Radha Geismann, M.D., P.C. v. Zocdoc, Inc.

• Decision Date: 28 July 2017
• Docket Number: 14 Civ. 7009 (LLS)
• Citation: 268 F.Supp.3d 599
• Parties: RADHA GEISMANN, M.D., P.C., Plaintiff, v. ZOCDOC, INC., Defendant.
• Court: U.S. District Court — Southern District of New York

268 F.Supp.3d 599

RADHA GEISMANN, M.D., P.C., Plaintiff,

v.ZOCDOC, INC., Defendant.

14 Civ. 7009 (LLS)

United States District Court, S.D. New York.

Signed July 28, 2017

Aytan Yehoshua Bellin, Bellin & Associates, White Plains, NY, Max G. Margulis, Margulis Law Group, Chesterfield, MO, Brian J. Wanca, Pro Hac Vice, Ross M. Good, Ryan M. Kelly, Anderson & Wanca, Rolling Meadows, IL, for Plaintiff.

Bryan K. Clark, Blaine C. Kimrey, Bryan K. Clark, Pro Hac Vice, Vedder, Price, P.C., Chicago, IL, Charles J. Nerko, Vedder Price P.C., New York, NY, for Defendant.

OPINION & ORDER

Louis L. Stanton, U.S.D.J.Defendant ZocDoc, Inc. requests leave to deposit $13,900.00 with the Clerk of Court and to move for summary judgment. For the following reasons, ZocDoc’s request is granted.

Background

In 2014, plaintiff Radha Geismann, M.D., P.C., a Missouri professional corporation, filed a complaint in Missouri state court, alleging that it received two unsolicited faxes from ZocDoc, in violation of the Telephone Consumer Protection Act of 1991 ("TCPA"), 47 U.S.C. § 227, which, inter alia, prohibits the use of "any telephone facsimile machine, computer, or other device to send, to a telephone facsimile machine, an unsolicited advertisement," unless "the unsolicited advertisement is from a sender with an established business relationship," the recipient volunteered its number to the sender, or the fax meets certain other notice requirements. Id. § 227(b)(1)(C).

Geismann seeks between $500.00 and $1,500.00 for each alleged TCPA violation, an injunction prohibiting ZocDoc from sending similar faxes in the future, and costs. It also filed a motion for class certification. On March 13, 2014, ZocDoc removed the action to the United States District Court for the District of Missouri. Two weeks later, ZocDoc made an offer of judgment pursuant to Fed. R. Civ. P. 68(a) for $6,000.00, plus reasonable attorney’s fees, and an injunction prohibiting it from sending Geismann similar faxes in the future. On April 8, Geismann rejected the offer.

On April 18, 2014, ZocDoc moved to transfer the action to the United States District Court for the Southern District of New York pursuant to 28 U.S.C. § 1404(a), which the court granted. ZocDoc then moved to dismiss the complaint, arguing that its offer of judgment satisfied all of Geismann’s claims, thereby mooting the action.

On September 26, 2014, I granted ZocDoc’s motion and entered judgment, holding that its offer of judgment "more than satisfies any recovery Geismann could make under the applicable statute" and as a result, "there remains no case or controversy before the Court." Geismann v. ZocDoc, Inc., 60 F.Supp.3d 404, 406–07 (S.D.N.Y. 2014), vacated and remanded, 850 F.3d 507 (2d Cir. 2017). Geismann appealed.

On January 20, 2016, during the pendency of Geismann’s appeal to the Second Circuit, the Supreme Court decided Campbell–Ewald Co. v. Gomez, ––– U.S. ––––, 136 S.Ct. 663, 193 L.Ed.2d 571 (2016), which resolved a circuit split over whether a defendant’s unaccepted offer of judgment pursuant to Fed. R. Civ. P. 68 in full satisfaction of a plaintiff’s claim moots that plaintiff’s claim so as to deprive a federal court of the Article III "cases" and "controversies" jurisdictional requirement. In Campbell–Ewald, respondent Jose Gomez sued for damages pursuant to the TCPA for unsolicited text messages he received from petitioner Campbell. Id. at 667. Before the agreed-upon deadline for Gomez to file for class certification, Campbell made an offer of settlement pursuant to Fed. R. Civ. P. 68. Id. It offered to pay Gomez costs, excluding attorney’s fees, and $1,503.00 for every unsolicited text message Gomez could show he had received. Id. at 668. Campbell also proposed an injunction barring it from sending further text messages in violation of the TCPA. Id. Gomez allowed Campbell’s offer to expire after the fourteen days specified in Rule 68. Id. Campbell then moved for summary judgment pursuant to Fed. R. Civ. P. 12(b)(1). Id. It argued that its offer mooted Gomez’s claims and accordingly, there remained no Article III case or controversy to adjudicate. Id.

Holding that such an unaccepted offer does not moot an action, the majority adopted Justice Kagan’s dissent in Genesis Healthcare Corp. v. Symczyk, 569 U.S. 66, 133 S.Ct. 1523, 1532, 185 L.Ed.2d 636 (2013) (Kagan, J., dissenting):

"When a plaintiff rejects such an offer—however good the terms—her interest in the lawsuit remains just what it was before. And so too does the court’s ability to grant her relief. An unaccepted settlement offer—like any unaccepted contract offer—is a legal nullity, with no operative effect. As every first-year law student learns, the recipient’s rejection of an offer ‘leaves the matter as if no offer had ever been made.’ Minneapolis & St. Louis R. Co. v. Columbus Rolling-Mill, 119 U.S. 149, 151 [7 S.Ct. 168, 30 L.Ed. 376] (1886). Nothing in Rule 68 alters that basic principle; to the contrary, that rule specifies that ‘[a]n unaccepted offer is considered withdrawn.’ Fed. Rule Civ. Proc. 68(b). So assuming the case was live before—because the plaintiff had a stake and the court could grant relief—the litigation carries on, unmooted." Ibid.

Campbell–Ewald, 136 S.Ct. at 670, 193, quoting Genesis Healthcare, 133 S.Ct. at 1532 (Kagan, J., dissenting).

The Supreme Court also raised a hypothetical which it declined to decide—"whether the result would be different if a defendant deposits the full amount of the plaintiff’s individual claim in an account payable to the plaintiff, and the court then enters judgment for the plaintiff in that amount." Id. at 672.

On February 1, 2016, ZocDoc requested leave to deposit $6,100.00 with the Clerk in satisfaction of its offer of settlement. I granted its request, noting "No principle or authority appears to prevent compliance with an unstayed judgment, even one under appeal." Dkt. No. 62. On February 5, 2016, ZocDoc deposited $6,100.00 with the Court’s Clerk’s Office, where it remains.

On March 9, 2017, the Second Circuit reversed and remanded my September 26, 2014 order and judgment, stating (850 F.3d at 512–13) (brackets and alterations in original):

While this appeal was pending before us, the Supreme Court decided Campbell–Ewald. Its decision made clear that an unaccepted Rule 68 offer of judgment does not render an action moot. Campbell–Ewald, 136 S.Ct. at 670–71. Because that decision controls our review and is dispositive of the case at bar, we need not, and decline to, reach the issues raised by Geismann in its pre- Campbell–Ewald submissions.

In Campbell–Ewald, the plaintiff sought individual and class-wide relief under the TCPA, alleging that he and members of the putative class received unsolicited text messages sent by the defendant in violation of the statute. Id. at 667. The defendant, like ZocDoc, "proposed to settle [the plaintiff’s] individual claim and filed an offer of judgment pursuant to Federal Rule of Civil Procedure 68," including an offer to pay "costs, excluding attorney’s fees, and $1,503 per message," as well as "a stipulated injunction in which [the defendant] agreed to be barred from sending text messages in violation of the TCPA." Id. at 667–68. The plaintiff, like Geismann, declined the offer. Id. at 668. The Supreme Court concluded that an Article III "case" or "controversy" remained, Rule 68 offer notwithstanding, because "[a]n unaccepted settlement offer—like any unaccepted contract offer—is a legal nullity, with no operative effect." Id. at 670 (quoting Genesis Healthcare Corp. v. Symczyk, 569 U.S. 66, 133 S.Ct. 1523, 1533, 185 L.Ed.2d 636 (2013) (Kagan, J., dissenting)). "[W]ith no settlement offer still operative, the parties remained adverse; both retained the same stake in the litigation they had at the outset." Id. at 670–71.

In light of Campbell–Ewald, the district court’s conclusion in this case that Geismann’s claim was "mooted by the amount and content of the Rule 68 offer made by ZocDoc," Geismann, 60 F.Supp.3d at 407, is incorrect. Rule 68 provides that, "[a]t 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 accrued." Fed. R. Civ. P. 68(a). "The plain purpose of Rule 68 is to encourage settlement and avoid litigation." Marek v. Chesny, 473 U.S. 1, 5, 105 S.Ct. 3012, 87 L.Ed.2d 1 (1985). Should the offeree decline the offer, however, it "is considered withdrawn." Fed. R. Civ. P. 68(b). Campbell–Ewald makes clear that such a "withdrawn" offer "ha[s] no continuing efficacy." 136 S.Ct. at 670. The district court’s entry of judgment, therefore, imbued ZocDoc’s offer with a power it did not possess.

The district court’s conclusion in the case now before us is, of course, understandable, it having been reached before Campbell–Ewald was decided. And, as we have noted, "our prior case law has not always been entirely clear on this subject." Tanasi, 786 F.3d at 199. The district court also followed the "typically proper" procedure by "enter[ing] judgment against the defendant for the proffered amount and [ ] direct[ing] payment to the plaintiff consistent with the offer." Cabala v. Crowley, 736 F.3d 226, 228 (2d Cir. 2013) (per curiam). But the basis upon which the district court entered judgment did not exist: An unaccepted Rule 68 offer of judgment does not render an action moot.

The Second Circuit cautioned that Rule 23 being "harmonized" with Rule 68 might impair the hypothetical’s application to class actions:

We note, without deciding because the situation is not before us, that an attempt by the defendant to use the tactic described in the Campbell–Ewald hypothetical to "place [it] in the driver’s seat," 136 S.Ct. at 672, might not work. The Supreme Court’s criticism of similar tactics suggests that Rule 68 should be harmonized with Rule 23. See id. (describing a "kindred strategy" intended to "avoid a potential adverse

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