District Court (Mo.) Allows TCPA Fax Class Action Past the Pleadings Stage; Says Offer of Judgment Did Not Moot Class Action When Pre-emptive Class Cert. Motion Already on File; Court Waffles on “Fail-Safe” Class, but Says Pleadings Stage is Not the Proper Time

In Connector Castings, Inc. v. Joseph T. Ryerson & Son, Inc., 2015 WL 6431704, at *2-3 (E.D.Mo., 2015), Judge Limbaugh allowed a TCPA class action past the pleadings stage.  He rejected the Defendant’s argument that a Rule 68 offer mooted the class.

Plaintiff contends that the offer of judgment was invalid insomuch as plaintiff had on file a motion to certify the class it seeks to represent. Plaintiff also points out that the offer of judgment sets up plaintiff with a conflict of interest between itself and its duties to the class, and plaintiff suggests that Rule 68 is therefore inapplicable to class actions.  The law in this arena—that is, the interplay between a class action complaint, the motion to certify, and an offer of judgment—is evolving. Plaintiff relies on March v. Medicredit, Inc., No. 4:13CV1210 TIA, 2013 WL 6265070, at *3 (E.D.Mo. Dec. 4, 2013), which observed that “the Eighth Circuit has not ruled squarely on the issue of whether the tender and rejection of an offer of judgment prior to a request for class certification moots a class action suit. Indeed, the Circuits are divided on this issue. See, e.g., Warren v. Sessoms & Rogers, P.A., 676 F.3d 365, 372 (4th Cir. 2012) (stating that if plaintiff would have made specific demand for actual damages and the defendants offered that amount or more, the offer of judgment would have mooted plaintiff’s claim); Damasco v. Clearwire Corp., 662 F.3d 891, 896 (7th Cir. 2011) (“To allow a case, not certified as a class action and with no motion for class certification even pending, to continue in federal court when the sole plaintiff no longer maintains a personal stake defies the limits on federal jurisdiction expressed in Article III.”); Pitts v. Terrible Herbst, Inc., 653 F.3d 1081, 1084 (9th Cir. 2011) (holding that a rejected offer of judgment for full amount of a putative class representative’s individual claim under the FLSA made prior to the filing of a motion for class certification does not moot the class action complaint); Lucero v. Bureau of Collection Recovery, Inc., 639 F.3d 1239, 1249 (10th Cir. 2011) (“[A] named plaintiff in a proposed class action for monetary relief may proceed to seek timely class certification where an unaccepted offer of judgment is tendered in satisfaction of the plaintiff’s individual claim before the court can reasonably be expected to rule on the class certification motion.”); Weiss v. Regal Collections, 385 F.3d 337, 348 (3d Cir. 2004) (“Absent undue delay in filing a motion for class certification, …, where a defendant makes a Rule 68 offer to an individual claim that has the effect of mooting possible class relief asserted in the complaint, the appropriate course is to relate the certification motion back to the filing of the class complaint.”).”  March, 2013 WL 6265070, at *2. Notably, one of the cases cited by March has since been overruled. See Chapman v. First Index, Inc., 796 F.3d 783, 787 (7th Cir. 2015) (overruling Damasco, 662 F.3d 891). There, the Seventh Circuit observed that “Settlement proposals designed to decapitate the class upset the incentive structure of the litigation by separating the representative’s interests from those of other class members.” Id. In March, in accordance with that prevailing view, this Court struck an offer of judgment despite plaintiff not having yet filed a motion to certify. March, 2013 WL 6265070, at *3. March further suggested that “putative class action plaintiffs would be wise to immediately file such motions [to certify the class] to protect the class from similar motions to dismiss based on offers of judgment.” Id.   Here, the parties’ disagreement is even simpler than the dispute in March because plaintiff did file a motion to certify the class with each complaint. Defendant contends that the motion to certify is irrelevant because, defendant insists, the putative class has no legal standing until the Court actually certifies the class; that is, it is the Court’s order, not the motion, that triggers standing. Defendant relies upon recent Supreme Court precedent in Genesis Healthcare Corp. v. Symczyk, 133 S.Ct. 1523, 1532 (2013) for that proposition. In that case, the Court held that the plaintiff’s Fair Labor Standards Act suit had been appropriately dismissed for lack of subject matter jurisdiction where an offer of judgment provided her with full relief. Id. at 1528–29. That case, however, involved whether a plaintiff’s action under the Fair Labor Standards Act remained justiciable after an unaccepted Rule 68 offer fully satisfied plaintiff’s claim, rendering plaintiff’s claim moot, and no other claimants had opted in. Id. The Court was clear, however, that the FLSA collective action case was “fundamentally different” from class actions arising under Federal Rule of Civil Procedure 23. Id. at 1529. Further, the Genesis Court held that in “the absence of any claimant’s opting in, respondent’s suit became moot when her individual claim became moot, because she lacked any personal interest in representing others in this action.” Id. As this Court held in March, “the Genesis case is inapposite to the present Rule 23 class action complaint.” 2013 WL 6265070, at *2. Indeed, the plaintiff in Genesis had no hope of representing others in her collective action because the opt-in period was over, and her claim was rendered moot by the offer of complete relief to her claim; that is not true here.  This Court agrees with the majority of courts that have rejected the mootness argument in the class action context. Seeid. at *3 (collecting cases). “The sound rationale behind these cases is that Defendant should not be able to use offers of judgment to thwart class actions.” Id. Although defendant may be technically correct that this Court may not strike a pleading that has not been filed, the Court holds that the offer of judgment does not render plaintiff’s case moot or subject to Rule 12(b)(1) dismissal.

The Court also found that a motion to strike the class allegations at the pleadings stage was premature, but suggested in dicta that the class definition could simply be revised to address any defects.

defendant argues that plaintiff has defined its class as a “fail safe” class, meaning “one that is defined so that whether a person qualifies as a member depends on whether the person has a valid claim on the merits.” Id. at *6 n.7, (quoting Lindsay, 2013 WL 275568, at *4 (quoting Messner v. Northshore Univ. HealthSystem, 669 F.3d 802, 825 (7th Cir. 2012))). As this Court has observed, however, “there is some debate within the federal courts as to whether a ‘fail-safe class’ is inherently problematic, and the Eighth Circuit has not weighed in on this debate.” St. Louis Heart Ctr., 2013 WL 1076540, at *6 n.7.  Although defendant is correct that some “junk fax” cases are not appropriate for certification, others are and have been certified. Compare Hinman v. M & M Rental Ctr., Inc., 545 F.Supp.2d 802, 807 (N.D.Ill.2008) (certifying class in case brought under TCPA where fax broadcasts at issue were sent en masse to recipients identified on list of phone numbers) and CE Design, Ltd. v. Cy’s Crabhouse North, Inc., 259 F.R.D. 135 (N.D.Ill.2009) (involving “blast faxing” in which more than 7,000 faxes were delivered on behalf of the defendant in a nine-day period) with Saf–T–Gard Int’l, Inc. v. Wagener Equities, Inc., 251 F.R.D. 312, (N.D.Ill.2008) (declining to certify class in case brought under TCPA where “there appears to be no list of numbers from which the parties (or the court) may reasonably assume class members could be identified” and “[i]t is unclear from the parties’ submissions whether [a third-party marketing company engaged by the defendant] would have any records that may reveal the intended recipients of the fax”) (emphasis in original). Critically, as defendant itself points out (# 45 at 2) the Court must look to evidence to make that determination. Here, there has been no discovery, nor even an answer filed by defendant. Defendant implores the Court to look to the declaration it filed with its motion to strike, but to do so at this early stage would be improper. Walker v. World Tire Corp., 563 F.2d 918, 921 (8th Cir. 1977) (“The propriety of class action status can seldom be determined on the basis of the pleadings alone.”).