Supreme Court Rules Monetary Offer Doesn’t End Class Action

January 20, 2016

The U.S. Supreme Court on Wednesday ruled against advertising firm Campbell-Ewald in a class action case, saying the lawsuit can proceed over claims the company violated a federal consumer law by sending unsolicited text messages on behalf of the U.S. Navy.

In a 6-3 decision, the court upheld a ruling by the San Francisco-based 9th U.S. Circuit Court of Appeals rejecting Detroit-based Campbell-Ewald’s bid to avoid the class action case brought by lead plaintiff Jose Gomez. Campbell-Ewald is a subsidiary of the Interpublic Group of Companies Inc.

Campbell-Ewald had argued that the court had no grounds to hear the case brought by Gomez on behalf of himself and others who had received the messages because the advertising firm offered to pay Gomez the maximum amount available under the law to settle the claims.

Liberal Justice Ruth Bader Ginsburg, writing on behalf of the court majority, wrote that an “unaccepted settlement offer … does not moot a plaintiff’s case.”

The conservative-leaning court in recent years has issued rulings that put restrictions on class action litigation but did not continue that trend in this case.

The ruling is limited in scope, with Ginsburg saying the court was not deciding whether a case would be resolved if the settlement funds had been transferred to the plaintiff rather than merely being offered.

“The question is appropriately reserved for a case in which it is not hypothetical,” Ginsburg wrote.

Three of the court‘s conservatives, including Chief Justice John Roberts, dissented. Roberts wrote that basic legal principles dictate that the case should have been brought to a close once the offer was made.

“When a plaintiff files suit seeking redress for an alleged injury, and the defendant agrees to fully redress that injury, there is no longer a case or controversy,” Roberts said.

The case is one of three in the current Supreme Court term in which the justices are hearing class action appeals, with the others brought by Tyson Foods Inc and Spokeo Inc.

The U.S. Navy messages were part of a recruitment drive. The brief text message, sent to around 100,000 people, included the phrase: “Destined for something big? Do it in the Navy.”

In September 2014, the appeals court ruled that the case could move forward despite the offer to Gomez.

Gomez turned down the $1,500 offer for each violation of the Telephone Consumer Protection Act, which Campbell-Ewald said would have fully resolved his case.

The Navy was not sued and was not involved in the case. The Obama administration filed a brief backing the plaintiffs.

The case, Campbell-Ewald v. Gomez, U.S. Supreme Court, No. 14-857, is embedded below.

(Reporting by Lawrence Hurley; Editing by Will Dunham


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