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Campbell-Ewald Co. v. Gomez

United States Supreme Court

January 20, 2016

CAMPBELL-EWALD COMPANY, Petitioner
v.
JOSE GOMEZ

         Argued October 14, 2015

         As Amended February 9, 2016.

          ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

          SYLLABUS

         [136 S.Ct. 664] [193 L.Ed.2d 574] The United States Navy contracted with petitioner Campbell-Ewald Company (Campbell) to develop a multimedia recruiting campaign that included the sending of text messages to young adults, but only if those individuals had " opted in" to receipt of marketing solicitations on topics that included Navy service. Campbell's subcontractor Mindmatics LLC generated [193 L.Ed.2d 575] a list of cellular phone numbers for consenting 18- to 24-year-old users and then transmitted the Navy's message to over [136 S.Ct. 665] 100,000 recipients, including respondent Jose Gomez, who alleges that he did not consent to receive text messages and, at age 40, was not in the Navy's targeted age group. Gomez filed a nationwide class action, alleging that Campbell violated the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227(b)(1)(A)(iii), which prohibits " using any automatic dialing system" to send a text message to a cellular telephone, absent the recipient's prior express consent. He sought treble statutory damages for a willful and knowing TCPA violation and an injunction against Campbell's involvement in unsolicited messaging.

         Before the deadline for Gomez to file a motion for class certification, Campbell proposed to settle Gomez's individual claim and filed an offer of judgment pursuant to Federal Rule of Civil Procedure 68. Gomez did not accept the offer and allowed the Rule 68 submission to lapse on expiration of the time (14 days) specified in the Rule. Campbell then moved to dismiss the case pursuant to Rule 12(b)(1) for lack of subject-matter jurisdiction. Campbell argued first that its offer mooted Gomez's individual claim by providing him with complete relief. Next, Campbell urged that Gomez's failure to move for class certification before his individual claim became moot caused the putative class claims to become moot as well. The District Court denied the motion. After limited discovery, the District Court granted Campbell's motion for summary judgment. Relying on Yearsley v. W. A. Ross Constr. Co., 309 U.S. 18, 60 S.Ct. 413, 84 L.Ed. 554, the court held that Campbell, as a contractor acting on the Navy's behalf, acquired the Navy's sovereign immunity from suit under the TCPA. The Ninth Circuit reversed. It agreed that Gomez's case remained live but concluded that Campbell was not entitled to " derivative sovereign immunity" under Yearsley or on any other basis.

          Held:

         1. An unaccepted settlement offer or offer of judgment does not moot a plaintiff's case, so the District Court retained jurisdiction to adjudicate Gomez's complaint.

         Article III's " cases" and " controversies" limitation requires that " an actual controversy . . . be extant at all stages of review, not merely at the time the complaint is filed," Arizonans for Official English v. Arizona, 520 U.S. 43, 67, 117 S.Ct. 1055, 137 L.Ed.2d 170 (internal quotation marks omitted), but a case does not become moot as " long as the parties have a concrete interest, however small," in the litigation's outcome, Chafin v. Chafin, 568 U.S. __, __, 133 S.Ct. 1017, 185 L.Ed.2d 1, 11 (internal quotation marks omitted).

         Gomez's complaint was not effaced by Campbell's unaccepted offer to satisfy his individual claim. Under basic principles of contract law, Campbell's settlement bid and Rule 68 offer of judgment, once rejected, had no continuing efficacy. With no settlement offer operative, the parties remained adverse; both retained the same stake in the litigation they had at the outset. Neither Rule 68 nor the 19th-century railroad tax cases California v. San Pablo & Tulare R. Co., 149 U.S. 308, 13 S.Ct. 876, 37 L.Ed. 747, Little v. Bowers, 134 U.S. 547, 10 S.Ct. 620, 33 L.Ed. 1016, and San Mateo County [193 L.Ed.2d 576] v. Southern Pacific R. Co., 116 U.S. 138, 6 S.Ct. 317, 29 L.Ed. 589, support the argument that an unaccepted settlement offer can moot a complaint. Pp. __ - __, 193 L.Ed.2d at 579-582.

         2. Campbell's status as a federal contractor does not entitle it to immunity from suit for its violation of the TCPA. Unlike the United States and its agencies, federal contractors do not enjoy absolute [136 S.Ct. 666] immunity. A federal contractor who simply performs as directed by the Government may be shielded from liability for injuries caused by its conduct. See Yearsley, 309 U.S., at 20-21, 60 S.Ct. 413, 84 L.Ed. 554. But no " derivative immunity" exists when the contractor has " exceeded [its] authority" or its authority " was not validly conferred." Id., at 21, 60 S.Ct. 413, 84 L.Ed. 554. The summary judgment record includes evidence that the Navy authorized Campbell to send text messages only to individuals who had " opted in" to receive solicitations, as required by the TCPA. When a contractor violates both federal law and the Government's explicit instructions, as alleged here, no immunity shields the contractor from suit. Pp. __ - __, 193 L.Ed.2d at 583-584.

         Ginsburg, J., delivered the opinion of the Court, in which Kennedy, Breyer, Sotomayor, and Kagan, JJ., joined. Thomas, J., filed an opinion concurring in the judgment. Roberts, C. J., filed a dissenting opinion, in which Scalia and Alito, JJ., joined. Alito, J., filed a dissenting opinion.

         Gregory G. Garre argued the cause for petitioner.

         Jonathan F. Mitchell argued the cause for respondent.

         Anthony A. Yang argued the cause for the United States, as amicus curiae, by special leave of the court.

         Ginsburg, J., delivered the opinion of the Court, in which Kennedy, Breyer, Sotomayor, and Kagan, JJ., joined. Thomas, J., filed an opinion concurring in the judgment. Roberts, C. J., filed a dissenting opinion, in which Scalia and Alito, JJ., joined. Alito, J., filed a dissenting opinion.

          OPINION

         Ginsburg Justice

         Is an unaccepted offer to satisfy the named plaintiff's individual claim sufficient to render a case moot when the complaint seeks relief on behalf of the plaintiff and a class of persons similarly situated? This question, on which Courts of Appeals have divided, was reserved in Genesis HealthCare Corp. v. Symczyk, 569 U.S. __, __, __, n. 4, 133 S.Ct. 1523, 185 L.Ed.2d 636, 644 (2013). We hold today, in accord with Rule 68 of the Federal Rules of Civil Procedure, that an unaccepted settlement offer has no force. Like other unaccepted contract offers, it creates no lasting right or obligation. With the offer off the table, and the defendant's continuing denial of liability, adversity between the parties persists.

         This case presents a second question. The claim in suit concerns performance of the petitioner's contract with the Federal Government. Does the sovereign's immunity from suit shield the petitioner, a private enterprise, as well? We hold that the petitioner's status as a Government contractor does not entitle it to " derivative sovereign immunity," i.e., the blanket immunity enjoyed by the sovereign.

         I

          The Telephone Consumer Protection Act (TCPA or Act) 48 Stat. 1064, 47 U.S.C. § 227(b)(1)(A)(iii), prohibits any [136 S.Ct. 667] person, absent the prior express consent of a telephone-call recipient, from " mak[ing] any call . . . using any automatic telephone dialing system . . . to any telephone number assigned to a paging service [or] cellular telephone service." A text message to a cellular telephone, it is [193 L.Ed.2d 577] undisputed, qualifies as a " call" within the compass of § 227(b)(1)(A)(iii). 768 F.3d 871, 874 (CA9 2014). For damages occasioned by conduct violating the TCPA, § 227(b)(3) authorizes a private right of action. A plaintiff successful in such an action may recover her " actual monetary loss" or $500 for each violation, " whichever is greater." Damages may be trebled if " the defendant willfully or knowingly violated" the Act.

         Petitioner Campbell-Ewald Company (Campbell) is a nationwide advertising and marketing communications agency. Beginning in 2000, the United States Navy engaged Campbell to develop and execute a multimedia recruiting campaign. In 2005 and 2006, Campbell proposed to the Navy a campaign involving text messages sent to young adults, the Navy's target audience, encouraging them to learn more about the Navy. The Navy approved Campbell's proposal, conditioned on sending the messages only to individuals who had " opted in" to receipt of marketing solicitations on topics that included service in the Navy. App. 42. In final form, the message read:

" Destined for something big? Do it in the Navy. Get a career. An education. And a chance to serve a greater cause. For a FREE Navy video call [ phone number]." 768 F.3d at 873.

         Campbell then contracted with Mindmatics LLC, which generated a list of cellular phone numbers geared to the Navy's target audience--namely, cellular phone users between the ages of 18 and 24 who had consented to receiving solicitations by text message. In May 2006, Mindmatics transmitted the Navy's message to over 100,000 recipients.

         Respondent Jose Gomez was a recipient of the Navy's recruiting message. Alleging that he had never consented to receiving the message, that his age was nearly 40, and that Campbell had violated the TCPA by sending the message (and perhaps others like it), Gomez filed a class-action complaint in the District Court for the Central District of California in 2010. On behalf of a nationwide class of individuals who had received, but had not consented to receipt of, the text message, Gomez sought treble statutory damages, costs, and attorney's fees, also an injunction against Campbell's involvement in unsolicited messaging. App. 16-24.

         Prior to the agreed-upon deadline for Gomez to file a motion for class certification, Campbell proposed to settle Gomez's individual claim and filed an offer of judgment pursuant to Federal Rule of Civil Procedure 68. App. to Pet. for Cert. 52a-61a. [1] Campbell offered to pay Gomez his [136 S.Ct. 668] costs, excluding attorney's fees, and $1,503 per message for the May 2006 text message and any other text message [193 L.Ed.2d 578] Gomez could show he had received, thereby satisfying his personal treble-damages claim. Id., at 53a. Campbell also proposed a stipulated injunction in which it agreed to be barred from sending text messages in violation of the TCPA. The proposed injunction, however, denied liability and the allegations made in the complaint, and disclaimed the existence of grounds for the imposition of an injunction. Id., at 56a. The settlement offer did not include attorney's fees, Campbell observed, because the TCPA does not provide for an attorney's-fee award. Id., at 53a. Gomez did not accept the settlement offer and allowed Campbell's Rule 68 submission to lapse after the time, 14 days, specified in the Rule.

         Campbell thereafter moved to dismiss the case pursuant to Federal Rule of Civil Procedure 12(b)(1) for lack of subject-matter jurisdiction. No Article III case or controversy remained, Campbell urged, because its offer mooted Gomez's individual claim by providing him with complete relief. Gomez had not moved for class certification before his claim became moot, Campbell added, so the putative class claims also became moot. The District Court denied Campbell's motion. 805 F.Supp.2d 923 (CD Cal. 2011). [2] Gomez was not dilatory in filing his certification request, the District Court determined; consequently, the court noted, the class claims would " relat[e] back" to the date Gomez filed the complaint. Id., at 930-931.

         After limited discovery, Campbell moved for summary judgment on a discrete ground. The U.S. Navy enjoys the sovereign's immunity from suit under the TCPA, Campbell argued. The District Court granted the motion. Relying on our decision in Yearsley v. W. A. Ross Constr. Co., 309 U.S. 18, 60 S.Ct. 413, 84 L.Ed. 554 (1940), the court held that, as a contractor acting on the Navy's behalf, Campbell acquired the Navy's immunity. No. CV 10-02007DMG (CD Cal., Feb. 22, 2013), App. to Pet. for Cert. 22a-34a, 2013 WL 655237. The Court of Appeals for the Ninth Circuit reversed the summary judgment entered for Campbell. 768 F.3d 871. The appeals court disagreed with the District Court's ruling on the immunity issue, but agreed that Gomez's case remained live. Concerning Gomez's individual claim, the Court of Appeals relied on its then-recent decision in Diaz v. First American Home Buyers Protection Corp., 732 F.3d 948 (2013). Diaz held that " an unaccepted Rule 68 offer that would fully satisfy a plaintiff's [individual] claim is insufficient to render th[at] claim moot." Id., at 950. As to the class relief Gomez sought, the Ninth Circuit held that " an unaccepted Rule 68 offer of judgment--for the full amount of the named plaintiff's individual claim and made before the named plaintiff files a motion for class certification--does not moot a class action." 768 F.3d at 875 (quoting Pitts v. Terrible Herbst, Inc., 653 F.3d 1081, 1091-1092 (CA9 2011)).

         Next, the Court of Appeals held that Campbell was not entitled to " derivative sovereign immunity" under [193 L.Ed.2d 579] this Court's decision in Yearsley or on any other basis. 768 F.3d at 879-881. Vacating the District Court's judgment, the Ninth Circuit [136 S.Ct. 669] remanded the case for further proceedings. [3]

         We granted certiorari to resolve a disagreement among the Courts of Appeals over whether an unaccepted offer can moot a plaintiff's claim, thereby depriving federal courts of Article III jurisdiction. Compare Bais Yaakov v. Act, Inc., 798 F.3d 46, 52 (CA1 2015); Hooks v. Landmark Industries, Inc., 797 F.3d 309, 315 (CA5 2015); Chapman v. First Index, Inc., 796 F.3d 783, 787 (CA7 2015); Tanasi v. New Alliance Bank, 786 F.3d 195, 200 (CA2 2015); Stein v. Buccaneers Limited Partnership, 772 F.3d 698, 703 (CA11 2014); Diaz, 732 F.3d at 954-955 (holding that an unaccepted offer does not render a plaintiff's claim moot), with Warren v. Sessoms & Rogers, P. A., 676 F.3d 365, 371 (CA4 2012); O'Brien v. Ed Donnelly Enterprises, Inc., 575 F.3d 567, 574-575 (CA6 2009); Weiss v. Regal Collections, 385 F.3d 337, 340 (CA3 2004) (noting that an unaccepted offer can moot an individual plaintiff's claim). We granted review as well to resolve the federal contractor immunity question Campbell's petition raised. 575 U.S. __, 135 S.Ct. 2311, 191 L.Ed.2d 977 (2015).

         II

          Article III of the Constitution limits federal-court jurisdiction to " cases" and " controversies." U.S. Const., Art. III, § 2. We have interpreted this requirement to demand that " an actual controversy . . . be extant at all stages of review, not merely at the time the complaint is filed." Arizonans for Official English v. Arizona, 520 U.S. 43, 67, 117 S.Ct. 1055, 137 L.Ed.2d 170 (1997) (quoting Preiser v. Newkirk, 422 U.S. 395, 401, 95 S.Ct. 2330, 45 L.Ed.2d 272 (1975)). " If an intervening circumstance deprives the plaintiff of a 'personal stake in the outcome of the lawsuit,' at any point during litigation, the action can no longer proceed and must be dismissed as moot." Genesis HealthCare Corp., 569 U.S., at __, 133 S.Ct. 1523, 185 L.Ed.2d 636, 643 (quoting Lewis v. Continental Bank Corp., 494 U.S. 472, 477-478, 110 S.Ct. 1249, 108 L.Ed.2d 400 (1990)). A case becomes moot, however, " only when it is impossible for a court to grant any effectual relief what-ever to the prevailing party." Knox v. Service Employees, 567 U.S. __, __, 132 S.Ct. 2277, 183 L.Ed.2d 281, 295 (2012) (internal quotation marks omitted). " As long as the parties have a concrete interest, however small, in the outcome of the litigation, the case is not moot." Chafin v. Chafin, 568 U.S. __, __, 133 S.Ct. 1017, 185 L.Ed.2d 1, 11 (2013) (internal quotation marks omitted).

         In Genesis HealthCare, the Court considered a collective action brought by Laura Symczyk, a former employee of Genesis HealthCare Corp. Symczyk sued on behalf of herself and similarly situated employees for alleged violations of the Fair Labor Standards Act of 1938, 29 U.S.C. § 201 et seq. In that case, as here, the defendant served the plaintiff with an offer of judgment pursuant to Rule 68 that would have satisfied the plaintiff's individual damages claim. 569 U.S., at __, 133 [193 L.Ed.2d 580] S.Ct. 1523, 185 L.Ed.2d 636, 642. Also as here, the plaintiff allowed the offer to lapse by failing to respond within the time specified in the Rule. Ibid. But unlike the case Gomez mounted, Symczyk did not dispute in the lower courts that Genesis HealthCare's offer mooted her individual claim. Id., at __, 133 S.Ct. 1523, 185 L.Ed.2d 636, 640. Because of that failure, the Genesis HealthCare majority refused to rule on the issue. Instead, [136 S.Ct. 670] the majority simply assumed, without deciding, that an offer of complete relief pursuant to Rule 68, even if unaccepted, moots a plaintiff's claim. Ibid. Having made that assumption, the Court proceeded to consider whether the action remained justiciable on the basis of the collective-action allegations alone. Absent a plaintiff with a live individual case, the Court concluded, the suit could not be maintained. Id., at __, 133 S.Ct. 1523, 185 L.Ed.2d 636, 644.

         Justice Kagan, writing in dissent, explained that she would have reached the threshold question and would have held that " an unaccepted offer of judgment cannot moot a case." Id., at __, 33 S.Ct. 1523, 185 L.Ed.2d 636, 649. She reasoned:

" When a plaintiff rejects such an offer--however good the terms--her interest in the lawsuit remains just what it was before. And so too does the court's ability to grant her relief. An unaccepted settlement offer--like any unaccepted contract offer--is a legal nullity, with no operative effect. As every first-year law student learns, the recipient's rejection of an offer 'leaves the matter as if no offer had ever been made.' Minneapolis & St. Louis R. Co. v. Columbus Rolling Mill, 119 U.S. 149, 151, 7 S.Ct. 168, 30 L.Ed. 376 (1886). Nothing in Rule 68 alters that basic principle; to the contrary, that rule specifies that '[a]n unaccepted offer is considered withdrawn.' Fed. Rule Civ. Proc. 68(b). So assuming the case was live before--because the plaintiff had a stake and the court could grant relief--the litigation carries on, unmooted." Ibid.

         We now adopt Justice Kagan's analysis, as has every Court of Appeals ruling on the issue post Genesis HealthCare. [4] Accordingly, we hold that Gomez's complaint was not effaced by Campbell's unaccepted offer to satisfy his individual claim.

         As earlier recounted, see supra, at __ - __, 193 L.Ed.2d at 577-578, Gomez commenced an action against Campbell for violation of the TCPA, suing on behalf of himself and others similarly situated. Gomez sought treble statutory damages and an injunction on behalf of a nationwide class, but Campbell's settlement offer proposed relief for Gomez alone, and it did not admit liability. App. to Pet. for Cert. 58a. Gomez rejected Campbell's settlement terms and the offer of judgment.

         Under basic principles of contract law, Campbell's settlement bid and Rule 68 offer of judgment, once rejected, had no continuing efficacy. See Genesis HealthCare, 569 U.S., at __, [193 L.Ed.2d 581] 133 S.Ct. 1523, 185 L.Ed.2d 636 (Kagan, J., dissenting). Absent Gomez's acceptance, Campbell's settlement offer remained only a proposal, binding neither Campbell nor Gomez. See App. to Pet. for Cert. 59a (" Please advise whether Mr. Gomez will accept [Campbell's] offer . . . ." ). Having rejected Campbell's settlement bid, and given Campbell's continuing denial of liability, Gomez gained no entitlement to the relief Campbell previously offered. See Eliason v. Henshaw, 17 U.S. 225, 4 Wheat. 225, 228, 4 L.Ed. 556 (1819) (" It is an undeniable principle of the law of contracts, that an offer of a bargain by one person to another, imposes no obligation upon the former, until it is accepted by the latter . . . ." ). In short, with no settlement offer still operative, the parties remained [136 S.Ct. 671] adverse; both retained the same stake in the litigation they had at the outset.

         The Federal Rule in point, Rule 68, hardly supports the argument that an unaccepted settlement offer can moot a complaint. An offer of judgment, the Rule provides, " is considered withdrawn" if not accepted within 14 days of its service. Fed. Rule Civ. Proc. 68(a), (b). The sole built-in sanction: " If the [ultimate] judgment . . . is not more favorable than the unaccepted offer, the offeree must pay the costs incurred after the offer was made." Rule 68(d).

         In urging that an offer of judgment can render a controversy moot, Campbell features a trio of 19th-century railroad tax cases: California v. San Pablo & Tulare R. Co., 149 U.S. 308, 13 S.Ct. 876, 37 L.Ed. 747 (1893), Little v. Bowers, 134 U.S. 547, 10 S.Ct. 620, 33 L.Ed. 1016 (1890), and San Mateo County v . Southern Pacific R. Co., 116 U.S. 138, 6 S.Ct. 317, 29 L.Ed. 589 (1885). None of those decisions suggests that an unaccepted settlement offer can put a plaintiff out of court. In San Pablo, California had sued to recover state and county taxes due from a railroad. In response, the railroad had not merely offered to pay the taxes in question. It had actually deposited the full amount demanded in a California bank in the State's name, in accord with a California statute that " extinguished" the railroad's tax obligations upon such payment. 149 U.S., at 313-314, 13 S.Ct. 876, 37 L.Ed. 747. San Pablo thus rested on California's substantive law, which required the State to accept a taxpayer's full payment of the amount in controversy. San Mateo and Little similarly involved actual ...


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