Second Circuit Finds Offer of Judgment on Individual Claims Negates Standing for Class

By Joseph C. Wylie II, Molly K. McGinley, and Nicole C. Mueller

The Second Circuit recently refused to allow a plaintiff to proceed with a putative class action brought under the Telephone Consumer Protection Act (“TCPA”) in Bank v. Alliance Health Networks, LLC, finding that he lacked standing after the District Court entered judgment for Defendant in the amount of an unaccepted offer of judgment on Plaintiff’s individual claims.

Plaintiff Todd C. Bank, an attorney proceeding pro se, brought individual and class-action claims against Alliance Health Networks, LLC and Medsource Rx Pharmacy, LLC, alleging that those entities made calls to him and others featuring an artificial or prerecorded voice advertising diabetic testing equipment in violation of the TCPA and New York state law.  The companies served Bank with an offer of judgment in February 2015 and then moved to dismiss.  The trial court dismissed his claim, finding that an offer for more than complete relief mooted Banks’s claims.

On appeal, the Second Circuit held that Bank lacked standing to pursue the class claims following the satisfaction of the judgment on his individual claims. Referencing Campbell-Ewald v. Gomez (previously discussed here and here), in which the Supreme Court held that an unaccepted Rule 68 offer of judgment will not moot a plaintiff’s claims, the Second Circuit determined that “where judgment has been entered and where the plaintiff’s claims have been satisfied, as they were here when Bank negotiated the check, any individual claims are rendered moot.”  It followed that because Bank lacked any connection to a live claim, did not have “any cognizable interest in pursuing the class claims,” and there being no other plaintiff in a position to pursue the class claims, the District Court had appropriately dismissed the class claims.

Bank argued that his personal stake in the class controversy hinged on the incentive reward that representatives of class actions typically receive. The Second Circuit disagreed, finding that such rewards are not guaranteed and are not sufficiently concrete to meet the standing requirements under the law.  Bank filed a motion for rehearing en banc earlier this week.

Courts continue to grapple with how to implement the Supreme Court’s ruling in Campbell-Ewald, and it may be some time before a consensus emerges as to whether, and when, defendants can moot class actions through tender of complete relief.

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