Summary
applying the relation back exception to mootness and finding that a Rule 68 offer of judgment filed one day after defendant's answer, and eighteen days before plaintiff's motion for class certification, did not moot plaintiff's class claims
Summary of this case from Mey v. Frontier Commc'ns Corp.Opinion
01-CV-1343 (ARR)
November 5, 2001
Attorney for the Plaintiff, Jerome Noll, Lax and Noll, 535 Fifth Avenue New York, NY.
Attorney for Defendant, Kevin Barry McHugh, Jacobowitz, Garfinkel Lesman, 110 William Street, 17th Floor New York, NY.
OPINION AND ORDER
The plaintiff, Henna White, filed this action on March 7, 2001 by means of a class action complaint on behalf of herself and all others similarly situated. The suit alleges violations of the Fair Debt Collection Practices Act ("FDCPA") and seeks damages provided by 15 U.S.C. § 1692k. Defendant, pursuant to a stipulation extending time to answer dated April 24, 2001, filed an answer on May 17, 2001. One day later, on May 18, 2001, defendant served an Offer of Judgment (the "offer") pursuant to Rule 68 of the Federal Rules of Civil Procedure in the amount of $2,000, plus costs and reasonable attorney's fees. No formal motion to certify has been filed with this court; however, on June 5, 2001, eighteen days after defendant's offer and less than one month after issue was joined in the case (and less than three months after plaintiff filed the complaint), plaintiff requested a premotion conference based on her intention to move for judgment on the pleadings and to certify a class pursuant to Rule 23 of the Federal Rules of Civil Procedure.
Rule 68 provides, in relevant part, that:
At any time more than 10 days before the trial begins, a party defending against a claim may serve upon the adverse party an offer to allow judgment to be taken against the defending party for the money or property or to the effect specified in the offer, with costs then accrued. . . . If 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.
Chambers' Rule 2A requires represented litigants to arrange a premotion conference before making any dispositive motion, motion for a change of venue, or to amend a pleading.
The defendant now moves this court to compel plaintiff to accept defendant's offer of judgment and to dismiss the complaint pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure for lack of subject matter jurisdiction. Defendant argues that plaintiffs claim is now moot and must be dismissed because its offer to plaintiff provided more than plaintiff sought in the action and all of the relief to which she is entitled under the FDCPA. The plaintiff argues that because, as defendant acknowledges, the offer was an individual and not a class offer, the offer fails to satisfy the class claims so that a live controversy remains for Article III purposes.
Assuming that defendant's offer provided all of the relief to which plaintiff, as an individual, was entitled under the Act, the question remains whether plaintiffs expressed intention to represent all those similarly situated leaves a live controversy such that plaintiffs case is not moot despite the fact that no motion to certify the class was pending when defendant made its Rule 68 offer of judgment. For the reasons explained below, the court holds that the relation back exception to the mootness doctrine applies to the specific facts of this case, and therefore concludes that plaintiffs case is not moot. The court therefore denies defendant's motion to dismiss and grants plaintiff leave to move for judgment on the pleadings and to certify the class.
Defendant's offer does not address plaintiffs request for declaratory and injunctive relief in addition to damages, and thus plaintiff maintains that defendant's offer does not provide the full relief sought by plaintiff. See Pl.'s Mem. in Opposition to Def.'s Motion to Dismiss at 1 n. 1. Because the court denies defendant's motion, it is unnecessary to resolve this dispute. The court notes, however, that some courts have found that private causes of action under the FDCPA may seek only damages, see, e.g., Crawford v. Equifax Payment Services, Inc., 201 F.3d 877, 882 (7th Cir. 2000) (stating that "all private actions under the Fair Debt Collection Practices Act are for damages"); Sibley v. Fulton DeKaib Collection Services, 677 F.2d 830, 834 (11th Cir. 1982) (finding that "equitable relief is not available to an individual under the civil liability section of the [FDCPA]"); Sokolski v. Trans Union Corp., 178 F.R.D. 393, 399 (E.D.N.Y. 1998) (finding that the "FDCPA does not provide for injunctive relief'), with injunctive relief reserved under the statutory scheme for enforcement actions pursued by the Federal Trade Commission. Plaintiff cites to cases that do not disagree. In fact, plaintiff cites to Gammon v. G.C. Services, L.P., 162 F.R.D. 313, 319-20 (N.D. Ill. 1995), which found that "injunctive relief [as distinguished from declaratory relief, which it did find to be available] is not available to private litigants under the FDCPA."
DISCUSSION
Pursuant to Article III of the Constitution, the exercise of judicial power demands a live case or controversy. "When a case becomes moot, the federal courts `lack subject matter jurisdiction over the action,' [and d]efects in subject matter jurisdiction cannot be waived. . . ." Fox v. Board of Trustees of State University of New York, 42 F.3d 135, 140 (2d Cir. 1994) (internal citations omitted). A case is moot when the parties lack a legally cognizable interest in the outcome. See id. As the Supreme Court has held, the right of a litigant to use Rule 23 to bring a claim is procedural, and if the substantive claims become moot, in the Article III sense, by settlement of all personal claims for example, the court retains no jurisdiction over the controversy of the individual plaintiffs." Deposit Guarantee Nat. Bank v. Roper, 445 U.S. 326, 333 (1980). See also Candy H. v. Redemption Ranch, Inc., 563 F. Supp. 505, 518 (M.D. Ala. 1983) ("Mootness may result from a number of causes, including . . . satisfaction of the claim by the defendant. . . .") (citing to United States Parole Comm'n v. Geraghty, 445 U.S. 388, 399 (1980), and Roper).
Defendant correctly cites to case law in the mootness and class action context that seems to draw a bright line at class certification. For example, the Second Circuit in Comer v. Cisneros, stated that "in general, if the claims of the named plaintiffs become moot prior to class certification, the entire action becomes moot. In contrast, class certification will preserve an otherwise moot claim." 37 F.3d 775, 798 (2d Cir. 1994) (internal citations omitted). See also Swan v. Stoneman, 635 F.2d 97, 102 n. 6 (2d Cir. 1980) ("As a general rule, a class cannot be maintained unless there is a named plaintiff with a live controversy both at the time the complaint is filed and at the time the class is certified."). In Ambalu v. Rosenblatt, 194 F.R.D. 451, 453 (E.D.N.Y. 2000), Judge Nickerson of this district relied on this general rule in dismissing a claim as moot following a pre-certification offer of judgment in a FDCPA case. He found that a defendant could successfully force settlement of the suit by making a Rule 68 offer of judgment because no class had yet been certified nor had any motion to certify been filed. He observed that plaintiffs opposition "may have some validity after class certification," but found, at least on the facts before him, that the tension between Rules 23 and 68 was not implicated prior to certification. Id.
The defendant argues that this court should findAmbalu persuasive and follow its holding. Admittedly, this case is similar to Ambalu: both cases concern offers made prior to the filing of formal motions for class certification and approximately three months following the filing of the complaint. Plaintiffs papers as well as Schaake v. Risk Mgt. Alternatives, Inc., No. 01-CV-4441, slip opin. (S.D.N.Y. Sept. 14, 2001) see discussion below, distinguish Ambalu on the basis that the plaintiff had failed to move for class certification two years after filing his class action complaint. InAmbalu, however, the offer came three months and one day after the complaint's filing. Thus, while this court maintains that Ambalu is distinguishable from the present case, it does not rely on this specific factual ground asserted by Schaake or plaintiff here. Rather, nothing in Ambalu indicates that the defendant sought an extension of time to answer. Thus, the offer of judgment in Ambalu, unlike here, may well have not come on the heels of the answer, thereby providing plaintiffs inAmbalu more time from joinder of issue to file a motion for class certification. The Ambalu court's reliance onAbrams v. Interco Inc, 719 F.2d 23 (2d Cir 1983), provides additional evidence that the court found that the plaintiffs had adequate time to move for certification prior to the offer. In Abrams, the putative named class representatives did not move to certify until two years after they had filed the complaint. Thus, there was no concern, unlike in the present case see below, of a race to the courthouse, that is, no real risk that the offer came so early in the litigation that it amounted to an effort to "pick off" or "buy off" the class action before the plaintiffs could reasonably move to certify a class. Thus, it is not at all clear that Ambalu's holding or reasoning would dictate a finding of mootness on the facts of this case.
Because mootness presents unique questions in the class action context, however, see e.g., Sosna v. Iowa, 419 U.S. 393, 399 (1975) (finding that certification of a class "significantly affects the mootness determination"); Comer, 37 F.3d at 798-99 (citing Supreme Court cases that considered the "special problems associated with class action mootness, including the timing of class certification"), the Supreme Court has acknowledged exceptions to the general bright line rule recited above. In Sosna, for example, the Court explicitly recognized the relation back exception to mootness:
There may be cases in which the controversy involving the named plaintiffs is such that it becomes moot as to them before the district court can reasonably be expected to rule on a certification motion. In such instances, whether the certification can be said to "relate back" to the filing of the complaint may depend upon the circumstances of the [particular case] and especially the reality of the claim that otherwise the issue would evade review.419 U.S. at 402 n. 11. The Court identified the rapidity of judicial review of exceptions to masters' proposals as one example of a case meriting relation back because mootness questions are likely to arise before the district court could reasonably be expected to rule on a motion for class certification. See Swisher v. Brady, 438 U.S. 204, 213 n. 11 (1978). Further, in Geraghty, the Court held that class certification may relate back to the complaint's filing where claims are "so inherently transitory that the trial court will not have even enough time to rule on a motion for class certification before the proposed representative's individual interest expires." 445 U.S. at 399. When a court relates class certification back to the original filing of the complaint, the putative class representatives retain standing to litigate the question of class certification even though their individual claims are moot. See, e.g., Candy H., 563 F. Supp. at 518.
The Second Circuit has elaborated on this general exception to mootness, finding that its applicability is intensely factbound and is consequently invoked in varying contexts. For example, the court inComer referenced the particular circumstances of the case, namely, the transitory nature of the public housing market, in relating the certification back to the original filing of the complaint. 37 F.3d at 799. See also Robidoux v. Celani, 987 F.2d 931. 939 (2d Cir. 1993) (finding inherently transitory the class claims of public assistance applicants who were challenging delays in the processing of their applications because "the Department will almost always be able to process a delayed application before a plaintiff can obtain relief through litigation"); Monaco v. Stone, 187 F.R.D. 50, 60 (E.D.N.Y. 1999) (finding challenges to state statutory scheme for involuntary commitment of criminal defendants who are incompetent to stand trial inherently transitory because the claimed injury lasts a mere seventy-two hours).See generally Geraghty, 445 U.S. at 400 (stating that "[t]hese cases [including Roper, which declined to find mootness despite the loss of the putative class representatives' personal stake in the merits of the litigation] demonstrate the flexible character of the Art. III mootness doctrine"); Marisol v. Giuliani, No. 95 Civ. 10533, 1998 WL 265123, at 6 (S.D.N.Y. May 22, 1998) ("Class actions, however, warrant a more flexible application of the mootness doctrine.").
Additionally, several courts, in contexts distinct from the present case, have demonstrated their concern with a defendant's ability to "pick off" plaintiffs prior to a ruling on class certification. For example, the Supreme Court has considered the defendant's role in mooting plaintiffs claims prior to certification in deciding whether a mootness exception applies, noting the potential for abuse by defendants if offers can moot putative class representatives' standing:
A district court's ruling on the certification issue is often the most significant decision rendered in these class-action proceedings. To deny the right to appeal simply because the defendant has sought to "buy off" the individual private claims of the named plaintiffs would be contrary to sound judicial administration. Requiring multiple plaintiffs to bring separate actions, which effectively could be "picked off" by a defendant's tender of judgment before an affirmative ruling on class certification could be obtained, obviously would frustrate the objectives of class actions; moreover it would invite waste of judicial resources by stimulating successive suits brought by others claiming aggrievement. It would be in the interests of a class-action defendant to forestall any appeal of denial of class certification if that could be accomplished by tendering individual damages claimed by the named plaintiffs.Roper, 445 U.S. at 339. As noted, Roper addressed an issue distinct from the one presented by this motion, namely, whether putative class representatives retain a private interest in appealing the denial of class certification subsequent to an entry of judgment in their favor over their objections. The Court held that such plaintiffs do retain an interest such that their appeal of the denial of class certification is not moot. Because the Court made clear that it was not reaching the question of a named plaintiffs responsibility to putative class members prior to certification, id. at 353 n. 12, its holding does not control the decision in this case. The rationale animating the Court's determination nonetheless speaks directly to the concerns present here.
The Fifth Circuit in Zeidman v. J. Ray McDermott Co., Inc., 651 F.2d 1030 (5th Cir. 1981), similarly noted the relevance of defendant's intent in mooting the plaintiffs action prior to certification. In Zeidman, the court had denied plaintiffs' motion to certify a class based on inadequate evidence of numerosity. On the same day that the plaintiffs submitted additional evidence on the numerosity question, the defendant tendered to the named plaintiffs the full amount of their personal claims. In refusing to dismiss for mootness the appeal by the named plaintiffs, the court observed that
plaintiffs' claims have been rendered moot by purposive action of the defendants . . . . By tendering to the named plaintiffs the full amount of their personal claims each time suit is brought as a class action, the defendants can in each successive case moot the named plaintiffs' claims before a decision on certification is reached. A series of individual suits, each brought by a new named plaintiff, could individually be "picked off before class certification . . .Id. at 1049-50. Though Zeidman is distinguishable on its facts and in its posture. the Fifth Circuit's concern that the defendants in that case were picking off named plaintiffs with strategically timed offers is, like inRoper, identical to the concern present in this case, as discussed below.
The Second Circuit similarly has noted, as a general principle, the relevance of defendant's intent in mooting a claim prior to certification. In White v. Mathews,F.2d 852, 857 (2d Cir. 1977), the plaintiffs challenged delays in administrative hearings concerning their disability benefits, and the defendants granted hearings to the named plaintiffs while the motion for class certification was pending. The Circuit related the class certification back to the date of the filing of the motion to certify because "[r]efusing to do so would mean that the SSA could avoid judicial scrutiny of its procedures by the simple expedient of granting hearings to plaintiffs who seek, but have not yet obtained, class certification." See also Trautz v. Weisman, 846 F. Supp. 1160, 1164 (S.D.N.Y. 1994) (citing to White for the proposition that "[t]he Second Circuit has also recognized an exception where a defendant can purposefully moot a named representative's claim prior to certification."). See also Mathis v. Bess, 692 F. Supp. 248, 258 (S.D.N.Y. 1988) ("Of particular interest is whether the defendant could purposefully moot the plaintiffs claim subsequent to the class action complaint being filed, or the claim is so transitory in nature that the district court cannot reasonably be expected to rule on the motion for class certification before the expiration of the named plaintiffs claim.") (internal citations omitted); Bacon v. Toia, 437 F. Supp. 1371, 1383 (S.D.N.Y. 1977) (finding that circumstances of the case merited relating class certification back to the filing of the complaint because "the mootness could be `created by the action of the defendant who could agree to the payment of (the benefits sought by the plaintiff) every time an action is instituted'") (quoting Lugo v. Dumpson, 390 F. Supp. 379, 381 (S.D.N.Y. 1975)).
Admittedly, these cases applying the relation back doctrine are distinguishable from the present case in that they concerned the mooting of a named plaintiffs claims after the filing of a motion to certify. Because the considerations animating the courts' deliberations in these cases, however, are identical to the concerns present in this case, it is appropriate to apply the relation back doctrine to the specific facts and circumstances of this case as well. Defendant made an offer of judgment to the plaintiff one day after the defendant answered and eighteen days before the plaintiff sought leave to move for class certification. If the court were to apply the bright line mootness rule and decline to apply an exception to the mootness doctrine, plaintiffs claim would be moot because defendant made the offer of judgment before plaintiff filed a motion for class certification. This would ignore defendant's strategic tender of an offer of judgment very early in the litigation, namely, only one day after issue was joined and with the specific purpose of mooting plaintiffs claim prior to class certification. The defendant, by its motion, is asking the court to deem plaintiffs claim moot as a result of defendant's Rule 68 offer, even before plaintiff has had a reasonable opportunity to seek certification. Rule 68 is a mechanism solely within defendant's power, and here it is wielded in a way precisely calculated to "pick off" the plaintiff before she could realistically bring a motion for class certification. The defendant manipulated the Rule 68 device so as to render plaintiffs claims so transitory that the court realistically could not address the class certification issue, or, more precisely, the plaintiff realistically could not even bring the motion.
See, e.g., Comer, 37 F.3d at 797 (citing to fact that class representatives filed a motion for class certification less than two months after filing their complaint to support its finding that plaintiffs "acted promptly to prosecute this suit"). Cf. Zeidman, 651 F.2d at 1041 (observing that "no party suggests that the plaintiffs' motion for class certification was untimely . . . [when] the plaintiffs submitted their motion within three months of the filing of their complaint and approximately one month after the defendants' filing of their answers").
Admittedly, the nature of plaintiffs case is not inherently transitory because her claim does not expire with the mere passage of time, unlike the claims of pretrial detainees, pregnant women seeking abortions, or challenges to one year residency requirements, for example. The Circuit in Comer, however, asked whether the claims were "acutely susceptible to mootness" and not whether they were by their nature time sensitive. 37 F.3d at 797. See also Marisol, 1998 WL 265123, at 6-7 (declining to define transitory as "necessarily `time-limited'" and looking instead to whether the claims are "particularly susceptible to mootness"). The FDCPA caps individual statutory damages at $1,000, so no individual statutory damages claim is very large. Thus, it may be financially feasible for the defendant to buy off successive plaintiffs in the hopes of preventing class certification. It is in this sense that plaintiffs claim is acutely susceptible to mootness, and thereby fairly characterized as transitory.
Additionally, as Judge McMahon recently observed in Schaake v. Risk Mgt. Alternatives, Inc., No. 01-CV-4441, slip opin. (S.D.N.Y. Sept. 14, 2001), "[t]aken to its absurd logical conclusion, the policy urged by defendant would clearly hamper the sound administration of justice, by forcing a plaintiff to make a class certification motion before the record for such motion is complete." This court agrees with Judge McMahon that it would be "absurd" to force plaintiffs to file motions for class certification with the complaint since often motions to certify require discovery, as well as scheduling orders from the court. Id.
Courts in other districts, while not explicitly acknowledging that they were applying the mootness exception doctrine, have declined to find claims moot in cases where no motion for class certification had yet been filed at the time defendant tendered its Rule 68 offer of judgment. For example, Schaake, mentioned above, is strikingly similar to this case. There, a defendant served a Rule 68 offer on a putative class representative thirty-two days after the complaint had been filed, before the defendant had answered, and before a motion to certify had been filed. Judge McMahon refused to compel the plaintiff to accept the offer and dismiss for mootness, even assuming the offer fully satisfied plaintiffs individual claims. She found that defendant's argument would lead to an "untenable result . . . by allowing a defendant to avoid liability for class wide relief, which could be prevented by the mere service of a Rule 68 offer at the outset of the case." Id.
Chief Judge Longstaff of the Southern District of Iowa similarly declined to find mootness in an FDCPA class action even though no motion for class action had been filed at the time of defendant's Rule 68 offer of judgment. See Liles v. American Corrective Counseling Services, Inc., 201 F.R.D. 452, 455 (S.D. Iowa 2001). The court opined that courts should only permit defendants to force judgment on putative class representatives if certification has been denied:
Hinging the outcome of this motion on whether or not class certification has been filed is not well-supported in the law nor sound judicial practice; it would encourage a "race to pay off' named plaintiffs very early in litigation, before they filed motions for class certification. A different situation could be presented if class certification had been considered and denied, but that is not the case here. Class certification has not been denied, and defendant will not be permitted to force an end to the putative class action.Id. Cf. Asch v. Teller. Levit Silvertrust, P.C., 200 F.R.D. 399, 400 (N.D. Ill. 2000) (rejecting, on different grounds, defendant's effort to force mootness by service of a Rule 68 offer prior to defendant's answer or plaintiffs motion for certification and observing generally that "[t]he tactic employed by defendant in this case, service of a Rule 68 offer before the defendant has appeared, answered or moved to dismiss, would force plaintiffs to file class certification motions with the complaint. That in turn would force defendants to brief the motion and the court to rule on it prior to any discovery and prior to any opportunity on the part of the parties to address settlement in a meaningful way.").
Judge Ward of the Southern District, moreover, explicitly applied the relation back exception to mootness in a distinct though related context in which the defendants mooted plaintiffs' claims before the plaintiffs filed their motion for class certification. In Crisci v. Shalala, 169 F.R.D. 563 (S.D.N.Y. 1996), plaintiffs filed a putative class action alleging that a particular administrative law judge was biased against Social Security claimants. Before the motion to certify had been filed, the putative class representatives' Social Security cases were transferred to a different administrative law judge, thus mooting the case under the formal mootness doctrine. Although no motion to certify had yet been filed, as in the present case, Judge Ward found that the relation back doctrine was applicable "`so long as a justiciable controversy existed some time prior to class certification.'" Id. at 567 (quoting Goetz v. Crosson, 728 F. Supp. 995, 1000 n. 8 (S.D.N.Y. 1990)). The court identified the specific circumstances in the case that warranted application of the relation back doctrine, including that the plaintiffs' complaint had alleged a substantial controversy regarding the administrative law judge's conduct, the adequacy of class representation, and that a live controversy exists as to unnamed members of the class. See id. at 568. Moreover, the Crisci court similarly acknowledged the fear that defendants will force dismissal on mootness grounds by "`purposefully moot[ing] the named plaintiffs' claims after the class action complaint has been filed but before the class has been properly certified.'" Id. at 568 (quoting Goetz, 728 F. Supp. at 1000). Specifically, defendants could transfer all named representatives' Social Security cases from the administrative law judge in question upon the filing of the class complaint but prior to filing a motion for class certification, thereby avoiding judicial scrutiny of his conduct. The court applied the relation back doctrine to these facts because otherwise the alleged bias would evade judicial review. The facts of the present case are highly analogous.
At least in the limited circumstances presented by the instant case, therefore, — when defendant's offer of judgment comes very early in the litigation and before a plaintiff, who has indicated in her complaint her intention to pursue the claim in a representative manner, can reasonably bring a motion to certify — it is proper to apply the relation back exception even though no motion for class certification has yet been filed. Thus, the defendant's offer of judgment did not moot plaintiffs claims in this case. The application of the mootness exception in this case is essential to prevent the race to the courthouse from entirely circumventing and stymieing the class action mechanism. See generally Roper, 445 U.S. at 339 (recognizing that aggrieved persons may be without effective redress unless they may employ the class-action device"). While there may be circumstances in which plaintiffs failure to move for class certification prior to service of a Rule 68 offer of judgment will not qualify for an exception to the bright line mootness rule. plaintiff did not run afoul of Rule 23 when the defendant served an offer a mere one day after defendant answered.
In similar contexts, courts have recognized the significance of the fact that the plaintiffs complaint is styled as a class action. See Fox, 42 F 3d at 142 (choosing to follow general mootness rule that looks to whether a class had been certified and distinguishing cases finding that plaintiffs were suing in a representational capacity even though class certification had not occurred based on the fact that the pleadings "explicitly asserted that student plaintiffs were acting in a representative capacity"); Liles, 201 F.R.D. at 455 (stating, on facts very similar to the instant case, that "[b[y the very act of filing a class action, the class representatives assume responsibilities to members of the class . . .; a ceasefire may not be pressed upon them by paying their claims . . . ["] regardless of whether a motion for class certification has been filed"). Cf. Littledove v. JBC Assoc., Inc., No. Civ. S-00-0586, 2000 WL 33141223, at 2 n. 1 (E.D. Cal. Dec. 22. 2000) (rejecting claim that Rule 68 offer prior to certification mooted the FDCPA claim, noting simply that the plaintiffs sued in a representative capacity and were seeking certification but not clarifying whether they had actually filed the motion to certify prior to the Rule 68 offer).
Federal Rule of Civil Procedure 23 provides that "as soon as practicable after the commencement of an action brought as a class action, the court shall determine by order whether it is to be so maintained."
CONCLUSION
For the reasons stated above, the defendant's motion to compel plaintiff to accept defendant's offer of judgment and to dismiss pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure is denied. The plaintiff may bring her 12(c) motion and motion for class certification in accordance with the briefing schedule set forth in the accompanying order of today's date.SO ORDERED.