Weiss v. Regal Collections

Opinions of the United
2004 Decisions States Court of Appeals
for the Third Circuit
9-29-2004
Weiss v. Regal Collections
Precedential or Non-Precedential: Precedential
Docket No. 03-4033
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PRECEDENTIAL William J. Pinilis, Esquire (Argued)
Gabriel H. Halpern, Esquire
UNITED STATES PinilisHalpern, LLP
COURT OF APPEALS 237 South Street
FOR THE THIRD CIRCUIT Morristown, New Jersey 07960
Attorneys for Appellant
No. 03-4033 Bruce D. Greenberg, Esquire (Argued)
Lite DePalma Greenberg & Rivas, LLC
Two Gateway Center, 12th Floor
RICHARD WEISS, on behalf of himself Newark, New Jersey 07102
and all others similarly situated, Attorney for Appellees
Appellant
v. OPINION OF THE COURT
REGAL COLLECTIONS;
LANCER INVESTMENTS, INC. SCIRICA, Chief Judge.
At issue is whether a putative class
representative’s claim is mooted by a Rule
On Appeal from the
68 offer of judgment so as to defeat federal
United States District Court for the
subject matter jurisdiction in a suit
District of New Jersey
requesting class-wide relief. This appeal
D.C. Civil Action No. 01-cv-00881
reflects the tension between two rules of
(Honorable Alfred M. Wolin)
civil procedure—Fed. R. Civ. P. 23 and
Fed. R. Civ. P. 68—and whether they can
be harmonized when the only individual
Argued May 28, 2004
relief requested by the representative
plaintiff has been satisfied through an
Before: SCIRICA, Chief Judge,
offer of judgment.1 The District Court
FISHER and ALARCÓN* ,
granted defendants’ motion to dismiss on
Circuit Judges
grounds of mootness. We will reverse and
remand.
(Filed: September 29, 2004)
1
Our Court addressed a similar issue in
Colbert v. Dymacol., Inc., 302 F.3d 155(3d Cir. 2002). That case was vacated and
reheard by the Court en banc, 305 F.3d
*
The Honorable Arthur L. Alarcón, 1256 (3d Cir. 2002), which then dismissed
United States Circuit Judge for the Ninth the appeal as improvidently granted. 344
Judicial Circuit, sitting by designation. F.3d 334 (3d Cir. 2003).
I. Facts amount of $1000 plus attorney fees and
expenses—the maximum amount an
On October 25, 2000, defendant bill
individual may recover under the FDCPA.
collector Regal Collections mailed a letter
The offer of judgment provided no relief
to Richard Weiss demanding payment of a
to the class and offered neither injunctive
debt allegedly owed to Citibank.
nor declaratory relief. Weiss declined to
Contending that certain statements in the
accept the offer of judgment. Defendants
letter constituted unfair debt collection
then filed a motion to dismiss under Fed.
practice in violation of the Fair Debt
R. Civ. P. 12(b)(1), arguing Weiss’s claim
Collections Practices Act (“FDCPA”), 15
was rendered moot because the Rule 68
U.S.C. § 1692, Weiss filed a federal class
offer provided him the maximum damages
action complaint on February 21, 2001,
available under the statute.3 For this
seeking statutory damages on behalf of
himself and a putative nationwide class.
On March 2, 2001, Weiss filed an is accepted, either party may
amended complaint seeking declaratory then file the offer and notice
and injunctive relief under the FDCPA, of acceptance together with
and adding Lancer Investments as a co- proof of service thereof and
defendant. thereupon the clerk shall
On April 16, 2001, before filing an enter judgment. An offer
answer, and before Weiss moved to certify not accepted shall be
a class, defendants made a Fed. R. Civ. P. deemed withdrawn and
68 2 offer of judgment to Weiss in the evidence thereof is not
admissible except in a
proceeding to determine
costs. If the judgment
2
Fed. R. Civ. P. 68 provides: finally obtained by the
At any time more than 10 offeree is not more
days before the trial begins, favorable than the offer, the
a party defending against a offeree must pay the costs
claim may serve upon the incurred after the making of
adverse party an offer to the offer.
allow judgment to be taken
3
against the defending party The FDCPA sets a $1000 statutory
for the money or property or limit on damages awarded in a private
to the effect specified in the actions. 15 U.S.C. § 1692k(a). The statute
offer, with costs then also limits the amount of damages
accrued. If within 10 days recoverable in a class action to the “lesser
after the service of the offer of $500,000 or 1 per centum of the net
the adverse party serves wo rth of the debt collector.” §
written notice that the offer 1692k(a)(2)(B).
2
reason, defendants contended the District moot the plaintiff’s claim, as at that point
Court no longer had subject matter the plaintiff retains no personal interest in
jurisdiction over Weiss’s claims. The the outcome of the litigation. Rand v.
District Court agreed and dismissed the Monsanto Co., 926 F.2d 596, 598 (7th Cir.
class action complaint. 1991) (“Once the defendant offers to
satisfy the plaintiff's entire demand, there
II. Discussion
is no dispute over which to litigate and a
On appeal, Weiss asserts the Rule plaintiff who refuses to acknowledge this
68 offer did not provide the maximum loses outright, under Fed. R. Civ. P.
possible recovery because the complaint 12(b)(1), because he has no remaining
requested declaratory and injunctive relief, stake.”) (internal citation omitted); see
and sought recovery for a putative also 13A Charles Alan Wright & Arthur
nationwide class. As such, Weiss argues R. Miller, Fed. Practice and Procedure:
his claim was not rendered moot by the Jurisdiction 2d § 3533.2, at 236 (2d ed.
Rule 68 offer, and the District Court erred 1984) (“Even when one party wishes to
in dismissing the class action complaint. 4 persist to judgment, an offer to accord all
Despite Weiss’s assertion, the FDCPA of the relief demanded may moot the
does not permit private actions for case.”).
declaratory or injunctive relief. The
A.
principal question, therefore, is whether
defendants’ Rule 68 offer mooted the As a threshold matter, we hold
claim. defendant’s Rule 68 offer of judgment, in
the amount of $1,000 plus reasonable costs
Article III of the United States
and fees provided the maximum statutory
Constitution limits the jurisdiction of the
relief available to Weiss individually under
federal courts to “cases and controversies.”
the FDCPA. The FDCPA allows a
U.S. Const. art. III § 2; Flast v. Cohen, 392
plaintiff to recover “any actual damage
U.S. 83, 94 (1968). When the issues
sustained” 5 as a result of the debt
presented in a case are no longer “live” or
collector’s violation of the FDCPA, as
the parties lack a legally cognizable
well as “such additional damages as the
interest in the outcome, the case becomes
court may allow, but not exceeding
moot and the court no longer has subject
$1,000,” and “the costs of the action,
matter jurisdiction. County of Los Angeles
v. Davis, 440 U.S. 625, 631 (1979). An
offer of complete relief will generally
5
Weiss does not allege any actual
damages. Cf. Colbert, 344 F.3d 334 (3d
4
We exercise plenary review over the Cir. 2003) (en banc) (reversing order of
District Court’s dismissal of a complaint. dismissal because all relief requested in
Oran v. Stafford, 226 F.3d 275, 281 n.2 complaint not included in Fed. R. Civ. P.
(3d Cir. 2000). 68 offer).
3
together with a reasonable attorney’s fees The remedies under the FDCPA
determined by the court.” 15 U.S.C. § differ depending on who brings the
1692k(a)(1), (2)(A), (3). action.8 Compare 15 U.S.C. § 1692k(a)
(damage remedies for private litigants)
The FDCPA contains no express
with 15 U.S.C. § 1692l (administrative
provision for injunctive or declaratory
e n f o r c e m e n t b y F e d e ra l T r a d e
relief in private actions. See 15 U.S.C. §
Commission). The statute authorizes
1692k (listing damages and counsel fees as
damages for civil liability, but permits only
remedies, but not declaratory or injunctive
the Federal Trade Commission to pursue
relief).6 Most courts have found equitable
injunctive or declaratory relief. See 15
relief unavailable under the statute, at least
with respect to private actions. See
Crawford v. Equifax Payment Servs., Inc.,
201 F.3d 877, 882 (7th Cir. 2000) (noting
that all private actions under the FDCPA
are for damages); Bolin v. Sears Roebuck
& Co., 231 F.3d 970, 977 n.39 (5th Cir.
2000) (“[A]lthough this circuit has not
definitively ruled on the issue, courts have found declaratory relief is available
uniformly hold that the FDCPA does not to a certified class. See, e.g., Ballard v.
authorize equitable relief.”); Sibley v. Equifax Check Servs., 158 F. Supp. 2d
Fulton Dekalb Collection Servs., 677 F.2d 1163, 1177 (E.D . Cal. 2001) (allowing
830, 834 (11th Cir. 1982) (holding in dicta declaratory relief in a class action);
that equitable relief is not available to an Woodard v. Online Info. Servs., 191
individual under the Act.) 7 F.R.D. 502, 507 (E.D.N.C. 2000) (same);
Gammon v. GC Servs. Ltd. P’ship, 162
F.R.D. 313, 319-20 (N.D. Ill. 1995)
6
The language of the FDCPA provides (same).
that a debt collector who fails to comply
8
with the Act shall be liable for an The legislative history of the Act also
“amount.” 15 U.S.C. § 1692k(a). suggests two categories of penalties
depending on who brings the action. See
7
As noted, most courts have found 95 S. Rep. 382, at 5 (discussing “civil
declaratory or equitable relief is not lia bi lity” a n d “ a dm inistr ativ e
available to private litigants under the enforcement” under separate sub-
FDCPA. See, e.g., In re Risk Mgmt. headings); see also Zanni v. Lippold, 119
Alternatives, Inc. Fair Debt Collection F.R.D. 32, 34 (C.D. Ill. 1988) (relying on
Practices Litig., 208 F.R.D. 493, 503 dual penalty schemes in legislative history
(S.D.N.Y. 2002); Goldberg v. Winston & of FDCPA to support conclusion that
Morrone, 1997 U.S. Dist. LEXIS 3521 equitable relief is unavailable to private
(S.D.N.Y. Mar. 26, 1997). Some courts litigants).
4
U.S.C. § 1692l. 9 Some trial courts have injunctive relief, coupled with the absence
interpreted this statutory structure to of a similar grant to private litigants, when
preclude injunctive or declaratory relief in they are expressly granted the right to
private actions. See Zanni v. Lippold, 119 obtain damages and other relief,
F.R.D. 32, 33-34 (C.D. Ill. 1988) (“‘The persuasively demonstrates that Congress
FDCPA specifically authorizes the Federal vested the power to obtain injunctive relief
Trade Commission (FTC) to seek solely with the FTC.”). Because the
injunctive relief . . . and defendant statute explicitly provides declaratory and
persuasively argues that this is a strong equitable relief only through action by the
indication of Congress' intent to limit Federal Trade Commission, we believe the
private actions to damage claims.’”) different penalty structure demonstrates
(quoting Strong v. Nat’l Credit Mgmt. Co., Congress’s intent to preclude equitable
600 F. Supp. 46 (E.D. Ark. 1984)); see relief in private actions.
also Washington v. CSC Credit Servs., 199
For these reasons, we hold
F.3d 263, 268 (5th Cir. 2000) (“[Under the
injunctive and declaratory relief are not
Fair Credit Reporting Act, the] affirmative
available to litigants acting in an
grant of power to the FTC to pursue
individual capacity under the FDCPA.
Therefore, the Rule 68 offer provided all
the relief available to Weiss as an
9
Section 1692l provides, in part: individual plaintiff acting in his personal
capacity.
Administrative enforcement
Of course, the Rule 68 offer did not
(a) Federal Trade
provide the maximum damages to the
Commission. Compliance
putative class. For class actions, the
with this title shall be
maximum relief under the FDCPA is
enforced by the
greater. The FDCPA authorizes additional
Commission, except to the
recovery for non-named class members
extent that enforcement of
“without regard to a minimum individual
the requirements imposed
recovery, not to exceed the lesser of
under this title is specifically
$500,000 or 1 per centum of the net worth
c o mmitted to an o ther
of the debt collector.” 15 U.S.C. §
agency under subsection (b)
1692k(a)(2)(B). Because defendants’ Rule
. . . . All of the functions and
68 offer included no relief for the putative
powers of the Commission
class, either under the provisions of the
under the Federal Trade
FDCPA or through the aggregation of
Commission Act [15 USCS
class claims, we address the mootness
§§ 41 et seq.] are available
question in that context.
to the Commission to
enforce compliance by any
person with this title . . . .
5
B. extends beyond his own.”). Nonetheless,
it appears to be settled that once a class has
1.
be e n certified, mooting a class
The Federal Rules of Civil representative’s claim does not moot the
Procedure are de signed to be entire action because the class “acquire[s]
interdependent. See Fed. R. Civ. P. 1 a legal status separate from the interest
(“These rules govern the procedure in . . . asserted by [the named plaintiff].” Sosna
all suits of a civil nature . . . .”); Canister v. Iowa, 419 U.S. 393, 399 (1975).
Co. v. Leahy, 182 F.2d 510, 514 (3d Cir.
In two decisions in 1980, United
1950) (“[The Rules] must be considered in
States Parole Comm’n v. Geraghty, 445
relation to one another.”). Whenever
U.S. 388 (1980) and Deposit Guar. Nat’l
possible we should harmonize the rules.
Bank v. Roper, 445 U.S. 326 (1980), the
In the event of an unreconcilable conflict,
Supreme Court provided some guidance in
then one rule of procedure may have to
this area. These cases permitted a named
take precedence over another.
plaintiff whose individual claims were
As discussed, under traditional mooted to appeal a denial of class
mootness principles, an offer for the certification.
entirety of a plaintiff’s claim will generally
In Geraghty, the question presented
moot the claim. We have held a class
was “whether a trial court’s denial of a
action may be dismissed when the named
motion for certification of a class may be
plaintiff’s claim is rendered moot before
reviewed on appeal after the named
filing a motion for class certification. See
plaintiff’s personal claim has become
Brown v. Phila. Hous. Auth., 350 F.3d
‘moot.’” 445 U.S. at 390. The Court
338, 343 (3d Cir. 2003) (“[W]hen claims
looked beyond the mootness of Geraghty’s
of the named plaintiffs become moot
substantive claims and focused on his
before class certification, dismissal of the
distinct “procedural . . . right to represent
action is required.”) (quoting Lusardi v.
a class.” Id. at 402. The Court held the
Xerox Corp., 975 F.2d 964, 974 (3d Cir.
action was not moot upon the expiration of
1992)). Defendants argue this action is
the substantive claim, because the plaintiff
moot because they submitted the Fed. R.
retained a “personal stake” in the class
Civ. P. 68 offer for complete individual
certification decision. Id. at 404.
relief before Weiss filed a motion for class
certification. Of special significance to this
appeal, in Roper , the Supreme Court
The question of mootness in the
expressed concern at a defendant’s ability
class action context is not a simple one.
to “pick off” named plaintiffs by mooting
See Lusardi, 975 F.2d at 974 (“[S]pecial
their private individual claims. 445 U.S.
mootness rules apply in the class action
at 339. Credit card holders brought a class
context, where the named plaintiff
action challenging finance charges levied
purports to represent an interest that
6
on their accounts and those of similarly frustrate the objectives of
situated card holders. Id. at 328-29. After class actions; moreover it
the district court denied their motion for would invite waste of
class certification, the bank tendered to j u d i c ia l r e so u r c e s b y
each named plaintiff the maximum stimulating successive suits
amount he would have received brought by others claiming
individually. Id. at 329. The named aggrievement.
plaintiffs refused the offer, but the district
445 U.S. at 339.
court, over their objections, entered
judgment in their favor and dismissed the Then-Associate Justice Rehnquist
action as moot. Id. at 330. The Court of concurred in the judgment, but wrote
Appeals for the Fifth Circuit reversed, separately, commenting:
noting: “The notion that a defendant may
The distinguishing feature
short-circuit a class action by paying off
here is that the defendant
the class representatives either with their
has made an unaccepted
acquiescence or, as here, against their will,
offer of tender in settlement
deserves short shrift. Indeed, were it so
of the individual putative
easy to end class actions, few would
representative’s claim. The
survive.” Roper v. Consurve, Inc., 578
action is moot in the Art. III
F.2d 1106, 1110 (5th Cir. 1978).
sense only if this Court
Granting certiorari, the Supreme adopts a rule that an
Court considered whether putative class individ u a l s e e k i n g to
representatives retained a private interest p r o c e e d as a c l a ss
in appealing the denial of class representative is required to
certification subsequent to the entry of accept a tender of only his
judgment in their favor, over their individual claims. So long
objections. The bank argued the entire as the court does not require
case had been mooted by the individual such acce ptanc e, the
offers. The Supreme Court disagreed, individual is required to
stating: prove his case and the
requisite Art. III adversity
Requiring multiple plaintiffs
continues. Acceptance [of
to bring separate actions,
defendant’s offer] need not
which effectively could be
be mandated under our
‘picked off’ by a
p r e c ed e n t s i n c e th e
defend ant’s tender o f
defendant has not offered all
judgment before an
that has been requested in
affirmative ruling on class
the complaint (i.e. relief for
c e r tification could be
the class) . . . .
obtained, obviously would
7
Id. at 341 (Rehnquist, J., concurring). representative.12 As in Roper, allowing
We recognize Roper addressed a
different issue, whether a putative class
12
representative retains an individual interest Courts have wrestled with the
in appealing the denial of class application of Rule 68 in the class action
certification subsequent to an entry of context, noting Rule 68 offers to
judgment in his favor, to which he individual named plaintiffs undercut close
objected.10 But the matters addressed in court supervision of class action
Roper—particularly a defendant’s ability settlements, create conflicts of interests for
to “pick off” representative plaintiffs and named plaintiffs, and encourage premature
thwart a class action—have direct class certification motions. See Gibson v.
application to the issue presented by this Aman Collection Serv. Inc., 2001 U.S.
appeal.11 Of course, plaintiff here was Dist. LEXIS 10669, at *8 (S.D. Ind. July
only a putative class representative. 23, 2001) (recognizing conflict of interest
Although Weiss filed a class complaint, he posed by Rule 68 offer to lead plaintiff);
had not yet moved for class certification. Gay v. Waiter’s and Dairy Lunchmen’s
Union, 86 F.R.D. 500, 502-03 (N.D. Cal.
As sound as is Rule 68 when
1980). Justice Brennan also discussed the
applied to individual plaintiffs, its
conflict of interests facing named
application is strained when an offer of
representatives presented with a Rule 68
ju d g m e n t i s m a d e t o a c l a s s
offer in Marek v. Chesny, 473 U.S. 1, 35
n.49 (1985) (Brennan, J., dissenting).
No express statement limits the
10
We also acknowledge Roper application of Fed. R. Civ. P. 68 in class
specifically limited its holding, stating: actions. Proposed amendments to make
“Difficult questions arises as to what, if Rule 68 inapplicable to class actions were
an y, a r e t h e n am e d p l a i n ti f f s’ suggested in 1983 and 1984, and they were
responsibilities to the putative class prior rejected both times. The proposals read in
to certification; this case does not require part: “[t]his rule shall not apply to class or
us to reach these questions.” 445 U.S. at derivative actions under Rules 23, 23.1,
340 n.12 (emphasis in original). and 23.2.” See 98 F.R.D. at 363; 102
F.R.D. at 433. In support of the proposals,
11
One court considering the identical the Advisory Committee wrote: “An
issue to ours in a FDCPA class action offeree’s rejection would burden a named
commented: “The rationale animating the representative-offeree with the risk of
Court’s determination [in Roper] . . . exposure to heavy liability [for costs and
speaks directly to the concerns present expenses] that could not be recouped from
here.” White v. OSI Collection Servs., Inc., unnamed class members. . . . [This] could
2001 U.S. Dist. LEXIS 19879, at *12 lead to a conflict of interest between the
(E.D.N.Y. Nov. 5, 2001). named representatives and other members
8
the defendants here to “pick off” a benefit to claimants who choose to litigate
representative plaintiff with an offer of their individual claims in a class-action
judgment less than two months after the context is the prospect of reducing their
complaint is filed may undercut the costs of litigation, particularly attorney’s
viability of the class action procedure, and fees, by allocating such costs among all
frustrate the objectives of this procedural members of the class who benefit from the
mechanism for aggregating small claims, recovery.” Roper, 445 U.S. at 338 n.9.
like those brought under the FDCPA. The Supreme Court also commented that
“[c]lass actions . . . may permit the
The purposes behind Fed. R. Civ.
plaintiffs to pool claims which would be
P. 23 are well-recognized. “A significant
uneconomical to litigate individually. For
example, this lawsuit involves claims
of the class.” Advisory Committee’s Note
averaging about $100 per plaintiff; most
to Proposed Amendment to Rule 68, 102
of the plaintiffs would have no realistic
F.R.D. at 436. See also Roy D. Simon, Jr.,
day in Court if a class action were not
The Riddle of Rule 68, 54 Geo. W ash. L.
available.” Phillips Petroleum v. Shutts,
Rev. 1, 52 (1985) (discussing rule changes
472 U.S. 797, 809 (1985). This “[c]ost-
and rationale for rejecting changes).
spreading can also enhance the means for
The leading treatises recognize the
private attorney general enforcement and
tension between these two procedural
the resulting deterrence of wrongdoing.”
rules. See, e.g., 12 Charles Alan Wright &
In re Gen’l Motors Corp., Pick-up Truck
Arthur R. Miller, Fed. Practice and
Fuel Tank Prods. Liab. Litig., 55 F.3d
Procedure § 3001.1, at 76 (2d ed. 1997)
768, 784 (3d Cir. 1995). Allowing
(“There is much force to the contention
defendants to “pick off” putative lead
that, as a matter of policy [Rule 68] should
plaintiffs contravenes one of the primary
not be employed in class actions.”); 13
purposes of class actions—the aggregation
James William M oore et. al., Moore’s
of numerous similar (especially small)
Federal Practice ¶ 68.03[3], at 68-15 (3d
claims in a single action.
ed. 2004) (“policy and practicality Moreover, a rule allowing plaintiffs
considerations make application of the to be “picked off” at an early stage in a
offer of judgment rule to class and putative class action may waste judicial
derivative actions questionable.”); 5 resources by “stimulating successive suits
Newberg on Class Actions § 15.36, at 115 brought by others claiming aggrievement.”
(4th ed.) (“[B]y denying the mandatory Roper, 445 U.S. at 339. This result is
imposition of Rule 68 in class actions, contrary to the purpose of Fed. R. Civ. P.
class representatives will not be forced to 68 as well. See 13 Moore’s Federal
abandon their litigation posture each time Practice § 68.02[2], at 68-7 (3d ed. 2004)
they are threatened with the possibility of (“The primary purpose of Rule 68 is to
incurring substantial costs for the sake of promote settlements and avoid protracted
absent class members.”).
9
litigation.”). 2.
There is another significant As the Court in Geraghty stated,
consideration. Congress explicitly “mootness . . . can be avoided through
provided for class damages in the FDCPA. certification of a class prior to expiration
See 15 U.S.C. § 1692k(a)(2)(B ) of the named plaintiff's personal claim.”
(establishing maximum damages in class 445 U.S. at 398; see also Holstein v. City
actions under the FDCPA). Congress also of Chi., 29 F.3d 1145, 1147-48 (7th Cir.
intended the FDCPA to be self-enforcing 1994) (finding case moot where plaintiff
by private attorney generals. See S. Rep. did not move for class certification before
No. 95-382 p.5 (describing FDCPA as “evaporation of his personal stake”).
“self-enforcing”); see also Graziano v. Some appellate courts have extended
Harrison, 950 F.2d 107, 113 (3d Cir. Geraghty and declined to dismiss on
1991) (“[FDCPA] mandates an award of mootness grounds while class certification
attorney’s fees as a means of fulfilling was pending. See Susman v. Lincoln Am.
Congress’s intent that the Act should be Corp., 587 F.2d 866, 869-71 (7th Cir.
enforced by debtors acting as private 1978) (holding case not moot when class
attorneys general.”). Representative certification motion was pending before
actions, therefore, appear to be district court at the time named plaintiffs
fundamental to the statutory structure of were tendered damages); Zeidman v. J.
the FDCPA. Lacking this procedural Ray McDermott & Co., 651 F.2d 1030,
mechanism, meritorious FDCPA claims 1051 (5th Cir. July 1981) (“conclud[ing]
might go unredressed because the awards that a suit brought as a class action should
in an individual case might be too small to not be dismissed for mootness upon tender
prosecute an individual action. For this to the named plaintiffs of their personal
reason, defendants’ view of the interplay claims, at least when, as here, there is
between Fed. R. Civ. P. 23 and Fed. R. pending before the district court a timely
Civ. P. 68 would frustrate Congress’s filed and diligently pursued motion for
explicit directive that the FDCPA be
enforced by private attorney generals
acting in a representative capacity. claimant’s damages are capped at $1,000.
Alleged violators of federal law would be As one trial court commented: “The
allowed to tender the statutory amount of FDCPA caps individual statutory damages
damages to a named plaintiff, derailing a at $1,000, so no individual statutory
putative class action and frustrating the damages claim is very large. Thus, it may
goals and enforcement mechanism of the be financially feasible for the defendant to
FDCPA.13 buy off successive plaintiffs in the hopes
of preventing class certification.” White v.
OSI Collection Servs., 2001 U.S. Dist.
13
Class actions may be well-suited to LEXIS 19879, at *16 n.7 (E.D.N.Y. Nov.
the FDCPA, where an individual 5, 2001).
10
class certification.”); see also Lusardi, 975 3.
F.2d 964, 975 (3d Cir. 1992) (noting the
There appears to be considerable
exception to the general mootness rule
authority that once a motion for class
where a certification motion which district
certification has been filed, the “relation
court did not have a reasonable
back” doctrine explained by the Supreme
opportunity to decide was filed before
Court in Sosna v. Iowa, 419 U.S. 393, 399
plaintiff’s claim expired). As noted,
(1975) comes into play. In Sosna, the
although plaintiff here filed a class
Court recognized:
complaint, he never filed a motion for
class certification. His individual claim There may be cases in
was allegedly “mooted” by the Rule 68 which the controv ersy
offer before the court had a reasonable i n v o lv i n g t h e n am e d
opportunity to consider class certification plaintiffs is such that it
under Fed. R. Civ. P. 23. This situation is becomes moot as to them
not uncommon in FDCPA cases and has before the district court can
created an unsettled area of law.14 reasonably be expected to
rule on a certification
motion. In such instances,
14 whether the certification can
Several courts have found that when
be said to ‘relate back’ to
a Fed. R. Civ. P. 68 offer of judgment for
the filing of the complaint
the entire individual claim follows closely
may depend upon the
on the heels of the filing of an FDCPA
c i r c u m s ta n c e s o f t h e
class complaint, the case should not be
p a r t ic u l a r c as e a n d
dismissed. See Nasca v. GC Servs., 2002
especially the reality of the
U.S. Dist. LEXIS 16992, at *9 (S.D.N.Y.
2002) (“To allow a Rule 68 offer to moot
a named plaintiff’s claim in these
circumstances would en courage Corrective Counseling Servs., Inc., 201
defendants to pick off named plaintiffs in F.R.D. 452, 455 (S.D. Iowa 2001) .
the earliest stage of the case.”); Schaake v. As another approach, some courts
Risk Mgmt. Alternatives, Inc., 203 F.R.D. have held a motion to certify the class filed
108, 112 (S.D.N.Y. 2001) (“Here, it is true within the Rule 68 ten-day offer period
no motion for class certification was will avoid mootness. See Parker v. Risk
pending at the time defendant made its Mgmt. Alternatives, Inc., 204 F.R.D. 113,
Rule 68 Offer of Judgment. However, the 115 (N.D. Ill. 2001) (claim not mooted
complaint was filed on May 23 . . . and where class certification motion filed
the Rule 68 offer was made a mere 32 before expiration of ten day period);
days later, well before plaintiff could be Kremnitzer v. Cabrera & Rephen, P.C.,
reasonably expected to file its class 202 F.R.D. 239, 244 (N.D. Ill. 2001)
certification motion.”); Liles v. Am. (same).
11
claim that otherwise the off” lead plaintiffs with a Rule 68 offer to
issue would evade review. avoid a class action. As noted, this tactic
may deprive a representative plaintiff the
Id. at 402 n.11. Furthermore, in Geraghty
opportunity to timely bring a class
the Court held class certification may
certification motion, and also may deny the
relate back to the filing of the complaint
court a reasonable opportunity to rule on
where claims are “so inherently transitory
the motion.15
that the trial court will not have even
enough time to rule on a motion for class It bears noting that most of the
certification before the proposed cases applying the relation back doctrine
re pr es en tat iv e's individual interest have done so after a motion to certify the
expires." 445 U.S. at 399 (1980). The class has been filed. See Zeidman v. J.
mootness exception recognizes that, in Ray McDermott & Co., 651 F.2d 1030,
certain circumstances, to give effect to the 1048-49 (5th Cir. July1981); Susman v.
purposes of Rule 23, it is necessary to Lincoln Am. Corp., 587 F.2d 866, 869-71
conceive of the named plaintiff as a part of (7th Cir, 1978).16 Nonetheless, reference
an indivisible class and not merely a single
adverse party even before the class
certification question has been decided. 15
One commentator addressed the
By relating class certification back to the problems encountered in Riverside, which
filing of a class complaint, the class are similar to those presented here. David
representative would retain standing to Hill Koysza, Note, Preventing Defendants
litigate class certification though his from Mooting Class Actions By Picking off
individual claim is moot. But the question Named Plaintiffs, 53 Duke L.J. 781, 804-
in this case is whether the “relation back” 805 (2003); see also 13 James William
doctrine should apply only after the filing Moore, et al., Moore’s Federal Practice §
of a motion for class certification or 68.03[3] (3d ed. 2004) (advocating
whether it may also be employed after the application of the relation back doctrine to
filing of a class complaint. problem of claims being “picked off”).
The “relation back” doctrine 16
At least one case has explicitly
generally has been used for “inherently
applied the relation back doctrine to Rule
transitory” claims. See County of
68 offers made before a class certification
Riverside v. McLaughlin, 500 U.S. 44, 52
motion is filed. See White, 2001 U.S. Dist.
(1991) (quoting Geraghty, 445 U.S. at
LEXIS 19879, at *16 n.7 (“[I]t may be
399). Although Weiss’s claims here are
financially feasible for the defendant to
not “inherently transitory” as a result of
buy off successive plaintiffs in the hopes
being time sensitive, they are “acutely
of preventing class certification. It is in
susceptible to mootness,” Comer v.
this sense that plaintiff’s claim is acutely
Cisneros, 37 F.3d 775, 797 (2d Cir. 1994),
susceptible to mootness, and thereby fairly
in light of defendants’ tactic of “picking
characterized as transitory.”); see also
12
to the bright line event of the filing of the therefore, that the class action process
class certification motion may not always should be able to “play out” according to
be well-founded. Representative actions the directives of Rule 23 and should permit
vary according to the substantive claims due deliberation by the parties and the
and the courses of action. There are at court on the class certification issues.
least three distinct events on the path to a
That said, the proper procedure is
certified class: filing the class complaint,
for the named representative to file a
filing the motion for class certification,
motion for class certification. That did not
and a decision on the motion. Yet
occur here. But neither was there undue
plaintiffs may file the class certification
delay. 18 In circumstances like these, we
motion with the class complaint, and in
believe the relation back doctrine should
some cases, include a motion for approval
apply. Absent undue delay in filing a
of an already negotiated settlement. Of
motion for class certification, therefore,
course, the federal rules do not require
certification motions to be filed with the
class complaint, nor do they require or
e n c o urage prem ature certif icatio n 23(c)(1)(a) Advisory Committee Notes.
determinations.17 It seems appropriate, Nor do local rules require or envision
expedited certification decisions. See E.
Dist. Pa. L.R.C.P. 23.1(c) (requiring the
McDowall, 216 F.R.D. 46, 50 n.4 filing of the certification motion within 90
(discussing relation back doctrine in days after filing the complaint).
reaching conclusion that FDCPA case not Allowing time for limited discovery
moot). As noted in footnote 12, several supporting certification motions may also
cases have declined to dismiss the class be necessary for sound judicial
claims on mootness grounds even when administration. See Newton v. Merrill
the Rule 68 offer came before the filing of Lynch, Pierce, Fenner & Smith, Inc., 259
a motion for class certification, but these F.3d 154, 166 (3d Cir. 2001) (“[I]t may
cases have not explicitly relied on the be necessary for the Court to probe behind
relation back doctrine. the pleadings before coming to rest on the
certification question.”) (quoting Gen. Tel.
17
Fed. R. Civ. P. 23 directs that Co. v. Falcon, 457 U.S. 147, 160 (1982));
certification decisions be made “at an 7B Wright and Miller, Fed. Practice and
early practicable time.” Fed. R. Civ. P. Procedure § 1785, at 107 (“The
23(c)(1)(a). This recent amendment [certification] determination usually
replaced the language of the old rule: The should be predicated on more information
former “‘as soon as practicable’ exaction than the complaint itself affords.”).
neither reflect[ed] prevailing practice nor
18
capture[ed] the many valid reasons that Defendants made their Rule 68 offer
may justify deferring the initial six weeks after plaintiff filed his amended
certification decision.” See Fed. R. Civ. P. complaint.
13
where a defendant makes a Rule 68 offer pla intif f s, f o l l o w i n g tw o o r d e rs
to an individual claim that has the effect of decertifying a class, agreed to a full and
mooting possible class relief asserted in unconditional release of their individual
the complaint, the appropriate course is to age discrimination claims, and the court
relate the certification motion back to the dismissed their individual claims. Id. at
filing of the class complaint. 19 Because in 968-69. Nonetheless, the named plaintiffs
this case, no motion for class certification filed a de novo motion for class
was made, we will direct the trial court to certification. After the trial court
allow Weiss to file the appropriate motion. dismissed the class claims as moot, we
affirmed, noting that after the named
4.
plaintiff’s claims had been voluntarily
We recognize our decision creates settled, they no longer had justiciable
some tension with our opinion in Lusardi
v. Xerox Corp., 975 F.2d 964 (3d Cir.
1992), but we believe the cases can be
required.” Id. at 343 (quoting Lusardi,
reconciled.20 In Lusardi, the named
975 F.2d at 974). But, Brown is
distinguishable on its facts.
19
To hold otherwise would In Brown, the housing authority and
automatically result in a plaintiff seeking certain tenants entered into a consent
class relief in a consumer representative decree in 1974. Id. No class was ever
action to file a motion for class certified. Upon discovering that the
certification at the time of filing the class named plaintiffs had not been tenants in
complaint. As one trial court noted: 1974 nor in 2002, the housing authority
“Hinging the outcome of this motion [to moved in 2002 to vacate the original 1974
dismiss] on whether or not class consent decree. The district court rejected
certification has been filed is not well- this motion and the housing authority
supported in the law nor sound judicial appealed to this court. We held that the
practice; it would encourage a ‘race to pay consent decree should be vacated because
off’ named plaintiffs very early in the appellees were not housing authority
litigation, before they file motions for class tenants at the entry of the consent decree in
certification.” Liles v. Am. Corrective 1974 nor in 2002. In so doing, we rejected
Counseling Servs., 201 F.R.D. 452, 455 the appellees argument for “implied class
(S.D. Iowa 2001). certification.” Id. at 343, 346. Therefore,
lacking representative and individual
20
Our decision may also appear to interests, their claims were clearly moot.
create tension with Brown v. Phila. Hous. Furthermore, the tenants’ claims in Brown
Auth., 350 F.3d 338 (3d Cir. 2003), where were not mooted by purposive action of
we noted that “when claims of the named the housing authority but rather because
plaintiffs become moot before class they were not public housing tenants at the
certification, dismissal of the action is relevant times.
14
claims when they moved for class two motions for class certification had
certification. Id. at 979-80. been denied. Indeed, even Lusardi noted,
in a somewhat different context, that it
Unlike the case here, Lusardi did
“simply was not a case where . . . the
not involve an offer of judgment made in
class-action defendant successfully
response to the filing of a complaint. The
prevented effective resolution of a class
named plaintiffs voluntarily entered into
certification issue.” Lusardi, 975 F.2d at
individual settlements subsequent to class
983. In Lusardi, no unilateral action by
decertification. See id. at 979 (“Here,
the Defendant rendered the plaintiffs’
there is no dispute that plaintiffs
claims “inherently transitory.” Defendants
voluntarily settled their individual
here used the Rule 68 offer to thwart the
claims.”). In this appeal, the “picking off”
putative class action before the
scenarios described by the Supreme Court
certification question could be decided.
in Roper are directly implicated. In
Lusardi they were not. The Roper Court Under this set of circumstances, we
stressed that “at no time did the named believe the tension between Fed. R. Civ.
plaintiffs accept the tender in settlement of P. 23 and Fed. R. Civ. P. 68 should be
the case; instead, judgment was entered in addressed through the “relation back”
their favor by the court without their analysis.21
consent.” 445 U.S. at 332. Similarly, in
Zeidman, the Court of Appeals for the
21
Fifth Circuit wrote: Weiss also argues Fed. R. Civ. P.
23(e) requires court approval of the Rule
[P]laintiffs claims have been
68 offer of judgment before dismissing the
rendered moot by purposive
class complaint. Several courts, including
action of the defendants . . .
our own, had concluded the supervisory
. By tendering to the named
guarantees of the former Rule 23(e)
plaintiffs the full amount of
applied in the pre-certification context.
their personal claims each
See Kahan v. Rosenstiel, 424 F.2d 161,
time suit is brought as a
169 (3d Cir. 1970) (“a suit brought as a
class action, the defendants
class action should be treated as such for
can in each successive case
purposes of dismissal or compromise, until
moot the named plaintiffs’
there is a full determination that the class
claims before a decision on
action is not proper”).
certification is reached.
These holdings arguably have been
651 F.2d 1030, 1049-50. The tactic at play superseded by the 2003 Amendments to
here, similar to those described in Roper the Federal Rules of Civil Procedure
and Zeidman, contrasts with the voluntary which provide that Fed. R. Civ. P. 23(e)
settlement in Lusardi where the plaintiffs approval is required only after a class has
agreed to settle with the defendants after been certified. The rule was revised in
2003, to provide: “The court must approve
15
III.
For the foregoing reasons, the
judgment of the District Court will be
reversed and the matter will be remanded
for proceedings consistent with our
opinion.
any settlement, voluntary dismissal, or
compromise of the claims, issues, or
defenses of a certified class.” Fed. R. Civ.
P. 23(e)(1)(a) (emphasis added). The
Advisory Committee Notes state the
amendment was designed to remove
ambiguity regarding the application of
Rule 23(e) approvals at the pre-
certification stage:
Rule 23(e)(1)(A) resolves
the ambiguity in former
Rule 23(e)’s reference to
dismissal or compromise of
a “class action.” That
language could be—and at
times was— read to require
court approval of
settlements with putative
class representatives that
resolved only individual
claims. The new rule
requires approval only if the
claims, issues, or defenses
of a certified class are
resolved by settlement,
voluntary dismissal, or
compromise.
2003 Adv isory Com mittee N otes
(emphasis added). Nevertheless, given our
holding here, we need not address this
argument.
16