Jan. 20, 2016

U.S. Supreme Court Victory for Consumer Class Actions

Defendants Can’t Escape Class Claims by Offering to Satisfy Only Individual Claims

Note: The U.S. Supreme Court today issued a favorable ruling for consumers in Campbell-Ewald Co. v. Gomez. Public Citizen attorney Scott Nelson served as co-counsel for plaintiffs in the case in the Supreme Court.

WASHINGTON, D.C. – In a much-anticipated ruling, the U.S. Supreme Court today held that a class-action defendant cannot avoid a class action suit by offering to pay damages to the individual named plaintiff who brings the case.

The decision in Campbell-Ewald Co. v. Gomez will eliminate what has become a common defense tactic of using offers of small amounts of money to “pick off” class representatives to avoid facing much larger liability for misconduct aimed at a broad class of victims. The decision will help preserve class actions as a meaningful remedy for wrongdoing that inflicts small to moderate losses on large numbers of people.

The case arose when the Campbell-Ewald Co. sent text marketing messages to thousands of people without their advance consent, in violation of the Telephone Consumer Protection Act (TCPA). When California resident Jose Gomez, who had received a message, brought a class action, the company offered him $1,503 to settle the case, which it said was three dollars more than the maximum amount of money he could receive under the TCPA if he won. After he turned down that offer, the company claimed that the case was “moot” and had to be dismissed even though neither Gomez nor any member of the class had received any compensation for their claims.

The Supreme Court’s ruling today rejected Campbell-Ewald’s claim that it could avoid liability to an entire class just by offering a small sum to one member. The justices held that because a court could still grant Mr. Gomez relief, his claim was not moot, and he must be given a “fair opportunity” to pursue it on behalf of the class as a whole. Any other approach, the court said, “would place the defendant in the driver’s seat” by allowing it to control whether the class action could proceed.

“Today’s decision is a major victory for consumer class actions,” said Scott Nelson, an attorney with Public Citizen who was one of the attorneys representing Gomez in the Supreme Court. “Had the court accepted Campbell-Ewald’s arguments, it would have let defendants escape liability for wrongdoing by cutting off class actions at the knees without paying anyone anything. With this ruling, class plaintiffs have a fair chance to prove their claims in court.”

The case was argued for Gomez in the Supreme Court by Jonathan F. Mitchell, former solicitor general of the state of Texas. Other attorneys for Gomez included Myles McGuire and Evan Meyers of Chicago’s McGuire Law, P.C.; Michael McMorrow of McMorrow Law, P.C., also from Chicago; and David Parisi and Suzanne Havens Beckman of Santa Monica’s Parisi & Havens LLP.

View more information about this case.

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