Marx Confronted Costs Issue, Providing Relief to Prevailing Defendants In District Court’s Discretion.
In Marx v. General Revenue Corp., 133 S. Ct. 1166, 1172 (2013), the U.S. Supreme Court held that an unsuccessful plaintiff in a Fair Debt Collection Practice Act (FDCPA) case can be liable for defense costs even absent proof that the lawsuit was brought in bad faith. However, the decision on whether to tax costs (in federal court parlance, grant them) is left to the district judge’s discretion. (Id. at 1179.)
Doyle Decision Says FDCPA Claims Can Be Mooted With Rule 68 Offer If District Judge Gives Plaintiff Everything He/She Wants and Reserves Jurisdiction to Award Reasonable Fees and Costs.
The defense in FDCPA cases often wants to utilize F.R.Civ.P. 68 offers in a way to moot these cases before attorney’s fees exposure eclipses a potential small recovery on the merits. The success of this strategy will depend on how the Rule 68 offer is structured.
Doyle v. Midland Credit Management, Inc., 722 F.3d 78, 80-81 (2d Cir. 2013) shows the right way to do this. There, the defense made a Rule 68 offer of judgment of $1,001 plus reserved with the district court plaintiff’s ability to further recoup reasonable fees and costs. At the hearing on the motion, plaintiff informed the court that he had also incurred several dollars in actual damages for calls made to his cellphone, with the defense offering to increase the Rule 68 offer accordingly. Plaintiff rejected the offer, and the district judge held the case was moot. The Second Circuit Court of Appeals sustained the ruling, finding that the defense’s complete offer to settle the case was sufficient ground to dismiss for lack of subject matter jurisdiction.
To be contrasted to Doyle are other Rule 68 offers that did not operate to moot an FDCPA case. See, e.g., Zinni v. ER Solutions, Inc., 692 F.3d 1162, 1166, 1168 (11th Cir. 2012) [Rule 68 offer did not moot case where it did not offer to have judgment entered against the particular defendants; promise to pay insufficient]; Hrivnak v. NCO Portfolio Mgt., Inc., 719 F.3d 564, 567, 570 (6th Cir. 2013) [Defense Rule 68 offer only offered what defendants thought was appropriate; to moot a case, the offer of judgment must give the plaintiff everything he has asked for as an individual].
Then, the mootness doctrine actually worked against the defense when it tried to “get too cute.” In Yunker v. AllianceOne Receivables Mgt., Inc., 701 F.3d 369, 372-374 (11th Cir. 2012), the defense made a full Rule 68 offer but expressly reserved the defendant’s right to appeal the district court’s rulings. Plaintiff accepted the Rule 68 offer, and defendant appealed. On appeal, the Eleventh Circuit held that the Rule 68 offer mooted the case, with the reservation of the right to appeal being inconsequential. The reviewing court dismissed the appeal as moot.