Franco v. Allied Interstate LLC

This Fair Debt Collection Practices Act (FDCPA) case was brought by Gilberto Franco on behalf of himself and other similarly situated people, alleging that defendant Allied Interstate used false, deceptive, and misleading tactics in connection with its attempts to collect debts. Before Mr. Franco moved for class certification, Allied Interstate made him an offer of judgment under Federal Rule of Civil Procedure 68 that offered him more than he could recover on his individual claim, but did not offer any relief to the rest of the class. Mr. Franco did not accept the offer, explaining that he would only settle on a class-wide basis. The Rule 68 offer expired, and Mr. Franco moved to certify the class.

Allied Interstate opposed class certification and moved to dismiss, arguing that the unaccepted Rule 68 offer rendered the case moot. The district court agreed, dismissed the complaint, and denied class certification. On appeal, we filed an amicus brief in support of Mr. Franco. Our brief explained that because an unaccepted offer of judgment does not deprive the court of its ability to grant relief, Allied Interstate’s unaccepted offer of judgment did not moot Mr. Franco’s individual claim, and because it did not moot his individual claim, the question whether the offer affected the class action does not even arise. The brief also argued that even if a Rule 68 offer could moot an individual claim, the case would not be moot because Mr. Franco has a personal stake in the class claims.

On May 18, 2015, the Second Circuit held that the unaccepted offer of judgment did not moot Mr. Franco’s claims and remanded. Later that day, Allied Interstate moved in the district court for entry of judgment in Mr. Franco’s favor in accordance with the terms of the unaccepted Rule 68 offer. Allied Interstate argued that entry of the judgment it sought would deny the court of jurisdiction over both Mr. Franco’s individual claim and the class claims. The district court granted Allied Interstate’s motion, entered judgment under Rule 68 in favor of Mr. Franco on his individual claim, and terminated the case.

We served as co-counsel for Mr. Franco on appeal to the Second Circuit. Our briefs explained that the district court erred in entering judgment on Mr. Franco’s individual claim, both because courts should not enter judgment on a named plaintiff’s claim giving effect to an unaccepted Rule 68 offer and because a named plaintiff with a live claim must be given a fair opportunity to show that class certification is warranted. We also argued that, regardless of the status of his individual claim, Mr. Franco retained a personal stake in the class claims.

On April 9, 2018, the Second Circuit vacated the district court’s judgment and remanded, explaining that an unaccepted Rule 68 offer is a legal nullity and therefore provides no basis for the entry of judgment.