In Chen v. Allstate Insurance Co., the first decision to take up the matter since Campbell-Ewald Co. v. Gomez, the Ninth Circuit has held that a company cannot pick off lead plaintiffs in a class action by paying them a full settlement. This is an important ruling because some companies were attempting to argue that while Campbell-Ewald held that settlement offers did not moot potential class actions, settlement payments were somehow different. Thus, in Chen, the defendant had offered $20,000 to settle the plaintiff’s claims. When the plaintiff rejected that offer, the defendant put the money in an escrow account. The defendant then argued that there was no longer any case or controversy because it had satisfied the plaintiff’s claims.
Both Chief U.S. District Judge Phyllis Hamilton and the Ninth Circuit disagreed. The court held that a claim becomes moot when a plaintiff receives complete relief on their claim, not when such relief is offered. Depositing money in an escrow account is offering relief, but it not receiving it.
Class actions are an important tool for protecting the rights of large groups of people who have been wronged. If you have a question about your rights, please feel free to contact Hunter Pyle Law for a free initial consultation.