Mooting Monster Class Actions: Illinois Supreme Court Decision Provides Framework For Employers

The Illinois Supreme Court recently affirmed a state appellate court’s holding that in class action lawsuits, an effective tender made before a named plaintiff files a class certification motion satisfies the named plaintiff’s individual claim and moots the plaintiff’s interest in the litigation.

For employers facing workplace class actions in Illinois and other states with similar statutes involving tenders of complete relief, this opinion provides an excellent framework for how to moot and defeat a class action lawsuit prior to class certification briefing.

Case Background

In Joiner v. SVM Management, LLC, 2020 IL 124671 (Ill. Feb. 21, 2020), the plaintiffs rented an apartment in a large residential apartment complex from the defendant. Although the defendant returned the plaintiffs’ full security deposit, the defendant did not pay security interest on that deposit at any time. Thereafter, the plaintiffs filed a three-count complaint in the Circuit Court of Cook County. In Count I, they alleged on behalf of themselves and others similarly situated that the defendant violated the Illinois Deposit Act by failing to pay interest on its tenants’ security deposits. In Count II, they alleged on behalf of themselves and others similarly situated that the defendant violated the Illinois Uniform Deceptive Trade Practices Act by way of various allegedly unlawful lease and rider provisions. Finally, in Count III, they alleged, individually, that the defendant violated the Illinois Rental Property Utility Service Act by failing to provide required notices and disclosures.

Although the plaintiffs brought Count I as a class action, they did not file a motion for class certification. The defendant responded to the pleadings by tendering the plaintiffs’ requested damages and attorney fees on Count I, and later moving to dismiss the other two causes of action. The plaintiffs refused that tender, and the defendant later argued that its tender mooted Count I pursuant to the Illinois Supreme Court’s decision in Barber v. American Airlines, Inc., 241 Ill. 2d 450 (2011), which held that if a tender is made to the named plaintiff before the filing of a motion for class certification, the claims are moot because the interests of the other class members are not before the trial court. The Circuit Court ultimately dismissed Count I with prejudice.

Before the Illinois Appellate Court, the plaintiffs argued that Barber was no longer good law in light of the U.S. Supreme Court’s decision in Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (2016), which held that a case becomes moot only when it is impossible for a court to grant any effectual relief whatever to the prevailing party. As such, the plaintiffs argued that if Barber was still good law, then the Circuit Court erred in holding that Barber permitted dismissal of all counts when the defendant only tendered on one count. After noting that Barber was still good law in Illinois, the Appellate Court held that the defendant made a sufficient tender and therefore the Circuit Court properly dismissed Count I as moot. The plaintiffs then appealed this issue (among others) to the Illinois Supreme Court.

The Illinois Supreme Court’s Decision

The Illinois Supreme Court affirmed the Appellate Court’s dismissal of Count I based on the tender. Regarding the application of the Barber rule, the Supreme Court explained that it, “has long held that, when a defendant tenders the full amount requested by a plaintiff purporting to represent a class before the named plaintiff files a class-certification motion, the plaintiff’s claim becomes moot.” Id. at 7 (citation omitted).

In its analysis, the Supreme Court examined federal court precedent from the Seventh Circuit and U.S. Supreme Court relative mooting class actions. After summarizing the federal case law, the Supreme Court explained that as a threshold matter, federal Rule 68 offers of judgment were distinguishable from “tenders.” The Illinois Code of Civil Procedure provides that a defendant must “tender what he or she shall conceive sufficient amends for the injury done or to pay the unliquidated damages or demands” to shift costs to the plaintiff. 735 ILCS 5/5-126 (2016) (emphasis added). Under the federal rule, conversely, a defendant only needs to “offer to allow judgment” and can do so, “on specified terms.” Fed. R. Civ. P. 68(a). Further, the Supreme Court noted that the federal rule expressly contemplates a plaintiff’s choice to accept or decline such an offer, while the Illinois rule does not. Id. at *13. Accordingly, the Supreme Court rejected the plaintiffs’ argument that the Campbell-Ewald holding was not limited to Rule 68, and held that when a defendant admits liability and provides the plaintiff with all relief requested — as one does with a tender — no controversy exists, and the trial court must dismiss the case if no other plaintiff steps into the named plaintiff’s shoes to represent the class. Id. at *15-16.

Applying this analysis to the case at hand, the Supreme Court noted that the defendant’s attorney brought the tender check with him to the oral argument and in no way intimated that the defendant intended to keep the check or not pay the plaintiffs’ reasonable attorney fees. The Supreme Court opined that future tenders made to satisfy a demand, if made after filing of suit, should be made to the trial court, and if the tender fully satisfies the plaintiff’s demand absent costs and attorneys’ fees, the trial court could then hold a hearing on costs and attorneys’ fees before dismissing the case. Accordingly, the Supreme Court affirmed the Appellate Court’s dismissal, and held that the defendant must pay the tendered funds to the Circuit Court pending a hearing on costs and attorney fees and dismissal. Id. at 19.

Implications For Employers

Although this case is outside the employment law context, the opinion in Joiner provides valuable strategic insight for employers who find themselves embroiled in bet-the-company workplace class actions. Particular to litigants in Illinois state courts, the opinion can be used as an instruction manual for how to tender complete relief to a named plaintiff and moot class actions where the named plaintiff has not yet moved for class certification. The Illinois Supreme Court’s analysis additionally provides an excellent framework to distinguish the U.S. Supreme Court’s decision in Campbell-Ewald and similar federal appellate court rulings, since those cases dealt with offers of judgment under the Federal Rules of Civil Procedure, which are merely “offers” of settlement, as opposed to an actual tender that completely satisfies a plaintiff’s demand