Class Action and Product Insights for Your Business
February 23, 2016 - False Advertising

New York Federal Court Rejects First Attempt Since Campbell-Ewald to Moot Class Plaintiffs’ Claims

In Campbell-Ewald v. Gomez, __ S.Ct. __ (Jan. 20, 2016), the United States Supreme Court held that a defendant’s unaccepted offer of complete relief did not moot a class plaintiff’s claim or require dismissal of the action.  However, the Court expressly reserved the question of whether the result would be different if “a defendant deposits the full amount of the plaintiff’s individual claim in an account payable to the plaintiff and the court then enters judgment for the plaintiff in that amount.”  Justice Breyer, who joined the majority, suggested at oral argument that this approach would have mooted plaintiff’s claims; Justice Thomas’s concurrence suggested that he might reach a similar conclusion.  The three dissenting justices would have held that the offer alone was sufficient to moot the claim. Campbell-Ewald thus suggested a possible strategy for a defendant to moot a class plaintiff’s claims.

Brady v. Basic Research, L.L.C., Case No. 2:13-cv-7169 (SFJ) (E.D. N. Y. Feb. 3, 2016), a false advertising class action involving a diet supplement, is the first case since Campbell-Ewald to attempt that strategy.  The defendants made a Rule 68 offer of judgment in an amount sufficient to satisfy plaintiffs’ individual claims, and in addition filed a motion and letter seeking permission pursuant to Federal Rule of Civil Procedure 67 to deposit the amount of their offer with the court.  Citing Ray Legal Consulting Group v. DiJoseph, et al., 37 F. Supp. 3d 704, 729 (S.D.N.Y. 2014), Eastern District of New York Judge Sandra Feuerstein noted that Rule 67 is a procedural device intended to provide a place for safekeeping for disputed funds pending resolution of a dispute, not a means for altering the contractual rights of the parties.  The court emphasized Campbell-Ewald’s “directive that a would-be class representative with a live claim of her own must be accorded a fair opportunity to show that certification is warranted,” and concluded that because defendants’ purpose was to moot plaintiffs’ claims rather than to deposit the money for safekeeping, defendants’ motion should be denied.

Brady does not address the situation where a defendant actually deposits the funds into an account payable to the plaintiff or sends the plaintiff a cashier’s check and then asks the court to enter judgment accordingly.