Opinions of the United 2004 Decisions States Court of Appeals for the Third Circuit
9-29-2004
Weiss v. Regal Collections Precedential or Non-Precedential: Precedential
Docket No. 03-4033
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Recommended Citation "Weiss v. Regal Collections" (2004). 2004 Decisions. Paper 264. http://digitalcommons.law.villanova.edu/thirdcircuit_2004/264
This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova University School of Law Digital Repository. It has been accepted for inclusion in 2004 Decisions by an authorized administrator of Villanova University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu. PRECEDENTIAL William J. Pinilis, Esquire (Argued) Gabriel H. Halpern, Esquire UNITED STATES PinilisHalpern, LLP COURT OF APPEALS 237 South Street FOR THE THIRD CIRCUIT Morristown, New Jersey 07960 Attorneys for Appellant
No. 03-4033 Bruce D. Greenberg, Esquire (Argued) Lite DePalma Greenberg & Rivas, LLC Two Gateway Center, 12th Floor RICHARD WEISS, on behalf of himself Newark, New Jersey 07102 and all others similarly situated, Attorney for Appellees Appellant
v. OPINION OF THE COURT
REGAL COLLECTIONS; LANCER INVESTMENTS, INC. SCIRICA, Chief Judge. At issue is whether a putative class representative’s claim is mooted by a Rule On Appeal from the 68 offer of judgment so as to defeat federal United States District Court for the subject matter jurisdiction in a suit District of New Jersey requesting class-wide relief. This appeal D.C. Civil Action No. 01-cv-00881 reflects the tension between two rules of (Honorable Alfred M. Wolin) civil procedure—Fed. R. Civ. P. 23 and Fed. R. Civ. P. 68—and whether they can be harmonized when the only individual Argued May 28, 2004 relief requested by the representative plaintiff has been satisfied through an Before: SCIRICA, Chief Judge, offer of judgment.1 The District Court FISHER and ALARCÓN* , granted defendants’ motion to dismiss on Circuit Judges grounds of mootness. We will reverse and remand. (Filed: September 29, 2004)
1 Our Court addressed a similar issue in Colbert v. Dymacol., Inc., 302 F.3d 155 (3d Cir. 2002). That case was vacated and reheard by the Court en banc, 305 F.3d * The Honorable Arthur L. Alarcón, 1256 (3d Cir. 2002), which then dismissed United States Circuit Judge for the Ninth the appeal as improvidently granted. 344 Judicial Circuit, sitting by designation. F.3d 334 (3d Cir. 2003). I. Facts amount of $1000 plus attorney fees and expenses—the maximum amount an On October 25, 2000, defendant bill individual may recover under the FDCPA. collector Regal Collections mailed a letter The offer of judgment provided no relief to Richard Weiss demanding payment of a to the class and offered neither injunctive debt allegedly owed to Citibank. nor declaratory relief. Weiss declined to Contending that certain statements in the accept the offer of judgment. Defendants letter constituted unfair debt collection then filed a motion to dismiss under Fed. practice in violation of the Fair Debt R. Civ. P. 12(b)(1), arguing Weiss’s claim Collections Practices Act (“FDCPA”), 15 was rendered moot because the Rule 68 U.S.C. § 1692, Weiss filed a federal class offer provided him the maximum damages action complaint on February 21, 2001, available under the statute.3 For this seeking statutory damages on behalf of himself and a putative nationwide class. On March 2, 2001, Weiss filed an is accepted, either party may amended complaint seeking declaratory then file the offer and notice and injunctive relief under the FDCPA, of acceptance together with and adding Lancer Investments as a co- proof of service thereof and defendant. thereupon the clerk shall On April 16, 2001, before filing an enter judgment. An offer answer, and before Weiss moved to certify not accepted shall be a class, defendants made a Fed. R. Civ. P. deemed withdrawn and 68 2 offer of judgment to Weiss in the evidence thereof is not admissible except in a proceeding to determine costs. If the judgment 2 Fed. R. Civ. P. 68 provides: finally obtained by the At any time more than 10 offeree is not more days before the trial begins, favorable than the offer, the a party defending against a offeree must pay the costs claim may serve upon the incurred after the making of adverse party an offer to the offer. allow judgment to be taken 3 against the defending party The FDCPA sets a $1000 statutory for the money or property or limit on damages awarded in a private to the effect specified in the actions. 15 U.S.C. § 1692k(a). The statute offer, with costs then also limits the amount of damages accrued. If within 10 days recoverable in a class action to the “lesser after the service of the offer of $500,000 or 1 per centum of the net the adverse party serves wo rth of the debt collector.” § written notice that the offer 1692k(a)(2)(B).
2 reason, defendants contended the District moot the plaintiff’s claim, as at that point Court no longer had subject matter the plaintiff retains no personal interest in jurisdiction over Weiss’s claims. The the outcome of the litigation. Rand v. District Court agreed and dismissed the Monsanto Co., 926 F.2d 596, 598 (7th Cir. class action complaint. 1991) (“Once the defendant offers to satisfy the plaintiff's entire demand, there II. Discussion is no dispute over which to litigate and a On appeal, Weiss asserts the Rule plaintiff who refuses to acknowledge this 68 offer did not provide the maximum loses outright, under Fed. R. Civ. P. possible recovery because the complaint 12(b)(1), because he has no remaining requested declaratory and injunctive relief, stake.”) (internal citation omitted); see and sought recovery for a putative also 13A Charles Alan Wright & Arthur nationwide class. As such, Weiss argues R. Miller, Fed. Practice and Procedure: his claim was not rendered moot by the Jurisdiction 2d § 3533.2, at 236 (2d ed. Rule 68 offer, and the District Court erred 1984) (“Even when one party wishes to in dismissing the class action complaint. 4 persist to judgment, an offer to accord all Despite Weiss’s assertion, the FDCPA of the relief demanded may moot the does not permit private actions for case.”). declaratory or injunctive relief. The A. principal question, therefore, is whether defendants’ Rule 68 offer mooted the As a threshold matter, we hold claim. defendant’s Rule 68 offer of judgment, in the amount of $1,000 plus reasonable costs Article III of the United States and fees provided the maximum statutory Constitution limits the jurisdiction of the relief available to Weiss individually under federal courts to “cases and controversies.” the FDCPA. The FDCPA allows a U.S. Const. art. III § 2; Flast v. Cohen, 392 plaintiff to recover “any actual damage U.S. 83, 94 (1968). When the issues sustained” 5 as a result of the debt presented in a case are no longer “live” or collector’s violation of the FDCPA, as the parties lack a legally cognizable well as “such additional damages as the interest in the outcome, the case becomes court may allow, but not exceeding moot and the court no longer has subject $1,000,” and “the costs of the action, matter jurisdiction. County of Los Angeles v. Davis, 440 U.S. 625, 631 (1979). An offer of complete relief will generally 5 Weiss does not allege any actual damages. Cf. Colbert, 344 F.3d 334 (3d 4 We exercise plenary review over the Cir. 2003) (en banc) (reversing order of District Court’s dismissal of a complaint. dismissal because all relief requested in Oran v. Stafford, 226 F.3d 275, 281 n.2 complaint not included in Fed. R. Civ. P. (3d Cir. 2000). 68 offer).
3 together with a reasonable attorney’s fees The remedies under the FDCPA determined by the court.” 15 U.S.C. § differ depending on who brings the 1692k(a)(1), (2)(A), (3). action.8 Compare 15 U.S.C. § 1692k(a) (damage remedies for private litigants) The FDCPA contains no express with 15 U.S.C. § 1692l (administrative provision for injunctive or declaratory e n f o r c e m e n t b y F e d e ra l T r a d e relief in private actions. See 15 U.S.C. § Commission). The statute authorizes 1692k (listing damages and counsel fees as damages for civil liability, but permits only remedies, but not declaratory or injunctive the Federal Trade Commission to pursue relief).6 Most courts have found equitable injunctive or declaratory relief. See 15 relief unavailable under the statute, at least with respect to private actions. See Crawford v. Equifax Payment Servs., Inc., 201 F.3d 877, 882 (7th Cir. 2000) (noting that all private actions under the FDCPA are for damages); Bolin v. Sears Roebuck & Co., 231 F.3d 970, 977 n.39 (5th Cir. 2000) (“[A]lthough this circuit has not definitively ruled on the issue, courts have found declaratory relief is available uniformly hold that the FDCPA does not to a certified class. See, e.g., Ballard v. authorize equitable relief.”); Sibley v. Equifax Check Servs., 158 F. Supp. 2d Fulton Dekalb Collection Servs., 677 F.2d 1163, 1177 (E.D . Cal. 2001) (allowing 830, 834 (11th Cir. 1982) (holding in dicta declaratory relief in a class action); that equitable relief is not available to an Woodard v. Online Info. Servs., 191 individual under the Act.) 7 F.R.D. 502, 507 (E.D.N.C. 2000) (same); Gammon v. GC Servs. Ltd. P’ship, 162 F.R.D. 313, 319-20 (N.D. Ill. 1995) 6 The language of the FDCPA provides (same). that a debt collector who fails to comply 8 with the Act shall be liable for an The legislative history of the Act also “amount.” 15 U.S.C. § 1692k(a). suggests two categories of penalties depending on who brings the action. See 7 As noted, most courts have found 95 S. Rep. 382, at 5 (discussing “civil declaratory or equitable relief is not lia bi lity” a n d “ a dm inistr ativ e available to private litigants under the enforcement” under separate sub- FDCPA. See, e.g., In re Risk Mgmt. headings); see also Zanni v. Lippold, 119 Alternatives, Inc. Fair Debt Collection F.R.D. 32, 34 (C.D. Ill. 1988) (relying on Practices Litig., 208 F.R.D. 493, 503 dual penalty schemes in legislative history (S.D.N.Y. 2002); Goldberg v. Winston & of FDCPA to support conclusion that Morrone, 1997 U.S. Dist. LEXIS 3521 equitable relief is unavailable to private (S.D.N.Y. Mar. 26, 1997). Some courts litigants).
4 U.S.C. § 1692l. 9 Some trial courts have injunctive relief, coupled with the absence interpreted this statutory structure to of a similar grant to private litigants, when preclude injunctive or declaratory relief in they are expressly granted the right to private actions. See Zanni v. Lippold, 119 obtain damages and other relief, F.R.D. 32, 33-34 (C.D. Ill. 1988) (“‘The persuasively demonstrates that Congress FDCPA specifically authorizes the Federal vested the power to obtain injunctive relief Trade Commission (FTC) to seek solely with the FTC.”). Because the injunctive relief . . . and defendant statute explicitly provides declaratory and persuasively argues that this is a strong equitable relief only through action by the indication of Congress' intent to limit Federal Trade Commission, we believe the private actions to damage claims.’”) different penalty structure demonstrates (quoting Strong v. Nat’l Credit Mgmt. Co., Congress’s intent to preclude equitable 600 F. Supp. 46 (E.D. Ark. 1984)); see relief in private actions. also Washington v. CSC Credit Servs., 199 For these reasons, we hold F.3d 263, 268 (5th Cir. 2000) (“[Under the injunctive and declaratory relief are not Fair Credit Reporting Act, the] affirmative available to litigants acting in an grant of power to the FTC to pursue individual capacity under the FDCPA. Therefore, the Rule 68 offer provided all the relief available to Weiss as an 9 Section 1692l provides, in part: individual plaintiff acting in his personal capacity. Administrative enforcement Of course, the Rule 68 offer did not (a) Federal Trade provide the maximum damages to the Commission. Compliance putative class. For class actions, the with this title shall be maximum relief under the FDCPA is enforced by the greater. The FDCPA authorizes additional Commission, except to the recovery for non-named class members extent that enforcement of “without regard to a minimum individual the requirements imposed recovery, not to exceed the lesser of under this title is specifically $500,000 or 1 per centum of the net worth c o mmitted to an o ther of the debt collector.” 15 U.S.C. § agency under subsection (b) 1692k(a)(2)(B). Because defendants’ Rule . . . . All of the functions and 68 offer included no relief for the putative powers of the Commission class, either under the provisions of the under the Federal Trade FDCPA or through the aggregation of Commission Act [15 USCS class claims, we address the mootness §§ 41 et seq.] are available question in that context. to the Commission to enforce compliance by any person with this title . . . .
5 B. extends beyond his own.”). Nonetheless, it appears to be settled that once a class has 1. be e n certified, mooting a class The Federal Rules of Civil representative’s claim does not moot the Procedure are de signed to be entire action because the class “acquire[s] interdependent. See Fed. R. Civ. P. 1 a legal status separate from the interest (“These rules govern the procedure in . . . asserted by [the named plaintiff].” Sosna all suits of a civil nature . . . .”); Canister v. Iowa, 419 U.S. 393, 399 (1975). Co. v. Leahy, 182 F.2d 510, 514 (3d Cir. In two decisions in 1980, United 1950) (“[The Rules] must be considered in States Parole Comm’n v. Geraghty, 445 relation to one another.”). Whenever U.S. 388 (1980) and Deposit Guar. Nat’l possible we should harmonize the rules. Bank v. Roper, 445 U.S. 326 (1980), the In the event of an unreconcilable conflict, Supreme Court provided some guidance in then one rule of procedure may have to this area. These cases permitted a named take precedence over another. plaintiff whose individual claims were As discussed, under traditional mooted to appeal a denial of class mootness principles, an offer for the certification. entirety of a plaintiff’s claim will generally In Geraghty, the question presented moot the claim. We have held a class was “whether a trial court’s denial of a action may be dismissed when the named motion for certification of a class may be plaintiff’s claim is rendered moot before reviewed on appeal after the named filing a motion for class certification. See plaintiff’s personal claim has become Brown v. Phila. Hous. Auth., 350 F.3d ‘moot.’” 445 U.S. at 390. The Court 338, 343 (3d Cir. 2003) (“[W]hen claims looked beyond the mootness of Geraghty’s of the named plaintiffs become moot substantive claims and focused on his before class certification, dismissal of the distinct “procedural . . . right to represent action is required.”) (quoting Lusardi v. a class.” Id. at 402. The Court held the Xerox Corp., 975 F.2d 964, 974 (3d Cir. action was not moot upon the expiration of 1992)). Defendants argue this action is the substantive claim, because the plaintiff moot because they submitted the Fed. R. retained a “personal stake” in the class Civ. P. 68 offer for complete individual certification decision. Id. at 404. relief before Weiss filed a motion for class certification. Of special significance to this appeal, in Roper , the Supreme Court The question of mootness in the expressed concern at a defendant’s ability class action context is not a simple one. to “pick off” named plaintiffs by mooting See Lusardi, 975 F.2d at 974 (“[S]pecial their private individual claims. 445 U.S. mootness rules apply in the class action at 339. Credit card holders brought a class context, where the named plaintiff action challenging finance charges levied purports to represent an interest that
6 on their accounts and those of similarly frustrate the objectives of situated card holders. Id. at 328-29. After class actions; moreover it the district court denied their motion for would invite waste of class certification, the bank tendered to j u d i c ia l r e so u r c e s b y each named plaintiff the maximum stimulating successive suits amount he would have received brought by others claiming individually. Id. at 329. The named aggrievement. plaintiffs refused the offer, but the district 445 U.S. at 339. court, over their objections, entered judgment in their favor and dismissed the Then-Associate Justice Rehnquist action as moot. Id. at 330. The Court of concurred in the judgment, but wrote Appeals for the Fifth Circuit reversed, separately, commenting: noting: “The notion that a defendant may The distinguishing feature short-circuit a class action by paying off here is that the defendant the class representatives either with their has made an unaccepted acquiescence or, as here, against their will, offer of tender in settlement deserves short shrift. Indeed, were it so of the individual putative easy to end class actions, few would representative’s claim. The survive.” Roper v. Consurve, Inc., 578 action is moot in the Art. III F.2d 1106, 1110 (5th Cir. 1978). sense only if this Court Granting certiorari, the Supreme adopts a rule that an Court considered whether putative class individ u a l s e e k i n g to representatives retained a private interest p r o c e e d as a c l a ss in appealing the denial of class representative is required to certification subsequent to the entry of accept a tender of only his judgment in their favor, over their individual claims. So long objections. The bank argued the entire as the court does not require case had been mooted by the individual such acce ptanc e, the offers. The Supreme Court disagreed, individual is required to stating: prove his case and the requisite Art. III adversity Requiring multiple plaintiffs continues. Acceptance [of to bring separate actions, defendant’s offer] need not which effectively could be be mandated under our ‘picked off’ by a p r e c ed e n t s i n c e th e defend ant’s tender o f defendant has not offered all judgment before an that has been requested in affirmative ruling on class the complaint (i.e. relief for c e r tification could be the class) . . . . obtained, obviously would
7 Id. at 341 (Rehnquist, J., concurring). representative.12 As in Roper, allowing We recognize Roper addressed a different issue, whether a putative class 12 representative retains an individual interest Courts have wrestled with the in appealing the denial of class application of Rule 68 in the class action certification subsequent to an entry of context, noting Rule 68 offers to judgment in his favor, to which he individual named plaintiffs undercut close objected.10 But the matters addressed in court supervision of class action Roper—particularly a defendant’s ability settlements, create conflicts of interests for to “pick off” representative plaintiffs and named plaintiffs, and encourage premature thwart a class action—have direct class certification motions. See Gibson v. application to the issue presented by this Aman Collection Serv. Inc., 2001 U.S. appeal.11 Of course, plaintiff here was Dist. LEXIS 10669, at *8 (S.D. Ind. July only a putative class representative. 23, 2001) (recognizing conflict of interest Although Weiss filed a class complaint, he posed by Rule 68 offer to lead plaintiff); had not yet moved for class certification. Gay v. Waiter’s and Dairy Lunchmen’s Union, 86 F.R.D. 500, 502-03 (N.D. Cal. As sound as is Rule 68 when 1980). Justice Brennan also discussed the applied to individual plaintiffs, its conflict of interests facing named application is strained when an offer of representatives presented with a Rule 68 ju d g m e n t i s m a d e t o a c l a s s offer in Marek v. Chesny, 473 U.S. 1, 35 n.49 (1985) (Brennan, J., dissenting). No express statement limits the 10 We also acknowledge Roper application of Fed. R. Civ. P. 68 in class specifically limited its holding, stating: actions. Proposed amendments to make “Difficult questions arises as to what, if Rule 68 inapplicable to class actions were an y, a r e t h e n am e d p l a i n ti f f s’ suggested in 1983 and 1984, and they were responsibilities to the putative class prior rejected both times. The proposals read in to certification; this case does not require part: “[t]his rule shall not apply to class or us to reach these questions.” 445 U.S. at derivative actions under Rules 23, 23.1, 340 n.12 (emphasis in original). and 23.2.” See 98 F.R.D. at 363; 102 F.R.D. at 433. In support of the proposals, 11 One court considering the identical the Advisory Committee wrote: “An issue to ours in a FDCPA class action offeree’s rejection would burden a named commented: “The rationale animating the representative-offeree with the risk of Court’s determination [in Roper] . . . exposure to heavy liability [for costs and speaks directly to the concerns present expenses] that could not be recouped from here.” White v. OSI Collection Servs., Inc., unnamed class members. . . . [This] could 2001 U.S. Dist. LEXIS 19879, at *12 lead to a conflict of interest between the (E.D.N.Y. Nov. 5, 2001). named representatives and other members
8 the defendants here to “pick off” a benefit to claimants who choose to litigate representative plaintiff with an offer of their individual claims in a class-action judgment less than two months after the context is the prospect of reducing their complaint is filed may undercut the costs of litigation, particularly attorney’s viability of the class action procedure, and fees, by allocating such costs among all frustrate the objectives of this procedural members of the class who benefit from the mechanism for aggregating small claims, recovery.” Roper, 445 U.S. at 338 n.9. like those brought under the FDCPA. The Supreme Court also commented that “[c]lass actions . . . may permit the The purposes behind Fed. R. Civ. plaintiffs to pool claims which would be P. 23 are well-recognized. “A significant uneconomical to litigate individually. For example, this lawsuit involves claims of the class.” Advisory Committee’s Note averaging about $100 per plaintiff; most to Proposed Amendment to Rule 68, 102 of the plaintiffs would have no realistic F.R.D. at 436. See also Roy D. Simon, Jr., day in Court if a class action were not The Riddle of Rule 68, 54 Geo. W ash. L. available.” Phillips Petroleum v. Shutts, Rev. 1, 52 (1985) (discussing rule changes 472 U.S. 797, 809 (1985). This “[c]ost- and rationale for rejecting changes). spreading can also enhance the means for The leading treatises recognize the private attorney general enforcement and tension between these two procedural the resulting deterrence of wrongdoing.” rules. See, e.g., 12 Charles Alan Wright & In re Gen’l Motors Corp., Pick-up Truck Arthur R. Miller, Fed. Practice and Fuel Tank Prods. Liab. Litig., 55 F.3d Procedure § 3001.1, at 76 (2d ed. 1997) 768, 784 (3d Cir. 1995). Allowing (“There is much force to the contention defendants to “pick off” putative lead that, as a matter of policy [Rule 68] should plaintiffs contravenes one of the primary not be employed in class actions.”); 13 purposes of class actions—the aggregation James William M oore et. al., Moore’s of numerous similar (especially small) Federal Practice ¶ 68.03[3], at 68-15 (3d claims in a single action. ed. 2004) (“policy and practicality Moreover, a rule allowing plaintiffs considerations make application of the to be “picked off” at an early stage in a offer of judgment rule to class and putative class action may waste judicial derivative actions questionable.”); 5 resources by “stimulating successive suits Newberg on Class Actions § 15.36, at 115 brought by others claiming aggrievement.” (4th ed.) (“[B]y denying the mandatory Roper, 445 U.S. at 339. This result is imposition of Rule 68 in class actions, contrary to the purpose of Fed. R. Civ. P. class representatives will not be forced to 68 as well. See 13 Moore’s Federal abandon their litigation posture each time Practice § 68.02[2], at 68-7 (3d ed. 2004) they are threatened with the possibility of (“The primary purpose of Rule 68 is to incurring substantial costs for the sake of promote settlements and avoid protracted absent class members.”).
9 litigation.”). 2. There is another significant As the Court in Geraghty stated, consideration. Congress explicitly “mootness . . . can be avoided through provided for class damages in the FDCPA. certification of a class prior to expiration See 15 U.S.C. § 1692k(a)(2)(B ) of the named plaintiff's personal claim.” (establishing maximum damages in class 445 U.S. at 398; see also Holstein v. City actions under the FDCPA). Congress also of Chi., 29 F.3d 1145, 1147-48 (7th Cir. intended the FDCPA to be self-enforcing 1994) (finding case moot where plaintiff by private attorney generals. See S. Rep. did not move for class certification before No. 95-382 p.5 (describing FDCPA as “evaporation of his personal stake”). “self-enforcing”); see also Graziano v. Some appellate courts have extended Harrison, 950 F.2d 107, 113 (3d Cir. Geraghty and declined to dismiss on 1991) (“[FDCPA] mandates an award of mootness grounds while class certification attorney’s fees as a means of fulfilling was pending. See Susman v. Lincoln Am. Congress’s intent that the Act should be Corp., 587 F.2d 866, 869-71 (7th Cir. enforced by debtors acting as private 1978) (holding case not moot when class attorneys general.”). Representative certification motion was pending before actions, therefore, appear to be district court at the time named plaintiffs fundamental to the statutory structure of were tendered damages); Zeidman v. J. the FDCPA. Lacking this procedural Ray McDermott & Co., 651 F.2d 1030, mechanism, meritorious FDCPA claims 1051 (5th Cir. July 1981) (“conclud[ing] might go unredressed because the awards that a suit brought as a class action should in an individual case might be too small to not be dismissed for mootness upon tender prosecute an individual action. For this to the named plaintiffs of their personal reason, defendants’ view of the interplay claims, at least when, as here, there is between Fed. R. Civ. P. 23 and Fed. R. pending before the district court a timely Civ. P. 68 would frustrate Congress’s filed and diligently pursued motion for explicit directive that the FDCPA be enforced by private attorney generals acting in a representative capacity. claimant’s damages are capped at $1,000. Alleged violators of federal law would be As one trial court commented: “The allowed to tender the statutory amount of FDCPA caps individual statutory damages damages to a named plaintiff, derailing a at $1,000, so no individual statutory putative class action and frustrating the damages claim is very large. Thus, it may goals and enforcement mechanism of the be financially feasible for the defendant to FDCPA.13 buy off successive plaintiffs in the hopes of preventing class certification.” White v. OSI Collection Servs., 2001 U.S. Dist. 13 Class actions may be well-suited to LEXIS 19879, at *16 n.7 (E.D.N.Y. Nov. the FDCPA, where an individual 5, 2001).
10 class certification.”); see also Lusardi, 975 3. F.2d 964, 975 (3d Cir. 1992) (noting the There appears to be considerable exception to the general mootness rule authority that once a motion for class where a certification motion which district certification has been filed, the “relation court did not have a reasonable back” doctrine explained by the Supreme opportunity to decide was filed before Court in Sosna v. Iowa, 419 U.S. 393, 399 plaintiff’s claim expired). As noted, (1975) comes into play. In Sosna, the although plaintiff here filed a class Court recognized: complaint, he never filed a motion for class certification. His individual claim There may be cases in was allegedly “mooted” by the Rule 68 which the controv ersy offer before the court had a reasonable i n v o lv i n g t h e n am e d opportunity to consider class certification plaintiffs is such that it under Fed. R. Civ. P. 23. This situation is becomes moot as to them not uncommon in FDCPA cases and has before the district court can created an unsettled area of law.14 reasonably be expected to rule on a certification motion. In such instances, 14 whether the certification can Several courts have found that when be said to ‘relate back’ to a Fed. R. Civ. P. 68 offer of judgment for the filing of the complaint the entire individual claim follows closely may depend upon the on the heels of the filing of an FDCPA c i r c u m s ta n c e s o f t h e class complaint, the case should not be p a r t ic u l a r c as e a n d dismissed. See Nasca v. GC Servs., 2002 especially the reality of the U.S. Dist. LEXIS 16992, at *9 (S.D.N.Y. 2002) (“To allow a Rule 68 offer to moot a named plaintiff’s claim in these circumstances would en courage Corrective Counseling Servs., Inc., 201 defendants to pick off named plaintiffs in F.R.D. 452, 455 (S.D. Iowa 2001) . the earliest stage of the case.”); Schaake v. As another approach, some courts Risk Mgmt. Alternatives, Inc., 203 F.R.D. have held a motion to certify the class filed 108, 112 (S.D.N.Y. 2001) (“Here, it is true within the Rule 68 ten-day offer period no motion for class certification was will avoid mootness. See Parker v. Risk pending at the time defendant made its Mgmt. Alternatives, Inc., 204 F.R.D. 113, Rule 68 Offer of Judgment. However, the 115 (N.D. Ill. 2001) (claim not mooted complaint was filed on May 23 . . . and where class certification motion filed the Rule 68 offer was made a mere 32 before expiration of ten day period); days later, well before plaintiff could be Kremnitzer v. Cabrera & Rephen, P.C., reasonably expected to file its class 202 F.R.D. 239, 244 (N.D. Ill. 2001) certification motion.”); Liles v. Am. (same).
11 claim that otherwise the off” lead plaintiffs with a Rule 68 offer to issue would evade review. avoid a class action. As noted, this tactic may deprive a representative plaintiff the Id. at 402 n.11. Furthermore, in Geraghty opportunity to timely bring a class the Court held class certification may certification motion, and also may deny the relate back to the filing of the complaint court a reasonable opportunity to rule on where claims are “so inherently transitory the motion.15 that the trial court will not have even enough time to rule on a motion for class It bears noting that most of the certification before the proposed cases applying the relation back doctrine re pr es en tat iv e's individual interest have done so after a motion to certify the expires." 445 U.S. at 399 (1980). The class has been filed. See Zeidman v. J. mootness exception recognizes that, in Ray McDermott & Co., 651 F.2d 1030, certain circumstances, to give effect to the 1048-49 (5th Cir. July1981); Susman v. purposes of Rule 23, it is necessary to Lincoln Am. Corp., 587 F.2d 866, 869-71 conceive of the named plaintiff as a part of (7th Cir, 1978).16 Nonetheless, reference an indivisible class and not merely a single adverse party even before the class certification question has been decided. 15 One commentator addressed the By relating class certification back to the problems encountered in Riverside, which filing of a class complaint, the class are similar to those presented here. David representative would retain standing to Hill Koysza, Note, Preventing Defendants litigate class certification though his from Mooting Class Actions By Picking off individual claim is moot. But the question Named Plaintiffs, 53 Duke L.J. 781, 804- in this case is whether the “relation back” 805 (2003); see also 13 James William doctrine should apply only after the filing Moore, et al., Moore’s Federal Practice § of a motion for class certification or 68.03[3] (3d ed. 2004) (advocating whether it may also be employed after the application of the relation back doctrine to filing of a class complaint. problem of claims being “picked off”). The “relation back” doctrine 16 At least one case has explicitly generally has been used for “inherently applied the relation back doctrine to Rule transitory” claims. See County of 68 offers made before a class certification Riverside v. McLaughlin, 500 U.S. 44, 52 motion is filed. See White, 2001 U.S. Dist. (1991) (quoting Geraghty, 445 U.S. at LEXIS 19879, at *16 n.7 (“[I]t may be 399). Although Weiss’s claims here are financially feasible for the defendant to not “inherently transitory” as a result of buy off successive plaintiffs in the hopes being time sensitive, they are “acutely of preventing class certification. It is in susceptible to mootness,” Comer v. this sense that plaintiff’s claim is acutely Cisneros, 37 F.3d 775, 797 (2d Cir. 1994), susceptible to mootness, and thereby fairly in light of defendants’ tactic of “picking characterized as transitory.”); see also
12 to the bright line event of the filing of the therefore, that the class action process class certification motion may not always should be able to “play out” according to be well-founded. Representative actions the directives of Rule 23 and should permit vary according to the substantive claims due deliberation by the parties and the and the courses of action. There are at court on the class certification issues. least three distinct events on the path to a That said, the proper procedure is certified class: filing the class complaint, for the named representative to file a filing the motion for class certification, motion for class certification. That did not and a decision on the motion. Yet occur here. But neither was there undue plaintiffs may file the class certification delay. 18 In circumstances like these, we motion with the class complaint, and in believe the relation back doctrine should some cases, include a motion for approval apply. Absent undue delay in filing a of an already negotiated settlement. Of motion for class certification, therefore, course, the federal rules do not require certification motions to be filed with the class complaint, nor do they require or e n c o urage prem ature certif icatio n 23(c)(1)(a) Advisory Committee Notes. determinations.17 It seems appropriate, Nor do local rules require or envision expedited certification decisions. See E. Dist. Pa. L.R.C.P. 23.1(c) (requiring the McDowall, 216 F.R.D. 46, 50 n.4 filing of the certification motion within 90 (discussing relation back doctrine in days after filing the complaint). reaching conclusion that FDCPA case not Allowing time for limited discovery moot). As noted in footnote 12, several supporting certification motions may also cases have declined to dismiss the class be necessary for sound judicial claims on mootness grounds even when administration. See Newton v. Merrill the Rule 68 offer came before the filing of Lynch, Pierce, Fenner & Smith, Inc., 259 a motion for class certification, but these F.3d 154, 166 (3d Cir. 2001) (“[I]t may cases have not explicitly relied on the be necessary for the Court to probe behind relation back doctrine. the pleadings before coming to rest on the certification question.”) (quoting Gen. Tel. 17 Fed. R. Civ. P. 23 directs that Co. v. Falcon, 457 U.S. 147, 160 (1982)); certification decisions be made “at an 7B Wright and Miller, Fed. Practice and early practicable time.” Fed. R. Civ. P. Procedure § 1785, at 107 (“The 23(c)(1)(a). This recent amendment [certification] determination usually replaced the language of the old rule: The should be predicated on more information former “‘as soon as practicable’ exaction than the complaint itself affords.”). neither reflect[ed] prevailing practice nor 18 capture[ed] the many valid reasons that Defendants made their Rule 68 offer may justify deferring the initial six weeks after plaintiff filed his amended certification decision.” See Fed. R. Civ. P. complaint.
13 where a defendant makes a Rule 68 offer pla intif f s, f o l l o w i n g tw o o r d e rs to an individual claim that has the effect of decertifying a class, agreed to a full and mooting possible class relief asserted in unconditional release of their individual the complaint, the appropriate course is to age discrimination claims, and the court relate the certification motion back to the dismissed their individual claims. Id. at filing of the class complaint. 19 Because in 968-69. Nonetheless, the named plaintiffs this case, no motion for class certification filed a de novo motion for class was made, we will direct the trial court to certification. After the trial court allow Weiss to file the appropriate motion. dismissed the class claims as moot, we affirmed, noting that after the named 4. plaintiff’s claims had been voluntarily We recognize our decision creates settled, they no longer had justiciable some tension with our opinion in Lusardi v. Xerox Corp., 975 F.2d 964 (3d Cir. 1992), but we believe the cases can be required.” Id. at 343 (quoting Lusardi, reconciled.20 In Lusardi, the named 975 F.2d at 974). But, Brown is distinguishable on its facts. 19 To hold otherwise would In Brown, the housing authority and automatically result in a plaintiff seeking certain tenants entered into a consent class relief in a consumer representative decree in 1974. Id. No class was ever action to file a motion for class certified. Upon discovering that the certification at the time of filing the class named plaintiffs had not been tenants in complaint. As one trial court noted: 1974 nor in 2002, the housing authority “Hinging the outcome of this motion [to moved in 2002 to vacate the original 1974 dismiss] on whether or not class consent decree. The district court rejected certification has been filed is not well- this motion and the housing authority supported in the law nor sound judicial appealed to this court. We held that the practice; it would encourage a ‘race to pay consent decree should be vacated because off’ named plaintiffs very early in the appellees were not housing authority litigation, before they file motions for class tenants at the entry of the consent decree in certification.” Liles v. Am. Corrective 1974 nor in 2002. In so doing, we rejected Counseling Servs., 201 F.R.D. 452, 455 the appellees argument for “implied class (S.D. Iowa 2001). certification.” Id. at 343, 346. Therefore, lacking representative and individual 20 Our decision may also appear to interests, their claims were clearly moot. create tension with Brown v. Phila. Hous. Furthermore, the tenants’ claims in Brown Auth., 350 F.3d 338 (3d Cir. 2003), where were not mooted by purposive action of we noted that “when claims of the named the housing authority but rather because plaintiffs become moot before class they were not public housing tenants at the certification, dismissal of the action is relevant times.
14 claims when they moved for class two motions for class certification had certification. Id. at 979-80. been denied. Indeed, even Lusardi noted, in a somewhat different context, that it Unlike the case here, Lusardi did “simply was not a case where . . . the not involve an offer of judgment made in class-action defendant successfully response to the filing of a complaint. The prevented effective resolution of a class named plaintiffs voluntarily entered into certification issue.” Lusardi, 975 F.2d at individual settlements subsequent to class 983. In Lusardi, no unilateral action by decertification. See id. at 979 (“Here, the Defendant rendered the plaintiffs’ there is no dispute that plaintiffs claims “inherently transitory.” Defendants voluntarily settled their individual here used the Rule 68 offer to thwart the claims.”). In this appeal, the “picking off” putative class action before the scenarios described by the Supreme Court certification question could be decided. in Roper are directly implicated. In Lusardi they were not. The Roper Court Under this set of circumstances, we stressed that “at no time did the named believe the tension between Fed. R. Civ. plaintiffs accept the tender in settlement of P. 23 and Fed. R. Civ. P. 68 should be the case; instead, judgment was entered in addressed through the “relation back” their favor by the court without their analysis.21 consent.” 445 U.S. at 332. Similarly, in Zeidman, the Court of Appeals for the 21 Fifth Circuit wrote: Weiss also argues Fed. R. Civ. P. 23(e) requires court approval of the Rule [P]laintiffs claims have been 68 offer of judgment before dismissing the rendered moot by purposive class complaint. Several courts, including action of the defendants . . . our own, had concluded the supervisory . By tendering to the named guarantees of the former Rule 23(e) plaintiffs the full amount of applied in the pre-certification context. their personal claims each See Kahan v. Rosenstiel, 424 F.2d 161, time suit is brought as a 169 (3d Cir. 1970) (“a suit brought as a class action, the defendants class action should be treated as such for can in each successive case purposes of dismissal or compromise, until moot the named plaintiffs’ there is a full determination that the class claims before a decision on action is not proper”). certification is reached. These holdings arguably have been 651 F.2d 1030, 1049-50. The tactic at play superseded by the 2003 Amendments to here, similar to those described in Roper the Federal Rules of Civil Procedure and Zeidman, contrasts with the voluntary which provide that Fed. R. Civ. P. 23(e) settlement in Lusardi where the plaintiffs approval is required only after a class has agreed to settle with the defendants after been certified. The rule was revised in 2003, to provide: “The court must approve
15 III. For the foregoing reasons, the judgment of the District Court will be reversed and the matter will be remanded for proceedings consistent with our opinion.
any settlement, voluntary dismissal, or compromise of the claims, issues, or defenses of a certified class.” Fed. R. Civ. P. 23(e)(1)(a) (emphasis added). The Advisory Committee Notes state the amendment was designed to remove ambiguity regarding the application of Rule 23(e) approvals at the pre- certification stage: Rule 23(e)(1)(A) resolves the ambiguity in former Rule 23(e)’s reference to dismissal or compromise of a “class action.” That language could be—and at times was— read to require court approval of settlements with putative class representatives that resolved only individual claims. The new rule requires approval only if the claims, issues, or defenses of a certified class are resolved by settlement, voluntary dismissal, or compromise. 2003 Adv isory Com mittee N otes (emphasis added). Nevertheless, given our holding here, we need not address this argument.