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Lafollette v. Liberty Mutual Fire Insurance Co.

United States District Court, W.D. Missouri, Central Division

January 9, 2015

ERIC LAFOLLETTE, CAMILLE LAFOLLETTE, DAVID BOND, and REBECCA BOND, individually and on behalf of others similarly situated, Plaintiffs,
v.
LIBERTY MUTUAL FIRE INSURANCE COMPANY, Defendant.

ORDER

NANETTE K. LAUGHREY, District Judge.

Pending before the Court are Plaintiffs' Motion to Strike Offer of Judgment, Doc. 44, and Defendant's Motion to Dismiss, Doc. 55. Plaintiffs' Motion to Strike Offer of Judgment, Doc. 44, is granted. Defendant's Motion to Dismiss, Doc. 55, is denied.

I. Background

This case was originally filed in the Cole County Circuit Court on April 8, 2014. On June 4, 2014, it was removed to this Court. Plaintiffs allege that Defendant violated the terms of their and the putative class members' homeowner's insurance policies by applying a $1000 deductible to the actual cash value payment for the losses to their homes. Plaintiffs ask for compensation for the deductible amounts withheld from the actual cash value payments for damage to their property, a declaration that Defendant breached its contractual obligations, pre-judgment and post-judgment interest, and reasonable attorneys' fees and costs.

In October 2014, Defendant filed notices of its offers of judgment to each of the named Plaintiffs. The offers of judgment were made pursuant to Federal Rule of Civil Procedure 68. The offers stated that Defendant would pay each named Plaintiff $1000 plus pre-judgment interest and costs. The offer did not address the putative class members' claims. Plaintiffs subsequently filed a motion to strike Defendant's offers of judgment, and Defendant filed a motion to dismiss for lack of subject matter jurisdiction.

II. Discussion

A. Defendant's Motion to Dismiss

Following Plaintiffs' denial of Defendant's offer of judgment, Defendant filed a motion to dismiss for lack of subject matter jurisdiction, arguing that as Defendant's offer of judgment provided relief for the entirety of the named Plaintiffs' claims, no case or controversy exists for the Court to exercise its Article III jurisdiction.

A circuit split exists as to whether pre-class certification offers of judgment may serve to moot a putative class action by providing representative plaintiffs the entirety of their requested relief. See Stein v. Buccaneers Ltd. Partnership, 2014 WL 6734819, at *3 (11th Cir. December 1, 2014) (offer did not moot plaintiff's claim); Pitts v. Terrible Herbst, Inc., 653 F.3d 1081, 1091-92 (9th Cir. 2011) (holding that pre-class certification rejection of offer of judgment did not moot the class action); Lucero v. Buearu of Collection Recovery, Inc., 639 F.3d 1239, 1249-50 (10th Cir. 2011) (because "the personal stake of the class inheres prior to certification, " Article III jurisdiction is not extinguished by an offer of judgment to the named plaintiff); Weiss v. Regal Collections, 385 F.3d 337, 348 (3d Cir. 2004) (offer of judgment did not moot case pre-class certification); but see Damasco v. Clearwire Corp., 662 F.3d 891, 896 (7th Cir. 2011) (holding that pre-class certification offer mooted the case); see also Goans Acquisition, Inc. v. Merchant Solutions, LLC, 2013 WL 5408460 (W.D. Mo. 2013) (holding that a pre-class certification settlement offer mooted a pending class action).

The Court concludes that the opinion reached by a majority of circuits addressing the issue, holding that unaccepted Rule 68 offers of judgment do not moot a pending class action, is the better rule. Rule 68 gives a plaintiff fourteen days to accept an offer of judgment made pursuant to the rule, after which time an unaccepted offer is automatically withdrawn and rendered a "legal nullity." See Genesis Healthcare Corp. v. Symczyk, 133 S.Ct. 1523, 1533-34 (2013) (Justice Kagan discussing in dissent that an unaccepted Rule 68 offer of judgment has "no operative effect"). As such, Defendant's offer has lapsed and a justiciable controversy exists over which the Court may exercise its Article III jurisdiction.

Furthermore, Defendant's offer of judgment did not encompass the entirety of the relief sought by Plaintiffs. Defendant cites a slew of authority supporting the contention that after class certification has been considered and denied, a Rule 68 offer of judgment for the entirety of the plaintiff's claim may moot the cause of action. In this case, however, the time for filing a motion for class certification has not yet run out. Plaintiffs' Complaint sets out a putative class action claim. Defendant's offers of judgment provided no relief for the putative class members' claims. As such, a justiciable controversy exists regarding the remainder of the damages Plaintiffs argue they are entitled to, and the claim is not moot. See cases cited infra page 6.

B. Plaintiffs' Motion to Strike

Plaintiffs contend that Defendant's Rule 68 offers of judgment should be stricken because they create an unacceptable conflict between the named plaintiffs and putative class ...


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