Opinion
Cause No. IP00-1798-C-T/G
July 23, 2001
ENTRY ON PLAINTIFF'S MOTION TO STRIKE DEFENDANT'S RULE 68 OFFER OF JUDGMENT
Though this Entry is a matter of public record and is being made available to the public on the court's web site, it is not intended for commercial publication either electronically or in paper form. The reason for this caveat is to avoid adding to the research burden faced by litigants and courts. Under the law of the case doctrine, the ruling or rulings in this Entry will govern the case presently before this court. See, e.g., Tr. of Pension, Welfare, Vacation Fringe Benefit Funds of IBEW Local 701 v. Pyramid Elec., 223 F.3d 459, 468 n. 4 (7th Cir. 2000); Avitia v. Metro. Club of Chicago, Inc., 49 F.3d 1219, 1227 (7th Cir. 1995). However, a district judge's decision has no precedential authority and, therefore, is not binding on other courts, on other judges in this district, or even on other cases before the same judge. See, e.g., Howard v. Wal-Mart Stores, Inc., 160 F.3d 358, 359 (7th Cir. 1998) ("a district court's decision does not have precedential authority"); Malabarba v. Chicago Tribune Co., 149 F.3d 690, 697 (7th Cir. 1998) ("district court opinions are of little or no authoritative value"); United States v. Articles of Drug Consisting of 203 Paper Bags, 818 F.2d 569, 571 (7th Cir. 1987) ("A single district court decision . . . has little precedential effect. It is not binding on the circuit, or even on other district judges in the same district."). Consequently, though this Entry correctly disposes of the legal issues addressed, this court does not consider the discussion to be sufficiently novel or instructive to justify commercial publication of the Entry or the subsequent citation of it in other proceedings.
On November 20, 2000, named Plaintiff, Melissa A. Gibson, filed a class action complaint against Defendant, Aman Collection Service, Inc. ("Aman"), alleging that Defendant's collection practices violate the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq. On or about December 29, 2000, pursuant to Rule 68 of the Federal Rules of Civil Procedure, Defendant offered to allow judgment to be entered against it in the amount of one-thousand one dollars plus costs and reasonable attorney's fees. Thereafter, on January 8, 2001, Gibson filed a motion to strike Defendant's offer of judgment and, also on that date, filed a motion for class certification. Gibson's motion to strike is currently before the court.
Analysis
Gibson moves to strike Defendant's offer of judgment on the ground that it is inappropriate in the context of a class action. Gibson argues that the offer of judgment (a) conflicts with the settlement requirements contained in Rule 23(e) of the Federal Rules of Civil Procedure and (b) creates a conflict between Gibson, the class representative, and the putative class members.
Defendant responds that because its offer of judgment was made before Gibson filed her motion for class certification, pursuant to Seventh Circuit precedent, its offer is valid and effective. Defendant relies upon Greisz v. Household Bank (Illinois), N.A., 176 F.3d 1012 (7th Cir. 1999), Holstein v. City of Chicago, 29 F.3d 1145 (7th Cir. 1994) and Wiskur v. Short Term Loans, LLC, 94 F. Supp.2d 937 (N.D.Ill. 2000). These cases, critically, however, are not procedurally identical to this case, as Defendant mistakenly contends, and are therefore not controlling. In Greisz, the offer of judgment was made after the class certification motion had been denied. In Holstein, the offer of judgment was made and expired before any class certification motion was filed. Also in Wiskur, the offer of judgment had expired prior to the motion for class certification. Here, however, although the offer of judgment was made prior to the motion for class certification, the offer had not yet expired when Gibson moved for class certification. See Fed.R.Civ.P. 6(a). Therefore, none of these cases cited by Defendant address the exact issue faced by this court, which is what should result when a class certification motion is filed after an offer of judgment is made but before that offer expires.
Although the court did not comment whether it would have made a difference in the outcome, the Seventh Circuit explicitly stated that the named plaintiff "did not even move for class certification prior to the evaporation of his personal stake." Holstein, 29 F.3d at 1147.
This court has identified two cases which have addressed the exact issue in front of this court. In a well reasoned "Order" dated October 25, 2000, Judge Gottshcall relied upon Judge Conlon's reasoning in Janikowski v. Lynch Ford, Inc., No. 98 C 8111, 1999 WL 608714 (N.D.Ill. Aug. 5, 1999), aff'd on other grounds, 210 F.3d 765 (7th Cir. 2000), in deciding that the defendant's Rule 68 offer of judgment was not valid where the named plaintiff moved for class certification during the ten-day pendency of the offer of judgment. See Asch v. Teller, Levit Silvertrust, P.C., No. 00 C 3290 (N.D.Ill. Oct. 25, 2000). In that case, Judge Gottschall opined,
The court notes that this opinion is unpublished. However, it can be accessed from the internet at the Northern District of Illinois' web site, and a copy was attached as Exhibit A to Gibson's reply brief. The court cites to this opinion in an effort to give credit where credit is due.
Allowing the plaintiffs the kind of retaliatory strike seen here and in Janikowski, where the plaintiff can avoid the Rule 68 offer by moving for class certification during its pendency, adds an appropriate degree of symmetry to the oft-observed asymmetrical bite of Rule 68. Nor does it run afoul of the express language of the Rule. It has the additional salutary effect of taking away the incentive for a defendant to make a Rule 68 offer before either party has had a reasonable opportunity to evaluate the case; it restores Rule 68 to the role it should have-a means of facilitating and encouraging settlements, rather than a clever device for gaining an advantage by racing to the courthouse.Id. at 4-5. Judge Gottschall also correctly recognized that allowing class action defendants to use Rule 68 in this way would result in few class actions being filed without accompanying class certification motions which would have the effect of increasing inefficiency in the management of class actions. Id. at 4.
In Janikowski, the case upon which Judge Gottschall relied in Asch, the court concluded that because the "motion for class certification was pending during the ten days allotted by Rule 68 for acceptance or denial of the offer[,]" the named plaintiff "could not consider a settlement offer made to her personally." Janikowski, 1999 WL 608714, at *2. Defendant argues that the Janikowski case is inopposite here because the class certification motion there was filed before the Rule 68 offer of judgment was made. Defendant's argument, as is evident by the court's language quoted above, is in error. In Janikowski, two motions for class certification were filed. (See Janikowski docket sheet attached to Defendant's Brief in Opposition as Exhibit 3, at entries 14 and 36.) The first motion was denied. (See id. at entry 30. Subsequently, the defendant made a Rule 68 offer of judgment. (See id. at entry 36.); see Janikowski, 1999 WL 608714, at *2. During the ten-day pendency of that offer of judgment, the named plaintiff renewed her motion for class certification. See id. It was the second class certification motion that the court considered when granting the named plaintiff's motion to strike the offer of judgment. See id.
This court agrees with the conclusions reached in Asch and Janikowski. The court finds Judge Gottschall's reasoning to be persuasive. Moreover, that reasoning is all the more persuasive here where it was perfectly clear from the language of Gibson's complaint that class certification would be sought. Defendant, by submitting its offer of judgment, raced to the courthouse in an effort to put Gibson in a tactical trick bag.
Also, the court recognizes that a Rule 68 offer of judgment conflicts with the requirements of Rule 23(e), which governs class action settlements, and could lead to conflict between the named plaintiff and the represented class.
Rule 23(e) provides:
A class action shall not be dismissed or compromised without the approval of the court, and notice of the proposed dismissal or compromise shall be given to all members of the class in such manner as the court directs.
Fed.R.Civ.P. 23(e). By its very language, Rule 23(e) requires that the court approve any class action settlement. Therefore, it would be impermissible for Gibson, the class representative, to accept an offer of judgment made to her in her individual capacity absent court approval. See Martin v. Mabus, 734 F. Supp. 1216, 1222 (S.D.Miss. 1990) ("[T]he procedures described by rule 68 for making an offer of judgment are literally inapplicable because rule 23(e) requires that court approval be obtained in order for a case to be dismissed or compromised.") (citing Gay v. Waiters' and Dairy Lunchmen's Union, Local No. 30, 86 F.R.D. 500, 502-03 (N.D.Cal. 1980)); accord Janikowski, 1999 WL 608714, at *2.
Finally, the court recognizes that a conflict of interest could exist between Gibson and the represented class members were Gibson forced to choose between exposure to risk, i.e., her own self-interest, and her fiduciary duty to the potential class. See Gay, 86 F.R.D. at 502-03 ("[T]he representative as offeree would be forced to balance his personal liability for costs against the prospects of sharing with the class in any recovery. His evaluation of the offer would therefore be tinged by self-interest and would tend to differ from that of absent class members.") (quoted in Janikowski, 1999 WL 608714, at *2); see also Marek v. Chesny, 473 U.S. 1, 35 n. 49 (1985) (Brennen, J., dissenting) ("[T]he Advisory Committee recently has cautioned, in the class-action context '[an] offeree's rejection would burden a named representative-offeree with the risk of exposure to heavy liability [for costs and expenses] that could be recouped from unnamed class members. . . . [This] could lead to a conflict of interest between the named representatives and other members of the class.'") (quoting Advisory Committee's Note to Proposed Amendment to Rule 68). All of these additional reasons lend further support to the appropriateness of granting Gibson's motion to strike.
For the foregoing reasons, Plaintiff's motion is GRANTED. The offer of judgment is STRICKEN and is therefore of no effect.