Commercial Litigation and Arbitration

Rule 68 Offer of Judgment Exceeding Putative Class Representative’s Individual Claim Does Not Moot Class Action If Offer Is Made after Class Certification Motion Made

Tocco v. Real Time Resolutions, Inc., 2014 U.S. Dist. LEXIS 112492 (S.D.N.Y. Aug. 13, 2014):

Rule 68 permits a defendant to "serve on an opposing party an offer to allow judgment on specific terms." Fed. R. Civ. P. 68(a). When an offer of judgment exceeds the amount the plaintiff could recover, the plaintiff's claim is moot. Doyle v. Midland Credit Mpmt., Inc., 722 F.3d 78, 78 (2d Cir. 2013). This rule has a complicated interaction with class actions. "[W]hen a court [*10]  has already granted or denied class certification, mootness of the named plaintiffs personal claim does not render the entire action moot." Franco v. Allied Interstate, LLC, No. 13 Civ. 4053 (KBF), 2014 WL 1329168, at *3 (S.D.N.Y. Apr. 2, 2014) (citing U.S. Parole Comm'n v. Geraghty, 445 U.S. 388,404 (1980); Sosna v. Iowa, 419 U.S. 393, 394 (1975)). But "neither the Supreme Court nor the Second Circuit has ruled on the effect of a Rule 68 offer made prior to resolution of a Rule 23 . . . certification motion." Franco, 2014 WL 1329168, at *3. District courts in this Circuit are split on the question. See Isaacs v. Malen & Assocs., P.C., No. 13 Civ. 2386 (WHP), 2013 WL 4734904, at *1 (S.D.N.Y. Aug. 14, 2013) (quoting Morgan v. Account Collection Tech., LLC, No. 05 Civ. 2131 (KMK), 2006 WL 2597865, at *4 (S.D.N.Y. Sept. 6, 2006)). This Court previously refused to dismiss a putative class action for lack of jurisdiction where the defendant made its Rule 68 offer before the plaintiff could reasonably have been expected to file its class certification motion. Isaacs, 2013 WL 4734904, at * 1. A contrary rule would risk "forcing a plaintiff to make a class certification motion before the record for such motion [was] complete" and "allow defendants to essentially opt-out of Rule 23 . . . by the mere service of a Rule 68 offer at the outset of the case." Isaacs, 2013 WL 4734904, at *1 (quoting Schaake v. Risk Memt. Alts., Inc., 203 F.R.D. 108, 112 (S.D.N.Y. 2001)).

Here, Tocco requested permission to move for class certification before any Rule 68 offer was made. At a conference on May 23, 2014, this Court notified the parties that for purposes of this motion, it would treat Tocco's request as a motion for class certification. If a Rule 68 offer made before a plaintiff had a reasonable time to move for class [*11]  certification could not moot a claim, then by extension a Rule 68 offer made after the plaintiff has moved for class certification should not do so.

Real Time asks this Court to follow Judge Forrest's recent decision in Franco v. Allied Interstate, LLC, which dismissed plaintiffs' claims notwithstanding a pending class certification motion. 2014 WL 1329168, at *5. Judge Forrest was persuaded that defendants' ability to "pick off' plaintiffs via Rule 68 offers was not a concern under the FDCPA. Franco, 2014 WL 1329168, at *5 ("[D]efendant here has offered to address plaintiff's harm and make plaintiff whole; other potential plaintiffs remain free to vindicate their rights in their own suits despite the mootness of plaintiffs individual claim." (internal quotation marks and citations omitted)). But timing is a key consideration in analyzing Rule 68 offers. See Franco, 2014 WL 1329168, at *3 (noting that courts have been more comfortable dismissing putative class actions as moot where a Rule 68 offer has been made and the plaintiff has not moved for class certification). The plaintiff in Franco only moved for class certification after a Rule 68 offer had been made. Franco, 2014 WL 1329168, at *1. Tocco's claim stands on a different footing.

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