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Tuesday, January 26, 2016

Supreme Court: You Can’t Shut Down A Consumer Class Action By Offering Settlement

If you believe that a company has wronged you and other consumers in the same way, you can file a class-action lawsuit seeking to represent all the purported victims of the company’s misbehavior. But can that company preempt the entire lawsuit by offering you a full settlement in advance? Today, the U.S. Supreme Court (well, six of them) said no.

Here’s the quick-sketch background on this case. The U.S. Navy hired a company called Campbell-Ewald to come up with a recruiting campaign that included sending out marketing text messages to consumers who, as required by law, had actively opted in to receiving such texts.

A man named Jose Gomez sued Campbell-Ewald, claiming that he never opted in to these messages and alleging that the company had violated the Telephone Consumer Protection Act (TCPA). He intended for the lawsuit to be a class action, representing consumers who were similarly texted without permission, but before he could file the motion for class certification, Campbell offered Gomez a settlement and moved to dismiss the case, even though Gomez rejected the offer.

Campbell claimed that its offer of a settlement rendered Gomez’s individual lawsuit moot because the offer would have provided him with complete relief. In fact, Gomez would have received $1,500 from Campbell, three times the statutory penalty for the alleged violation.

Going a step further, Campbell contended that, because Gomez had not yet filed his motion for class certification, any related class action was similarly mooted.


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