In Campbell-Ewald Co. v. Gomez, 577 U.S. 153, 163 (2016), as revised (Feb. 9, 2016), the Supreme Court held that an unaccepted offer of judgment cannot moot a plaintiff’s claims. While that decision left some questions unanswered, recent Court of Appeals decisions have applied its reasoning to broader situations, such as holding that an unaccepted refund offer made prior to litigation does not deprive a plaintiff of standing to sue.  Adam v. Barone, 41 F.4th 230, 234 (3d Cir. 2022).

Another court recently added a twist to the analysis, holding that offering a full refund may make dismissal appropriate under the prudential mootness doctrine.  See Sharp v. FCA US LLC, 2022 WL 14721245 (E.D. Mich. Oct. 25, 2022).

In Sharp, 15 plaintiffs—seeking to represent a putative class of individuals from 18 states—alleged that they purchased trucks with defective fuel injection pumps that could cause engine failure.  Id. at *2.  Investigation of those fuel injection pumps by defendants and the National Highway Traffic Safety Administration (NHTSA) resulted in a phased recall of the trucks that included promises to replace the fuel injection pump and other components if needed. Id. Although all of the plaintiffs had access to this recall program, and although only four plaintiffs experienced engine failure as a result of the defect, id. at *3, all of the plaintiffs alleged that the existence of the defect had deprived them of the “benefit of their bargain,” id. at *4.

The court held that almost all of the plaintiffs had, in fact, suffered an actual injury, giving rise to Article III standing.  According to the court, those plaintiffs plausibly alleged that the trucks they purchased had a defective fuel injection pump that had generated “metal shavings that contaminate the fuel system, eventually leading to catastrophic engine failure.”  Id. at *5. (internal marks omitted).  For that reason, all of those plaintiffs suffered some amount of engine damage—and thus Article III injury.  See id.

Nevertheless, the court still dismissed their claims under the doctrine of prudential mootness.  Id. at *7.  It held that in cases where a “coordinate branch of government steps in to promise the relief” that plaintiffs seek, the judiciary can exercise discretion to dismiss the suit in deference to the other branch, so as to avoid “needless inter-branch disputes over the execution of the remedial process.”  Id. at *6 (internal marks omitted).  Applying that standard to the facts before it, the court noted that because the NHTSA had been notified of the defect, the parties were in the middle of “the great grinding gears of a statutorily mandated and administratively overseen national recall process.”  Id. (internal marks omitted).  For that reason, even though the plaintiffs had Article III standing, the prudential mootness doctrine weighed in favor of deference to the NHTSA.  Id. at *6–7.  Notably, the court held that even the plaintiffs’ claims for monetary relief for their lost “benefit of the bargain” were subject to dismissal under the prudential mootness doctrine—even though the agency had not directed the vehicle manufacturer to provide such relief to plaintiffs.  Id. at *8. 

The Sharp decision is a good reminder that although Campbell-Ewald and its progeny have made it more difficult to argue that a refund offer deprives a plaintiff of Article III standing, the prudential mootness doctrine may still be available to defendants—such as where a refund is part of a statutory recall process that is overseen by an administrative agency. 

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Photo of Alex Setzepfandt Alex Setzepfandt

Focusing on class actions, Alex Setzepfandt regularly advises clients in the life sciences and financial services industries in complex litigations involving product defects and mass torts. He also has experience representing both plaintiffs and defendants in commercial actions, including breach of contract, insurance…

Focusing on class actions, Alex Setzepfandt regularly advises clients in the life sciences and financial services industries in complex litigations involving product defects and mass torts. He also has experience representing both plaintiffs and defendants in commercial actions, including breach of contract, insurance recovery, and business tort actions.

Alex handles all phases of litigation, including initial pleadings, discovery, trial, and appeals. His experience includes drafting complaints and dispositive motions, arguing discovery motions, taking and defending depositions, negotiating discovery and pre-trial stipulations, and assisting with a broad range of tasks at trial.

Through his active pro bono practice, Alex has honed his oral advocacy skills. His experience includes:

  • Directly examining his client and giving the closing argument at a jury trial in SDNY;
  • Arguing motions in limine and other pre-trial matters;
  • Presenting an oral argument in the 11th Circuit; and
  • Acting as lead counsel at multiple mediations in federal courts.
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.