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South Orange Chiropractic Center, LLC v. Cayan LLC

United States District Court, D. Massachusetts

April 12, 2016

SOUTH ORANGE CHIROPRACTIC CENTER, LLC, individually, and on behalf of all others similarly situated, Plaintiff,
v.
CAYAN LLC d/b/a CAPITAL BANKCARD, Defendant.

MEMORANDUM AND ORDER

PATTI B. SARIS, Chief District Judge.

INTRODUCTION

This proposed class action is about an unsolicited fax allegedly sent in violation of the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227. Plaintiff South Orange Chiropractic Center, LLC ("South Orange"), received the fax from Defendant Cayan LLC, doing business as Capital Bankcard ("Capital Bankcard"), [1] promoting various merchant services. Soon afterwards, on August 3, 2015, South Orange filed a proposed class action with itself as class representative. Plaintiff immediately filed a motion to certify a class defined to include "all persons or entities within the United States to whom Capital Bankcard sent Junk Faxes promoting Capital Bankcard's goods or services at any time within four years prior to the filing of this Complaint through the date of certification in this action." Docket No. 1, ¶ 28. The complaint seeks injunctive relief and statutory damages.

On December 18, 2015, Defendant served Plaintiff with an offer of judgment pursuant to Federal Rule of Civil Procedure 68 and a stand-alone settlement offer. Defendant offered (1) to have judgment entered against it; (2) to pay $7, 500 to Plaintiff, an amount in excess of the TCPA's statutory maximum of $1, 500 per unsolicited fax; (3) to pay for any costs recoverable in the case; (4) to be enjoined from using any fax machine, computer, or other device to send unsolicited fax advertisements in violation of the TCPA to Plaintiff or any other entity; and (5) to preserve evidence. Defendant tendered a bank check in the amount of $7, 500 with its offer and asserts that its settlement offer remains open. Plaintiff has rejected Defendant's offer of judgment and settlement offer, and has refused to accept the check Defendant offered. On January 8, 2016, Defendant moved to dismiss and to strike class allegations.

Two days after the Supreme Court issued Campbell-Ewald Co. v. Gomez, 136 S.Ct. 663 (2016), Plaintiff withdrew the motion for class certification, apparently viewing the precedent as a victory that obviated the need for a "placeholder" class action. Docket No. 20. Plaintiff contends it needs class certification discovery.

On February 4, 2016, Defendant requested that it be allowed to deposit the $7, 500 with the Court in the event that the bank check that it tendered is deemed insufficient to provide the named plaintiff with complete relief. Docket No. 28 at 5 n.5.

Disagreeing that Campbell-Ewald provides a silver bullet to salvage the class action claims, Defendant now moves to dismiss pursuant to Rules 12(b)(1) and 12(b)(6), and to strike class allegations pursuant to Rule 12(f), arguing that Plaintiff's individual claims are now moot and, therefore, Plaintiff can no longer serve as a class representative. While the Court agrees the individual claims are moot, the Court DENIES the motion to dismiss the class action. However, in light of the uncertainty in the caselaw, I request the parties confer on whether the issue of the justiciability of the class action is appropriate for interlocutory review under 28 U.S.C. § 1292(b).

DISCUSSION

I. The Genesis: Two Recent Supreme Court Cases

This case raises the cutting-edge question: If a defendant tenders complete relief to a proposed class representative, does it moot her individual claims and preclude certification of the proposed class action under Rule 23? The analysis is framed in two recent Supreme Court cases. See Campbell-Ewald Co. v. Gomez, 136 S.Ct. 663 (2016); Genesis Healthcare Corp. v. Symczyk, 133 S.Ct. 1523 (2013).

In Genesis Healthcare, the plaintiff filed a complaint on behalf of herself and similarly situated persons under the Fair Labor Standards Act of 1938 ("FLSA"), 29 U.S.C. § 201 et seq., claiming statutory damages for compensable work performed during unpaid meal breaks. 133 S.Ct. at 1527. Soon after, the defendants served an offer of judgment under Federal Rule of Civil Procedure 68 for the unpaid wages, reasonable attorneys' fees, costs, and expenses. Id . At the time, no other person had opted into the collective action. Id . The defendants then moved to dismiss for lack of subject matter jurisdiction. Id . The plaintiff responded that the defendants were "inappropriately attempting to pick off' the named plaintiff before the collective-action process could unfold." Id. at 1527.

The Supreme Court resolved the issue of "whether such a case is justiciable when the lone plaintiff's individual claim becomes moot." Id. at 1526. The Court "assume[d], without deciding, that [defendants'] Rule 68 offer mooted [plaintiff's] individual claim." Id. at 1529. Given that the individual claim was deemed moot, the Court held: "In the absence of any claimant's opting in, respondent's suit became moot when her individual claim became moot, because she lacked any personal interest in representing others in this action." Id . It added that "the mere presence of collective-action allegations in the complaint cannot save the suit from mootness once the individual claim is satisfied." Id.

Discussing the line of cases beginning with Sosna v. Iowa, 419 U.S. 393 (1975), the Court rejected the argument that the collective action remained justiciable because it raised "inherently transitory" issues that would evade review. Id. at 1530-31. The Court held: "In this case, respondent's complaint requested statutory damages. Unlike claims for injunctive relief challenging ongoing conduct, a claim for damages cannot evade review; it remains live until it is served, judicially resolved, or barred by a statute of limitation." Id. at 1531. The Court also rejected the argument that the purpose of the collectiveaction provisions "would be frustrated by defendants' use of Rule 68 to pick off' named plaintiffs before the collectiveaction process [had] run its course." Id.

In dissent, Justice Kagan, joined by three other members of the Court, emphasized that when a "plaintiff rejects such an offer-however good the terms-her interest in the lawsuit remains just what it was before. And so too does the court's ability to grant her relief." Id. at 1533 (Kagan, J., dissenting). "An unaccepted settlement offer-like any unaccepted contract offer- is a legal nullity, with no operative effect." Id . She added: "To be sure, a court has discretion to halt a lawsuit by entering judgment for the plaintiff when the ...


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