Debt collectors cannot use Rule 68 to “buy off” named class representatives

Rule 68 of the Federal (and Minnesota) Rules of Civil Procedure allows a defendant to make a “firm offer” to a plaintiff so that, if the plaintiff refuses the offer and goes on to recover less than the Rule 68 offer, the plaintiff must pay the defendant’s costs. If a defendant’s Rule 68 offer is for all the relief requested by the plaintiff, the case is moot. This makes perfect sense, since a plaintiff who refuses an offer for everything they are asking for is wasting a lot of time and money, since they cannot get more money by going further.

In the case of Jancik v. Cavalry Portfolio Svcs., LLC, an FDCPA case, Judge Michael Davis of the U.S. District Court for the District of Minnesota decided that a defendant cannot “pick off” individual named plaintiffs to prevent a class action merely by making a Rule 68 offer prior to class certification.

As Judge Davis put it:

The Court finds that in spite of Defendant’s offer, a live case or controversy
exists in this case. First, Plaintiff properly rejected Defendant’s settlement offer in
a timely fashion, and the offer is therefore deemed withdrawn. See Fed. R. Civ. P.
68. Second, Plaintiff seeks relief on behalf of the class – relief Defendant clearly
has not offered.

. . .

[A]llowing defendants to avoid liability merely by winning the race to the
courthouse and by proffering settlement offers that have the effect of denying all
putative plaintiffs’ claims even before scheduling orders are issued and plaintiffs
have the applicable motion deadlines in front of them, would be bad policy and
would effectively eviscerate the effectiveness of class actions in cases such as this
one.