E-Alert Case Updates

Complete Settlement Offer Did Not Make Putative Class Action Suit Moot

Kensington Physical Therapy, Inc. v. Jackson Therapy Partners, LLC
Case No.: 8:11-2467 (U.S. District Court for the District of Maryland, July 30, 2012)
by Eric M. Leppo, Associate
Semmes, Bowen & Semmes (www.semmes.com)

In this recently issued Memorandum Opinion from the U.S. District Court for the District of Maryland, Judge Alexander Williams, Jr. denied Defendant’s Motion to Dismiss the Complaint despite Defendant’s offer of a complete settlement.

The Plaintiff, Kensington Physical Therapy, Inc., brought this action alleging violations of the Telephone Consumer Protection Act (“TCPA”), particularly seeking relief under 47 U.S.C. § 227(b)(3). The TCPA provides private individuals an opportunity to seek injunctive relief and recover up to $1500 for willful and knowing violations of the statute or its prescribed regulations. Kensington alleged that Defendant Jackson Therapy Partners, LLC sent multiple unsolicited advertising facsimiles to its offices. It claimed that such faxes violated an implementing FCC regulation of the TCPA that forbids the “[u]se [of] a telephone facsimile machine, computer, or other device to send an unsolicited advertisement to a telephone facsimile machine.” 47 C.F.R. § 64.1200.

On September 1, 2011, Kensington filed its class action complaint in the Federal District Court alleging that other like parties also received such unsolicited facsimiles. On October 12, 2011, Defendant Jackson offered to settle the case by making $1,500 payments for each fax received; any additional amount authorized under state law; attorney’s fees; and injunctive relief; as well as having a judgment entered against it and waiving any confidentiality. On the date of this settlement offer, the Plaintiff had not yet moved for class certification.

Defendant Jackson moved to dismiss the action as moot because its settlement offer presented complete relief to the Plaintiff. The Court noted that the jurisdiction of federal courts is restricted to actual cases or controversies, and issues that are moot are generally nonjusticiable. Kensington at *5. A settlement offer of complete relief, whether or not accepted by the Plaintiff, will moot a claim. Zimmerman v. Bell, 800 F.2d 386, 390 (4th Cir. 1986).

While a complete offer of settlement will generally render a Plaintiff’s case moot, “special mootness rules apply in the class action context.” Lusardi v. Xerox Corp., 975 F.2d 964, 974 (3rd Cir. 1992). The Plaintiff filed this case as a class action matter on the behalf of like-situated entities, but had not moved for class certification in the six (6) weeks between filing and the Defendant’s settlement offer.

Therefore, the Court was called to determine whether Defendant’s complete offer to settle the Plaintiff’s claim before any class certification would moot the entire case. Jackson asserted that because no certification motion was pending, the complete settlement offer mooted Kensington’s individual claim and the case could not proceed. The Court noted that the Fourth Circuit had not addressed this issue, and looked to Weiss v. Regal Collections, 385 F.3d 337, 348 (3rd Cir. 2004) for guidance.

The Weiss court determined that the settlement offer provided all the relief available to the plaintiff, but noted that it did not include any relief for the putative class. The Weiss court expressed a preference that the class action process should be able to “play out” in cases where the complete settlement offer was made before the plaintiff moved for class certification. Id. at 347-48.

The Court followed the reasoning of Weiss noting that the maximum statutory fine is relatively small, and as such, class action suits like this are susceptible of being cut-off prematurely. The Court noted that one policy concern regarding “pickoffs” is that they create a perverse incentive to file motions prematurely for conditional class certification. As such, the Court denied the Motion to Dismiss and indicated it would apply the relation back doctrine as long as Plaintiff timely moved for class certification.