380484-mighty-pen-duel.jpgAuthored by Laura Reathaford

Employers considering a Rule 68 Offer of Judgment in order to moot class certification must think again at least in the Ninth Circuit where the Court of Appeals has ruled that unaccepted Rule 68 offers do not moot class claims even if those offers are made before the lead plaintiff has timely moved for class certification.

In Pitts v. Terrible Herbst, Inc., the Plaintiff alleged that his former employer violated the Fair Labor Standards Act and Nevada state wage laws by not paying minimum and overtime wages. The Plaintiff pursued claims on his own behalf and as part of a collective and class action.  Before Plaintiff moved for class certification, the Defendant made a $900 offer of judgment pursuant to Rule 68.  This amount would have satisfied Plaintiff’s individual claim of $88 but Plaintiff rejected it.  The district court said the unaccepted Rule 68 offer of judgment did not moot Plaintiff’s putative class action as long as the plaintiff timely filed a motion for class certification.

The Ninth Circuit reviewed and upheld the trial court’s decision.  In so doing, the Court reviewed relevant U.S. Supreme Court decisions which generally hold that a Rule 68 offer made to the lead plaintiff does not moot an already certified class.  The Court held that the principles of those cases could guide its decision here.  Significantly, the Court recognized that if employers were allowed to make a Rule 68 offer for the full value of the lead plaintiff’s claim prior to class certification, this would permit employers to “buy off” lead plaintiffs and avoid the class certification question:

A rule allowing a class action to become moot simply because the defendant has sought to buy off the individual private claims of the named plaintiffs’ before the named plaintiffs have a chance to file for class certification would thus contravene Rule 23’s core concern: the aggregation of similar, small, but otherwise doomed claims [internal quotations omitted].

Accordingly, the Court held that an unaccepted Rule 68 offer of judgment – for the full amount of the named plaintiff’s individual claim and made before named plaintiff files a motion for class certification – does not moot a class action.  This decision follows the Third, Fifth and Tenth circuits who also have addressed and decided this issue.

Although the Ninth Circuit has followed other appellate courts on this issue, other Circuit Courts have reached the opposite conclusion: See e.g. Abrams v. Interco, 719 F.2d 23  (2nd Cir. 1983) and Rand v. Monsanto Co., 926 F.2d 596 (7th Cir. 1986).  It remains to be seen whether the United States Supreme Court will resolve this difference of opinion.  Until then, it is clear that in the Ninth Circuit at least, a Defendant’s Rule 68 pen is not mightier than the class certification sword.