Seventh Circuit Aligns with Ninth and Second Ahead of SCOTUS Decision in Campbell-Ewald

Class Actions  •  Litigation

Thumbnail for 1318Last week, the Seventh Circuit reversed its prior circuit precedent regarding whether a Rule 68 offer of judgment moots a case.  In Chapman v. First Index, Inc., the Seventh Circuit considered the question of mootness as well as whether the United States District Court for the Northern District of Illinois erred in denying class certification.  In Chapman, the plaintiff alleged that First Index violated the Telephone Consumer Protection Act when it sent him two junk faxes. Chapman, — F.3d —, 2015 WL 4652878, at *1 (7th Cir. Aug. 6, 2015).  Plaintiff initially sought certification of a class of individuals who had received junk faxes without giving consent.  Id.  After plaintiff’s initial motion for class certification was denied, he sought to certify a class of individuals who received a junk fax where the fax did not contain an opt-out notice.  Id.  The District Court denied plaintiff’s second certification attempt, finding that “[c]hanging the focus of the litigation almost five years into the case was impermissible.”  Id.  While plaintiff’s first motion for class certification was pending, First Index made him an offer of judgment encompassing each form of relief plaintiff had requested.  Id.  After denying plaintiff’s second motion for class certification, the District Court dismissed the plaintiff’s individual case as moot in light of the offer of judgment.  Id.

Giving the class-certification question only a cursory glance, the Seventh Circuit concluded that the District Court did not err in refusing to allow plaintiff to alter his class definition so late in the case.  Id.  The court focused its decision on the question of whether plaintiff’s suit should have been dismissed because of the offer of judgment.  In several earlier cases, the Seventh Circuit had concluded that a full offer of judgment mooted the case.  See id. (citing Damasco v. Clearwire Corp., 662 F.3d 891, 895 (7th Cir. 2011) and Thorogood v. Sears, Roebuck & Co., 595 F.3d 750, 752 (7th Cir. 2010); Rand v. Monsanto Co., 926 F.2d 596, 598 (7th Cir.1991)).  Citing Justice Kagan’s dissent in Genesis Heathcare Corp. v. Symczyk, the Seventh Circuit overruled its earlier precedent, and held that an offer of judgment, even if it covers all relief requested by the plaintiff, does not moot the case. Id. at *3. The court reasoned that such a rule would lead to an unworkable result because, for example, “a district court cannot enter judgment in a moot case,” and “the district court could not order [a defendant] to pay” if a plaintiff accepted an offer of judgment.  Id.

In reaching this conclusion, the Seventh Circuit joined the Second and Ninth circuits, both of which have recently held that offers of judgment do not moot suits.  The Third, Fourth, Fifth, and Sixth circuits, by contrast, have held an offer of judgment does moot a plaintiff’s claims.  Next term, the Supreme Court will consider this circuit split in Campbell-Ewald Co. v. Gomez.  By reversing its prior precedent in Chapman, the Seventh Circuit seems to have weighed in on what conclusion it believes the Court should reach.

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