When a class action is filed, defendants often wonder whether tendering a payment to a class representative can defeat the claims.  In a recent decision, the Third Circuit held that a mid-litigation payment to a class representative plaintiff does not moot her claim if the check is not cashed.  Duncan v. Governor of the Virgin Islands, — F.4th —-, 2022 WL 3906213 (3d Cir. Aug. 31, 2022).  But tendering the payment, even if the check is uncashed and even if the plaintiff claims the payment does not cover the full value of her claim, did make the plaintiff an atypical class representative and provided a basis to defeat certification of a damages class.

            The lead plaintiff alleged that she was owed a $7,104 tax refund from the U.S. Virgin Islands government for her 2016 tax return.  She sought to represent a putative class consisting of all the Territory’s residents who qualified for but had not yet received a tax refund from the Territory’s government.  During litigation but before class certification, the government sent the plaintiff a check for $2,474, which it contended was the proper amount of her refund.  She declined to cash the check.  Then, following close of discovery, the district court denied class certification on grounds that by virtue of receiving the refund check the plaintiff’s claim was no longer typical of the class she sought to represent.

            On appeal, the Third Circuit held that the post-litigation refund did not moot the plaintiff’s claims.  The court began with the doctrine of mootness, holding that just as settlement offers “cannot moot a case when they are not accepted,” the government’s sending of a check to the plaintiff cannot moot the case unless she accepts—cashes—it.  Because she did not, her claims could not be moot.  But even if they were, the court would apply the “picking-off exception,” which “allows a plaintiff to continue representing a class, notwithstanding otherwise mooted claims” where it appears that the defendant had picked off the named plaintiff with the intention of mooting her claims.  That, the Third Circuit held, is exactly what happened in Duncan.

            Then the court addressed the district court’s class certification ruling, ultimately agreeing that the post-litigation refund offer made the plaintiff’s damages claims no longer typical of those in her class.  The Third Circuit’s decision turned on the fact that the plaintiff’s check was for less than the amount the plaintiff believed she was owed, meaning the plaintiff would need to “‘devote time and effort’ to facts unique to her claim”—whether the government had sent her the correct amount of money.  This finding defeated typicality for the plaintiff’s damages claim.

            The post-litigation refund check, however, did not prevent class certification on the plaintiff’s claims for injunctive, mandamus, and declaratory relief.  Instead, “the central point with respect to the claims for mandamus, declaratory relief, and injunctive relief is the question of systemic, arbitrary, and indefinite withholding of refunds, which is ‘essentially the same’ for every class member, regardless of whether he or she is the lucky recipient of a long-delayed refund check.”

            Notably, a single dissenting judge would have gone farther.  Judge Matey would have found all her claims atypical, including those for injunctive, mandamus, and declaratory relief because the plaintiff’s receipt of a refund check “is reason enough to ‘motivate [her] to litigate against or settle with the defendants in a way that prejudices the absentees.’”  The majority of the panel disagreed, and permitted the plaintiff to seek class certification on her non-monetary claims.

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Photo of Andrew Leff Andrew Leff

Andrew Leff represents clients in complex, high stakes litigation in state and federal courts, and in ADR proceedings. With a focus on complex commercial litigation and class action defense, Andrew has represented a diverse range of clients including fintech companies, electric utilities, food…

Andrew Leff represents clients in complex, high stakes litigation in state and federal courts, and in ADR proceedings. With a focus on complex commercial litigation and class action defense, Andrew has represented a diverse range of clients including fintech companies, electric utilities, food and beverage manufacturers, pharmaceuticals companies, and trade organizations.

Andrew has experience representing clients at all stages of litigation, from case inception through trial and appeal. He regularly leads briefing efforts (including motions to dismiss and summary judgment) as well as complex discovery processes. Andrew was also a key associate on a trial team that won total victory against the U.S. Government, as documented in The New York Times, Law360, and elsewhere. Andrew participated at every level of the pre-trial and trial phases, including a deposition of a key Government witness.

Andrew also maintains an active pro bono practice, representing (among others) disabled veterans appealing denial of the VA benefits to which they are entitled, and jail inmates seeking constitutional conditions of confinement regarding COVID-19 precautions.

Photo of Andrew Soukup Andrew Soukup

Andrew Soukup has a wide-ranging complex litigation practice representing highly regulated businesses in class actions and other high-stakes disputes. He has built a successful record of defending clients from consumer protection claims asserted in class-action lawsuits and other multistate proceedings, many of which…

Andrew Soukup has a wide-ranging complex litigation practice representing highly regulated businesses in class actions and other high-stakes disputes. He has built a successful record of defending clients from consumer protection claims asserted in class-action lawsuits and other multistate proceedings, many of which were defeated through dispositive pre-trial motions.
Andrew is co-chair of the firm’s Class Action Litigation practice group.

Andrew has helped his clients achieve successful outcomes at all stages of litigation, including through trial and appeal. He has helped his clients prevail in litigation against putative class representatives, government agencies, and commercial entities. Representative victories include:

  • Delivered wins in multiple nationwide class actions on behalf of large financial companies related to fees, disclosures, and other banking practices, including the successful defense of numerous lenders accused of violating the Paycheck Protection Program’s implementing laws, which contributed to Covington’s recent recognition as a “Class Action Group Of The Year.”
  • Successfully defending several of the nation’s leading financial institutions in a wide variety of litigation and arbitration proceedings involving alleged violations of RICO, FCRA, TILA, TCPA, FCBA, ECOA, EFTA, FACTA, and state consumer protection and unfair and deceptive acts or practices statutes, as well as claims involving breach of contract, fraud, unjust enrichment, and other torts.
  • Successfully defended several of the nation’s leading companies and brands from claims that they deceptively marketed their products, including claims brought under state consumer protection and unfair deceptive acts or practices statutes.
  • Obtained favorable outcomes for numerous clients in commercial disputes raising contract, fraud, and other business tort claims.

Because many of Andrew’s clients are subject to extensive federal regulation and oversight, Andrew has significant experience successfully invoking federal preemption to defeat litigation.

Andrew also advises clients on their arbitration agreements. He has successfully helped numerous clients avoid multi-district class-action litigation by successfully enforcing the institutions’ arbitration agreements.

Clients praise Andrew for his personal attention to their matters, his responsiveness, and his creative strategies. Based on his “big wins in his class action practice,” Law360 named Mr. Soukup a “Class Action Rising Star.

Prior to practicing law, Andrew worked as a journalist.

Photo of Sonya Winner Sonya Winner

A litigator with three decades of experience, Sonya Winner handles high-stakes civil cases for clients in a wide range of industries, including banking, pharmaceuticals and professional sports. She has handled numerous antitrust and consumer disputes, many of them class actions, in state and…

A litigator with three decades of experience, Sonya Winner handles high-stakes civil cases for clients in a wide range of industries, including banking, pharmaceuticals and professional sports. She has handled numerous antitrust and consumer disputes, many of them class actions, in state and federal courts across the country.

Sonya’s cases typically involve difficult technical issues and/or complex legal and regulatory schemes. She is regularly able to resolve cases before the trial phase, often through dispositive motions. But when neither summary judgment nor a favorable settlement is an option, she has the confidence of her clients to take the case all the way through trial and on appeal. Her recent successes have included a cutting-edge decision rejecting a “true lender” challenge to National Bank Act preemption in a class action involving interest rates on student loans, as well as the outright dismissal of a putative antitrust claim against the National Football League and its member clubs asserting an unlawful conspiracy to fix cheerleader compensation.

Sonya has been recognized as a leading trial lawyer by publications like Chambers and the Daily Journal. She is chair of the firm’s Class Action Litigation Practice Group.