One of the requirements for filing a class action lawsuit is that the representatives of the class must have a complaint or complaints against the defendant which adequately represent the complaints of the rest of the class members. If a class representative (or representatives) is offered a settlement from the defendant which covers all of the damages to which they are legally entitled, then the plaintiff can no longer represent a class, as their complaint against the defendant would be invalidated.
This was the argument made by Buccaneers Limited Partnership when they filed a motion to dismiss a lawsuit against them. The lawsuit was filed by three dentists, a pest control service, and two others, all of whom allegedly received "unsolicited facsimiles" which were sent "for the purposes of offering for sale game tickets to the Tampa Bay Buccaneers' home football games." Because fax recipients have to pay for the faxes that they receive, including the paper and toner used to print the faxes, solicitations such as these are illegal under the federal Telephone Consumer Protection Act.
The Buccaneers offered to pay the plaintiffs the maximum amount of damages which they would be able to collect under the Telephone Consumer Protection Act. The plaintiffs refused the money and continued with the lawsuit. The Buccaneers then filed a motion to dismiss. Regardless of whether or not the plaintiffs accepted the offer made by the defendants, the mere existence of the offer negates any complaint that the plaintiffs have against the defendant.
The fact that a defendant can invalidate a plaintiff's claim by offering to settle runs the risk of defendants making an offer to plaintiffs to settle the case before the plaintiffs have a chance to make their case for class certification. In order to avoid this, courts have provided plaintiffs with the option of filing for class certification at the same time that they file the complaint. They can then ask the court to wait to make a decision until they have had time to provide evidence that the case should be tried as a class action.
Because the plaintiffs in this case did not file for class certification until after the Buccaneers had already filed their motion to dismiss (and after the Buccaneers had made their offer to settle), the court determined that the plaintiffs no longer had a valid complaint against the defendants. As a result, the plaintiffs were ineligible to represent a class of recipients of facsimiles from the Buccaneers.
Under the relevant statute, the TCPA or Telephone Communications Protection Act, each class member would be entitled to $500 in damages. If all potential 100,000 class members are included, this raises the potential penalty for the defendant to $50 million. If the plaintiffs are able to prove to the court that the defendant violated the TCPA "willfully or knowingly", then the penalty triples to $150 million. As a result, the attorneys' fees would likewise be inflated. The awards to the named plaintiffs in the lawsuit would also rise accordingly. The court therefore determined that the plaintiffs had an ulterior motive in filing the lawsuit and granted the defendant's motion to dismiss.
The same lawyers later filed a class action on behalf of another plaintiff and moved for class certification thus barring another pick off attempt and the class action is now proceeding. This demonstrates that the pick off tactic can sometimes do nothing but delay a class case.
You can view the full court opinion here.