In Hrivnakv. NCO Portfolio Management, Inc., the defendants used their Rule 68 offer of judgment to argue that a potential class action complaint had become moot. Rule 68 of the Federal Rules of Civil Procedure is designed to facilitate settlement short of a trial. Under it, a defendant can make an offer to settle a claim on certain terms. If the plaintiff doesn’t accept the offer, he must obtain a more favorable result at trial or pay the costs that the defendant incurred after the offer was made. The defendants in Hrivnak offered everything (according to them) that the plaintiff could possibly recover for his claims. But the Sixth Circuit clarified that whether a dispute remains to be litigated depends on what the plaintiff wants, not what the defendant believes the plaintiff is entitled to.
In Hrivnak, the plaintiff alleged that the defendants violated the Fair Debt Collection Practices Act and Ohio consumer-protection law. His complaint requested damages in excess of $25,000 along with injunctive and declaratory relief. Early in the litigation, the defendants made a Rule 68 offer, which proposed paying the plaintiff $7,000 plus an amount for costs and attorney’s fees (to be determined later). The parties then engaged in an interesting round of motion practice. The plaintiff moved to strike the offer, or, in the alternative, certify the class. The defendants opposed but, instead of arguing that the plaintiff could simply reject the offer and bear the consequence, they argued that the offer mooted the case because it satisfied all of the plaintiff’s claims. The defendants explained that the injunctive and punitive damages that the plaintiff requested were not available under the causes of action that his complaint alleged and that he was entitled to only $1,000 per violation of the FDCPA. The district court rejected the defendant’s mootness argument, but certified the question to the Sixth Circuit.
On appeal, the Sixth Circuit explained that “[t]o moot a case or controversy between opposing parties, an offer of judgment must give the plaintiff everything he has asked for as an individual.” The Court declined to engage in an assessment of whether the defendants were correct that they offered the plaintiff everything he could ever hope to recover: “The question is whether the defendant is willing to meet the plaintiff on his terms.” For the Court, the exercise of restraint was necessary to avoid conflating a jurisdictional issue—mootness—and an adjudication on the merits—i.e., what the plaintiff’s claims did and did not entitled him to. The Court observed that there are mechanisms to whittle down the plaintiff’s claims and what he can recover under those claims. For example, the defendants could file a partial motion to dismiss or for judgment on the pleadings to eliminate certain relief from the equation, and, if successful, they may then be positioned to make the same offer that they made previously. But the Court explained that it wouldn’t jump ahead and use a Rule 68 offer to reach those substantive, merits-based issues.
One interesting aspect of the Rule 68 offer and the plaintiff’s rejection that the Sixth Circuit didn’t address was its impact on class certification. As the Court noted, “the offer created a risk that Hrivnak would be hit with all costs later incurred if he failed to obtain more than $7,000 on the merits.” One element of certifying a class requires the plaintiff to show that he can adequately represent the class. This often requires courts to consider whether the plaintiff has some unique interest that would put him at odds with the putative class or potentially lead to him making decisions that are not in the best interest of the class as a whole. Hrivnak’s interest in chasing additional damages and doing better than the offer could put his interests at odds with those of the class. But that remains an issue for another day.