In some class action lawsuits, the defendant (usually a company or corporation) will offer the main plaintiffs named in the lawsuit full compensation. Why would the defendant do such a thing? In a legal tactic and effort to avoid having to pay all members in a class action lawsuit, the full compensation to the main plaintiff only could automatically end the lawsuit, stopping the class action lawsuit altogether. This tactic worked for some defendants in the past. However, it will no longer work due to a recent Supreme Court decision.
In a mid-January ruling, the Supreme Court announced its decision on this matter of whether or not the defendant can avoid a class action lawsuit by immediately paying off the initially named plaintiffs. The ruling?
Defendants can no longer pay full compensation to plaintiffs to avoid a class action lawsuit. This is an important ruling and win for plaintiffs considering a class action lawsuit as this case is the first of many other cases in the Supreme Court’s docket that could impact future class actions.
The decision came down to a 6-3 ruling, with Justice Ruth Ginsburg writing the majority opinion. Citing back to basic contract law, “An unaccepted settlement offer, like other unaccepted contract offers, creates no lasting right or obligation.” With the dissenting opinion, Chief Justice John Roberts believes that such an offer should end the lawsuit.
For those siding with the majority, concerns were raised on how allowing such a tactic would close the door for many plaintiffs who may only be able to have legal recourse through a class action lawsuit.
The continuing impact of the Supreme Court decisions remains to be seen as more cases are yet to be decided.