The Supreme Court dealt a rare setback Wednesday to companies trying to avoid potentially expensive class-action lawsuits.
The justices ruled that offers of full compensation to the lead plaintiff in such a case do not automatically end the legal challenge. The 6-3 decision was written by Justice Ruth Bader Ginsburg.
“An unaccepted settlement offer, like other unaccepted contract offers, creates no lasting right or obligation,” Ginsburg said. “Once unaccepted, the offer is off the table.”
The Supreme Court correctly ruled that an unaccepted offer of judgment to a named plaintiff cannot moot a proposed class action. First of all, Rule 68 governs offers of judgment and explicitly states that an unaccepted offer has no effect, so any argument that it has the effect of ending an entire case is contrary to the Rule’s plain language. Further, people need to remember that the defendant simply made an offer to pay full relief to the named plaintiff, but never actually paid the plaintiff any money or agreed to satisfy his other non-monetary demands. Mooting the plaintiff’s claim would have left him without both a claim or the relief he sought. Finally, even if the defendant had paid the money offered, allowing an unaccepted offer to moot a claim would have given the defendant unilateral power to end all class actions filed against it, regardless of the merits of the case or relief requested. As headless classes cannot proceed, defendants would have simply offered full relief to each person who attempted to stand up for the rest of the class as a named plaintiff. Class actions could not survive if defendants could moot cases with the mere stoke of a pen. While some people claim that class actions are unnecessary, they are wrong. There are many upstanding corporations in our country, but I am contacted on a daily basis by people who have been defrauded or wronged by the others – corporations that bank on the fact that most consumers will not challenge their unlawful actions. Class actions level the playing field and are often the only way consumers can stop a corporation’s misbehavior. That the majority of the Supreme Court saw through this defendant’s attempts to game our legal system to avoid having to actually defend the legality of its actions should be applauded.
~ Katie Honeker