A Good Day: Supreme Court Rules Settlement Offer Doesn't Moot Suits

Last week, the U.S. Supreme Court ruled that settlement offers made to individual plaintiffs can’t be used to dismiss consumer lawsuits. That might not sound like much, but it’s an important clarification at a time when companies are increasingly eager to avoid class action lawsuits and arbitration is becoming more prevalent. In its decision, the court ruled 6-3 that “an unaccepted settlement offer has no force.”

The case being heard concerned U.S. Navy advertising partner company Campbell-Ewald Co., which had tried to sweep away a TCPA lawsuit by offering the plaintiff, Jose Gomez, more than triple the required amount in damages. The company’s reasoning made a kind of grim sense: by paying (much) more than legally required, they were, presumably, hoping to make the case go away while avoiding setting a precedent and/or being forced to admit wrongdoing. Because the case was a class action lawsuit, the company would also have avoided a possible multi-million dollar settlement pool. In and of itself, there’s no harm in offering the money, but when Gomez refused and continued with his lawsuit, Campbell-Ewald, acting more like a spurned child than a partner of the United States military, tried to have the entire lawsuit dismissed – arguing, it seems, that if someone won’t take their more than generous offer, then they have no right to complain.

Except, of course, that consumers do have the right – and the Supreme Court has now made sure everyone knows where they stand. Fact is, companies cannot dictate how and when lawsuits filed against them should be settled. Gomez may have received more money if he took their offer – $1,503 dollars for every unwanted text message rather than the federally required $500 – but there are often bigger things at stake: principles, lawyers’ fees, and a plaintiff who wants a company to be brought to account. Campbell-Ewald can’t sweep these claims under the rug by throwing money at their problems – and they can’t act wounded when money turns out not to be enough. In the justices’ written opinion, the court pointed out that:

“Like other unaccepted contract offers, it creates no lasting right or obligation. With the offer off the table, and the defendant’s continuing denial of liability, adversity between the parties persists.”

For all that, this might seem like a straightforward point of law, but there’s a reason the Supreme Court is involved. In earlier cases, courts have had trouble nailing down exactly what is and isn’t required when a company volunteers a monetary settlement outside of a lawsuit. Is an offer of payment enough? Do things change when a company actually has the money ready to send? Without a court order, how can plaintiffs rely upon a settlement offer? If, unlike Gomez, a plaintiff doesn’t fight to keep a lawsuit going, should the settlement money bring the suit to its de facto end? Even in the Supreme Court, dissenters were eager to point out the important nuances of this case, with Chief Justice John G. Roberts writing:

“The problem for Gomez is that the federal courts exist to solve real disputes, not to rule on a plaintiff’s entitlement to relief already there for the taking Here, the district court found that Campbell agreed to fully satisfy Gomez’s claims. That makes the case moot, and Gomez is not entitled to a ruling on the merits of a moot case.”

Campbell-Ewald originally brought its case to the Supreme Court after the Ninth Court ruled that they could not offer individual plaintiffs relief as a way to avoid court litigation – the litigation in question stemming from unsolicited text messages sent to around 100,000 people in 2006. In discussing the case, the Supreme Court Justices were divided along party lines, with Republican-leaning judges generally OK’ing the idea and the more liberal judges arguing in favour of a case continuing until a legal judgement is made. It seems to be a difference of priorities, with those who see the case as focusing on money drawing very different conclusions than those who see it as part of a larger question about consumer class actions and their place in modern business. Yes, Gomez could have taken the money, but by avoiding the class action lawsuit and potential ruling against it, Campbell-Ewald would still have been the winner. In the end, any move that takes away consumers’ ability to make their own decisions is bad for the United States. It’s a good thing that, in this instance, the United States Supreme Court has made the right call.