In Chen v. Allstate, the named Plaintiffs, Richard Chen and Florencio Pacleb, filed a class action complaint against Allstate Insurance Company (“Allstate”), alleging they received automated phone calls to their cell phones in violation of the Telephone Consumer Protection Act (“TCPA”). Before Pacleb and Chen moved for class certification, Allstate offered $15,000 to Chen and $10,000 to Pacleb pursuant to Rule 68 of the Federal Rules of Civil Procedure. The amounts offered by Allstate included the statutory damage amounts that would result if Allstate were found to have violated the TCPA. Allstate also offered reasonable attorneys’ fees and costs. When Chen and Pacleb did not accept the offer in 14 days, it expired. Allstate then extended the offer and moved for dismissal of the action, contending the Rule 68 offer rendered the claims moot because no class certification motion had been filed. Ultimately, Chen accepted the offer, but Pacleb did not, the district court denied Allstate’s motion to dismiss, and Allstate appealed.
While Chen v. Allstate was pending in the Ninth Circuit, the Supreme Court decided Gomez v. Campbell-Ewald Co., 136 S. Ct. 663 (2016) (“Campbell-Ewald”), which confirmed that a mere offer to settle holds no force and that a defendant’s attempt to satisfy a named plaintiff’s individual claim does not result in mootness of the claim if the plaintiff is seeking relief on behalf of a class.
After the Supreme Court’s decision in Campbell-Ewald, Allstate deposited $20,000 in escrow on Pacleb’s individual claims and proposed entry of judgment in favor of Pacleb for damages and injunctive relief. Through this deposit, Allstate contended that the hypothetical which was not addressed by the Court in Campbell-Ewald—whether a case becomes moot when a defendant deposits into an account payable to plaintiff the full amount of that plaintiff’s individual claim, and the court subsequently enters judgment of that amount—became reality. Allstate also asserted that the Ninth Circuit should order the district court to enter judgment for Pacleb in the amount of $20,000 based on Allstate’s unilateral deposit and effort to pick off the class representative.
The Ninth Circuit rejected Allstate’s argument and followed Campbell-Ewald. The panel held that an individual’s claim does not become moot until he actually receives complete relief on his claim. Though the $20,000 was tendered to him in escrow, Pacleb objected to this offer and never received the money because the district court did not enter judgment thereof.
The panel also relied on a plaintiff’s personal stake in obtaining class certification and held that a district court should not enter a judgment until the plaintiff has had a fair opportunity to move for class certification. In dicta, the panel explained that a plaintiff does not exhibit obstinacy or madness by refusing an offer of complete individual relief in order to seek relief on behalf of his putative class members. Instead, he can remain in the case for class certification purposes despite such an offer and perhaps even if the offer were accepted.
For additional analysis of the implications of Chen v. Allstate, see what Paul Bland, Executive Director of Public Justice, said regarding the decision. Public Justice represented Pacleb on appeal.