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Will the Supreme Court's Text Spamming Decision Kill Class Actions?

Uncle Sam advertisement calling for citizens to join the navy
Corporate defendants can use the technique to defeat class action claims.

The Supreme Court has agreed to decide a putative class action case where a man received unsolicited spam text messages sent by advertiser Campbell-Ewald Company on behalf of US Navy recruitment efforts in violation of the Telephone Consumer Privacy Act (TCPA).

The court’s decision will resolve a split in the circuit courts on whether a whether a case becomes moot when a single plaintiff is offered complete relief on his or her claim. The technique can be used by corporate defendants to defeat any further individual or class action claims on an issue.

Massive spam text messages

The spam text message meant to “target” the cell phones of 150,000 young adults -- a number equal to the size of Pasadena, California’s population -- from an opt-in list of more than three million. The message, reading “Destined for something big? Do it in the navy. Get a career. An education. And a chance to serve a greater cause,” was also received several times by 40-year-old Jose Gomez, who never consented to receive the text messages, according to court documents.

A text message is a call within the meaning of the TCPA.  Gomez sought compensation as relief for Campbell-Ewald's violation of the TCPA and sought to represent a class of others who did not give consent to receive the US Navy text messages.

Circuit court split

The case is on appeal from a Ninth Circuit court of appeals decision that the plaintiff’s refusal to accept a settlement offer was insufficient to moot the case. Campbell-Ewald offered to settle the case with Gomez for $1,503 for each TCPA violation.

Gomez rejected the offer by allowing it to lapse. A district court then granted the company's motion for derivative immunity, asserting that Gomez’s rejection of the offer mooted his personal and class action claims.

Gomez appealed and the Ninth Circuit Court of Appeals ruled that, “an unaccepted Rule 68 [settlement] offer that would fully satisfy a plaintiff's claim is insufficient to render the claim moot” and “does not moot a class action.”

[sws_pullquote_right] See also: Text-Spam Class Action Against Path Proceeds in Illinois [/sws_pullquote_right]

The Second and 11th circuit have made similar rulings on the issue. The Third, Fifth, Sixth and Seventh Circuits have reached the opposite conclusion that a full settlement offer of relief renders the individual and class action claims moot.

Impact on current and future class action claims

Campbell-Ewald petitioned the Supreme Court to determine whether an offer of complete relief on a single claim renders it and putative class action claim moot and beyond judicial power because there is no longer the existence of a “case of controversy” as required by Article III of the constitution.

The anti-consumer U.S. Chamber Litigation Center filed an amicus brief asserting that “’headless’ class actions violate Article III’s case-or-controversy requirement” and “incentiviz[e] lawyers to advise their clients not to accept full settlement offers and instead assume the hefty risks of litigation in the hopes that the lawyers will obtain class fees.”

If the Supreme Court resolves the circuit split in favor of the majority circuit positions, companies that send massive spam messages or make massive calls, could have a defense against TCPA violation claims by simply mooting any claims through an offer of complete relief to an individual plaintiff.

The case is set for the Supreme Court’s October 2015 term and is expected to be heard before the end of June 2016.

The case is Campbell-Ewald Company v. Gomez in the U.S. Supreme Court, case no. 14-857.

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