Federal Rule 68 Loophole; Not So Fast, My Friend.
As we recently blogged about, in January the U.S. Supreme Court rejected the Rule 68 ‘pick off’ strategy in its Campbell-Ewald decision. The ‘pick off’ strategy’ occurs when defense counsel offers the plaintiff full relief through a Rule 68 offer of judgment. If that offer is rejected, then the defense argues the fact that the plaintiff was offered complete relief which, even if it was rejected, moots the case and requires dismissal. While the U.S. Supreme Court rejected the ‘pick off’ strategy it left unanswered whether defendants could moot a class action by making an actual payment of full relief to named plaintiffs into a Court’s escrow.
On February 3rd, 2016, Judge Sandra J. Feuerstein of the U.S. Eastern District Court of New York dispelled any doubts about whether the decision in Campbell-Ewald left a Federal Rule 68 ‘pick off’ loophole by denying a Rule 67(a) motion to deposit the full payment with the court filed by diet pill maker, Basic Research LLC and its spokesperson, “Jersey Shore” star, Nicole "Snooki" Polizzi. Judge Feuerstein closed the door on the actual payment option ruling that the purpose of Rule 67 is for safekeeping disputed funds pending resolution of a legal dispute and is not a means of altering contractual relationships and legal duties. This ruling changes the landscape for companies looking to intercept class actions before they occur and likely quashes the ‘pick off’ strategy for good.
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