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Slovin v. Sunrun, Inc.

United States District Court, N.D. California

July 7, 2017

Lynn Slovin, Samuel Katz and Jeffery Price, individually and on behalf of all others similarly situated, Plaintiffs,
v.
Sunrun, Inc., Clean Energy Experts, LLC, dba Solar America, and Does 1 through 5, Defendants.

          ORDER GRANTING MOTION TO DECLARE INEFFECTIVE DEFENDANTS' OFFER OF JUDGMENT DKT. NO. 89

          YVONNE GONZALEZ ROGERS UNITED STATES DISTRICT COURT JUDGE.

         Plaintiffs Lynn Slovin, Samuel Katz, Jeffery Price, and Justin Birkhofer bring this putative class action alleging willful violations of the Telephone Consumer Protection Act, 47 U.S.C. 227 (the “TCPA”). (Dkt. No. 46.) Plaintiffs seek to represent a putative class of individuals who received unwanted calls from defendants SunRun, Inc. and Clean Energy Experts, LLC, dba Solar America, allegedly in violation of the TCPA.

         Currently before the Court is plaintiffs' motion to declare ineffective defendants' offer for judgment. (Dkt. No. 89.)[1] Having carefully considered the pleadings and the papers submitted on this motion, and for the reasons set forth below, plaintiffs' motion is Granted.

         I. Relevant Factual Background

         On March 21, 2017, defendants made an offer of judgment pursuant to Federal Rule of Civil Procedure 68 to each individual plaintiff for $100, 000 apiece, “costs and prejudgment interest now accrued, ” and “an injunction . . . prohibiting Defendants and their officers and employees from calling Plaintiffs without their prior express consent . . . .” (the “Offer”). (Dkt. No. 89-2.) The Offer was contingent on acceptance by all four individual plaintiffs. (Id.) Plaintiffs did not accept the Offer and “allowed the time to accept [the Offer to] expire.” (Opposition at 5.)

         II. Legal Framework

         A. Federal Rule of Civil Procedure 68

         Under Federal Rule of Civil Procedure 68(a), a defendant may “serve on an opposing party an offer to allow judgment on specific terms, with the costs than accrued.” If the offer is not accepted within 14 days the “unaccepted offer is considered withdrawn, but it does not preclude a later offer.” Fed.R.Civ.P. 68(b). If the ultimate judgment that the “offeree finally obtains is not more favorable than the unaccepted offer, the offered must pay the costs incurred after the offer was made.” Fed.R.Civ.P. 68(d).

         The “plain purpose of Rule 68 is to encourage settlement and avoid litigation.” Marek v. Chesny, 473 U.S. 1 (1985) (citing Rules of Civil Procedure, Report of Proposed Amendments, 5 F.R.D. 433, 483 n. 1 (1946)); see also 12 Charles Allan Wright, Arthur R. Miller, et al. § 3001 Fed. Prac. & Proc. Civ. § 3001 (2d ed. 2017) (explaining that “Rule 68 was intended to encourage settlements and avoid protracted litigation” and “the general principle [behind Rule 68 is] that even a prevailing party could be denied costs for persisting vexatiously after refusing an offer of settlement . . . .”). The Supreme Court has explained that Rule 68 seeks to achieve this purpose by “prompt[ing] both parties to a suit to evaluate the risks and costs of litigation, and to balance them against the likelihood of success upon trial on the merits.” Id.; See also Mavris v. RSI Enterprises Inc., 303 F.R.D. 561, 562-63 (D. Ariz. 2014) (noting that Rule 68 seeks to encourage “plaintiffs to accept reasonable settlement offers rather than forcing defendants through the expensive process of going to trial”). Federal courts apply Rule 68(d)'s cost-shifting provisions so long as the offer is made in “good faith.” See Gay v. Waiters' and Dairy Lunchmen's Union Local No. 30, 86 F.R.D. 500, 502 (N.D. Cal. 1980); Scheriff v. Beck, 452 F.Supp. 1254 (D. Colo. 1978); Dual v. Cleland, 79 F.R.D. 696 (D.D.C. 1978); Mr. Hanger, Inc. v. Cut Rate Plastic Hangers, Inc., 63 F.R.D. 607 (E.D.N.Y. 1974). “Some courts therefore have suggested that offers that in form satisfied the rule might nevertheless be denied the Rule 68 cost-shifting consequences because they were sham or were made in bad faith.” 12 Charles Allan Wright, Arthur R. Miller, et al., Fed. Prac. & Proc. Civ. § 3002.1 (2d ed. 2017) (citing Gay, 86 F.R.D. at 502).

         B. Federal Rule of Civil Procedure 23

         Pursuant to Federal Rule of Civil Procedure 23(a) “. . .[o]ne or more members of a class may sue or be sued as representative parties on behalf of all members . . . .” The class action mechanism serves two primarily purposes. First, class actions “promote ‘efficiency and economy of litigation.'” In re Wells Fargo Home Mortg. Overtime Pay Litig., 571 F.3d 953, 958 (9th Cir. 2009) (quoting Am. Pipe & Constr. Co. v. Utah, 414 U.S. 538, 553 (1974)). Second, class actions “overcome the problem that small recoveries do not provide the incentive for any individual to bring a solo action prosecuting his or her rights.” Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 617 (1997).

         Before a class action may proceed the putative class must be certified by a federal judge. See Fed. R. Civ. P. 23(a), (c)(1). The certification process first requires an individual class representative to file a complaint that raises claims on behalf of a group of similarly situated persons. Fed R. Civ. P. 23(c)(1)(A). Thereafter the class representatives may seek certification of the class under the provisions of Rule 23. Id. The named plaintiffs bear the responsibility to “represent the collective interests of the putative class.” Deposit Guar. Nat. Bank, Jackson, Miss. v. Roper, 445 U.S. 326, 331 (1980). Class representatives owe a duty to the putative class to “prosecute the action vigorously on behalf of the class.” Staton v. Boeing, 327 F.3d 938, 957 (9th Cir. 2003). As a “result of the special obligations inherent in the role of class representative, the plaintiff forgoes some ability to dispose of his individual claim that an ordinary litigant enjoys.” Johnson v. U.S. Bank Nat'l Ass'n, 276 F.R.D. 330, 336 (D. Minn. 2011).

         III. Discussion

         Plaintiffs argue that the Offer should be declared ineffective because applying the Rule 68(d) cost-shifting mechanism to this case would be contrary the purposes of Rules 23 and Rule 68.[2] Defendants counter that (1) the Supreme Court's recent holding in Campbell-Ewald Co. v. Gomez, 136 S.Ct. 663, 670 (2016), eliminates any potential conflict between the two rules, (2) no authority exists for the relief plaintiffs seek ...


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