New York Federal Court Holds That Offer of Judgment to FDCPA Plaintiff Rendered Class Action Moot

The United States District Court for the Southern District of New York recently held that a debt collector’s offer of judgment pursuant to Federal Rule of Civil Procedure 68 rendered the plaintiff’s putative class action claims under the Fair Debt Collection Practices Act (“FDCPA”) moot.  See Franco v. Allied Interstate LLC, 2015 WL 7758534 (S.D.N.Y. Nov. 30, 2015).  In the case, in which the plaintiff did not allege actual damages, the defendant made an offer of judgment to the plaintiff of $1,501 plus reasonable attorneys’ fees and costs.  Under the FDCPA, plaintiffs can recover actual damages, additional damages up to $1,000, and the costs of the action, including reasonable attorneys’ fees.  15 USC 1692k.  The plaintiff did not respond and, once the plaintiff moved for class certification, the defendant moved to dismiss and argued that the plaintiff’s claims were moot because he had been offered judgment in complete satisfaction of the damages he could have recovered in the action.  The District Court granted the motion and dismissed the action. On appeal, the Second Circuit vacated the dismissal, holding that the Rule 68 offer did not moot the claim as it did not result in an entry of judgment.  The defendant immediately moved for an entry of judgment before the District Court and the plaintiff opposed, primarily arguing that the defendant’s offer would only satisfy the plaintiff’s possible damages, not those of the class.  The Court rejected the plaintiff’s argument and granted the motion, holding that the Second Circuit had not addressed this issue, and that when “the claims of the named plaintiffs become moot prior to class certification, the entire action becomes moot[.]”  The Court further held that other potential class members were free to seek their own relief in separate lawsuits if they wanted. For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com.