Supreme Court’s Momentous Decision Bolsters Consumer Class Actions

United States Supreme Court BuildingPrologue: On June 5, 2015, I had the privilege of writing an article for this blog entitled To Moot or not to Moot. In the article, I analyzed Tanasi v. New Alliance Bank,[i] in which the Court of Appeals for the Second Circuit affirmed that a District Court maintains jurisdiction when a Plaintiff’s individual claims are not moot at the time the District Court denies a defendant’s motion to dismiss.[ii] This was despite the fact that the Tanasi defendants made a Rule 68 Offer of Judgment[iii] to Plaintiff for full relief on his individual claims. As noted in the prior article, the Second Circuit expressly declined to rule on the certified question as to whether the plaintiff’s putative class action claims, brought pursuant to Rule 23 of the Federal Rules of Civil Procedure,[iv] provided an independent basis for Article III standing (e.g., having a case or controversy before the court).

Abridged Summary of Facts

Yesterday, the Supreme Court of the United States, in Campbell-Ewald Co. v. Gomez,[v] resolved the disagreement among the Courts of Appeals over whether an unaccepted Offer of Judgment can moot claims made by a putative class action plaintiff, thereby depriving federal courts of Article III jurisdiction. Here, Gomez filed a putative class action lawsuit against Campbell-Ewald Co. (Campbell), a nationwide advertising and marketing communication agency, under the Telephone Consumer Protection Act (TCPA)[vi]. In response, Campbell offered to pay Gomez his costs, excluding attorney’s fees,[vii] and $1,503 per message for the text messages at issue and any other text message Gomez could show he had received, thereby fully satisfying plaintiff’s personal treble-damages claim. Additionally, Campbell proposed a stipulated injunction in which it agreed to be barred from sending text messages in violation of the TCPA.


Even though Campbell offered to pay the maximum amount that Gomez could recover under the TCPA,[viii] the Court found that “[a]s long as the parties have a concrete interest, however small, in the outcome of the litigation, the case is not moot.”[ix]  Undeterred by the fact that the phrase “concrete interest” is simply not concrete, Justice Ginsburg, in delivering the opinion of the majority, also chose to rely on “principles of contract law,” finding that “a would-be class representative with a live claim of her own must be accorded a fair opportunity to show that certification is warranted.” In his dissenting opinion, Chief Justice Roberts speaks directly to this point, stating “Gomez does not have standing to seek relief based solely on the alleged injuries of others, and Gomez’s interest in sharing attorney’s fees among class members or in obtaining a class incentive award does not create Article III standing.”

In essence, the majority’s decision allows a putative class plaintiff to seek redress for an alleged injury, even after the defendant agrees to fully redress that injury. Undoubtedly, self-proclaimed consumer attorneys are applauding this decision. However, many of you reading this are painfully aware that thousands of lawsuits are filed each year against law-abiding businesses that thought they were taking the right precautions to stay within the law. Unfortunately, this decision may serve to strengthen vexatious litigation tactics regularly used for the sole purpose of increasing the fees and costs associated with protracted litigation.

On the Moderately Bright Side

As expressed by Justice Alito in his dissenting opinion, “[the Court’s] decision thus does not prevent a defendant who actually pays complete relief—either directly to the plaintiff or to a trusted intermediary—from seeking dismissal on mootness grounds.” In fact, the Court did not decide “whether the result would be different if a defendant deposits the full amount of the plaintiff’s individual claim in an account payable to the plaintiff, and the court then enters judgment for the plaintiff in that amount.” Therefore, claims made by a plaintiff may still be automatically mooted by an unaccepted Rule 68 Offer of Judgment, thus insulating defendants willing to consent to judgment for full relief against incurring the costs of further litigation in an individual action. However, for the Offer of Judgment to be successful – as noted by Justice Alito, “the majority raises the possibility that a defendant must both pay the requisite funds and have the court enter judgment for the plaintiff in that amount.”


Because an unaccepted Offer of Judgment has no force (in this context), it is no longer an open question of law as to whether a putative class action claim under Rule 23 independently provides for Article III justiciability. On the other hand, the reallocation of risk effectuated through properly applying Rule 68 is still a powerful litigation tool. This especially applies to the archetypal statutory consumer case where class action pleadings are used for leverage rather than in anticipation of actual certification.

The information and materials in this article are provided for general informational purposes only and are not intended to be legal advice. The law changes frequently and varies from jurisdiction to jurisdiction. Being general in nature, the information and materials provided may not apply to any specific factual and/or legal set of circumstances. No attorney-client relationship is formed, nor should any such relationship be implied. Nothing here is intended to substitute for the advice of an attorney, especially an attorney licensed in your jurisdiction. 

by Scott E. Wortman, Partner Warshaw Burstein, LLP

555 Fifth Avenue, New York, NY 10017,  attorney profile


Direct Telephone:  212-984-7723 , Cell phone: 646-709-6408, Facsimile: 212-972-9150

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[i] Tanasi v. New Alliance Bank, 786 F.3d 195 (2d. Cir. 2015)

[ii] Since the district court had not yet entered judgment against the defendants when it reached its decision on the motion to dismiss, the court maintained Article III subject matter jurisdiction over the case regardless of Tansi’s putative class action claims. Id.

[iii] Federal Rule of Civil Procedure 68(a) provides that at least fourteen (14) days before trial, a “party defending against a claim may serve on the opposing party an offer to allow judgment on specified terms, with costs then accrued. If, within fourteen (14) days after being served, the opposing party serves written notice accepting the offer, either party may then file the offer and notice of acceptance . . . . The clerk must then enter judgment.” Although, [a]n unaccepted offer is considered withdrawn . . . [i]f the judgment that the offeree finally obtains is not more favorable than the unaccepted offer, the offeree must pay costs incurred after the offer was made.” Fed. R. Civ. P. §§ 68(b), 68(d).

[iv] Rule 23 governs the procedure and conduct of class action suits brought in Federal courts.

[v] Campbell-Ewald Co. v. Gomez, 577 U.S. ____ (2016), No. 14-857 (S.Ct. January 20, 2016)

[vi] 42 U.S.C.S. § 227

[vii] The TCPA does not contain a statutory fee shifting provision.

[viii] $1,500.00 per text message, plus the costs of filing suit.

[ix] Citing, Chafin v. Chafin, 133 S.Ct. 1017, 1021, 185 L.Ed.2d 1 (2013)

Take Back Control through Rule 11 of the Federal Rules of Civil Procedure

Take Action on Direction Sign - Green Arrow on a Grey Background.

In an attempt to reorganize my personal library, I stumbled upon some sociology textbooks dating back to my college years. While reading through a chapter on learned helplessness[i], I couldn’t help but anecdotally ponder the question as to whether members of the Credit and Accounts Receivable Management Industry are experiencing some form of organizational learned helplessness. The industry is in a twilight zone of sorts, finding itself up against inflexible and powerful bureaucratic forces that are demanding monies and unrealistic obedience to cure-findings that haven’t actually been found, while also combatting metastasizing myths that are not rooted in empirical reality. With that being said, there is an established method for unlearning helplessness, which is to change perception by taking back control.

An on-point application of this technique is to maintain a firm stance against helplessness by fighting frivolous claims and attempted exploitation. Even though this idea or ideal might sound like superficial and clichéd motivational dogma, it is actually consistent with findings by courts around the country that are beginning to see the light. It should come as no surprise that these positive court findings are undoubtedly connected with individual members of the industry taking a principled stance against helplessness by fighting frivolous claims. Point being, while a basic cost-benefit analysis may consistently lead to the conclusion that it’s simply less expensive to pay nuisance value for an entirely manufactured action, this analysis might be shortsighted, because it does not take into account all potential variables, for example the effect on the industry at large and the possibility for a positive shift in perception by refusing to give credence to the surreal. To further this point, just recently, the federal court with quite possibly the highest number of consumer lawsuits in the country, noted the following:

“In this Court…and I suspect in many others, the use of the [FDCPA] has evolved into something quite different than its original purpose would suggest….Frequently, these cases are brought on behalf of the same debtor-plaintiffs, who seize on the most technical alleged defects in collection notices or telephone communications, often raising claims of ‘confusion’ or ‘deception’ regarding practices as to which no one, not even the least sophisticated consumer, could reasonably be confused or misled. These cases are often brought for the non-salutary purpose of squeezing a nuisance settlement and a pittance of attorneys’ fees out of a collection company, which it will often find cheaper to pay than to litigate….The collection company in this case did everything by the book, and yet has still found itself a defendant in an FDCPA action.”[ii]

 Just in the last year, there have been some interesting case developments with companies affirmatively and successfully using Rule 11 of the Federal Rules of Civil Procedure,[iii] which stands as the ne plus ultra of deterrent sanctions. To better understand this possible shift in perception, I reviewed a random sample of 15 FDCPA cases containing Rule 11 filings by respective defendants within the last year.[iv] This does not account for effectively using a Rule 11 letter to compel a voluntary dismissal of an objectively frivolous lawsuit, nor does it account for other sanctions powers, such as vexatious litigation,[v] discovery sanctions,[vi] pretrial conference sanctions[vii] and the Inherent Power of the Court to issue applicable sanctions.

However, this article would not be complete without mentioning the recent victory out of the Northern District of Texas, in which the defendant went all the way to trial and beyond to expose what amounted to a shakedown by a massive multi-state “consumer attorney” operation.[viii] While the defendant strictly requested discovery sanctions[ix] and sanctions for vexatious conduct,[x] the court found that “[plaintiff’s attorneys] effected a fraud on the Court through evasion, prevarication and outright lies, in an attempt to avoid negative legal consequences against them and their firm…,” and used the Inherent Power of the Court to deliver three-year suspensions to the plaintiff’s attorneys. Once again, it goes without saying that this result would not be possible without the defendant’s decision to decisively defend against frivolous allegations and attempted exploitation.

In reviewing the random sample of cases, I was surprised to see that Rule 11 sanctions were actually granted in 6 out of the 15 cases, and I was even more surprised as to the considerate and at times sympathetic tone of the courts throughout the country in cases where sanctions were denied for mostly technical reasons.

In cases where sanctions were granted, courts found various abuses by plaintiffs and their attorneys in reaching a determination that Rule 11 was a proper deterrent to prevent against future misconduct. See:

  • Shetiwy v. Midland Credit Mgmt., a finding that plaintiffs’ attorney has brought numerous meritless claims;[xi]
  • Duncan v. CitiMortgage, Inc., the11th circuit upholding a finding of Rule 11 sanctions, due to a lack of factual basis in the complaint and the plaintiff’s failure to address why individual defendants were included, despite having multiple opportunities to do so;[xii]
  • Farley v. Bank of Am., N.A., a holding that courts have the authority to protect defendants from the harassment of frivolous and vexatious lawsuits, and to protect themselves from having to process frivolous and repetitive papers;[xiii]
  • Tacoronte v. Cohen, entering an order for Rule 11 sanctions, as the plaintiff’s claims were frivolous, presented for the improper purpose of harassment, and asserted without evidentiary support);[xiv] and
  • Diaz v. First Marblehead Corp, finding bad faith where the plaintiff’s attorney knew his client’s claim was frivolous and still chose to pursue it.[xv]

In conclusion, in arrogating to themselves the power to determine guilt without perceived consequence, some attorneys and regulators claiming to represent consumers have done everything possible to usurp the role of the court as the fundamental arbiter of justice. To this point, I’m not advocating for expending gratuitous monies on every case or for a letter threatening litigation, but if a matter is unequivocally objectively frivolous, I do advocate that we Take Back Control.

by Scott E. Wortman, Partner Warshaw Burstein, LLP

555 Fifth Avenue, New York, NY 10017,  attorney profile


Direct Telephone:  212-984-7723 , Cell phone: 646-709-6408, Facsimile: 212-972-9150


[i] By way of example, see

[ii] Huebner v. Midland Credit Mgmt., 2015 U.S. Dist. LEXIS 16677 (E.D.N.Y. Feb. 11, 2015)

[iii] Rule 11(b): By presenting to the court a pleading, written motion, or other paper—whether by signing, filing, submitting, or later advocating it—an attorney or unrepresented party certifies that to the best of the person’s knowledge, information, and belief, formed after an inquiry reasonable under the circumstances: (1) it is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation; (2) the claims, defenses, and other legal contentions are warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law; (3) the factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support after a reasonable opportunity for further investigation or discovery; and (4) the denials of factual contentions are warranted on the evidence or, if specifically so identified, are reasonably based on belief or a lack of information.

[iv] Hopkins v. Capital One Bank, USA, N.A., 2015 U.S. Dist. LEXIS 8346 (W.D. Wis. Jan. 26, 2015); Bernard v. MGC Mortg., Inc., 2015 U.S. Dist. LEXIS 47818 (W.D. Tex. Apr. 10, 2015); Justice v. Gemini Capital Group, LLC, 2015 U.S. Dist. LEXIS 60623 (D. Colo. May 8, 2015); Kniley v. Citibank, N.A., 2015 U.S. Dist. LEXIS 53021 (N.D. Cal. Apr. 22, 2015); Wood v. Citibank, N.A., 2015 U.S. Dist. LEXIS 73067 (M.D. Fla. June 4, 2015); Mulato v. Wells Fargo Bank, N.A., 2014 U.S. Dist. LEXIS 176404 (N.D. Cal. Dec. 19, 2014); Dicion v. Mann Mortg., LLC, 2014 U.S. Dist. LEXIS 159675 (D. Haw. Nov. 10, 2014); Schwantes v. Monco Law Offices, 2014 U.S. Dist. LEXIS 116532 (D. Minn. Aug. 21, 2014); Rojas v. Forster & Garbus LLP, 2014 U.S. Dist. LEXIS 105780, 2014 WL 3810124 (E.D.N.Y. July 31, 2014); Shetiwy v. Midland Credit Mgmt., 2014 U.S. Dist. LEXIS 104244, 2014 WL 3739512 (S.D.N.Y. July 28, 2014); Huebner v. Midland Credit Mgmt., 2015 U.S. Dist. LEXIS 16677 (E.D.N.Y. Feb. 11, 2015); Duncan v. CitiMortgage, Inc., 2015 U.S. App. LEXIS 10111 (11th Cir. Ga. June 16, 2015); Farley v. Bank of Am., N.A., 2015 U.S. Dist. LEXIS 75972 (E.D. Va. June 11, 2015); Tacoronte v. Cohen, 594 Fed. Appx. 605, 2015 U.S. App. LEXIS 2622 (11th Cir. Fla. 2015); Diaz v. First Marblehead Corp., 2014 U.S. Dist. LEXIS 174853 (M.D. Fla. Nov. 3, 2014)

[v] 28 U.S.C. § 1927

[vi] Federal Rules of Civil Procedure §§ 26(g), 30(d), 37(c) and (d)

[vii] Federal Rules of Civil Procedure § 16(f)(1)

[viii] White v. Regional Adjustment Bureau, Inc. 11-cv-01817-B, Northern District of Texas (Dallas)

[ix] Fed. R. Civ. P. 37

[x] 28 U.S.C. § 1927

[xi] 2014 U.S. Dist. LEXIS 104244, 2014 WL 3739512 (S.D.N.Y. July 28, 2014)

[xii] 2015 U.S. App. LEXIS 10111 (11th Cir. Ga. June 16, 2015)

[xiii] 2015 U.S. Dist. LEXIS 75972 (E.D. Va. June 11, 2015)

[xiv] 594 Fed. Appx. 605, 2015 U.S. App. LEXIS 2622 (11th Cir. Fla. 2015)

[xv] 2014 U.S. Dist. LEXIS 174853 (M.D. Fla. Nov. 3, 2014)