Argument analysis: Justices struggle over procedures for forcing settlement of class actions
on Oct 15, 2015 at 2:52 pm
SPOILER ALERT: If you’re reading this post to find out what the Justices and counsel had to say about the “derivative sovereign immunity” question Wednesday in Campbell-Ewald Co. v. Gomez (the second of two questions on which the Court granted review), you should stop now. None of the counsel offered a word of argument on that question, and it came up only a single time with a desultory question from Justice Ruth Bader Ginsburg to Jonathan Mitchell, arguing on behalf of respondent José Gomez, just as time expired. We should feel sympathy for the government contracts lawyers who strolled down to the Court yesterday to see what the Justices would think about their problem.
But if you’re reading this post to see how the Justices received the class-action mootness question, you’ve come to the right place. The argument was spirited, even heated at times. And the equal-opportunity gauntlet of pointed questions that confronted all three counsel might lead you to think that the Justices are far from resolving this case. But a little attention to the identity of the questioners suggests that Campbell-Ewald Co. is likely to eke out some sort of victory.
As I explained in more detail in my preview, this case is a follow-on to Genesis HealthCare Corp. v. Symczyk, in which a sharply divided Court held that the mootness of the individual interest of the named plaintiff in a collective action moots the entire case, bringing the collective action to an immediate conclusion, with no opportunity for certification. Among other things, the opinion explicitly rejected the idea that the plaintiff’s interest in pursuing a collective action is sufficient to sustain the adversity of the controversy required by Article III of the Constitution. (I should mention that my perspective on the subject is shaped by my representation of the defendants in Genesis.)
The question before the Court yesterday was the premise from which the Court started in Genesis: whether a defendant’s offer to provide complete relief vitiates the named plaintiff’s controversy. Because the plaintiff in Genesis had conceded that point, the Genesis Court did not reach that question, and so limited its analysis to the propriety of the plaintiff’s interest in class certification being enough to sustain an Article III controversy (it’s not). But the four dissenters did reach the individual mootness question. And on that point, Justice Elena Kagan (joined by Justices Ginsburg, Stephen Breyer, and Sonia Sotomayor) was clear: an unaccepted settlement offer (the focal point of both this case and Genesis) is not enough to moot the plaintiff’s interest in the controversy. Because those four Justices are on record as rejecting the defendant’s position on the question at issue here, the principal question for observers yesterday was whether Gomez, the plaintiff in yesterday’s case, has any chance of attracting a fifth vote from a member of the Genesis majority.
With that background in mind, who could have been surprised at the barrage of questioning Gregory Garre (arguing for contractor Campbell-Ewald) received from Sotomayor, Kagan, and Ginsburg. In Sotomayor’s view, the difference between a voluntary willingness to pay damages and a judicial decree is crucial. As she put it: “What’s an Article III determination is whether [the plaintiff] is entitled to the relief that they asked for. May well be they’re not. But they’re entitled to have the Court say it, not you.” Similarly, Kagan spent much of Garre’s time challenging his claim that long-standing precedent supports his position. And Ginsburg emphasized the language of Federal Rule of Civil Procedure 68: “Rule 68 – says an offer of judgment expires automatically after 14 days if it’s not accepted. … So we have a Federal Rule directly on point, and that instructs litigants what an offer of judgment means. Why do we look any further than that?”
But those hostile remarks all came from members of the Genesis dissent, presumptively a lost cause for Campbell-Ewald. What was noteworthy were the concerns of Justice Anthony Kennedy – a member of the Genesis majority who could provide a fifth vote for Gomez, the plaintiff. He was not at all ready to accept Campbell-Ewald’s contention that an offer itself would moot the case, as long as it in fact promises complete relief: “It seems you want us to write an opinion saying that a settlement offer is equivalent to a judgment … [but] that just doesn’t equate with the Federal Rules of Civil Procedure.” So when Garre sat down, we had no reason to think that he would pry any votes away from the Genesis dissenters, and his hold on Kennedy appeared tenuous.
In the same vein, we learned little from the torrent of hostile remarks that Mitchell faced as soon as he began. Chief Justice John Roberts interrupted Mitchell almost immediately to ask: “If you’re getting everything you want, what is the case or controversy? What is the live dispute in which you have a personal stake? … You won’t take ‘yes’ for an answer!” Similarly, Justice Samuel Alito asked: “Suppose Mr. Garre right now were to take a big stash of cash out of his briefcase, or a certified check and present that to you. Would there be any case left then?” And Justice Antonin Scalia characterized the problem as a lack of adversity: “So even though the parties have no adverseness at all and they all agree on what the outcome should be, … we want a court to go into this matter which we’ve all agreed on because we want a judgment? Is that the Article III adverseness requirement? I think it’s remarkable.”
But those were all comments from the Genesis majority – the Justices least likely to be receptive to Gomez’s praise of the Genesis dissent. What was telling, though, was Kennedy’s quick embrace of the concerns voiced by the Chief Justice:
You’re saying that the plaintiff has an interest in the judgment quite separate from obtaining all the relief that he requests? Let’s assume the case in which asked for $10,000 and $10,000 is deposited in a bank with irrevocable instructions to pay it. What is the concrete injury, as the Chief Justice said, that results in adversity?
Apparently unpersuaded by Mitchell’s response, Kennedy concluded: “[T]here has to be adversity, as the Chief Justice mentioned in the first question. And if $10,000 is in the bank and he’s been injured in the sum of $10,000, there’s no adversity. Other than the stigma of a judgment.”
At first, Kennedy might seem wholly at sea – offering one view to challenge Campbell-Ewald and another to challenge Gomez. But a protracted line of questioning late in the argument from Breyer suggested a middle ground that seems to reconcile Kennedy’s comments. Because Breyer was one of the four Justices who joined Kagan’s dissent in Genesis, he seems certain to be a necessary vote for any ruling in favor of Gomez. Because the colloquy suggests a ruling that as a practical matter would favor Campbell-Ewald, it is the crux of the entire argument, and so warrants a complete description (apologies for the resulting length of the post).
The colloquy began with a seemingly innocuous comment to Mitchell, inquiring about an amicus brief from the AFL-CIO, filed in support of Gomez: “The thing I thought was interesting here, and I wanted to know your position, is the AFL-CIO brief … which is on your side. Do you agree with it?” If you hadn’t read the AFL-CIO brief, you probably would have been surprised to hear Mitchell promptly disavow any agreement with the brief.
But that disavowal only sparked a detailed and laudatory explanation of the brief’s reasoning from Breyer:
Fine [that you don’t agree]. But why not? What they say is that the right way to go about this is … the defendant is supposed to tender the money. And when he tenders the money, if the plaintiff won’t accept it, he goes to the court and he deposits the money in the court. And the court then issues a judgment saying “This case is over.” … [T]hat gets rid of the problem. … It seems to me if it isn’t right, why isn’t it?
When Mitchell responded that “[i]t may be over, but it’s not moot,” Breyer continued to press:
Why? What the judge does is say “They want $10,000.” What the defendant does is he says “They won’t take my check,” which should be certified. So he deposits it in court. … The judge at that point should say “The [plaintiff] has all he wants. The case is over. Good-bye.” And, of course, if that person now has all he wants, he can’t certify this as a class action because he isn’t harmed.
Mitchell stuck to his position that the plaintiff should “get[ a] judgment on the merits in that situation,” but that only made Breyer even more tenacious:
JUSTICE BREYER: Fine. Give him judgment on the merits. Who cares?”
MR. MITCHELL: It’s actually a very important distinction.
JUSTICE BREYER: Why?
MR. MITCHELL: Because many reasons.
JUSTICE BREYER: Well, give me one.
When Mitchell tried to repeat his view that payment in full is merely a defense on the merits – as opposed to a vitiation of the controversy –Breyer refused to be diverted, explaining:
I’m being practical. … And the practical thing is that the defendant wants to pay off the plaintiff by giving him everything he wants. Is there a way to do it? What the [AFL-CIO] say is “Yes, the way to do it is you tender the money in a certified check, and if he won’t take it, pay the money into court.” And the judge then enters a judgment in favor of the plaintiff who has gotten everything he asked for.
Mitchell then tried to accept the point in part, suggesting that he would agree that tendering the money into the court might moot the plaintiff’s interest “apart from class [certification,] which is a more complicated question.” But Breyer was having none of that: “No, it’s not a more complicated question. In my hypothetical, … do you or do you not agree, and if not, why not? The only thing that’s left is you’d like, says the plaintiff, class certification, or at least the lawyer would.” When Mitchell suggested that class certification should be enough to keep the case alive, Breyer shut him down, emphasizing how dubious he found that idea: “Even though there’s been a certified check tendered to the plaintiff and a judgment has been entered saying the case is over because he’s got everything he wants?”
Breyer’s tender-the-money-into-court rule satisfies both of Kennedy’s concerns – that an unexecuted offer seems a slim reed on which to force the termination of litigation, while a plaintiff should not be able to press the case forward in the face of complete satisfaction from the defendant. So Kennedy might be prepared to join an opinion accepting that rule. That would give defendants what they want most – a roadmap for how to definitively end a class action – but it still doesn’t clarify how to dispose of this case. On the one hand, the Court could reverse the Ninth Circuit’s holding that the cessation of the named plaintiff’s interest is not enough to vitiate the entire case, leaving it to the court of appeals to sort out the adequacy of the offer here (which certainly did not include a tender of money into the Court – a point that might motivate a concurrence from those agreeing with Breyer). On the other hand, any Justices sharing Breyer’s views might emphasize the defendant’s failure to complete the offer by tendering the money into court. That failure might justify an affirmance here, but presumably it would not get the plaintiff very far, as the defendant presumably would free such a tender as soon as the case returns to the district court (if not sooner).
In sum, then, I find it pretty unlikely that the Court will go all the way to hold that a defendant has no mechanism for using a concession of liability to end litigation, but remain quite uncertain how this particular dispute will end.
