Mey v. Monitronics International, Inc. et al
Filing
121
MEMORANDUM OPINION AND ORDER Denying Mey's 66 Motion to Strike VMS'S offer of judgment, Docket 100 be deemed filed as the second Amended Complaint and Granting May's 88 Motion to file a second amended complaint. Signed by District Judge Irene M. Keeley on 3/22/12. (mji)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
DIANA MEY, individually and on
behalf of a class of all persons
and entities similarly situated,
Plaintiff,
v.
//
CIVIL ACTION NO. 5:11CV90
(Judge Keeley)
MONITRONICS INTERNATIONAL, INC.,
VERSATILE MARKETING SOLUTIONS, INC.,
doing business as VMS Alarms, and
UTC FIRE AND SECURITY AMERICAS
CORP., INC.,
Defendants.
MEMORANDUM OPINION AND ORDER
For the reasons discussed below, during a hearing on January
17, 2012, the Court GRANTED the motion of the plaintiff, Diana Mey
(“Mey”), to file a second amended complaint and DENIED her motion
to
strike
the
offer
of
judgment of
the
defendant,
Versatile
Marketing Solutions, Inc. (“VMS”).
I.
On May 18, 2011, Mey filed a putative class action in the
Circuit Court of Ohio County, West Virginia, against the defendants
Monitronics
International,
Inc.
(“Monitronics”),
UTC
Fire and
Security Americas Corp., Inc. (“UTC”), and VMS. In her complaint,
Mey alleged that the defendants had violated the Telephone Consumer
Protection Act of 1991 (“TCPA”), 47 U.S.C. § 227, by making
MEY V. MONITRONICS INTERNATIONAL, ET AL.
5:11CV90
MEMORANDUM OPINION AND ORDER
unlawful telephone solicitations. After the defendants removed the
case to this Court on June 24, 2011, Mey filed a first amended
complaint
on July
15,
2011
(dkt.
no.
13).
Following
initial
discovery, Mey moved for leave to file a second amended complaint
(dkt. no. 88), which the Court GRANTED on January 17, 2012. Mey
then filed her second amended complaint on February 16, 2012 (dkt.
no. 100).
According to Mey, in attempting to sell home alarm systems on
behalf of UTC and monitoring services on behalf of Monitronics, VMS
violated the TCPA by calling persons whose numbers were on the
Federal Trade Commission’s (“FTC”) “Do Not Call Registry,” and by
using an autodialer to contact mobile phones. Because the TCPA
imposes penalties on both the caller and the entity on whose behalf
the calls are made, Mey is seeking statutory damages from each
defendant for both willful and negligent violations. She also is
seeking an injunction to prevent further violations and preserve
the defendants’ records of their telemarketing calls to potential
class members.
On November 4, 2011, VMS sent the plaintiff a $30,000 offer of
judgment pursuant to Fed. R. Civ. P. 68, offering to compensate her
for all available statutory penalties if she would drop her claims
against Monitronics and UTC (dkt. no. 66-1). If Mey failed to
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MEY V. MONITRONICS INTERNATIONAL, ET AL.
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MEMORANDUM OPINION AND ORDER
accept the offer of judgment within fourteen days and ultimately
received a less favorable judgment at trial, under Fed. R. Civ. P.
68 she would be required to compensate VMS for all litigation costs
it incurred after the offer.
Mey did not accept VMS’s offer. Rather, on November 16, 2011,
she moved to strike its offer of judgment as an improper attempt to
“pick off” the named plaintiff in this putative class action (dkt.
no. 66). Mey argues that VMS may not employ an offer of judgment in
the context of a Rule 23 class action because the threat of
liability for a defendant’s litigation costs injects an improper
conflict of interest between a named plaintiff such as herself and
any unnamed class members who would be left to re-file their
complaints should she accept the offer of judgment. VMS contends
that, not only does Rule 68 authorize defendants to make an offer
of judgment to the named plaintiff in a class action, but also,
under that rule’s provision that an “unaccepted offer is considered
withdrawn,” there is nothing on the record for the Court to strike.
II.
At least fourteen days before the date set for trial, a
defendant may serve on an opposing party an offer to allow judgment
against it pursuant to specified terms. Fed. R. Civ. P. 68(a). If
the opposing party fails to accept the offer within fourteen days,
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MEY V. MONITRONICS INTERNATIONAL, ET AL.
5:11CV90
MEMORANDUM OPINION AND ORDER
the offer is considered withdrawn. Fed. R. Civ. P. 68(b). Should
the opposing party ultimately obtain a judgment less favorable than
the
unaccepted
offer,
it
is
obligated
to
pay
the
costs
the
defendant incurred after making the offer. Fed. R. Civ. P. 68(d).
Therefore, an offer of judgment prompts both parties to the lawsuit
to evaluate the risks and costs of litigation as balanced against
the likelihood of success at trial. As the Supreme Court has
explained, the “plain purpose of Rule 68 is to encourage settlement
and avoid litigation.” Marek v. Chesny, 473 U.S. 1, 5 (1985).
III.
Although nothing in the Federal Rules states as much, Mey
argues, and some courts have held, that a Rule 68 offer of judgment
is inappropriate in the context of a class action. See, e.g.
Zeigenfuse v. Apex Asset Mgmt., LLC, 239 F.R.D. 400, 403 (E.D. Pa.
2006); Janikowski v. Lynch Ford, Inc., No 98-8111, 1999 WL 608714
(N.D. Ill. Aug. 5, 1999). Mey asserts that VMS’s offer was a “pick
off” attempt to persuade her, as the named plaintiff, to abandon
the remaining class members. This strategy, she argues, forces the
plaintiff
to
choose
between
furthering
her
own
interests
by
accepting the offer, or advancing the interests of the entire class
by rejecting the offer and exposing herself to the risk of paying
the defendant’s costs. Mey contends that such an effect undermines
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MEMORANDUM OPINION AND ORDER
Rule 23's salutary purpose of aggregating similar claims into a
single efficient action, and she urges the Court to strike VMS’s
offer of judgment on the basis that Rules 68 and 23 cannot coexist.
The few courts that have addressed this issue have reached
disparate conclusions. Some courts have held that a defendant may
not make a Rule 68 offer of judgment to a class action plaintiff
for the same reasons now advanced by Mey. See, e.g. Zeigenfuse, 239
F.R.D. at 403; Janikowski, 1999 WL 608714, at *2. Others have
refused to strike such an offer of judgment, finding, as VMS has
argued here, that there is nothing on the record to strike. See,
e.g.
Stovall v. Suntrust Mortg., Inc., No. RDB-10-2836, 2011 WL
4402680, at *5 (D. Md. Sept. 20, 2011); Buechler v. Keyco, Inc.,
No. WDQ-09-2948, 2010 WL 1664226, at *3 (D. Md. April 22, 2010);
McDowall v. Cogan, 216 F.R.D. 46, 49 (E.D.N.Y. 2003).
A.
Mey asks the Court to adopt the reasoning in Zeigenfuse, which
struck
a
defendant’s
offer
of
judgment
“to
prevent
it
from
undermining the use of the class action device.” 239 F.R.D. at 403.
In Zeigenfuse, a defendant to a putative class action made the
named plaintiff an offer of judgment equivalent to the maximum
available
statutory
damages.
In
rejecting
such
a
procedural
maneuver, the district court reasoned that, if allowed to stand,
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MEY V. MONITRONICS INTERNATIONAL, ET AL.
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MEMORANDUM OPINION AND ORDER
the offer would effectively thwart the class action and deny the
possibility of obtaining relief to potential class members whose
claims might be too small to pursue individually. Id. at 401. As
the court stated, the defendant’s offer of judgment constituted an
impermissible “attempt to inject a conflict of interest between
[the named plaintiff] and those she seeks to represent.” Id. at
403.
Zeigenfuse relied heavily upon the reasoning articulated by
the Third Circuit in Weiss v. Regal Collections, 385 F.3d 337 (3d
Cir. 2004). Weiss held that a Rule 68 offer of judgment made before
class
action
certification
did
not
render
moot
a
class
representative’s claim. Prior to class action certification, the
defendants in Weiss served an offer of judgment for the entire
amount of the plaintiff’s claims. Because the named plaintiff was
the only adverse party at the moment, and because the defendants
were willing to settle with that sole plaintiff, the defendants
argued
that
no
controversy
remained
and
the
case
should
be
considered moot.
In rejecting that argument, the Third Circuit stated that
“allowing the defendants here to ‘pick off’ a representative
plaintiff with an offer of judgment less than two months after the
complaint is filed may undercut the viability of the class action
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MEY V. MONITRONICS INTERNATIONAL, ET AL.
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MEMORANDUM OPINION AND ORDER
procedures
and
frustrate
the
objectives
of
this
procedural
mechanism for aggregating small claims.” Id. at 344. It further
explained that, although an offer of complete relief will generally
moot a plaintiff’s claim, such is not the case when the offer is
made to an individual plaintiff in a class action. Id. at 342.
The court in Weiss observed that “the Federal Rules of Civil
Procedure are designed to be interdependent” and that Rule 68 must
be interpreted in harmony with Rule 23, which is intended to
“permit the plaintiffs to pool claims which would be uneconomical
to litigate individually.” Id. at 342, 344 (quoting Phillips
Petroleum
v.
Shutts,
472
U.S.
797,
809
(1985)).
Allowing
a
defendant to “pick off” individual plaintiffs at an early stage by
mooting their claims with offers of judgment would both disrupt the
aggregating role of Rule 23 as well as Rule 68's purpose of
avoiding
protracted
litigation.
Id.
at
344.
Therefore,
the
defendant’s pre-certification offer of judgment did not moot the
putative class representative’s claims so long as there was no
undue delay in the filing of a motion for class certification. Id.
at 348.
Although Weiss never ordered that an offer of judgment be
stricken, the court in Zeigenfuse expanded on Weiss’s holding and
concluded that defendants could not make offers of judgment to
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MEY V. MONITRONICS INTERNATIONAL, ET AL.
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MEMORANDUM OPINION AND ORDER
putative class representatives in most circumstances: “Rule 68
cannot be invoked to shift costs where a plaintiff has filed a
class action complaint unless the motion for class certification is
unduly delayed.” Zeigenfuse, 239 F.R.D. at 403.
Zeigenfuse, in effect, recognized an unwritten exception to
Rule 68 prohibiting offers of judgment in the context of class
actions. In reaching this conclusion, the court acknowledged that
its view had not been universally accepted by the few district
courts that
had
confronted
the
issue.
Id.
at
402-03
(citing
McDowall, 216 F.R.D. at 52). While Janikowski struck an offer of
judgment on the ground that it created an impermissible conflict
between the named plaintiff and the putative class, the court in
McDowall denied a motion to strike an offer of judgment because
there
was
“nothing
to
strike.”
McDowall,
216
F.R.D.
at
52;
Janikowski, 1999 WL 608714, at *2. Concluding that “[f]ollowing
McDowall would allow the defendant to achieve what Weiss seems to
forbid,”
the
court
in
Zeigenfuse
adopted
the
reasoning
in
Janikowski. Zeigenfuse, 239 F.R.D. at 403.
B.
VMS does not read Weiss to forbid defendants from making
offers of judgment to class representatives, and urges the Court to
follow
the
reasoning
of
McDowall,
8
where
the
district
court
MEY V. MONITRONICS INTERNATIONAL, ET AL.
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MEMORANDUM OPINION AND ORDER
acknowledged the perceived incompatibility of Rules 68 and 23, but
concluded that the apparent conflict is not irreconcilable. 216
F.R.D.
at
49-50.
McDowall
explained
that
Rule
68
permits
a
defendant to make an offer of judgment to an “adverse party,” who,
in a class action, is the indivisible class, not the individually
named plaintiff:
[W]hereas the adverse party prior to class certification
“consisted previously of a single plaintiff, it is now
[after certification] comprised of dozens, scores, or
even hundreds of individuals.” . . . Following this
logic, . . . . an offer of judgment made to a named
plaintiff prior to class certification “disappears” once
the class is certified.
Id. at 50 (citing Kremnitzer v. Cabrera & Rephen, P.C., 202 F.R.D.
239, 243-44 (N.D. Ill. 2001)). Thus, it concluded that an offer of
judgment made only to the class representative is without force
because it is not an offer to the adverse party.
McDowall also stated that this rule applies equally to offers
of judgment made to a named plaintiff prior to class certification.
Observing that, under Rule 23(e), for the purposes of settlement or
compromise, courts “must presume that a class action is ‘proper,’”
even prior to class certification, id. (citing Phila. Elec. Co. v.
Anaconda Am. Brass Co., 42 F.R.D. 324, 326 (E.D. Pa. 1967)), the
court concluded that a defendant wishing to make an offer of
judgment before class certification must make the offer to the
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MEMORANDUM OPINION AND ORDER
putative class as the proper adverse party: “If it makes its offer
only to the class representative, it cannot then seek to impose
costs on him after judgment is rendered pursuant to Rule 68, as it
will not have directed its offer to the proper offeree.” Id. at 51.
The court explained that this resolution avoids any friction
between Rules 68 and 23 because it obviates the potential conflict
of interest between a named plaintiff and the putative class.
McDowall ultimately denied the motion to strike an offer of
judgment because, as the defendant had not made a demand for costs
upon the plaintiff, there was “nothing to strike.” Id. at 52.
Moreover, it surmised that, even were it possible to strike a
document not yet filed, there would be “no point in striking
defendants’ offer, as it has no legal significance” because it was
not made to the proper adverse party. Id.
Since the decision in McDowall, other district courts in the
Fourth
Circuit
have
followed
its
approach.
For
example,
in
Buechler, the court denied the motion to strike an offer of
judgment on the ground that there was “nothing to strike.” 2010 WL
1664226, at *3. Because Rule 68(b) states that “[e]vidence of an
unaccepted offer is not admissible except in a proceeding to
determine costs,” the court concluded that it would constitute an
advisory opinion to address the plaintiff’s motion before the
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MEMORANDUM OPINION AND ORDER
defendant filed its unaccepted offer of judgment. Id.; see also
Stovall, 2011 WL 4402680, at *5 (denying a motion to strike an
offer of judgment on the same grounds).
IV.
After due consideration of these cases, the Court declines the
plaintiff’s invitation to judicially amend Rule 68 in the context
of class actions where no such exception exists either in the text
of the Federal Rules or in the notes of the Advisory Committee on
Rules of Practice and Procedure of the Judicial Conference of the
United States. It finds significance in the fact that, in 1984,
that Committee rejected a proposal to create such an exception
despite the same arguments advanced by Mey here.* Nor did the Third
Circuit advocate such an exception; Weiss held only that an offer
of judgment to a class representative does not moot his claims and
clarified the effect of an offer of judgment made to a named
*
In 1984, the Advisory Committee proposed a revision of Rule 68
that would have expressly precluded offers of judgment in class or
derivative actions. Preliminary Draft of Proposed Amendments to the Fed.
R. App. P., Fed. R. Civ. P., Fed. R. Crim. P. & Rules Governing § 2254
Cases and § 2255 Proceedings in the United States District Courts, 102
F.R.D. 407, 436 (1985). Proponents of the proposal reasoned that
acceptance of any offer must be subject to court approval under Rules
23(e) and 23.1 and that an offer of judgment in this context “could lead
to a conflict of interest between the named representative and other
members of the class.” Id. Despite these arguments, the Committee
rejected the revision.
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MEMORANDUM OPINION AND ORDER
plaintiff. 385 F.3d at 348. It did not bar outright the use of this
procedural device in a class action.
Moreover, the court in McDowall acknowledged the potential
that an offer of judgment to a named plaintiff could ignite a
conflict between her and a future class. 216 F.R.D. at 49. The mere
potential for a conflict, however, does not require a court to
strike an offer of judgment such as the one by VMS in this case.
Indeed, the decisions in McDowall, Buechler, and Stovall all note
that, until a defendant files a notice of the refused offer of
judgment and demands costs, there is “nothing to strike.” Stovall,
2011 WL 4402680, at *5; Buechler, 2010 WL 1664226, at *3; McDowall,
216 F.R.D. at 49.
Finally, should this case proceed through class certification,
VMS’s offer of judgment to Mey will effectively “disappear.” See
McDowall, 216 F.R.D. at 50. The adversary then will have changed
from Mey alone to an entire class and the original offer of
judgment will no longer be enforceable against the single named
plaintiff. See id. at 51. Conversely, if this case does not proceed
to class certification, VMS’s offer of judgment will stand, and, if
applicable, Mey will be held to the cost requirements imposed by
Rule 68(d). To the extent this possibility requires Mey to make a
difficult choice at an early stage of litigation, this merely
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reflects the strategic nature of our adversary system and in no way
indicates a defect in the Federal Rules of Civil Procedure.
V.
As discussed at the hearing on January 17, 2012, the Court:
1. GRANTED Mey’s motion to file a second amended complaint
(dkt. no. 88);
2. ORDERED that docket number 100 be deemed filed as the
second amended complaint; and
3. DENIED Mey’s motion to strike VMS’s offer of judgment (dkt.
no. 66).
It is so ORDERED.
The Court directs the Clerk to transmit copies of this Order
to counsel of record.
DATED: March 22, 2012
/s/ Irene M. Keeley
IRENE M. KEELEY
UNITED STATES DISTRICT JUDGE
13
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