Supreme Court of the United States Rules in Favor of Class Action Plaintiffs

01/21/2016 | Class Actions/Mass Torts

The Supreme Court of the United States ruled in favor of class action plaintiffs and against companies’ attempts to “buy off” lead class action plaintiffs in exchange for ending class action suits.  The Supreme Court prevented big businesses from being able to unilaterally end class action litigation by simply offering the lead plaintiff(s) the sum of money they sought, regardless of whether the plaintiff(s) actually accepted the settlement offer.  The end goal was for big businesses to cut off class action lawsuits at their inception to prevent paying money damages to hundreds or thousands of class action plaintiffs. 

Generally a class-action lawsuit arises where there are a few plaintiffs with similar claims and similar damages who join together to bring a lawsuit.  The plaintiffs have to petition the court to certify the case as a class-action.  In a very rudimentary explanation, once the court grants the request all persons having similar claims and damages can be joined to the lawsuit.  Obviously this increases the company’s financial exposure significantly. 

In the case that went before the Supreme Court the named plaintiff, Jose Gomez, received a text message in violation of the Telephone Consumer Protection Act which was enacted to protect cellphone users from robocalls and mass solicitations.  Gomez filed a class action lawsuit against the contractor, Campbell-Ewald Company.  In order to “buy-off” Gomez and end the class-action lawsuit before other plaintiffs joined, the company offered Gomez $1,503 in damages for each unauthorized text – three times what the law requires.  Despite being exactly what Gomez sought in the suit he rejected the company’s offer and intended to continue pursuing the class action suit. 

A federal court however, put an end to Gomez’s class action when it dismissed the case after he rejected the offer.  The federal court found the case ended when the company offered Gomez exactly what he sought – despite the fact that Gomez did not accept their offer.  The federal court determined there was no case or controversy left for it to hear since the defendant offered to give the plaintiff exactly what he wanted.  This, of course, destroyed the class action and the claims of potentially hundreds or thousands of other people. 

Gomez’s lawyer appealed the federal court’s dismissal and the appellate court reversed the dismissal.  The Supreme Court took the case and Ruth Bader Ginsburg wrote the majority opinion.  The Court ruled a plaintiff’s claim is not voided if he or she does not accept a defendant’s offer, even if the offer is exactly what the plaintiff requested.  Therefore, the class action was not ended by the company’s offer to Mr. Gomez which he rejected and the case was improperly dismissed. 

Chief Justice Roberts who wrote the main dissenting opinion said, “The federal courts exist to resolve real disputes, not to rule on a plaintiff’s entitlement to relief already there for the taking.”  “If there is no actual case or controversy, the lawsuit is moot, and the power of federal courts to declare the law has come to an end.”  Justices Ginsburg and Sotomayor saw the bigger effect on the civil justice system – the ability of wrongdoing big businesses to “buy off” a few plaintiffs at a discount of the price they would have to pay to settle a class action.  Justice Sotomayor said of the company, “You get to say on your own, unilaterally, ‘I offered you complete relief.’”  “You, without any judicial interpretation, intervention, get to moot the case on your terms.”  Justice Ginsburg stated Roberts’ reasoning “would place the defendant in the driver’s seat” since it costs a company very little money to pay off an individual plaintiff.