By: Kiki McArthur

On January 20, 2016 the Supreme Court held that an unaccepted offer for settlement has no force under Rule 68 of the Federal Rules of Civil Procedure and that government contractors are not granted sovereign immunity when in violation of federal law.[1] Mindmatics LLC, a subcontractor of defendant Campbell, sent text messages to a list of consenting 18-24 year old male users regarding Navy services.[2] When Jose Gomez, age 40, received an unsolicited text from Mindmatics, he filed a class action suit asserting that Campbell was in violation of the Telephone Consumer Protection Act (TCPA), 47 U.S.C. §227(b)(1)(A)(iii).[3] The TCPA prohibits sending a text message to a cellular phone using “any automatic dialing system” without the recipient’s prior expressed consent.[4]

Pursuant to Federal Rules of Civil Procedure 68, Campbell offered to settle Gomez’s claim, which Gomez did not accept.[5] Campbell then moved to dismiss the case for lack of subject matter jurisdiction, first arguing that since its offer provided Gomez with complete relief, Gomez’s case was consequently moot.[6] Subsequently, Campbell argued that because Gomez’s case was now moot, and he did not move for class certification beforehand, the putative class claims would be moot as well.[7] The district court denied Campbell’s motion to dismiss but after limited discovery, granted Campbell’s motion for summary judgment.[8] The district court relied on Yearsley v. W. A. Ross Constr. Co., 309 U.S. 18 to hold that since Campbell was a contractor acting on the Navy’s behalf, Campbell was granted sovereign immunity from suit under the TCPA through the Navy.[9] The Ninth Circuit reversed this decision, holding that Gomez’s case was still valid and that Campbell did not qualify for sovereign immunity under any basis, Yearsley or otherwise.[10]

Rule 68 allows a defendant to serve a plaintiff with a settlement offer containing specified terms of judgment and fourteen days to accept.[11] If the offer is not accepted within the time frame, it is considered withdrawn, but does not preclude a subsequent offer.[12] As with other unaccepted contract offers, offers to settle do not create a lasting right or obligation.[13] The Chief Justice’s dissent argues that the decision hands authority for judgment from the federal courts to the plaintiff.[14] The majority believes the Chief Justice’s rational would instead transfer authority to the defendant.[15] The Court also held that though Campbell is a federal contractor, it is not granted sovereign immunity from suit when in violation of the TCPA.[16] Though Mindmatics is the actual company that sent the text message, Campbell is held liable through vicarious liability.[17]

The Supreme Court’s holding that Gomez’s case is still live after refusing Campbell’s settlement offer sets a precedent for businesses, corporations, and other parties, that making settlement offers cannot relieve them from potential court judgment. This decision could prove to be monumental for businesses that, in the past, have blatantly made decisions it knew were harmful because it thought it would just offer settlements to those injured because of its actions. The Court also seems to be sending a clear message that a party has a right to be heard in court.

The Supreme Court’s holding that Campbell is not granted immunity under TCPA communicates that entities will be held responsible for its actions and that excuses will not be tolerated. This decision will force corporations to think through its decisions and actions before claiming it was simply acting blindly as it was told. Furthermore, the decision by the Court proves that it takes the privacy of its citizens very seriously and that violations of the TCPA, no matter how small, will not be tolerated and will discourage other entities from acting in the same regard. This decision will help continue to protect citizens’ right to privacy with respect to their personal cell phone usage.



[1] Campbell-Ewald Co. v. Gomez, 577 U. S. ____ (2016); Fed. R. Civ. P. 68.

[2] Gomez, 577 U. S. ____.

[3] Id.

[4] Id.

[5] Id.

[6] Id.

[7] Id.

[8] Id.

[9] Id.

[10] Id.

[11] Fed. R. Civ. P. 68.

[12] Id.

[13] Gomez, 577 U. S. ____.

[14] Id.

[15] Id.

[16] Id.

[17] Id.

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