Campbell-Ewald Co. v. Gomez
193 L. Ed. 2d 571, 2016 U.S. LEXIS 846, 136 S. Ct. 663 (2016)
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Rule of Law:
An unaccepted offer of judgment under Federal Rule of Civil Procedure 68 does not moot a plaintiff's claim because a rejected offer has no legal effect and does not eliminate the controversy between the parties. Additionally, a government contractor is not entitled to derivative sovereign immunity for actions that violate both federal law and the government's explicit instructions.
Facts:
- The United States Navy engaged Campbell-Ewald Company (Campbell), an advertising agency, to develop a recruiting campaign.
- Campbell proposed sending recruitment-focused text messages to young adults between the ages of 18 and 24.
- The Navy approved the campaign on the condition that messages be sent only to individuals who had expressly consented, or "opted in," to receiving such marketing solicitations.
- Campbell contracted with a subcontractor, Mindmatics LLC, to generate a list of cellular phone numbers and transmit the messages.
- In May 2006, Mindmatics sent the Navy's recruiting message to over 100,000 individuals.
- Jose Gomez, who was nearly 40 years old, received one of these text messages.
- Gomez had never consented to receiving marketing text messages on his cellular phone.
Procedural Posture:
- Jose Gomez filed a class-action complaint against Campbell-Ewald in the U.S. District Court for the Central District of California.
- Prior to the deadline for Gomez to move for class certification, Campbell made an offer of judgment under Rule 68 to satisfy Gomez's individual claim, which Gomez did not accept.
- Campbell moved to dismiss for lack of subject-matter jurisdiction, arguing the unaccepted offer mooted Gomez's claim; the District Court denied the motion.
- Campbell then moved for summary judgment on the grounds of derivative sovereign immunity.
- The District Court granted summary judgment for Campbell, holding it was immune as a government contractor.
- Gomez, the appellant, appealed to the U.S. Court of Appeals for the Ninth Circuit.
- The Ninth Circuit reversed the District Court, holding that the unaccepted offer did not moot the case and Campbell, the appellee, was not entitled to sovereign immunity.
- The U.S. Supreme Court granted Campbell's petition for a writ of certiorari.
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Issue:
Does a defendant's unaccepted offer of judgment that would fully satisfy a named plaintiff's individual claims in a class action render the case moot? And is a federal contractor entitled to derivative sovereign immunity from suit for actions taken while performing work for the government?
Opinions:
Majority - Justice Ginsburg
No, a defendant's unaccepted offer of judgment does not render a case moot, and no, a federal contractor is not entitled to derivative sovereign immunity for actions that exceed its authority. An unaccepted settlement offer is a legal nullity with no operative effect, akin to any rejected contract offer. Because Gomez rejected Campbell's offer, the offer was withdrawn under Rule 68(b), the parties remained adverse, and Gomez's claim was not satisfied, leaving a live controversy for the court to resolve. Regarding immunity, the protection afforded to government contractors under Yearsley v. W.A. Ross Constr. Co. does not apply when a contractor violates the government's explicit instructions. The Navy authorized Campbell to send messages only to individuals who had opted in; by allegedly texting non-consenting individuals like Gomez, Campbell exceeded the scope of its authority and cannot claim the sovereign's immunity.
Concurring - Justice Thomas
Yes, the case is not moot, but the majority's reasoning is flawed. The conclusion that an unaccepted offer does not moot a case should rest on the common-law history of tenders, not modern contract law. Under common law, a mere offer was insufficient to end a case; a defendant had to make an unconditional 'tender' by actually producing the full sum owed and admitting liability. Because Campbell only made an offer and did not effectuate a formal tender, it was insufficient to extinguish the court's jurisdiction under the historical principles that inform Article III's 'case or controversy' requirement.
Dissenting - Chief Justice Roberts
Yes, the defendant's offer should render the case moot. The core function of federal courts under Article III is to resolve actual cases or controversies. When a defendant offers to provide the plaintiff with the complete relief sought, the personal stake in the dispute is eliminated, and there is no longer a live controversy for the court to adjudicate. The plaintiff's rejection of an offer for full relief does not create a federal case where one no longer exists; the court's authority ends when the dispute ends, regardless of whether the plaintiff accepts the resolution.
Dissenting - Justice Alito
Yes, the case is moot, joining the Chief Justice's dissent. The key factor is whether it is absolutely clear that the defendant will actually pay the offered relief if the case is dismissed. Because there is no dispute that Campbell, a major company, would have made good on its promise to pay Gomez, its offer of complete relief was sufficient to extinguish Gomez's personal stake in the claim, rendering the case moot. If the defendant's ability or willingness to pay were in doubt, the outcome would be different.
Analysis:
This decision resolved a significant circuit split, establishing a clear rule that prevents defendants in class actions from 'picking off' named plaintiffs with offers of judgment to moot the entire case before a class can be certified. It solidifies the position of class action plaintiffs and removes a powerful defense tactic, especially in cases involving small individual damage claims that are only viable when aggregated. The holding on derivative immunity also clarifies that contractors cannot shield themselves from liability by claiming government authority when their actions directly contravene the government's instructions, thus reinforcing contractor accountability.
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