United States District Court, W.D. Missouri, Southern Division
DOUGLAS HARPOOL, District Judge.
Before the Court is Plaintiff's Motion to Strike Defendant's Offer of Judgment (Doc. 5) and Plaintiff's Motion to Expedite Ruling (Doc. 6). Per court order granting Plaintiff's motion for expedited ruling (Doc. 6), Defendant filed an expedited response to Plaintiff's motion to strike (Doc. 11). Plaintiff then submitted a reply in support of his motion (Doc. 17), along with a motion to certify the class and a motion to delay ruling on class certification. Defendant's offer of judgment expired the same day. The Court, after careful consideration of the issues raised and legal arguments provided by the parties, hereby GRANTS Plaintiff's Motion to Strike Defendant's Offer of Judgment (Doc. 5).
Plaintiff filed the present action in the Circuit Court of Greene County, Missouri on August 5, 2014. Plaintiff's petition seeks recovery on behalf of himself and all other similarly situated, pursuant to Missouri Rule of Civil Procedure 52.08. The petition alleges that Defendant sold to its consumers unleaded gasoline that improperly contained diesel fuel at Kum & Go store number 473. Plaintiff alleges that Defendant's faulty gasoline caused damage to his truck and he seeks to recover based on six different legal theories: (1) violation of the Missouri Merchandising Practice Act ("MMPA"), (2) breach of the implied warranty of merchantability, (3) negligence, (4) strict products liability, (5) breach of the warranty of fitness for a particular purpose, and (6) breach of contract. Plaintiff requested that the Court certify the class and award to the plaintiff and class: restitution, punitive damages, reasonable attorney fees, and such other relief as may be just and proper.
Defendant removed this case to federal court on September 5, 2014. On September 12, 2014, Defense counsel served upon Plaintiff's counsel an offer of judgment pursuant to Rule 68 of the Federal Rules of Civil Procedure. Within that offer, Defendant agreed to allow judgment granted in favor of Plaintiff on all counts for a sum of $6, 250, inclusive of attorney fees and costs. The offer of judgment did not address the claims on behalf of the putative class. In response, Plaintiff filed a motion to strike the offer of judgment and an accompanying motion to expedite ruling.
Plaintiff argues, generally, that where a plaintiff brings a class action pursuant to Rule 23 and the court has not yet ruled on class certification, an offer of judgment as to the named plaintiff is improper because it creates a conflict of interest between that person and the putative class. Because "Defendant's offer of judgment is an improper attempt to thwart this class action, " Plaintiff argues the Court should strike the offer. Defendant argues that this Court has previously struck down the rule for which Plaintiff advocates, arguing that within the Western District of Missouri, "an offer of judgment tendered to a putative class representative should be given its normal effect." Defendant further supports its position with the rationale provided by the Supreme Court in Genesis Healthcare Corp. v. Symczyk, wherein the Court held that an FLSA collective action brought by the plaintiff was moot and non-justiciable where the plaintiff conceded her individual claim was mooted by the defendant's offer of judgment.
Offers of judgment are permitted under Rule 68 of the Federal Rules of Civil Procedure. The party served with an offer of judgment has fourteen (14) days to respond. Fed.R.Civ.P. 68(a). An unaccepted offer "is considered withdrawn, but does not preclude a later offer." Fed.R.Civ.P. 68(b). To encourage plaintiffs to carefully consider such offers, the rule provides that if an offeree rejects an offer of judgment and then obtains a judgment less favorable than the unaccepted offer, "the offeree must pay the costs incurred after the offer was made." Fed.R.Civ.P. 68(d).
Courts have continuously struggled to apply Rule 68 in the context of class action litigation. Weiss v. Regal Collections, 385 F.3d 337, 344 (3d Cir. 2004) ("As sound as is Rule 68 when applied to individual plaintiffs, its application is strained when an offer of judgment is made to a class representative.... allowing the defendants here to pick off' a representative plaintiff with an offer of judgment less than two months after the complaint is filed may undercut the viability of the class action procedure, and frustrate the objectives of this procedural mechanism for aggregating small claims"); Lucero v. Bureau of Collection Recovery, Inc., 639 F.3d 1239, 1249 (10th Cir. 2011) (acknowledging tension); Pitts v. Terrible Herbst, Inc., 653 F.3d 1081, 1091 (9th Cir. 2011) (discussing conflicting goals between Rules 68 and 23); see also Marek v. Chesny, 473 U.S. 1, 35 n. 49 (1985) (Brennan, J., dissenting) (discussing potential conflicts between Rules 68 and 23).
While case law now appears settled on how to approach offers of judgment that are made after the court's decision on class certification, courts are divided on how to approach pre-certification offers of judgment. Sosna v. Iowa, 419 U.S. 393 (1975) (holding that where a class is certified it acquires a separate legal status from the named plaintiff and, thus, class action remains justiciable even where named plaintiff's individual claim becomes moot); Hartis v. Chicago Title Ins. Co., 694 F.3d 935, 949 (8th Cir. 2012) (holding that where class certification is properly denied, a court should enter judgment against named plaintiff if the offer of judgment is for plaintiff's entire demand). The Supreme Court expressed concerns about pre-certification offers, stating that:
Requiring multiple plaintiffs to bring separate actions, which effectively could be picked off' by a defendant's tender of judgment before an affirmative ruling on class certification could be obtained, obviously would frustrate the objectives of class actions; moreover it would invite waste of judicial resources by stimulating successive suits brought by others claiming aggrievement.
Deposit Guar. Nat'l Bank v. Roper, 445 U.S. 326, 339 (1980).
A fellow district court recently summarized further why courts are hesitant to apply Rule 68 in pre-certification situations:
There are ordinarily two concerns that motivate a putative class representative to move to strike an offer of judgment. One is subject matter jurisdiction. If the offer of judgment satisfies the individual claim of the putative class representative, this raises a question of whether there is a controversy between the representative and the defendant. Should the offer of judgment render the controversy moot, then the ...