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Saturday, October 19, 2013

Diaz v. First American Home Buyers Protection Corporation: Unaccepted Offer of Judgment Does Not Moot Individual Action

In Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523, 569 US __ (2013) (discussed here), the Supreme Court of the United States "assume[d], without deciding," that an employer's Rule 68 offer of judgment mooted an employee's individual claim in an FLSA putative collective action, even though the plaintiff did not accept the defendant's Rule 68 offer. 

In Diaz v. First American Home Buyers Protection Corporation, ___ F.3d ___ (9th Cir. 10/4/13), the plaintiff filed a putative class action alleging a number of state law claims. The district court dismissed certain claims and denied class certification, and the defendant made a Rule 68 offer of judgment on the remaining individual claims. The plaintiff rejected the offer, and the district court dismissed her claims for lack of subject matter jurisdiction.  

The Ninth Circuit reversed. First, it noted that the issue has not been addressed until now: 
The Supreme Court has yet to address this issue. See Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523, 1528–29 (2013) (“While the Courts of Appeals disagree whether an unaccepted offer that fully satisfies a plaintiff’s claim is sufficient to render the claim moot, we do not reach this question, or resolve the split, because the issue is not properly before us.” (footnote omitted)). Nor have we squarely addressed the issue. In Pitts v. Terrible Herbst, Inc., 653 F.3d 1081, 1091–92 (9th Cir. 2011), we held “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” (emphasis added), but we did not squarely address whether the offer mooted the plaintiff’s individual claim. We assumed that an unaccepted offer for complete relief will moot a claim, but we neither held that to be the case nor analyzed the issue. See id. at 1090–92. In GCB Communications, Inc. v. U.S. South Communications, Inc., 650 F.3d 1257, 1267 (9th Cir. 2011), we noted that a case will “become moot” when “an opposing party has agreed to everything the other party has demanded,” but we did not address the effects of an unaccepted Rule 68 offer, an issue not presented in that case. We therefore treat this as an open question in this circuit.  
Slip op. at 8. 

The Court then turned to Justice Kagan's dissent in Genesis Healthcare and found it persuasive. Slip op. at 10-14. 
We are persuaded that Justice Kagan has articulated the correct approach. We therefore hold that an unaccepted Rule 68 offer that would have fully satisfied a plaintiff’s claim does not render that claim moot. This holding is consistent with the language, structure and purposes of Rule 68 and with fundamental principles governing mootness. These principles provide that “[a] case becomes moot only when it is impossible for a court to grant ‘any effectual relief whatever to the prevailing party.’” Knox v. Serv. Employees Int’l Union, 132 S. Ct. 2277, 2287 (2012) (quoting City of Erie v. Pap’s A.M., 529 U.S. 277, 287 (2000)). Here, once First American’s offer lapsed, it was, by its own terms and under Rule 68, a legal nullity. 
Slip op. at 14. 

Diaz v. First American is available here

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