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Big Business Could Shut Down Class-Action Suits With One Weird Trick

The Huffington Post The Huffington Post 15/10/2015 Cristian Farias
POLITICS © Alex Wong via Getty Images POLITICS

WASHINGTON -- Chances are you've received annoying, unsolicited text messages before. Chances are you've never taken the sender to court over the nuisance.

José Gómez did once, and he went for broke: He aimed to form a class action against the alleged mass texter, hoping to convince a federal court to make it pay dearly for violating federal law

The U.S. Supreme Court on Wednesday heard arguments in Campbell-Ewald Co. v. Gómez -- a quirky, low-profile case that's about much more than undesired text messages. A ruling against Gómez could have wide-reaching implications for class-action lawsuits and access to justice more generally.

It all began with this offending text message:

Destined for something big? Do it in the Navy. Get a career. An education. And a chance to serve a greater cause. For a FREE Navy video call [number].

In his lawsuit, Gómez said he never "opted in" to receiving the text from Campbell-Ewald, a Navy contractor hired to provide "multimedia recruiting campaign" services. That seemed to be a bit much for Gómez, who, as a 40-year-old, said he was too old to be targeted anyway.

So he sued, seeking the formation of a class action of "other unconsenting recipients of the Navy’s recruiting text messages," plus damages under the federal Telephone Consumer Protection Act. After some legal wrangling, the Navy contractor offered Gómez a settlement in hopes of making the whole thing go away: $1,503 for the unwanted text message, or about three times what federal law allows for these kinds of violations. 

Unmoved, Gómez refused the offer by letting it expire. But then the Navy contractor did something amazing. It told the federal court hearing the dispute that Gómez's rejection "mooted" the case because there wasn't any controversy left to decide -- in other words, that there was nothing the court could do for Gómez that would make him whole, so the case should be thrown out. And if the case is thrown out, the company argued, so should Gómez's attempt to link with other disgruntled spam recipients in a big class action later on.

A federal appeals court in California rejected Campbell-Ewald's arguments. And on Wednesday, the Supreme Court heard from lawyers on both sides in the case, which may again reveal to what extent the court is willing to shut the courthouse door to everyday plaintiffs to the benefit of corporate defendants, which typically have greater resources to fight lawsuits and resist class-action liability.

Before the justices, the Navy contractor once again insisted Gómez was given "complete relief" in the settlement offer -- the $1,503 -- and his rejection meant the case should be tossed.

That argument greatly confused Justice Sonia Sotomayor.

"You get to say on your own, unilaterally, 'I offered you complete relief.' Even though, right or wrong, the plaintiff is asking for" something completely different, Sotomayor told the lawyer for Campbell-Ewald. “You, without any judicial interpretation or intervention, get to moot out the case on your own terms."

Under the Constitution, mootness matters because federal courts can only hear actual “cases” or “controversies” that can be resolved by a judgment that will have real consequences. If a case is moot, there's nothing to resolve, and courts must dismiss it.

With a simple hypothetical, Justice Elena Kagan laid out why that requirement poses problems for Campbell-Ewald.

"Let's say that there's a plaintiff, and ... he wants $10,000 plus attorneys' fees, OK?" she said in her conversational style. "And the defendant said, 'I'll give you $10,000.' And the plaintiff says, 'No, I really want attorneys' fees, too.' And the defendant says, 'No, you're not entitled to attorneys' fees.' And the plaintiff says, 'No, I think I am. I think I'm going to reject your settlement offer.'"

That would mean there’s still a “live” controversy, and that’s how Kagan went straight to the crux of what the Supreme Court will be deciding: "So at that point, the court can come in and say, 'Your case is moot'?," she asked.

That went largely unanswered by Campbell-Ewald's lawyer, perhaps with good reason. But the inquiry inspired a joke by Justice Antonin Scalia, who wondered whether people like Gómez might then be tempted, in future lawsuits, to "ask for the key to Fort Knox" or "ask for a unicorn" -- implying that no good-faith offer to settle a case will ever be acceptable to them, which in turn would force protracted class-action battles against hapless defendants. 

Beyond those concerns, which Kagan called "frivolous" and "trivial," there's a real reason why the answer to her question matters for class-action lawsuits. Under federal law, every class action begins with someone like Gómez: a person who is willing to step up and sue on behalf of many others who will join his legal cause in the near future. He is the class representative -- the ringleader whose "injury" under the law must represent the injuries of all other prospective class members. 

But under court rules, the very process of certifying a class -- which happens at the front-end of the litigation -- can be lengthy, onerous and very expensive. If Gómez doesn't stay the course, runs out of money or simply buckles and accepts an offer to settle the case before the class becomes official, the whole class action falls apart. Someone else would then have to step into the shoes of the class representative, and not everyone is up to the task.

This explains why Campbell-Ewald wants the money offer to "moot" the case -- a strategy that Gómez’s lawyers have said would “decapitate” the class-action case, since there would be no one to lead it. It’s creative argument that a number of business groups -- including the U.S. Chamber of Commerce -- have supported in a series of court filings backing Campbell-Ewald.

To counter it, it may very well fall on Kagan to convince a majority of the justices that Gómez needs to prevail.

In a 2013 case dealing with a collective action for stolen wages under the Fair Labor Standard Acts, Kagan had dire words for the five conservative justices who ruled against a health care worker who declined to accept a $7,500 settlement offer from her employer. The court said the worker’s claim was moot and dismissed both the case and the collective action, which effectively sent her home empty-handed. This was nonsense to Kagan, and she warned every court in the country that they’d be foolish to follow a ruling with no practical grounding in how litigation ought to work in real life.

“The majority’s decision is fit for nothing,” Kagan said. “Aside from getting this case wrong, it serves only to address a make-believe problem.”

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