Ninth Circuit rules deposit of offer of judgment into escrow fund does not moot class action

April 29, 2016 by

justiceThe U.S. Court of Appeals for the Ninth Circuit ruled that a putative class action could proceed despite a defendant offering judgment on a named plaintiff’s individual claims under Federal Rule of Civil Procedure 68. 

In the case, Chen, et al. v. Allstate Ins. Co., named plaintiffs Richard Chen and Florencio Pacleb filed a class-action complaint against Allstate Insurance Company alleging violations of the Telephone Consumer protection Act (“TCPA”) after receiving unsolicited automated calls and texts from the company. Plaintiffs, on behalf of themselves and those similarly situated, sought $500 in statutory damages for each violation by Allstate, as well as injunctive relief.
Allstate attempted to have the class action dismissed by offering settlement to the named plaintiffs and depositing $20,000 in an escrow fund in furtherance of the settlement.
The insurance company’s actions were seen by many as an attempt to take advantage of the decision in Campbell-Ewald v. Gomez, a case decided early this year by the U.S. Supreme Court. In Campbell-Ewald, the Supreme Court held that defendants could not end a class action by offering to settle in full with the named plaintiffs.  However, some defense lawyers pointed to the court’s refusal to rule as to whether a defendant’s deposit of the named plaintiffs’ settlement funds into an escrow account, plus an entry of judgment, as a way to preclude a class action from moving forward.
Justice Ruth Bader Ginsberg, who authored the January 2016 Campbell-Ewald opinion, stated that it would be better to decide this issue in a case where the issue is actually present and not a mere hypothetical.
That decision lead to Allstate’s actions and this Ninth Circuit decision. Some believe they expect Allstate to appeal the issue all the way to the Supreme Court.  The case is Chen, et al. v. Allstate Ins. Co., No. 13-16816 (9th Cir.).
Steve Larson
An experienced trial lawyer who handles both hourly and contingent fee cases, Steve has expertise in class actions, consumer cases, antitrust litigation, securities litigation, corporate disputes, intellectual property disputes, unfair competition claims, employment matters, and disputes involving family wealth. Steve regularly represents individuals and businesses in federal and state court and has obtained class-wide recovery in multiple class actions. A veteran practitioner, Steve's clients value his creative approach to resolving complex litigation matters.

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