Monday, August 27, 2012
The Eleventh Circuit ruled in Zinni v. ER Solutions, Inc. that the defendants' settlement offer for the full amount available under federal law, but not including an offer of a judgment, did not moot the plaintiffs' Fair Debt Collection Practices Act case.
The plaintiffs sued defendants in federal court for harassing debt collection calls in violation of the FDCPA and sought monetary damages and a judgment against the defendants. The defendants offered $1,001 to each plaintiff--one dollar more than the maximum damage award under the FDCPA--plus unspecified attorneys' fees and costs. But they didn't offer a judgment against them.
The Eleventh Circuit ruled that the offer didn't moot the plaintiffs' case. The court said that the defendants' offer wasn't the full relief requested by the plaintiffs (because the plaintiffs also asked for a judgment), and that a settlement for monetary damages without a judgment could simply lead to more litigation--for state law breach-of-contract--while at the same time divesting the federal court of jurisdiction over the claim. In other words: If the court dismissed the case as moot, the plaintiffs had only the defendants' promise to pay, and no means of enforcement in the federal courts. (With no judgment, the federal court where the plaintiffs brought the case would lack jurisdiction to enforcement a settlement. The plaintiffs could only enforce it in state court, on a breach-of-contract claim.)
The court distinguished two Seventh Circuit cases that held that an offer of full settlement did moot the claims, because the offer in those cases included a court-enforceable judgment.
The ruling allows the case to move forward, presumably on the issue of the judgment alone (assuming that the plaintiffs accept the offer of monetary damages).