Ninth Circuit Holds That Pre-Certification Offer Of Judgment To Named Plaintiff Does Not Moot Class Claims
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On August 9, 2011, the Ninth Circuit Court of Appeals ruled that a putative class action cannot be rendered moot by a defendant’s Rule 68 offer of judgment to the named plaintiff, even when the offer of judgment fully satisfies the named plaintiffs claim.  In doing so, the Ninth Circuit joined the other three circuits that have considered the pre-certification effect of an offer of judgment on the mootness of a class action.  The other three circuits (Second, Third, and Fifth) have similarly held that a defendant cannot “pick off” lead plaintiffs with an offer of judgment in order to avoid a class action.

In Pitts v. Terrible Herbst, Inc., Gareth Pitts sued his employer for overtime and minimum wages, asserting a collective action under the Fair Labor Standards Act, a class action under Nevada state wage and hour laws, and a class action for breach of contract.  Before Pitts could move for class certification, the defendant-employer made an offer of judgment pursuant to Fed. R. Civ. P. 68 “to allow judgment to be taken against it in the total amount of $900.00 plus costs and reasonable attorney’s fees.”  Pitts’ claimed damages in the case were only $88.00, but he nonetheless rejected the offer.

In response, the employer filed a motion to dismiss the case on the grounds that Pitts’ rejection of the offer of judgment mooted the entire case.  The district court disagreed and held that a Rule 68 offer of judgment does not moot a putative class action so long as the class representative can still file a timely motion for class certification.  The district court went on to find that Pitts had failed to timely move for class certification and thus granted the motion to dismiss on other grounds.

On appeal, the Ninth Circuit affirmed the district court’s ruling regarding the effect of a Rule 68 offer of judgment on a yet-to-be-certified class action, holding that “[a] rule allowing a class action to become moot simply because the defendant has sought to buy off the individual private claims of the named plaintiffs before the named plaintiffs have a chance to file for class certification would thus contravene Rule 23’s core concern:  the aggregation of similar, small, but otherwise doomed claims.”  The Court acknowledged that the wage and hour claims at issue in the case were not “inherently transitory” like most claims previously found to be resistant to the mootness doctrine.  Nonetheless, the Court reasoned that “[t]he end result is the same:  a claim transitory by its very nature and one transitory by virtue of the defendant’s litigation strategy share the reality that both claims would evade review.”

Underlying the Ninth Circuit’s decision was its belief that a “plaintiff who brings a class action presents two separate issues for judicial resolution.  One is the claim on the merits; the other is the claim that he is entitled to represent a class.”  According to the Court, though the offer of judgment may moot the named plaintiff’s claim on the merits, it does nothing to moot the named plaintiff’s right to have a class certified if the requirements of the rules are met.

Though not the focus of this posting, it should be noted that the Ninth Circuit ultimately reversed the district court’s ruling that the named plaintiff had missed the time for filing a motion for certification and thus reinstated the class action.


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