District Court (Minn.) Stays TCPA-Fax Case Following Declined Rule 68 Offer Pending Outcome of SCOTUS’ Decision in Campbell–Ewald

In Yaakov v. Varitronics, LLC, 2015 WL 5092501, at *1 (D.Minn.,2015), Judge Montgomery stayed a TCPA-fax class action pending the outcome of the SCOTUS’ decision in Campbell-Ewald.  The facts were as follows.

This putative class action stems from eight unsolicited fax advertisements Bais Yaakov received between November 2013 and February 2014. See Compl. [Docket No. 1] ¶ 10; Ex. A (the “Fax Advertisements”). Bais Yaakov alleges the Fax Advertisements violate the Telephone Consumer Protection Act, 47 U.S.C. § 227 (the “TCPA”) and New York General Business Law § 396–aa. Compl. ¶ 1.  On January 30, 2015, Varitronics moved to dismiss [Docket No. 22] the Complaint, arguing that since the Fax Advertisements were sent by a third party, R & M Letter Graphics, Inc. (“R & M”), Varitronics was not liable under the TCPA or New York state law. Varitronics’ motion was denied on April 3, 2015. See April 3 Order.  After Varitronics’ initial motion to dismiss was denied, Varitronics made three offers of judgment to Bais Yaakov pursuant to Rule 68 of the Federal Rules of Civil Procedure. The three offers of judgment were each for $13,000 plus additional amounts determined by the Court for costs, the latest of which was extended on August 10, 2015. See Freeman Decl. [Docket No. 46] Ex. B (May 20, 2015 Rule 68 Offer); Ex. C (June 9, 2015 Rule 68 Offer); Third Freeman Decl. [Docket No. 57] Ex. S (August 10, 2015 Rule 68 Offer). Bais Yaakov did not accept any of Varitronics’ offers of judgment.  Varitronics now moves again for dismissal. Varitronics argues that because Bais Yaakov declined to accept a Rule 68 Offer of Judgment that would have afforded it complete relief, its claims are moot. Alternatively, Varitronics asks that proceedings be stayed until the United States Supreme Court issues a decision in Campbell–Ewald Co. v. Gomez, 135 S.Ct. 2311 (2015), which is set for argument on October 14, 2015.

Judge Montgomery found the case appropriate for a temporary stay.

In Genesis Healthcare’s wake, the judicial landscape is uncertain on the mootness question in the context of offers of judgment in putative class actions. Compare Hanover Grove Consumer Hous. Coop. v. Berkadia Commercial Mortg., LLC, No. 13–13553, 2014 WL 354674 (E.D.Mich. Jan. 31, 2014) (holding that under Genesis Healthcare, Rule 68 offer of full judgment mooted putative class action); Mey v. N. Am. Bancard, LLC, No. 14–11331, 2014 WL 6686773, at *2–3 (E.D.Mich. Nov. 26, 2014) (same); St. Amant v. Knights’ Marine and Indus. Servs., Inc., No. 14–174, 2015 WL 4568813, at *6 (S.D.Miss. July 28, 2015) (same), with Chapman v. First Index, Inc., –––F.3d ––––, ––––, Nos. 14–2773, 14–2775, 2015 WL 4652878, at *3 (7th Cir. Aug. 6, 2015) (overruling decisions “to the extent that they hold that a defendant’s offer of full compensation moots the litigation or otherwise ends the Article III case or controversy”); Hooks v. Landmark Indus., Inc., –––F.3d ––––, ––––, No. 14–20496, 2015 WL 4760253, at *3–4 (5th Cir. Aug. 12, 2015) (holding that an unaccepted Rule 68 offer did not moot the individual or the class claims). While the Eighth Circuit has not directly ruled on this issue after Genesis Healthcare, District courts in this circuit have declined to use the Genesis Healthcare majority opinion to terminate a putative class action at an early stage. See Sandusky Wellness Ctr. LLC v. Medtox Sci., Inc., No. 12–2066, 2013 WL 3771397, at *2 (D.Minn. July 18, 2013) (finding Genesis Healthcare inapposite to a TCPA based putative class action). The majority in Genesis Healthcare noted several differences between collective and class actions, specifically stating Rule 23 cases are “inapposite … because Rule 23 actions are fundamentally different from collective actions under the FLSA.” Genesis Healthcare, 133 S.Ct. at 1529. This lawsuit arises under the TCPA and seeks Rule 23 relief, a distinction explicitly noted in Genesis Healthcare. Therefore, Varitronics’ motion to dismiss is denied.. . .Like the case at bar, Campbell–Ewald is a putative class action alleging violations of the TCPA. Gomez v. Campbell–Ewald Co ., 768 F.3d 871, 873 (9th Cir.2014). After the named plaintiff let a Rule 68 offer lapse, the defendant moved for dismissal, arguing that the personal and putative class claims were moot. Id. at 874. The district court denied the motion and the Ninth Circuit agreed, holding that both the individual and class claims remained in controversy and that Genesis Healthcare did not compel the opposite result. Id. The Supreme Court granted certiorari to consider, among other issues, the following question: “Whether a case becomes moot, and thus beyond the judicial power of Article III, when the plaintiff receives an offer of complete relief on his claim.” Campbell–Ewald Co. v. Gomez, No. 14–857, 2015 WL 241891 (U.S.), Pet. for Writ of Certiorari (i).  Several federal district courts have elected to stay similar proceedings until a decision in Campbell–Ewald is reached. See e.g., Wolf v. Lyft, Inc., No. 15–1441, 2015 WL 4455965, at *2 (N.D.Cal. July 20, 2015); Boise, 2015 WL 4077433, at *5–6; Williams v. Elephant Ins. Co., No. 15–119, 2015 WL 3631691, (E.D .Va. May 27, 2015); Klein v. Verizon Commc’ns, Inc., No 141735 (4th Cir.);3 In re: Monitronics Int’l, Inc., Tel. Consumer Prot. Act. Litig, 13–2493 (N.D.W.Va.).  In resisting a stay, Bais Yaakov identifies cases where the court elected not to impose a stay. See e.g., Chapman, 2015 WL 4652878, at *3; Hooks v. Landmark Indus., Inc., ––– F.3d ––––, ––––, No. 14–20496, 2015 WL 4760253, at *3 n. 6 (5th Cir. Aug. 12, 2015). In Chapman, the Seventh Circuit declined to stay the case in light of Campbell–Ewald. 2015 WL 4652878, at *3. That decision, however, was motivated by the Circuit Court’s desire “to clean up the law of this circuit promptly, rather than require Chapman and others in his position to wait another year for the Supreme Court’s decision.” Id. In Hooks, the Fifth Circuit recognized the pendency of Campbell–Ewald but did not stay the case, noting, however, that “[t]he parties have not requested a stay pending the outcome of that case, and due to the uncertainty of timing and nature of resolution, we ordinarily do not wait in such situations.” Hooks, 2015 WL 4760253, at *3, n. 6. Neither Chapman nor Hook suggest that a stay is inappropriate here. Unlike Chapman, this Court is not in the position of needing to settle uncertainty in the circuit, and unlike Hooks, Varitronics has moved for a stay. . . .Bais Yaakov’s claims of prejudice must be balanced with the preservation of resources and the interests of all parties. The question the Supreme Court is anticipated to answer is likely dispositive of Bais Yaakov’s claims. Waiting until the Supreme Court has ruled may avoid expending unnecessary resources. Furthermore, the stay will be of short duration since the argument in Campbell–Ewald is scheduled to occur in less than two months. In short, although the risk of lost or destroyed evidence is always a concern whenever pending litigation is stayed, the threat here is insufficient to offset the practicalities of staying the case until the Supreme Court provides direction