A Question of Constitutional Interpretation in the Post-Campbell-Ewald Era

Supreme Court

Though it is the majority opinion of a U.S. Supreme Court decision that creates precedent, the dissent, if done correctly, can still potentially have influence on lower court decisions in similar cases. Also, what is not said can often lead to even more legal headaches down the road.

As is typically the case of a U.S. Supreme Court decision with a narrow ruling, several issues were left in limbo by the majority opinion in Campbell-Ewald Co. v. Gomez, 2016 BL 14352 (2016). For one, how much credence should the lower federal courts give Chief Justice John Roberts’ dissent regarding the methods outlined that could potentially moot the Article III issue described in my last blog posting?

In addition, the issue of due process comes to mind. If the named plaintiff(s) are able to have their individual claims mooted as described by Chief Justice Roberts, what becomes of the claims of the other unnamed class members (Rule 23) or the potential opt-in collective action members (FLSA) who have not yet had a chance to decide whether or not they want to participate in the legal action?

In this second part of a two-part Q&A blog series, I turn back to James N. Boudreau, the Chair of the Labor & Employment Practice's Class and Collective Action Group at Greenberg Traurig, LLP, and Prof. Ruben J. Garcia, the faculty advisor for the law student chapter of the American Constitution Society at the University of Nevada Las Vegas, to discuss these issues.

Bloomberg BNA: How likely are the federal courts to adopt the Campbell-Ewald dissent’s Article III argument in situations where the defendant employer takes the step of placing the monetary amount in an account payable to the plaintiff (or some similar vehicle)? 

Boudreau: So far, district courts are seemingly suspicious of defendants’ renewed efforts to moot claims post-Campbell-Ewald. Some themes are emerging, however, and defendants who want to maximize their chance of mooting claims would be well advised to tender cashier’s checks, move for the entry of judgment in favor of plaintiff (over the plaintiff’s objection), and avoid trying to deposit the funds into court.

In three instances since the Supreme Court issued its ruling, district courts have addressed a defendant’s attempt to moot a claim by depositing (or at least trying to deposit) the funds into a court for dispersal to the plaintiff. In each instance, the district court rejected the idea and declined to dismiss the complaint. 

However, in Leyse v. Lifetime Entertainment Services LLC, 2016 BL 111605 (S.D.N.Y. Mar. 17, 2016), the district court did dismiss the case where the defendant presented the plaintiff with an offer of full relief (which then plaintiff ignored) and then moved the court to enter judgment in favor of the plaintiff, over the plaintiff’s objection.

Additionally, in Price v. Berman’s Automotive Inc., 2016 BL 85592 (D. Md., Mar. 21, 2016), the District of Maryland ruled that the defendant’s tender of a cashier’s check to the plaintiff in the full amount of any potential recovery would moot the case, which was a putative class action.

Garcia: The risk with any decision like this is that federal courts may be quite inclined to see the step of placing the funds in an escrow account, whether with them or a third party, as a further step by the defendant to try to settle the case and be very hard on named plaintiffs who do not accept what they deem complete relief. In other words, it might be a convenient way to clear complex litigation from their dockets. There should probably be a hearing on why the tendered funds are not complete relief, but some district courts may feel they can decide what complete relief should be without a hearing, as was arguably the case in Campbell-Ewald (fixed treble statutory damages under the Telephone Consumer Protection Act).

Bloomberg BNA: Could the issue of due process rights, particularly in the case of potential opt-in plaintiffs in an FLSA collective action, be an issue in such a situation going forward?

Boudreau: I do not believe the due process rights of putative opt-in claimants in FLSA cases is likely an issue going forward as I believe the Supreme Court effectively rejected such concerns in Genesis HealthCare.

That said, there is no doubt that the Supreme Court will have to answer the question of how might the existence of an alleged, but not yet certified, putative Rule 23 class impact the Article III analysis. Specifically, if a defendant successfully moots the claim of a named plaintiff in a putative Rule 23 class action, does the existence of the potential Rule 23 class – by itself – preclude the court from dismissing the case, at least without taking some steps to protect whatever rights the putative Rule 23 claimants might have by virtue of the already filed complaint? There is ample case support for the idea that a putative Rule 23 class does not create any interests sufficient to prevent dismissal of an otherwise moot case, but the Supreme Court avoided that very question in Genesis HealthCare.  Indeed, much of this question seems answered by Genesis HealthCare, but clearly awaits further explanation from the Supreme Court. 

I would argue that this discussion ultimately means that the mere existence of a Rule 23 class, before any certification decision has been rendered, does not provide the named plaintiff whose individual claim is moot with any ongoing stake sufficient to let the case move forward.  That said, I am concerned that some district courts post-Campbell-Ewald are interpreting that decision in a contrary way, to imply that a would-be class representative must be accorded a fair opportunity to show that class certification is warranted, meaning that any putative class action cannot be dismissed until a certification decision is rendered. This is simply not the case, and defense lawyers will likely be litigating for years to come to establish as much.

Garcia: All of this tends to be more of a problem for uncertified opt-out classes than ones that have gone through the certification process or are opt-in collective actions under the FLSA. If the class has been certified, and all named plaintiffs are offered complete relief, plaintiffs’ counsel will be able to get other plaintiffs to step in the shoes of those who have been offered complete relief and to keep the Court’s jurisdiction. If it is an opt-in collective action under the FLSA, then other plaintiffs who have not been offered complete relief can keep the case alive after class certification.

This is why this will tend to be less of an issue in FLSA cases, but also a reason for plaintiffs’ lawyers to move as quickly as possible for class certification! In the end, though, the majority opinion in Campbell-Ewald should serve for some time to cast doubt on this strategy by defense counsel to defeat class actions.

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