing and has largely been completed.
Thus, this case is in a similar procedural posture to Beachwood. Second, “being required to
defend a suit, without more, does not constitute a ‘clear case of hardship or inequity’ within the
meaning of Landis.” Citizens Banking Corp. v. Citizens First Bancorp, Inc., No. 07-10985, 2007
WL 4239237, at *7 (E.D. Mich. Dec. 3, 2007) (citing Lockyer v. Mirant Corp., 398 F.3d 1098
(9th Cir. 2005)). Like the Court reasoned in Beachwood, however, prejudice could befall
Plaintiff if this case were stayed, as evidence may be lost, and the memories of those with
pertinent information may be lost as well. The Plaintiff asserts that this is especially true in the
instant case because the putative class includes persons who were allegedly subjected to
automated calls as early as August 2009. Finally, like in Beachwood, the Court currently retains
jurisdiction over this case, as explained supra. The law of the majority of circuits to have
considered the issue supports this Court’s holding that it retains jurisdiction.
Because the Supreme Court’s decision in Gomez is unlikely to affect this Court’s
jurisdiction over this case, and because Plaintiff “has a right to a determination of its rights ...
20
without undue delay,” Ohio Envtl. Council, 565 F.3d at 396, Defendant’s motion for a stay is
hereby DENIED.
IV.
CONCLUSION
In summary, Defendant’s Motion to Dismiss for Lack of Jurisdiction is DENIED, (Doc.
36); Plaintiff’s Motion to Strike Defendant’s Offer of Judgment is GRANTED, (Doc. 41);
Defendant’s Motion for Reconsideration is DENIED, (Doc. 48); and, Defendant’s Motion to
Stay is DENIED. (Doc. 52).
IT IS SO ORDERED.
/s/ Algenon L. Marbley
ALGENON L. MARBLEY
UNITED STATES DISTRICT JUDGE
DATE: September 8, 2015
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