Pitts v. Terrible Herbst: Ninth Circuit Holds that Offer of Judgment for Full Amount Owed to Class Rep. Does Not Moot Class Action

In Pitts v. Terrible Herbst, Inc., --- F.3d ----, 2011 WL 3449473 (9th Cir. 8/9/11) , the plaintiff filed a putative class and collective action under the Fair Labor Standards Act (FLSA) and Nevada state law. Before the plaintiff filed her motion for class certification, the defendant made a Rule 68 offer of judgment for $900, even though the plaintiff claimed only $88 in damages for himself. The plaintiff rejected the offer.

Because Terrible's offer fully compensated Pitts for his individual monetary claim, Terrible filed a motion to dismiss the action for lack of subject matter jurisdiction. Specifically, Terrible argued that its offer of judgment rendered the entire case moot. Following the Fifth Circuit's decision in Sandoz v. Cingular Wireless LLC, 553 F.3d 913 (5th Cir.2008), the district court, in March 2010, held that a Rule 68 offer of judgment does not moot a putative class action so long as the class representative can still file a timely motion for class certification. Nevertheless, the district court then held that Terrible's offer mooted the action because Pitts failed to timely seek class certification.... The court then dismissed the entire action with prejudice for lack of subject matter jurisdiction, entered judgment in the defendant's favor, and ordered Terrible to pay $900 to Pitts and $3,500 to Pitts's attorney.

Slip op. at 1-2.

The Ninth Circuit reversed. Reviewing a line of Supreme Court decisions regarding mootness of class actions, the Court discerned several important principles:

First, if the district court has certified a class, mooting the putative class representative's claim will not moot the class action. [After certification], a defendant may moot a class action through an offer of settlement only if he satisfies the demands of the class; an offer to one cannot moot the action because it is not an offer to all.

Second, if the district court has denied class certification, mooting the putative class representative's claim will not necessarily moot the class action. The putative class representative retains an interest in obtaining a final decision on class certification that allows him to litigate the denial of class certification on appeal.

Third, even if the district court has not yet addressed the class certification issue, mooting the putative class representative's claims will not necessarily moot the class action. “[S]ome claims are so inherently transitory that the trial court will not have even enough time to rule on a motion for class certification before the proposed representative's individual interest expires.” McLaughlin, 500 U.S. at 52 (internal quotation marks omitted). An inherently transitory claim will certainly repeat as to the class, either because “[t]he individual could nonetheless suffer repeated [harm]” or because “it is certain that other persons similarly situated” will have the same complaint. Gerstein, 420 U.S. at 110 n. 11. In such cases, the named plaintiff's claim is “capable of repetition, yet evading review,” id., and “the ‘relation back’ doctrine is properly invoked to preserve the merits of the case for judicial resolution,” McLaughlin, 500 U.S. at 52; see also Geraghty, 445 U.S. at 398; Sosna, 419 U.S. at 402 n. 11. Application of the relation back doctrine in this context thus avoids the spectre of plaintiffs filing lawsuit after lawsuit, only to see their claims mooted before they can be resolved.

Slip op. at 6. Applying these principles to the case at hand, the Court held that "Terrible's unaccepted offer of judgment did not moot Pitts's case because his claim is transitory in nature and may otherwise evade review. Accordingly, if the district court were to certify a class, certification would relate back to the filing of the complaint." Slip op. at 7. The Court reasoned that allowing a defendant to "buy off" a class action by offering to satisfy the named plaintiff's claim would make the matter transitory such that it would evade review. Ibid.

Accordingly, we hold that an unaccepted Rule 68 offer of judgment-for the full amount of the named plaintiff's individual claim and made before the named plaintiff files a motion for class certification-does not moot a class action.

Slip op. at 8.

The opinion is available here.