Yaakov v. Act, Inc., 987 F. Supp. 2d 124

Background

Plaintiff Bais Yaakov (a New York religious corporation) sued ACT, Inc. alleging thousands of unsolicited faxes violated the TCPA and N.Y. Gen. Bus. Law § 396‑aa and sought to represent three nationwide/statewide classes.
Defendant served a Rule 68 offer of judgment before Plaintiff moved for class certification that would pay statutory damages for the faxes received, attorneys’ fees if recoverable, costs, and a plaintiff‑specific injunction.
Plaintiff did not accept the Rule 68 offer within 14 days (the offer lapsed under Rule 68).
Defendant moved to dismiss for lack of subject‑matter jurisdiction, arguing the unaccepted offer mooted Plaintiff’s individual and thus the entire putative class action.
The Court denied dismissal, holding an unaccepted Rule 68 offer is a legal nullity and does not moot the case where no class has yet been certified.
The Court certified the interlocutory question for appeal under 28 U.S.C. § 1292(b) because circuits are split and resolution could materially advance termination of the litigation.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether an unaccepted Rule 68 offer made before class‑certification motion moots the plaintiff’s individual claim and the putative class action	The unaccepted offer lapsed under Rule 68 and thus left Plaintiff’s claim unsatisfied; case remains justiciable	The offer, though unaccepted, fully offered the relief sought and therefore removed any live case or controversy, requiring dismissal for lack of jurisdiction	Court held the unaccepted Rule 68 offer did not moot the case; it is a legal nullity and Plaintiff retains an unsatisfied claim; jurisdiction remains
Whether attorney’s‑fees reservation prevents mootness	Plaintiff: residual interest in fees or incentive awards preserves a stake and prevents dismissal	Defendant: interest in fees does not prevent mootness of underlying claim	Court held attorney’s‑fee interest does not prevent dismissal for mootness; such fees are ancillary and insufficient to resurrect an otherwise moot controversy
Whether an offer leaving damages/relief to the court precludes mootness	Plaintiff: offer leaves some amounts (fees) and relief undetermined so case not moot	Defendant: the offer gave full statutory relief for the faxes; only fees are left to court discretion	Court found the offer provided the full individual statutory relief Plaintiff sought; fee determination alone does not prevent dismissal if underlying claim were otherwise moot
Whether injunctive relief limited to plaintiff (not classwide) is insufficient	Plaintiff: injunction limited to Plaintiff is inadequate to moot the putative class claims	Defendant: absent class certification, Plaintiff can only seek injunction for itself; the offer was adequate for individual relief	Court agreed that offered injunction adequately covered what Plaintiff could seek individually; classwide relief was not available before certification

Key Cases Cited

Cruz v. Farquharson, 252 F.3d 530 (1st Cir. 2001) (named plaintiffs’ receipt of full relief rendered proposed class action moot when no class had been certified)
Damasco v. Clearwire Corp., 662 F.3d 891 (7th Cir. 2011) (an unaccepted Rule 68 offer can moot an action when it fully satisfies the plaintiff’s claim)
Warren v. Sessoms & Rogers, P.A., 676 F.3d 365 (4th Cir. 2012) (Rule 68 offer that unequivocally affords all requested relief renders plaintiff’s action moot)
O’Brien v. Ed Donnelly Enters., Inc., 575 F.3d 567 (6th Cir. 2009) (unaccepted Rule 68 offer moots case but court may enter judgment consistent with the offer)
McCauley v. Trans Union, LLC, 402 F.3d 340 (2d Cir. 2005) (unaccepted rule 68 offer moots individual claim and judgment appropriate under the offer)
Weiss v. Regal Collections, 385 F.3d 337 (3d Cir. 2004) (early Rule 68 offer does not moot the class action although it moots the individual claim)
Sandoz v. Cingular Wireless LLC, 553 F.3d 913 (5th Cir. 2008) (follows Weiss; early offer does not bar later class certification efforts)
Lucero v. Bureau of Collection Recovery, Inc., 639 F.3d 1239 (10th Cir. 2011) (adopts Weiss reasoning allowing class certification where offer preceded reasonable certification ruling)
Diaz v. First Am. Home Buyers Prot. Corp., 732 F.3d 948 (9th Cir. 2013) (an unaccepted Rule 68 offer that would fully satisfy a plaintiff’s claim does not render that claim moot)
Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523 (2013) (Supreme Court did not resolve the Rule 68 mootness split; Justice Kagan’s dissent argued unaccepted offers are legal nullities)
Diffenderfer v. Gomez‑Colon, 587 F.3d 445 (1st Cir. 2009) (interest in recovering attorney’s fees does not create Article III case or controversy when underlying claim is moot)
Lewis v. Cont’l Bank Corp., 494 U.S. 472 (1990) (attorney‑fee interests alone cannot save an otherwise moot controversy)