Take Care When Crafting an Offer of Judgment

In Compressor Eng’g Corp. v. Thomas, Case No. 10-10059, 2015 U.S. Dist. LEXIS 20079 (E.D. Mich. Feb. 19, 2015), Defendant Charles Thomas Jr. sought to moot the claim of Plaintiff Compressor Engineering Corporation (“Compressor”) by making an offer of judgment for $1,500, the maximum statutory award for a single violation of the TCPA.

Compressor filed suit after receiving an allegedly unsolicited fax and sought to certify a class of “[a]ll persons that are holders of telephone numbers to which a facsimile transmission was sent on behalf of Defendant advertising the goods or services of Defendant at any time from August 13, 2005 to present….” Id. at 4. In addition to seeking monetary damages, Compressor also sought injunctive relief.

After Judge Borman denied Thomas’s motion to dismiss under Rule 12(b)(6), Thomas served Compressor with an offer of judgment for $1,500 and “the cost of the action and the reasonable attorney fee[s] incurred through the date of this offer as determined by the Court.” Id. at *7. When Compressor failed to respond, Thomas moved to dismiss the case again, this time arguing under Rule 12(b)(1) that the court lacked jurisdiction because the offer of judgment mooted Compressor’s claim. Id. at *8.

Judge Borman disagreed. He began by noting the existence of a Circuit split surrounding the question of whether an offer of judgment could moot a class action. See id. at *8 (discussing the Supreme Court’s holding in Genesis Health Care Corp. v. Symczk, 133 S. Ct. 1523 (2013)). Judge Borman found that Thomas’s offer did not moot the case because he did not offer any injunctive relief. Id. at *14. Relying on deposition testimony and a report showing that there was only one fax, Thomas argued that the request for injunctive relief was meritless because the violations would not recur. Id. at *14. Judge Borman rejected that argument because he believed it would oblige him to “improperly determine the merits of Plaintiff’s injunctive claim.” Id. at *17; see also id. at *14-15 (“it appears that Defendant Thomas is attempting to argue that Plaintiffs injunctive relief is a request without merit.”). The Court therefore denied Thomas’s motion and found that this offer of judgment “failed to satisfy Plaintiffs “entire” demand. Id. at *21.

Judge Borman’s opinion serves as a warning to defendants that seek to moot a named plaintiff’s claim through an offer of judgment. To moot a named plaintiff’s claim and potentially deprive a court of subject matter jurisdiction over the claims of the putative class, defendants must ensure that the offer of judgment provides the named plaintiff with complete relief.

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