Is it possible for a defendant to moot a putative class action prior to class certification by tendering an offer of judgment for everything the named plaintiff could conceivably recover? The U.S. Supreme Court agreed to decide that question at the Federal level not long ago. The Illinois Supreme Court heard oral argument late last month in Ballard RN Center, Inc. v. Kohll’s Pharmacy and HomeCare, Inc., a decision posing that same question as a matter of state law. A detailed summary of the facts and underlying court decisions in Ballard is here.
The plaintiff alleged that he received an unsolicited fax advertisement from the defendant. The plaintiff allegedly had no prior relationship with the sender, had not given permission for such faxes to be sent, and the fax purportedly lacked the mandatory “opt out” notice. The complaint alleged that the fax was sent to plaintiff as part of a “blast fax” advertising campaign. The plaintiff purported to state one claim for violation of the Telephone Consumer Protection Act (“TCPA”), one for violation of the Illinois Consumer Fraud Act and one for conversion. On the same day the plaintiff filed its complaint, plaintiff filed a skeletal motion seeking certification of three classes and promising a memorandum of law “in due course.”
Defendant moved for partial summary judgment on the TCPA claim, alleging that on three different occasions, it had made an unconditional tender of all possible damages under the Act to the plaintiff, thus mooting the claim (notwithstanding the plaintiff’s skeletal motion for class certification). The trial court denied the motion, holding that a bare-bones motion for certification is enough to satisfy the standard of Barber v. American Airlines. The Appellate Court reversed, holding that a motion for class certification had to include sufficient factual allegations to bring the absent class members’ interests before the court in order to prevent a tender of judgment from entirely mooting the claim.
Counsel for the plaintiff began the argument. According to counsel, the fact that the defendant’s tender included only one of the three claims was dispositive – a partial tender of judgment didn’t moot anything. Defendant argues that its position is supported by the policy favoring settlement, counsel argued, but even if there is such a policy, tender as to only one of three claims does nothing to advance that interest. Plaintiff argued that the partial pick-off just amounted to manipulation of the plaintiff’s claims. Justice Thomas asked counsel why he had not sought a hearing or filed a memorandum of law on his motion for class certification for two years after filing. Counsel responded that discovery had been arduous, and there had been motions to dismiss in related cases. Once all that was completed, the plaintiff had filed an amended motion for class certification. Counsel argued that if his skeletal motion for class certification isn’t enough to satisfy Barber – if there must be evidence offered in support of certification – then defendants will always have the chance to moot class claims if they offer judgment within thirty days of the complaint being filed. If the Appellate Court is upheld, according to the plaintiff, class actions in cases seeking only modest damages are effectively dead in Illinois. Instead, plaintiff urged the Court to adopt the same standard as the Seventh Circuit, by which a bare-bones motion for certification is sufficient to block pick-off attempts. Plaintiff concluded by briefly addressing the propriety of the class certification order. The case had all the earmarks of a blast fax seeking new business, counsel argued, and the defendant had paid after the fact for 4,000 transmissions having been sent – obviating the need for any individual evidence that faxes had been received. Defendant had argued that class certification would lead to excessive damages, but plaintiff argued that the proper response, even if that were so, was to certify the class and reduce every class member’s recovery equally. Counsel suggested that since the class had already been notified, if the class were now decertified, most of the individual class members would pursue claims, and defendant wouldn’t avoid substantial damages anyway.
Counsel for the defendant followed. The plaintiff had received all the documents it said it needed for its certification motion by March, 2012, defendant argued – and yet the amended motion wasn’t filed until November, 2012. Justice Kilbride asked whether that eight month delay had involved motions to compel, but counsel said no. Counsel pointed out that plaintiffs were relying heavily on various Federal Circuit cases, but with the U.S. Supreme Court’s grant of certiorari in Gomez v. Campbell Ewald, all those cases were now under a cloud. Justice Thomas asked counsel about plaintiff’s argument that a party can’t tender as to one count only. Counsel responded that plaintiff had chosen to split their remedies, and there was no authority suggesting the the defendant can’t moot the statutory action. Counsel argued that allowing prompt payment to the named plaintiff wouldn’t harm the rights of other plaintiffs, who were still free to come forward, nor would it eviscerate class actions in Illinois (since most class claims are for more than a defendant will likely be willing to tender without a fight). If plaintiff’s position were adopted, defendant argued, then plaintiffs will file a shell motion for certification in every case. Justice Thomas asked whether there was a policy concern involved that defendants would game the system if pickoffs were allowed. Counsel answered perhaps, but the way to balance those concerns was to require some minimum threshold of evidence in the plaintiff’s motion. Justice Theis asked how the Court should fashion such a standard if it’s not in the statute. Counsel suggested that the Court could look to the standard for some minimum level of factual support under Rule 801. Justice Kilbride asked whether, if the Court decides the defendant’s tender didn’t moot the case, it needed to resolve the other issues. Counsel responded no, but if the case were reduced to the two other claims, it would likely be quickly settled. But what if the plaintiffs won on the mootness point, Justice Kilbride asked. Counsel responded that shell motions for certification would become routine, and Barber would be effectively a dead letter. Justice Kilbride asked if Barber covers a partial tender. Counsel said no, but this wasn’t a partial tender – the defendant made a full tender with respect to the TCPA.
Counsel for the plaintiff responded that the defendant was mistaken to argue that none of the cases cited in the briefs had involved a partial tender. Justice Thomas suggested that there was a bigger difference between the counts here than in the cases plaintiff relied upon. Counsel responded that the only difference was statutory damages under the Consumer Protection Act. There was no delay during discovery, counsel argued. The plaintiffs had to take discovery from third parties and had to retain an expert to analyze the defendant’s hard drive. The action was diligently prosecuted throughout, according to counsel. Counsel argued that the only thing required for a class certification motion to prevent mootness was good faith and some reasonable basis. Counsel concluded by arguing that he had heard no policy in favor of partial tender during the argument, and that a wrongdoer shouldn’t get to decide which claims proceed.
We expect Ballard to be decided in three to four months.