United States District Court, M.D. Georgia, Macon Division
PHILLIP GILMORE, on behalf of himself and others similarly situated, Plaintiff,
USCB CORPORATION, Defendant.
T. TREADWELL, JUDGE
Phillip Gilmore has moved to declare Defendant USCB
Corporation's offer of judgment ineffective. Doc. 19. For
the following reasons, Gilmore's motion is
March 30, 2017, Gilmore filed a class action complaint under
the Telephone Consumer Protection Act ("TCPA") and
the Fair Debt Collection Practices Act ("FDCPA"),
alleging that USCB Corporation used an automatic telephone
dialing system to place non-emergency calls to cellular
telephone numbers without obtaining consent and engaged in a
conduct that harassed, oppressed, or abused consumers in
connection with collecting debts. Doc. 1 ¶¶ 2-3.
August 2, 2017, USCB Corporation made to Gilmore a $7, 500
offer of judgment in accordance with Federal Rule of Civil
Procedure 68. Docs. 19 at 1; 23 at 1. In response,
Gilmore filed this motion. Doc. 19. To date, Gilmore has not
moved to certify the putative class, and USCB Corporation has
neither filed the offer of judgment with the
Court nor sought any relief as to the offer.
Doc. 23 at 2.
argues that USCB Corporation's Rule 68 offer of judgment
should be declared ineffective because it places him in the
untenable position of choosing between his personal interest
and the interest of the putative class he seeks to represent.
Doc. 19 at 3, 5. If Gilmore accepts the offer, then members
of the putative class would not recover; if Gilmore rejects
the offer, and the ultimate judgment is less favorable than
the unaccepted offer, then he "must pay the costs
incurred after the offer was made." Fed.R.Civ.P. 68(d).
This cost-shifting tactic, which is designed to "pick
off" the named plaintiff prior to class certification,
is not uncommon. District courts across the country have
many times addressed the issue of whether to invalidate a
pre-certification offer made to a named plaintiff. See,
e.g., Slovin v. Sunrun, Inc., 2017 WL 2902902 (N.D.
Cal.); Leahy-femandez v Bayview Loan Servicing, LLC,
2016 WL 1047159 (M.D. Fla.); Mavris v. RSI Enterprises
Inc., 303 F.R.D. 561 (D. Ariz. 2014). In the absence of
circuit authority, district courts have established and
followed three main approaches. See Mavris, 303
F.R.D. at 564 (categorizing the three approaches).
some courts strike the Rule 68 offer of judgment. These
courts reason that striking the offer is necessary to
"prevent an improper conflict of interest between a
putative class representative and the putative class."
March v. Medicredit, Inc., 2013 WL 6265070, at *4
(E.D. Mo.) (quotation marks and citation omitted); see
also Johnson v. U.S. Bank Nat'l Ass'n, 276
F.R.D. 330, 335 (D. Minn. 2011) ("Like other courts have
concluded, this Court concludes that Defendant's Rule 68
offer of judgment must therefore be stricken to prevent it
from undermining the use of the class action device.").
rather than striking the offer of judgment, some courts have
declared the offer ineffective. These courts reason that
there is no procedural mechanism to strike an offer of
judgment because Federal Rule of Civil Procedure 12(f)
permits striking matters only from pleadings. Hrivnak v.
NCO Portfolio Mgmt, 723 F.Supp.2d 1020, 1029 (N.D. Ohio
2010). Unless and until the offer of judgment is filed, there
is nothing to strike. See, e.g., McDowall v. Cogan,
216 F.R.D. 46, 52 (E.D.N.Y. 2003) ("As defendants
observe, there is nothing to strike here, as an offer of
judgment is not filed with the court until accepted or until
offered by a deferred party to prove costs."). Thus, to
address the potential conflict of interest between a putative
class representative and the putative class, courts in this
group simply declare the offer ineffective. See Id.
at 50, 51 (rendering the offer ineffective in a
pre-certification stage and noting that "if a defendant
wishes to make an offer of judgment prior to class
certification in the interests of effecting a reasonable
settlement and avoiding the costs and inefficiencies of
litigation, it must do so to the putative class and not to
the named plaintiff alone").
some courts do nothing. Like the courts in the second group,
these courts conclude that they "simply ha[ve] nothing
to strike until the offer is filed on the
record." Leahy-fernandez, 2016 WL 1047159,
at *2. However, unlike the second group, these courts decline
to declare the offer ineffective, reasoning that, because a
defendant has not yet moved for relief under Rule 68,
"determining the effectiveness of [the defendant's]
offer of judgment would be advisory." Id.; see also
Combe v. Goodman Frost, PLLC, 217 F.Supp.3d 986, 989
(E.D. Mich. 2016) ("In light of this uncertainty about
matters that have not yet (and may never) come to pass,
Plaintiff's motion [to declare the offer of judgment
ineffective] is aptly characterized as seeking an advisory
opinion that the Court is not authorized to give.").
Court favors the second approach. Both parties seem to agree
that Rule 12(f) does not authorize this Court to strike the
offer of judgment, and the Court agrees that until the offer
is filed, there is nothing to strike. Docs. 19 at 1 n.1, 8
n.3; 23 at 1-2, 3-5. However, the Court believes it has the
authority to declare an offer of judgment ineffective.
Pursuant to Rule 23(d), this Court may "issue
orders" that "impose conditions on the
representative parties" and "deal with similar
procedural matters." Slovln, 2017 WL 2902902,
at *5. Logically, "to protect the putative class
members" and "manage the class action in a manner
consistent with the purposes of Rule 23, " courts should
have the ability to declare "pick off" offers of
judgment ineffective. Id. (quotation marks omitted)
(quoting Boles v. Moss Codilis, LLP, 2011 WL
4345289, at *4 (W.D. Tex.)).
does the Court agree that, because USCB Corporation has not
yet moved for relief under Rule 68, "'determining
the effectiveness of [its] offer of judgment would be
advisory.'" Doc. 23 at 6 (quoting
Leahy-femandez, 2016 WL 1047159, at *2). As other
courts have recognized, a pre-certification offer of judgment
can have "an immediate adverse impact" on the named
plaintiff. See, e.g., Johnson, 276 F.R.D. at 335
(noting that "[e]ach time Plaintiff pushes the
litigation forward on behalf of the class, the cost-shifting
risk to Plaintiff individually ratchets up, thus
disincentivizing Plaintiff from acting in the best interest
of the class"). So even if USCB Corporation has not
moved for relief under Rule 68, "there is a current and
meaningful legal dispute arising from the conflict of
interests caused by the Rule 68 offer."
Johnson, 276 F.R.D. at 335. By offering Gilmore $7,
500, which Gilmore could not accept without breaching his
duty to the putative class and could not reasonably expect to
surpass at trial,  USCB Corporation attempts to shift onto
Gilmore the "costs incurred after the offer was
made." See Fed. R. Civ. P. 68(d). This
"pick off" attempt "is an abuse of the Federal
rules that is designed to do nothing more than frustrate
class actions." Mavris, 303 F.R.D. at 566.
Accordingly, the Court concludes that USCB Corporation's
offer of judgment is ineffective for purposes of Rule 68(d).