Lucero v. Bureau of Collection Recovery Inc.

• Decision Date: 31 March 2011
• Docket Number: No. 10–2122.,10–2122.
• Citation: 639 F.3d 1239
• Parties: Richard LUCERO, on behalf of himself and all others similarly situated, Plaintiff–Appellant,v.BUREAU OF COLLECTION RECOVERY, INC., Defendant–Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

639 F.3d 1239

79 Fed.R.Serv.3d 25

Richard LUCERO, on behalf of himself and all others similarly situated, Plaintiff–Appellant,

v.BUREAU OF COLLECTION RECOVERY, INC., Defendant–Appellee.

No. 10–2122.

United States Court of Appeals, Tenth Circuit.

March 31, 2011.

John Wells of Law Offices of John M. Wells, P.A., Albuquerque, New Mexico, for Plaintiff–Appellant.Adam Plotkin (and Steve Wienczkowski of Adam L. Plotkin, P.C., Denver, CO, with him on the brief; and Jennifer G. Anderson and Erin E. Langenwalter of Modrall, Sperling, Roehl, Harris & Sisk, P.A., Albuquerque, New Mexico, on the brief), for Defendant–Appellee.Before KELLY, HOLLOWAY, and TACHA, Circuit Judges.PAUL KELLY, JR., Circuit Judge.

Plaintiff–Appellant Richard Lucero appeals from the district court's order dismissing his class-action complaint against Defendant–Appellee Bureau of Collection Recovery, Inc., for lack of subject matter jurisdiction based upon mootness of his individual claims. We must decide whether a class-action complaint must be dismissed for mootness upon the tender of a Fed.R.Civ.P. 68 offer of judgment for the full amount of the individual Plaintiff's monetary claim in the absence of undue delay in filing a motion for class certification. The district court felt bound by the general statement that “a suit brought as a class action must be dismissed for mootness when the personal claims of the named plaintiffs are satisfied and no class has been properly certified.” Clark v. State Farm Mut. Auto. Ins., 590 F.3d 1134, 1138 (10th Cir.2009) (internal quotation marks and citation omitted). Our jurisdiction arises under 28 U.S.C. § 1291, and based on the Supreme Court's holdings in Sosna v. Iowa, 419 U.S. 393, 95 S.Ct. 553, 42 L.Ed.2d 532 (1975), and U.S. Parole Commission v. Geraghty, 445 U.S. 388, 100 S.Ct. 1202, 63 L.Ed.2d 479 (1980), we hold that the district court erred in dismissing the class action complaint without considering the undoubtedly timely motion for certification. Therefore, we reverse and remand.

Background

The parties agree on the pertinent facts in this case. Plaintiff (“Lucero”) filed a class action complaint in state court seeking declaratory relief and damages, alleging violation of the Fair Debt Collection Practices Act (“FDCPA”) and the New Mexico Collection Agency Regulatory Act on April 20, 2009. Aplt.App. 10, 13. Included in the complaint were various class-action allegations. Id. at 13. Defendant (“BCR”) removed the case to federal court. On June 2, 2009, BCR filed its answer and also served Plaintiff with a Rule 68 offer of judgment, offering to settle for $3,001 plus reasonable attorneys' fees and costs incurred to that date. Id. at 2, 64. On August 13, 2009, the parties submitted a joint status report and provisional discovery plan proposing that discovery be divided into two phases, the first phase pertaining to certification of the class, with the second phase devoted to the merits claims and defenses of the parties. Doc. 10 at 1–2. The parties further agreed to conduct discovery only on the class certification issue for the first six months. Id. at 5. The district court then adopted the joint status report and provisional discovery plan, setting the deadlines for class-action discovery (February 13, 2010) and motions regarding class certification (February 23, 2010), and setting a class certification hearing date (March 31, 2010). Aplt.App. 58–59.

On December 21, 2009, BCR filed a motion to dismiss for lack of subject matter jurisdiction. Aplt. Br. 4. On February 22, 2010, Lucero filed his motion for class certification and supporting memorandum. Id. The court vacated the class certification hearing. On May 6, 2010, the district court dismissed Lucero's claims against BCR as moot and dismissed his complaint for lack of subject matter jurisdiction. Aplt.App. 61–85; see Lucero v. Bureau of Collection Recovery, Inc., 716 F.Supp.2d 1085 (D.N.M.2010).

The district court concluded that jurisdiction is not present “over a case where no class has been certified but the defendant has satisfied the plaintiff's demand for relief.” Lucero, 716 F.Supp.2d at 1097. Therefore, the court concluded, because BCR offered to satisfy Lucero's entire claim there was no longer a justiciable dispute. Accordingly, the court granted BCR's motion to dismiss for lack of subject-matter jurisdiction pursuant to Rule 12(b)(1). Because BCR's offer of judgment had terminated, the district court did not compel Lucero to accept the judgment and did not enter a judgment against BCR. Id. at 1100.

On appeal, Plaintiff argues that courts have generally looked with disfavor on allowing defendants in class action lawsuits to “buy off” class action plaintiffs by tendering an early Rule 68 judgment for the full amount of individual claims. Plaintiff argues that this dilemma can be solved either of two ways: providing that the class certification motion relates back to the filing of the class-action complaint or recognizing that an offer of judgment to a named plaintiff in a class action does not terminate the continued personal stake of the class, which, Plaintiff argues, is present from the inception of the suit. Aplt. Br. at 5–6, 9. BCR argues that our decision in Reed v. Heckler recognizes a general presumption of mootness in cases such as this and that the Supreme Court recognizes only narrow exceptions to this “general rule.” The only way we may reach the result Mr. Lucero requests, BCR argues, is to relate his motion for class certification back to the filing of the complaint, which is an improper application of mootness principles. See Aplee. Br. at 9; Weiss v. Regal Collections, 385 F.3d 337 (3d Cir.2004).

Discussion

We review de novo a dismissal pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure. Butler v. Kempthorne, 532 F.3d 1108, 1110 (10th Cir.2008); Disability Law Ctr. v. Millcreek Health Ctr., 428 F.3d 992, 996 (10th Cir.2005).

A. Article III

Article III of the Constitution requires that the federal courts render decisions only where there is a live case or controversy between parties. U.S. Const. art. III, § 2. The controversy must exist not only at the time the complaint is filed but at all stages of appellate review. United States v. Munsingwear, Inc., 340 U.S. 36, 39, 71 S.Ct. 104, 95 L.Ed. 36 (1950). The case or controversy requirement is a constitutional imperative; however, the boundaries of Article III's dictates are notoriously murky. See Flast v. Cohen, 392 U.S. 83, 95–97, 88 S.Ct. 1942, 20 L.Ed.2d 947 (1968).

“[M]ootness has two aspects: ‘when the issues presented are no longer ‘live’ or the parties lack a legally cognizable interest in the outcome.' ” Geraghty, 445 U.S. at 396, 100 S.Ct. 1202 (quoting Powell v. McCormack, 395 U.S. 486, 496, 89 S.Ct. 1944, 23 L.Ed.2d 491 (1969)); see also Flast, 392 U.S. at 94–95, 88 S.Ct. 1942. For this reason, although a case may present issues apparently primed for resolution, it is moot in the absence of “self-interested parties vigorously advocating opposing positions.” Geraghty, 445 U.S. at 403, 100 S.Ct. 1202. For example, in Disability Law Center v. Millcreek Health Center, this court determined that a declaratory judgment action was moot in a non-class action seeking access to records because the individual request was withdrawn and the plaintiff's claims did not embrace other similarly situated individuals, notwithstanding any interest in adjudication held by similarly situated individuals not a party to the action. 428 F.3d at 996.

Like Article III standing, mootness is oft-cited as a constitutional limitation on federal court jurisdiction. E.g., Building & Constr. Dep't v. Rockwell Int'l Corp., 7 F.3d 1487, 1491 (10th Cir.1993) (“Constitutional mootness doctrine is grounded in the Article III requirement that federal courts only decide actual, ongoing cases or controversies.”); see Matthew I. Hall, The Partially Prudential Doctrine of Mootness, 77 Geo. Wash. L.Rev. 562, 571 (2009) (citing footnote 3 in Liner v. Jafco, Inc., 375 U.S. 301, 84 S.Ct. 391, 11 L.Ed.2d 347 (1964), as the first occasion in which the Supreme Court expressly derived its lack of jurisdiction to review moot cases from Article III). But although issues of mootness often bear resemblance to issues of standing, their conceptual boundaries are not coterminous. See Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 189–92, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000). Indeed, the Supreme Court has historically recognized what are often called “exceptions” to the general rule against consideration of moot cases, as where a plaintiff's status is “capable of repetition yet evading review,” S. Pac. Terminal Co. v. Interstate Commerce Comm'n, 219 U.S. 498, 515, 31 S.Ct. 279, 55 L.Ed. 310 (1911), or where a defendant has ceased the challenged action but it is likely the defendant will “return to his old ways”—the latter often referred to as the voluntary cessation exception, United States v. W.T. Grant Co., 345 U.S. 629, 632, 73 S.Ct. 894, 97 L.Ed. 1303 (1953); see also, e.g., City of Erie v. Pap's A.M., 529 U.S. 277, 120 S.Ct. 1382, 146 L.Ed.2d 265 (2000). These exceptions do not extend to the standing inquiry, demonstrating the contours of Article III as it distinctly pertains to mootness. Friends of the Earth, Inc., 528 U.S. at 191, 120 S.Ct. 693.

A great deal of debate has ensued regarding the application of the Supreme Court's mootness doctrine in the unique circumstances posed by class actions. We are called on to consider some of these issues as they pertain to the operation of Rule 68 of the Federal Rules of Civil Procedure prior to certification of a class. We look first to the rule and then to the Supreme Court's guidance in this area.

B. Rule 68

Rule 68 states, “At least 14 days before the date set for trial, a party defending against a claim may serve on an opposing party an offer to allow judgment on specified terms, with the costs then...