Feeling Uncomfortable: Class Counsel Must Live With Rule 68 Offers Targeting Class Representative Court Says

We have all heard it from putative class counsel before: “I can’t entertain a settlement offer on an individual basis.” Sure you can, as one recent decision out of the Southern District of Florida makes clear.

In Davis v. Post Univ., Inc., No. 18-81004-CIV, 2019 U.S. Dist. LEXIS 17521 (S.D. Fla. Feb. 1, 2019), the Plaintiff argued that the Defendant should not be allowed to make a Rule 68 Offer of Judgment prior to a decision on whether the putative class would be certified, pursuant to Rule 23. After recognizing the difficult position the offer put Class Counsel in – sort of a conflict of interest, no? – the Court ultimately determined that the rules tolerate such maneuvers by Defendants and the Rule 68 offer should not be stricken.

The facts of the case are pretty straightforward: the Plaintiff contends that the Defendant failed to heed stop calling requests from her and other class members. So, she sued the Defendant in a putative nationwide TCPA class action. Back in 2018, the Defendant offered – via a Rule 68 offer – to settle the case for US$10,000. Notably, the Defendant did not argue that the case was thereby mooted – a common, if not often ineffective, strategy in TCPAworld – but merely sought to take advantage of the post-judgment fee shifting paradigm the statute affords. (According to Rule 68(d), if the judgment that the offeree finally obtains is not more favorable than the unaccepted offer, then the offer must pay the costs incurred after the offer was made.)

Rather than accepting the offer, the Plaintiff moved to strike it. She argued the offer was a “bad faith attempt to defeat a class action by creating conflict between her and the putative class members,” and stating the court had jurisdiction to strike the offer under Rule 23(d) and/or its inherent power. Defendant University argued that since it had been past the 14 days since the offer had been made, it had expired, and thus, was inadmissible and moot except for purposes of fee shifting after final judgment was entered (Rule 68(d)). The Plaintiff, in response, argued that because the Motion to Strike was made while the offer was still valid, under Federal Code of Civil Procedure 6, it was still valid. The court determined that the offer had expired and was no longer valid and did not find “good cause” to extend the time for the rather odd purpose of striking it.

In analyzing these issues, the court walked through the tension that exists between Rules 68 and 23. Specifically, courts have recognized that “offers to individual named plaintiffs have the potential to undercut close court supervision of class action settlements, create conflicts of interests for named plaintiffs, and encourage premature class certification motions.” Weiss v. Regal Collections, 385 F.3d 337 (3d Cir. 2004). As Davis points out, courts have not taken a uniform approach to resolving this tension, but in the view of at least that one court, whatever complications may arise, the current rules create no exception on the timing of Rule 68 offers in putative class actions. Hence Davis refused to strike the offer.

So there you have it, TCPAworld – no matter how uncomfortable a Rule 68 offer may make a TCPA class representative (or her counsel), they remain perfectly viable under the federal rules.