Opinion
No. CIV. 3-00-0586 WBS OGH
December 21, 2000
MEMORANDUM AND ORDER
This is a suit alleging violations of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692, and the California Unfair Business Practices Act ("CUBPA"), Cal. Bus Prof. Code § 17200, et seq. Defendants move to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1).
I. Factual and Procedural Background
Plaintiffs sue "on behalf of themselves and . . . all others similarly situated," accusing defendants of debt collection practices that violate FDCPA and CUBPA. Specifically, plaintiffs claim defendants collected unauthorized service charges on dishonored checks, threatened to suspend plaintiffs' driver's licenses, and threatened litigation if their payment demands were not met.
The First Amended Complaint seeks declaratory and injunctive relief, in addition to damages. With respect to their first claim for alleged violations of FDCPA, plaintiffs request a "declaratory judgment that defendants' practices violate the FDCPA[;] the maximum amount of statutory damages provided under 15 U.S.C. § 1692k[;] actual damages equal to all unauthorized charges collectedB'] attorney's fees, litigation expenses and costs[;] [and] such other or further relief as the Court deems appropriate." (First Am. Compl. at 10). On their second claim for alleged violations of CUBPA, plaintiffs seek "a preliminary and permanent injunction prohibiting defendants from adding or attempting to collect the unauthorized charges, and from engaging in the other conduct . . . violative of the CUBPA[;] a preliminary and permanent injunction prohibiting defendants from retaining the unauthorized service charges and ordering restitution to the class[;] attorney's fees, litigation expenses and costs[;] [and] such other or further relief as the Court deems appropriate." id.
On September 15, 2000, defendants made the following offer of judgment pursuant to Federal Rule of Civil Procedure 68:
(1) Payment to Young of the maximum statutory damages allowed to her individually under 15 U.S.C. § 1692k and any actual damages equal to all unauthorized charges collected from Young individually; (2) Payment to Littledove of the maximum statutory damages allowed to her individually under 15 U.S.C. § 1692k and any actual damages equal to all unauthorized charges collected from Littledove individually; (3) Payment of recoverable costs of the action and reasonable attorneys' fees as determined by the Court against defendants JBC Associates, Mary Brandon, and Jack H. Boyajian; and (4) The imposition of a permanent injunction prohibiting defendants JBC Associates, Mary Brandon, and Jack H. Boyajian from adding or attempting to collect unauthorized charges and from engaging in other conduct that violates the Fair Debt Collection Practices Act and the California Unfair Business Practices Act as set forth in plaintiffs' Complaint.
(Defs.' Ex. B, Attached to Coleman Decl.). Plaintiffs rejected the offer.
Defendants move to dismiss because "[p]laintiffs received an offer from defendants that provides for all remedies sought to which plaintiffs are entitled," and thus, "plaintiffs have no cognizable interest or personal stake in the matter." (Mot. at 1).
II. Discussion
Defendants argue that the court lacks subject matter jurisdiction over the action because their Rule 68 offer effectively mooted plaintiffs individual claims. "Mootness can be characterized as a doctrine of standing set in a time frame: The requisite personal interest that must exist at the commencement of the litigation (standing) must continue throughout its existence (mootness)." Cook Inlet Treaty Tribes v. Shalala, 166 F.3d 986, 989 (9th Cir. 1999) (citations and internal quotation marks omitted). "[A] case is moot when the issues presented are no longer `live' or the parties lack a legally cognizable interest in the outcome." Norman-Bloodsaw v. Lawrence Berkeley Laboratory, 135 F.3d 1260, 1274 (9th Cir. 1998) (quoting County of Los Angeles v. Davis, 440 U.S. 625, 631 (1979)). If plaintiffs no longer have a cognizable interest in the outcome of the litigation, their claims are moot and must be dismissed for lack of jurisdiction. See Ruvalcaba v. City of Los Angeles, 167 F.3d 514, 520 (9th Cir. 1999) ("Article III of the Constitution limits federal courts to the adjudication of actual, ongoing controversies between litigants." (quoting Ruiz v. City of Santa Maria, 160 F.3d 543, 548 (9th Cir. 1998)).
Plaintiffs' claims in this case are not moot. As a general rule, a mere offer of settlement, without acceptance, does not moot an action. See Deposit Guar. Nat'l Bank, Jackson, Miss., v. Roper, 445 U.S. 326, 329, 332-33 (1980) (holding that defendant's tender and plaintiffs' refusal of maximum amount that each plaintiff could have recovered did not moot plaintiffs' claims on the merits so long as they retained an economic interest in class certification); Bancroft Masters, Inc. v. Augusta National Inc., 223 F.3d 1082 (9th Cir. 2000) (declaring, without further consideration, that the defendant's contention that its settlement offer mooted the appeal was without merit); Public Utilities Comm'n of State of Cal. v. F.E.R.C., 100 F.3d 1451, 1460 (9th Cir. 1996) ("voluntary cessation of allegedly illegal conduct" does not moot case "unless there is no reasonable expectation that wrong will be repeated"); Church of Scientology of Hawaii v. United States, 485 F.2d 313, 318 (9th Cir. 1973) (taxpayer who rejected Government's tender of refund was entitled to determination of underlying legal issues). The fact that defendants' offer was made pursuant to Rule 68 does not compel a contrary result. Rule 68 allows a defending party to make an offer of judgment before trial, which remains valid for ten days. The Rule provides for certain consequences if a party does not accept the offer; dismissal of the action is not one of them. Specifically, if the offer is rejected and "the judgment finally obtained by the offeree is not more favorable than the offer, the offeree must pay the costs incurred after the making of the offer." Id.
Furthermore, under Rule 68, "[a]n offer not accepted shall be deemed withdrawn." Defendants' offer of judgment is therefore considered withdrawn because plaintiffs rejected it. Accordingly, plaintiffs have not obtained any relief for it defendants' alleged violations of FDCPA and CUBPA, and thus still have a cognizable interest in the outcome of this action.
Defendants cite a district court case from Connecticut where the court held the plaintiff no longer had a personal stake in the outcome of her claim based on FDCPA because the defendant's settlement offer included the maximum amount of damages that she was entitled to recover.Murphy v. Equifax Check Services, Inc., 35 F. Supp.2d 200, 203 (D. Conn. 1999). This court is not bound by the decisions of that court. Moreover, the instant case is distinguishable from Murphy because here, plaintiffs are seeking class certification. See Deposit Guar. Nat'l Bank, 445 U.S. at 332-23 (recognizing the individual plaintiffs' economic interest in pursuing class certification to shift the costs of litigation). In addition, defendants' offer was made pursuant to Rule 68 and is deemed withdrawn upon plaintiffs' rejection or the passing of ten days.
IT IS THEREFORE ORDERED that defendants' motion to dismiss be, and the same hereby is, DENIED.