September 19, 2013 Articles

Throwing to First: A Defendant's Pick-Off Move

The strategy may have received new life from Genesis Healthcare Corp. v. Symczyk.

By Matthew M.K. Stein

A pitcher facing the opposing team’s slugger, someone on base, and two outs can sometimes escape the inning by picking off the base runner. Like that pitcher, a defendant facing a class action may seek to escape the litigation without having to defeat a class-certification motion by picking off the plaintiff. In baseball, the pitcher throws to the right base and his teammate applies the tag. In litigation, the defendant tenders the relief requested by the individual plaintiff (through a Rule 68 offer of judgment or otherwise, or perhaps even by reaching an individual settlement with the named plaintiff).

Some courts permit the pick-off move. Others do not. But the pick-off move may have received new life from the U.S. Supreme Court’s recent decision in Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523 (Apr. 16, 2013).

For those circuits that already permit the pick-off move, the general optimal approach for a defendant is clear (especially in cases in which each individual’s recovery is low): Tender sufficient relief to moot the named plaintiff’s claims, and if plaintiff’s counsel files a new case with a new named plaintiff, do it again. And repeat until plaintiff’s counsel gives up. (The author is aware of one defendant directly reaching a settlement with the named plaintiff over plaintiff’s counsel’s apparent objection. That approach is novel and superficially viable, but it risks criticism as an inappropriate communication with a represented party in violation of the applicable enactment of Rule 4.3 of the Model Rules of Professional Conduct if the court is convinced that defense counsel is behind the strategy.)

Conversely, plaintiff’s counsel’s optimal approach in those circuits is to move for class certification earlier in the case than they would have otherwise—as early as when the complaint is filed. In Damasco v. Clearwire Corp., the defendant mooted the named plaintiff’s claims (by tendering the relief sought), and on appeal, the Seventh Circuit approved. The court explained that the process would not have been successful if plaintiff’s counsel had already moved for class certification. 662 F.3d 891, 896–97 (7th Cir. 2011). (Why a non-dilatory class-certification motion should have this effect is a question left unanswered by the court, but it may be because under applicable U.S. Supreme Court precedent, discussed in more detail below, those motions are viewed as relating back to the filing of the complaint.)

Plaintiff’s response—the preemptive class-certification motion—is problematic for both plaintiff and defendant:

For the defendant, who has to oppose a class-certification motion while still analyzing and determining how to respond to the complaint, it increases the costs and pressures at the start of the case and the associated risk of a misstep. (In some courts, such as the U.S. District Court for the District of Massachusetts, the defendant’s class-certification opposition is due one week before its response to the complaint. See Fed. R. Civ. P. 12(a)(1)(A)(i) (21 days after service to respond to a complaint); D. Mass. L.R. 7.1(B)(2) (14 days to oppose motions).)

For the plaintiff, the stakes may ironically be even higher. The U.S. Supreme Court’s recent jurisprudence on Rule 23 makes clear that the plaintiff has the burden of proving, through evidence, that Rule 23’s requirements have been met. As the Court made clear in Wal-Mart Stores, Inc. v. Dukes (and reiterated recently in Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013)), “Rule 23 does not set forth a mere pleading standard. A party seeking class certification must affirmatively demonstrate his compliance with the Rule—that is, he must be prepared to prove that there are in fact sufficiently numerous parties, common questions of law or fact, etc.” 131 S. Ct. 2541, 2552 (2011). A court inexperienced with these preemptive motions might deny the named plaintiff’s motion because the plaintiff cannot provide the affirmative proof called for by Dukes and Behrend, and then refuse to reconsider when the plaintiff has actually developed that proof (or what the plaintiff believes to be that proof) through discovery.

The circuits that do not permit pick-off moves may have the better of the argument. Rule 23, after all, specifies only that class certification be decided at “an early practicable time.” The question, however, is how long their position will be tenable.

Broadly speaking, those circuits’ conclusions are based on four U.S. Supreme Court decisions from the late 1970s and early 1980s concerning the mooting of a named plaintiff’s claims in certain circumstances. See Sosna v. Iowa, 419 U.S. 393 (1975) (challenge to one-year residency requirement); Gerstein v. Pugh, 420 U.S. 103 (1975) (challenge to pretrial detention); Deposit Guar. Nat’l Bank v. Roper, 445 U.S. 326 (1980) (defendant tendered relief to plaintiff after class-certification denial); U.S. Parole Comm’n v. Geraghty, 445 U.S. 388 (1980) (challenge to parole denial). In Sosna, Gerstein, and Geraghty, the Court explained that transitory claims that evade review—where the passage of time moots the claim and thus prevents court review of the challenged law or policy—present an exception to the mootness doctrine. Therefore, in Geraghty, the Court held that a plaintiff whose claims had been mooted (by release from jail) had standing to appeal the denial of class certification on behalf of other prisoners who had been denied parole. Id. at 394, 399–401. (Roper, in contrast, held that the defendant’s tendering relief to the named plaintiffs after class-certification denial did not moot their ability to appeal the class-certification denial. 445 U.S. at 340–41.)

The Ninth Circuit, and some other courts, have viewed the pick-off move as analogous to the “inherently transitory” claims that are “capable of repetition, yet evading review” at issue in Sosna, Gerstein, and Geraghty: “The end result is the same: a claim transitory by its very nature and one transitory by virtue of the defendant’s litigation strategy share the reality that both claims would evade review.” Pitts v. Terrible Herbst, Inc., 653 F.3d 1081, 1090–91 (9th Cir. 2011). See also Lucero v. Bureau of Collection Recovery, Inc., 639 F.3d 1239 (10th Cir. 2011); Sandoz v. Cingular Wireless LLC, 553 F.3d 913 (5th Cir. 2008); Weiss v. Regal Collections, 385 F.3d 337 (3d Cir. 2004).

It is unclear, however, whether the Court would reach the same conclusion today. In April, in Genesis Healthcare, the Court determined that a Rule 68 offer of judgment could moot an individual plaintiff’s claims under the Fair Labor Standards Act (FLSA). 133 S. Ct. at 1532. Even though the FLSA certification procedure is different from the Rule 23 procedure—for example, the former is an opt-in procedure, and the latter is opt-out—courts have imported concepts from Rule 23 class actions into FLSA collection actions. Sandoz was an FLSA collective action, and there the Fifth Circuit looked to Sosna, Geraghty, and Roper. It therefore stands to reason that a court might apply Genesis Healthcare in the future to determine that tendering complete relief to a named plaintiff before class certification moots the claim, restoring defendants’ pick-off moves in other circuits—as a judge in the Southern District of Florida did in July. See Keim v. ADF Midatlantic, LLC, No. 12-80577-CIV, 2013 WL 3717737, at *9 (S.D. Fla. July 15, 2013).

If Keim is a harbinger of changes across the circuits in light of Genesis Healthcare, the defendant may, like a pitcher, be free to pick off opposing base runners.

Keywords: litigation, class actions, derivative suits, Federal Rule of Civil Procedure 68, offer of judgment, mootness doctrine

Matthew M.K. Stein – September 19, 2013