Illinois Supreme Court reaffirms availability of “pick off” strategy in class action cases
On Feb. 21, 2020, the Illinois Supreme Court handed down a major decision reaffirming that a defendant’s tender of the full amount of the plaintiff’s claim moots the claim under Illinois law, including a putative class action lawsuit so long as the defendant tenders payment prior to the plaintiff filing a motion for class certification. In reaching its decision, the Illinois Supreme Court distinguished a recent decision from the U.S. Supreme Court, Campbell-Ewald Co. v. Gomez,1 which held that an unaccepted offer of judgment does not moot a plaintiff’s claim under the Federal Rules of Civil Procedure. The Illinois Supreme Court’s opinion clarifies any uncertainty Campbell-Ewald created regarding Illinois law and preserves tender offers as a powerful tool for defendants to resolve putative class action lawsuits early in the proceedings.
In Joiner v. SVM Management, LLC,2 the plaintiffs filed a putative class action alleging, among other things, that the defendant (SVM), the lessor of a large residential apartment complex, violated the Illinois Security Deposit Interest Act. Before the plaintiffs filed a motion for class certification, SVM fully and unconditionally tendered to the plaintiffs the amounts claimed under the Deposit Act. SVM then moved to dismiss the Deposit Act claim, arguing that the tender rendered the claim moot under a prior decision of the Illinois Supreme Court, Barber v. American Airlines, Inc.3
The plaintiffs opposed the motion, arguing that Barber was no longer good law in light of the U.S. Supreme Court’s decision in Campbell-Ewald. The trial court dismissed the claim, holding that it was bound by the Illinois Supreme Court’s Barber decision. The appellate court affirmed, and the Illinois Supreme Court granted leave to appeal to determine whether Barber remained good law in light of Campbell-Ewald.
The Illinois Supreme Court unanimously held that Barber remains good law, notwithstanding Campbell-Ewald. The Court stated that it has “long held that, when a defendant tenders the full amount requested by a plaintiff purporting to represent a class before the named plaintiff files a class-certification motion, the plaintiff’s claim becomes moot.” The court acknowledged the U.S. Supreme Court’s decision in Campbell-Ewald, but held that Campbell-Ewald was distinguishable from Barber given differences between the procedures the defendants employed in each case.
In particular, the court noted that, unlike SVM, the defendant in Campbell-Ewald had only made an offer of judgment to the plaintiff, but had not tendered payment. The court held that the distinction between an offer of judgment and a tender of payment was dispositive. The court noted that, unlike the Federal Rules, the Illinois Code does not contain any provision for an offer of judgment, and instead requires the defendant to actually tender payment. The court also noted that, although the Federal Rules expressly allow a plaintiff to accept or reject an offer of judgment, the Illinois Code does not allow a plaintiff to reject a tender.
The court concluded that an offer of judgment is “really an offer to settle,” and thus a “mere contract,” while a tender is “only effective if it is for the entire amount owed.” The court also noted that the Campbell-Ewald Court had specifically stated that the outcome might be different even under the Federal Rules if the defendant actually tendered payment rather than merely offering to settle. The Court thus reaffirmed Barber and held that “an effective tender made before a named plaintiff purporting to represent a class files a class-certification motion satisfies the named plaintiff’s individual claim and moots her interest in the litigation.” The court further held that a defendant should make the tender by depositing the tender with the court where the lawsuit is pending.
TAKEAWAYS
The Joiner decision dispels any uncertainty that Campbell-Ewald created regarding Barber’s continued viability. Defendants named in putative class action lawsuits should promptly analyze the named plaintiff’s claims and determine whether the plaintiff has filed a motion for class certification. If not, defendants should consider whether tendering an amount sufficient to cover the named plaintiff’s damages is practical. Tenders may be particularly appropriate where the named plaintiff is seeking damages that are fixed by statute. If a tender is feasible, defendants should make sure to follow the appropriate procedures for making the tender. Defendants should actually tender the money, rather than simply making a settlement offer, and should deposit the money with the court in which the action is pending.
[1] 577 U.S. __, 136 S. Ct. 663 (2016).
[2] 2020 IL 124671.
[3] 241 Ill. 2d 450 (2011).
