U.S. Supreme Court holds government contractor not entitled to derivative immunity; also full offer of settlement does not moot Plaintiff’s claims

Campbell-Ewald v. Gomez, 14-857 (January 20, 2016)

The United States Supreme Court issued this opinion on derivative sovereign immunity for contractors.

The United States Navy contracted with Campbell-Ewald Company (“Campbell”) to develop a multimedia recruiting campaign that included the sending of text messages to young adults, but only if those individuals had “opted in” to receipt.  Gomez, who alleges that he did not consent to receive text messages and, at age 40, was not in the Navy’s targeted age group. He brought a national class action suit. Campbell utilized an offer for judgment strategy and argued it mooted Gomez’ claims. Also, Campell argued it was entitled to derivative sovereign immunity as a government contractor. The trial court granted Campbell’s motion for summary judgment but the Ninth Circuit Court of Appeals reversed. Campbell appealed.

The Telephone Consumer Protection Act prohibits any person, absent the prior express consent of a telephone call recipient, from “mak[ing] any call . . . using any automatic telephone dialing system…”  which includes text messages. The Supreme Court first analyzed the offer of judgment argument under Rule 68 and determined that an unaccepted Rule 68 offer that would fully satisfy a plaintiff’s individual claim is insufficient to render that claim moot. This ruling resolved a split in the circuits.  The Court then analyzed the immunity issue. [Comment: while it is federal immunity at play, the analysis can be very helpful to local and state government attorneys arguing state derivative immunity.]  Unlike sovereign immunity, derivative immunity is not absolute. When a contractor violates both federal law and the government’s explicit instructions, as here alleged, no “derivative immunity” shields the contractor. In other words, the contractor exceeded its authority under its government contract because it contacted individuals who had not “opted in” to receiving such messages. As a result, no immunity can be given for exceeding such authority.  Justice Thomas concurred in the judgment.

The dissent asserts that Rule 68 does moot the Plaintiff’s claims if the offer of judgment provides all the relief the Plaintiff is entitled to get thereby eliminating the constitutional case-or-controversy element. The dissent asserts no case-or-controversy exists so the lawsuit is moot. The dissent does not address the immunity issues at all.

If  you would like to read this opinion click here. GINSBURG, J., delivered the opinion of the Court, in which KENNEDY, BREYER, SOTOMAYOR, and KAGAN, JJ., joined. THOMAS, J., filed an opinion concurring in the judgment. ROBERTS, C. J., filed a dissenting opinion, in which SCALIA and ALITO, JJ., joined. ALITO, J., filed a dissenting opinion.