CLASS ACTIONS AND ARTICLE III OF THE US CONSTITUTION
Class actions are an exception to the general rule in the United States that every individual is entitled to a day in court. Representative actions, such as class actions, therefore require special rules to ensure that individual rights are respected. Enter Rule 23 of the Federal Rules of Civil Procedure (and its state analogues).
Rule 23 sets forth various criteria that a representative plaintiff must fulfill in order to proceed with a proposed class action. But before a court can reach the question of whether a case may proceed as a class action, the court must first assess whether it has jurisdiction to hear the case.
Under Article III of the US Constitution, a court may only hear a ‘case or controversy’. Otherwise, it lacks jurisdiction and the case must be dismissed. Within the past year or so, the US Supreme Court has heard three cases which, in varying ways, have revolved around the case or controversy requirement.
The Supreme Court recently ruled in Campbell-Ewald Co. vs. Gomez, No. 14-857, slip op. (20 January 2016), that an unaccepted offer of judgment cannot moot a class action. If a case becomes moot, that means that there is no case or controversy and no jurisdiction for a court to hear the matter under Article III.
The Campbell-Ewald case occurred in the Telephone Consumer Protection Act context, but the decision reaches across all areas of the law, and followed at least a decade of uncertainty and contrary rulings by the lower courts. Some courts prior to Campbell-Ewald rejected the notion that an unaccepted offer of judgment could moot a putative class action because allowing that tactic would render the class action vehicle ineffective, allowing defendants to ‘pick off’ successive named plaintiffs.
Jul-Sep 2016 issue
BakerHostetler