ARTICLE
19 February 2016

Federal Rule 68 Loophole; Not So Fast, My Friend

M
Mintz

Contributor

Mintz is a general practice, full-service Am Law 100 law firm with more than 600 attorneys. We are headquartered in Boston and have additional US offices in Los Angeles, Miami, New York City, San Diego, San Francisco, and Washington, DC, as well as an office in Toronto, Canada.
As we recently blogged about, in January the U.S. Supreme Court rejected the Rule 68 ‘pick off' strategy in its Campbell-Edwald decision.
United States Litigation, Mediation & Arbitration

As we recently blogged about, in January the U.S. Supreme Court rejected the Rule 68 'pick off' strategy in its Campbell-Edwald 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-Edwald 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.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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