The Ninth Circuit Court of Appeals has rejected an attempt by Allstate Insurance Co. to stop a Telephone Consumer Protection Act class action.
In Chen, et al. v. Allstate Insurance Co., Allstate had deposited $20,000 in a bank escrow account, a figure the company stated would moot the plaintiff’s individual monetary and injunctive relief claims. The appeals court, however, affirmed the district court’s denial of Allstate's motion to dismiss the case, ruling that a class action does not end even when the defendant deposits full settlement funds into an escrow account for the plaintiff’s benefit. The appeals court further held that even if the plaintiff’s individual claim was mooted, a class action cannot be dismissed until the plaintiff has an opportunity to obtain class certification.
The case was filed as a proposed class action seeking statutory damages for alleged violations of the TCPA, which amounted to $500 per unlawful call, or up to $1,500 per unlawful call. The complaint claimed that Allstate engaged in unlawful activities by contacting Richard Chen, Florencio Pacleb and the members of the proposed class on their cell phones using an automatic telephone dialing system without their consent in an attempt to solicit the purchase of insurance policies.
Allstate made an offer of judgment to Chen and Pacleb pursuant to Federal Rule of Civil Procedure 68. While Chen accepted the offer, Pacleb did not.
The Ninth Circuit offered two reasons why the case was not moot. First, the court explained that even if the district court entered judgment providing the plaintiff full relief on individual claims for damages and injunctive relief, mooting those claims, he would still be able to seek class certification. Second, even if the defendant could moot the entire action by mooting the plaintiff’s individual claims, the individual claims were not yet moot because the plaintiff had not yet actually received relief.
The Ninth Circuit thus ruled that it would not direct the district court to enter judgment, over the plaintiff’s objections, on individual claims, because the plaintiff had not yet had fair opportunity to move for class certification. The ruling is a response to a question the U.S. Supreme Court left unanswered in January’s decision in Campbell-Ewald Co. v. Gomez, which is whether a defendant may moot a case by actually providing, rather than merely offering, complete relief to a plaintiff.
The Chen decision likely means that the Supreme Court at some point will have to address instances when a defendants deposits funds into an account payable to a plaintiff and then asks the court to enter judgment.
In Campbell-Ewald, the Supreme Court ruled that the named plaintiff’s proposed class action is not rendered moot when the defendant makes a settlement offer or a Rule 68 offer of judgment that would satisfy the plaintiff’s individual claim but the plaintiff refuses to accept the offer.
But Justice Ginsburg’s majority opinion specifically noted that the court was not deciding whether a case would be mooted if a defendant actually deposits the full amount of the plaintiff’s individual claim in an account payable to the plaintiff and the court then enters judgment for the plaintiff in that amount.
From the various opinions in Campbell-Ewald, it appeared that at least three justices already had expressed their views on the question the majority reserved for a future case. Chief Justice Robert's dissent, joined at that time by Justices Scalia and Alito, would have held an unaccepted offer sufficient, suggesting "the majority’s analysis may have come out differently if Campbell had deposited the offered funds with the District Court."