There is an unavoidable tension in class-action jurisprudence between the class-action rule (FRCP 23 or Rule 4:32 in New Jersey) and the remaining rules of procedure. Straightforward rules become complicated when applied to potentially thousands of plaintiffs, almost none of whom know they are putative parties to litigation. One of those rules is the under-utilized offer of judgment rule (FRCP 68, or Rule 4:58 in New Jersey). The idea is simple: before trial, a party may serve on its opponent an offer to allow judgment for a specific amount. If the opposing party rejects the offer, and ultimately receives a less favorable judgment at trial, the rejecting party may be responsible for all of its opponent’s costs incurred since the rejection of the offer. In some instances, those costs can include attorney fees.

The rule exists to encourage settlement, avoid litigation where possible, and conserve judicial resources, but like many rules, it is less straightforward in the class-action context. For instance, does an offer providing full relief moot the action entirely? If not, how does it affect the class-certification analysis? Does it create a conflict between the named plaintiff and the absent class members? Despite robust federal precedent, New Jersey, until recently, had not considered these questions. Now, in a case of first impression, a New Jersey trial court has held that a defendant in a putative class action may not use offers of judgment to “pick off” named plaintiffs in an attempt to render a case moot. This significant decision, removing a powerful tool in favor of settlement, brings New Jersey in line with the U.S. Court of Appeals for the Third Circuit.

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