In a noteworthy decision earlier today involving the mootness doctrine and the scope of Rule 68 of the Federal Rules of Civil Procedure, the Sixth Circuit held that an offer of judgment does not moot a plaintiff’s claims where the defendant fails to offer the “entire demand” or “full relief” requested by the plaintiff. See Hrivnak v. NCO Portfolio Management, Inc. (6th Cir., Case No. 11-3142) (PDF).
The Hrivnak case arose when Christopher Hrivnak brought suit in Ohio state court against several debt management companies and a law firm under the Fair Collection Practices Act, 15 U.S.C. §§ 1692-1692p, and Ohio’s consumer protection law, Ohio Rev. Code §§1345.01-.99, 4165.01-04. Hrivnak claimed that the defendants violated the law when they dunned him on several credit card debts. In addition to seeking class relief, Hrivnak requested statutory, compensatory, and punitive damages “exceeding $25,000,” in addition to injunctive and declaratory relief. Two days after the case was removed, the defendants made an offer of judgment to Hrivnak under Federal Civil Rule 68 providing for $7,000 in damages, plus reasonable costs and attorneys’ fees. The defendants argued that their offer mooted the case because it satisfied all of Hrivnak’s claims, but the district court rejected this argument and allowed Hrivnak’s claims to proceed.
The Sixth Circuit permitted an interlocutory appeal to address the mootness issue. In a unanimous panel opinion written by Judge Sutton, the Sixth Circuit affirmed. The panel rejected the defendants’ argument that they had offered to satisfy all of Hrivnak’s demands. As Judge Sutton noted, “[a]n offer limited to the relief the defendant believes is appropriate does not suffice. The question is whether the defendant is willing to meet the plaintiff on his terms.” Here, Hrivnak had asked for more than $25,000, plus reasonable attorney’s fees and injunctive and declaratory relief. Yet the defendants had only offered him $7,000, plus costs and attorney’s fees. As Judge Sutton stated, “Reasonable though the defendants’ offer may have been (and may still prove to be), the disparity between what they offered and what the plaintiff sought generally will preclude a finding of mootness. Just so here.”
Because of the defendants’ Rule 68 offer in this case, it is possible that Hrivnak may be hit with costs incurred if he fails to recover more than $7,000 on the merits. Rule 68 provides that “[i]f the judgment that the offeree finally obtains is not more favorable than the unaccepted offer, the offeree must pay the costs incurred after the offer was made.” Fed. R. Civ. P. 68(d). The rule thus creates a strong incentive for parties to give serious consideration to offers of judgment. But it is clear that incomplete offers will not deprive the court of subject matter jurisdiction.