March 28, 2015
March 27, 2015
March 26, 2015
Fair Labor Standards Act (FLSA) Collective Action: Supreme Court Holds Offer of Judgment Moots Claim
Does a “make whole” offer of judgment to the lead plaintiff in a wage and hour collective action put an end to the case? According to the US Supreme Court, the answer is “yes”- at least on the specific facts of the case before it.
The case is Genesis v Symczyk. The plaintiff, Laura Symczyk, worked for Genesis Health Corporation as a registered nurse. According to Ms. Symczyk, Genesis violated the Fair Labor Standards Act by automatically deducting thirty minutes of time worked per shift for employees’ meal breaks, even when the employees performed compensable work during those breaks. Seeking unpaid wages under the FLSA, Ms. Symczyk filed a lawsuit as a collective action, meaning that it was filed on behalf of herself and other similarly situated employees. Under rules pertaining to collective actions, the court must first certify the class and, thereafter, class members must affirmatively “opt-in” to the lawsuit. Throughout the life of the case, Ms. Symczyk was the only named plaintiff and did not seek to have a class certified.
When Genesis answered the complaint, it simultaneously served a formal offer of judgment, which included payment of $7500 as payment for the allegedly unpaid wages. Under the rule pertaining to offers of judgment (Rule 68 of the Federal Rules of Civil Procedure), if an offer is rejected and the final court decision is less favorable than the final offer that was made, the party who rejected the offer is subject to certain penalties. The rule also provides that an unaccepted offer is considered withdrawn.
Ms. Symczyk ignored the offer. Genesis then moved to dismiss Ms. Symczyk’s complaint, arguing that because it had offered Ms. Symcyzk complete relief on her individual damages claim she no longer possessed a personal stake in the outcome of case, rendering the action moot. The district court agreed with Genesis and dismissed the case. The Third Circuit Court of Appeals agreed that the offer of judgment mooted Ms. Symczyk’s individual claim, but noted that to allow employers to moot FLSA collective actions by “picking off” representative plaintiffs in this manner would frustrate the purpose of the FLSA. Accordingly, the Court revived the case, to give Ms. Symczyk the opportunity to seek certification.
The United States Supreme Court reversed. First, the Court “assumed, without deciding” that Genesis’ offer of judgment mooted Ms. Symczyk’s claim despite the fact that she did not actually accept the offer. Therefore, the Court reasoned, under basic principles of mootness, once Ms. Symczyk’s individual FLSA claim was satisfied, the collective action allegations in her complaint no longer presented the Court with a justiciable controversy. Stating that “the mere presence of collective-action allegations in the complaint cannot save the suit from mootness once the individual claim is satisfied,” the Court intimated that if the plaintiff had been joined by others or sought certification before the offer of judgment was made, the result may have been different.
In a sharply worded dissenting opinion, four Justices seized upon the Court’s assumption which, in their view, was erroneous. Relying on the principal that as “every first-year law student learns, the recipient’s rejection of an offer ‘leaves the matter is if no offer had ever been made.’” For this reason, the dissent argued, the plaintiff’s claim was not moot when her case was dismissed.
While this case may appear to be a win for employers, we encourage employers to take caution. As the dissent pointed out, the Court assumed, without deciding, that Ms. Symczyk’s claim was moot. This 5-4 Supreme Court decision highlights an ongoing underlying dispute – does an offer of judgment actually moot a representative Plaintiff’s FLSA claim and therefore dispose of the collective action altogether? Federal courts have come down differently on this question, and Genesis Health does not conclusively resolve this issue. We will continue to monitor this issue and update you as the law develops.