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Second Circuit: Action Not Mooted by Rejected FRCP 68 Offer of Judgment

The United States Court of Appeals for the Second Circuit held that a rejected offer of judgment is “a legal nullity” which does not moot an action.

Radha Geismann, M.D., P.C., is a Missouri corporation that received two unsolicited advertising faxes from ZocDoc, Inc., a Delaware corporation. Both faxes required the recipient to call a telephone number to “stop receiving faxes.”

Geismann brought suit in state court in 2014, alleging that the ZocDoc faxes violated the Telephone Consumer Protection Act (TCPA), 47 USC § 227, which prohibits using a “telephone facsimile machine, computer, or other device to send, to a telephone facsimile machine, an unsolicited advertisement.” See: 47 USC § 227(b)(1)(C). The TCPA authorizes a private cause of action for injunctive relief and damages of “actual monetary loss” or $500, for each violation, whichever is greater, “to be tripled at the court’s discretion if the defendant willfully or knowingly violated” the TCPA.

For each violation, Geismann sought between $500 and $1,500 in damages, injunctive relief, prohibiting ZocDoc for sending similar faxes in the future, and costs. Geismann also moved for class certification under Missouri law. “Defendants in class litigation have resorted to making individual settlement offers to named plaintiffs before a class action is certified in an attempt to ‘pick-off the putative class representative and thereby derail the class action litigation,” Geismann noted in the class certification motion.

ZocDoc removed the action to federal court on March 13, 2014. As Geismann warned, two weeks later, ZocDoc made an offer of judgment pursuant to Federal Rule of Civil Procedure (FRCP) 68. ZocDoc offered $6,000 and reasonable attorney’s fees to satisfy Geismann’s individual claims and injunctive relief, prohibiting ZocDoc from engaging in future statutory violations.

Geismann rejected the offer on April 8,2014. Geismann said it would accept only if ZocDoc extended the same offer to all members of the putative class action. ZocDoc declined.

ZocDoc then moved to dismiss, arguing that its offer of judgment mooted the action. The district court granted the motion, finding that “ZocDoc’s offer of judgment not only adds Geismann’s attorneys’ fees, but is twice the trebled amount, and thus more than satisfies any recovery Geismann could make under the applicable statute.” See: Geismann v. ZocDoc, Inc., 60 F.Supp.3d 404, 405-06 (S.D.N.Y. 2014).

While Geismann’s appeal was pending, the United States Supreme Court held in Campbell-Ewald Co. v. Gomez, 511 U.S.___ , 137 S.Ct. 663 (2016) that an unaccepted Rule 68 offer of judgment does not render an action moot. “An unaccepted settlement offer - like any unaccepted contract offer - is a legal nullity, with no operative effect,” the Court held.

The Second Circuit reversed, holding that Campbell-Ewald “controls our review and is dispositive of the case at bar.” Although it found the district court’s conclusion was understandable given the previous lack of clarity in circuit case law, the Second Circuit concluded that “the basis upon which the district court entered judgment did not exist: An unaccepted Rule 68 offer of judgment does not render an action moot.”

See: Geismann v. ZocDoc, 850 F.3d 507 (2nd Cir. 2017).


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