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Supreme Court Closes One Door. Did It Open Another?

9 Feb, 2016 By: Jeffrey D. Knowles, Venable LLP’s Advertising, Daniel S. Blynn

In the November issue of The DRMA Voice, we wrote that the United States Supreme Court had recently heard oral arguments in Campbell-Ewald Co. v. Gomez, an important case for telemarketers and other companies operating under statutes with defined damages for class actions. Last month, the Supreme Court published its decision. Although the court closed the door on the best possible outcome for defendants in such suits, it did appear to leave another avenue of attack for companies attempting to fend off class actions involving statutorily defined damages.

By way of review, plaintiff Jose Gomez used the Telephone Consumer Protection Act (TCPA) to sue Campbell-Ewald after receiving an unsolicited text message from the company. Before Gomez could file for class certification, Campbell-Ewald admitted fault and offered him a full settlement of $1,503 – slightly more than the maximum award allowed under the TCPA. Gomez refused the settlement offer, and nine years of litigation later, the case wound its way to the Supreme Court, setting up a high-stakes showdown over the viability of certain types of class actions.

If Campbell-Ewald prevailed, companies providing services regulated under the TCPA might receive a mechanism to short-circuit potential class actions by offering the maximum allowed award. If the court sided with Gomez, companies could still be faced with cases going forward if plaintiffs reject an offer of complete relief.

In a 6-to-3 decision penned by Justice Ruth Bader Ginsburg, the Supreme Court affirmed the Ninth Circuit Court of Appeals, which had sided with Gomez, and cited the dissenting decision in Genesis Healthcare Corp. v. Symczyk, a 2013 Supreme Court case that dealt with similar issues.

In Genesis, the majority suggested that a settlement offer making the plaintiff whole mooted the plaintiff's individual claims. However, in Campbell-Ewald, the majority of the Court explicitly adopted Justice Elena Kagan's dissent in Genesis, which stated, "When a plaintiff rejects such an offer – however good the terms – her interest in the lawsuit remains just what it was before … an unaccepted settlement offer – like any unaccepted contract offer – is a legal nullity with no operative effect."

Interestingly, the court left open the question of whether the defendant tendering payment of the full amount of the offer to the plaintiff, as opposed to simply making the offer, would have changed its decision in the case.

Had the court gone the way of the dissenting justices, many believe that most class actions involving statutory damages would be ended by early settlement offers. That did not happen. However, the court did leave open the possibility that defendants can accomplish the same goal by simply tendering the offered payment to plaintiffs, rather than merely offering to satisfy their claims in full. It is almost certain that this approach will be tried, and that it will, like Campbell-Ewald, have a many years of litigation ahead of it before reaching a final resolution.

Jeffrey D. Knowles is the chair of Venable’s Advertising, Marketing, and New Media practice group. Daniel S. Blynn is a partner in the group. They may be contacted at (202) 344-4000.

About the Author: Jeffrey D. Knowles

Jeffrey D. Knowles

About the Author: Daniel S. Blynn

Daniel S. Blynn

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