Imagine Jane Doe sues you (hereinafter “You”) for violating a statute one time and the statute provides for an award of $250 per violation, plus reasonable attorneys’ fees and costs. You contact Jane, admit to the violation, and offer to pay her $250 for the violation plus reasonable attorneys’ fees and costs, as determined by the court.
Imagine Jane Doe says, “No.” She prefers to press forward with the case (knowing full well that you have (1) just confessed to liability, and (2) you will be paying her “reasonable attorneys’ fees” per the statute. (In other words, what is her incentive to settle?)
I predict You’d be irked, to say the least.
Years ago, I had a client in Your exact situation.
I could have torn my hair out. The Plaintiff’s lawyer argued that the Plaintiff did not want to settle the case because, for all she knew, this statutory violation was part of some extensive willful conspiracy and, she argued, she should be entitled to discovery even though my client had admitted liability and damages were a “fixed price” (set by statute). To my disappointment, the court agreed with the plaintiff and she proceeded to undertake costly discovery until my client buckled and settled her lawsuit for magnitudes more money than the nominal statutory penalty (not because it was trying to conceal any wrong-doing but because it did not want to pay to put my children through college while the Plaintiff’s lawyers did the same at my clients expense).
This case, in my opinion, was an unfortunate perversion of our legal process.
But what if there are THOUSANDS of Jane Does? And many of them do not even know they are entitled to money damages for a defendant’s statutory violation. And Jane Doe brought the case as a class action? This is what class actions are for — where one Jane Doe, with her own lawyer(s), can vindicate the rights of all of the Jane Does. Under those circumstances, where’s the perversion of the legal process – in allowing the case to go forward after an “offer of judgment” is rejected or in prohibiting the case to go forward after an “offer of judgment” is rejected?
In other words, what if You offer Jane Doe #1 her $250 plus reasonable attorneys’ fees and costs and then ask the court to dismiss her claim as “moot” because she got all that she was entitled to under the statute, when Jane Doe #1 was trying to bring the case as a class action for all Jane Does?
The problem with allowing defendants to “pick off” the named plaintiffs is that this will effectively abolish the class action mechanism. Jane Doe #1 will get her $250, maybe. But Jane Does #2-1,000, probably not. And I say Jane Doe #1 only MIGHT get her $250 because no class action lawyer(s) would take her case if it could be disposed of individually. In fact, very few lawyers anywhere would have the expertise + willingness to take Jane Doe #1’s piddly case (or cases of Does #2, #3, and #4 for that matter) if individual cases could be settled one-by-one and no class action could be brought.
It looks like this issue will be decided this year by the U.S. Supreme Court in in Campbell-Ewald Co. v. Gomez, 135 S.Ct. 2311 (2015), which is set for argument on October 14, 2015.