District Court (Cal.) Finds that Rule 68 Offer Did Not Moot FDCPA Class Claims; Denies Plaintiff’s Motion to Strike “Offset” and “Good Faith” Affirmative Defenses

In Jacobson v. Persolve, LLC, 2014 WL 4090809 (N.D.Cal. 2014), Judge Koh found an FDCPA class-action defendant’s Rule 68 offer to the class representative did not moot either the Action or the represenative’s ability to bring class claims.

The Court agrees with Persolve that Plaintiff’s Motion to Strike Persolve’s Offer of Judgment is procedurally improper. Persolve’s Offer of Judgment was not filed with the Court. Indeed, the Court became aware of the existence of the Offer of Judgment only after Plaintiff moved to strike it. In the absence of a filing, there is nothing for the Court to strike. See, e.g., Bogner v. Masari Invs., LLC, No. 08–1511, 2009 WL 1395398, at *1 (D.Ariz. May 19, 2009) (“Because Defendants have not filed the offer of judgment with the Court, there is nothing to strike from the record.”); McDowall v. Cogan, 216 F.R.D. 46, 52 (E.D.N.Y.2003) (“[T]here is nothing to strike here, as an offer of judgment is not filed with the court until accepted or until offered by a deferred party to prove costs.”); Parker v. Risk Mgmt. Alternative, Inc., 204 F.R.D. 113, 114 (N.D.Ill.2001) (“Plaintiff has erred by moving to strike a document that has not been filed with the court.”). ¶ The Court also notes that Rule 68(b) states that “[e]vidence of an unaccepted offer is not admissible except in a proceeding to determine costs.” In light of this restriction, it is doubtful that a motion to strike at the pleadings stage is the proper mechanism to address Plaintiff’s concerns with the fairness of a Rule 68 offer in a class action. See Tillman v. Calvary Portfolio Servs., LLC, No. 08–8142, 2009 WL 510921, at *2 (D.Ariz. Feb. 27, 2009) (finding motion to strike an unfiled offer of judgment to be procedurally improper because the offer’s “fairness and validity will only ripen after an entry of judgment less favorable than Defendant’s offer” or, alternatively, “the issue may not ripen at all”). ¶ Even if the Court could strike an unfiled document, it is unclear why this would be necessary in this case. Persolve has not moved to dismiss the putative class claims as moot or taken any other action based on the unaccepted offer of judgment. Nor could it. In Pitts v. Terrible Herbst, Inc., 653 F.3d 1081, 1086 (9th Cir.2011), the Ninth Circuit held that a rejected Rule 68 offer of judgment made before the filing of a motion for class certification does not moot the putative class action claims. Recognizing that a defendant may use a Rule 68 offer of judgment to “pick off” lead plaintiffs and avoid class actions, the Court in Pitts determined that class certification would relate back to the filing of the complaint so class claims could not evade review simply because the defendant had of-fered the representative plaintiff all the individual relief she sought. Id. at 1090–91. Therefore, absent undue delay, a plaintiff may still certify a class and avoid mootness of the class claims even after a de-fendant has offered complete individual relief via a Rule 68 offer of judgment. Id. at 1091. Accordingly, there is no risk here that Plaintiff will find herself unable to pursue her class claims regardless of Persolve’s Offer of Judgment. ¶ The Court recognizes that a conflict of interest may arise when a defendant makes a Rule 68 offer for individual relief to a named plaintiff in a class action. Even in a putative class action, a representative plaintiff maintains a fiduciary duty to the unnamed class members. Thus, a Rule 68 offer of judgment made only to the class representative rather than the class as a whole can pit the individual’s self-interest in accepting the settlement against the interests of the putative class in obtaining relief. See McDowall, 216 F.R.D. at 49. Nevertheless, nothing in the Federal Rules of Civil Procedure or in case law interpreting the Federal Rules of Civil Procedure forbids a defendant from making a Rule 68 offer of judgment to a putative class representative.FN3 Despite the pressure a Rule 68 offer of judgment may place on a class representative, this Court agrees with the reasoning in Torres v. Client Services, Inc., No. 11–1604 (C.D.Cal. Apr. 3, 2012), that a policy categorically barring Rule 68 offers of judgment in class actions “would be best set forth in the Federal Rules of Civil Procedure themselves.” Persolve’s Request for Judicial Notice, Ex. A, ECF No. 26–1 at 7.FN4In summary, the Court finds that Plaintiff’s Motion to Strike an unfiled document is procedurally improper. Regardless, Persolve’s Offer of Judgment poses no danger to the putative class claims in this case in light of the Ninth Circuit’s holding in Pitts. The Court therefore DENIES Plaintiff’s Motion to Strike Persolve’s Offer of Judgment. In the alternative, Plaintiff requests the Court certify her class at an early stage with briefing stayed until the completion of discovery. ECF No. 21–1 at 9. This request is premature, and Plaintiff’s request to certify a class at this stage is therefore DENIED without prejudice.

The Court also denied the Plaintiff’s Motion to Strike the debt collector’s affirmative defenses of “good faith” and “offset”.