I have written many times about making Offers of Judgment in a FLSA collective action case, in an effort to eliminate the lead plaintiff and perhaps then dispose of the entire case before it escalates into conditional certification and beyond. I had utilized the procedure to defeat such a motion and, as my client had fixed the procedure that was allegedly broken, we broke the back of any future possible class action. Then, the tide started to turn and some cases came out holding that such an a tactic was an attempt to “pick off” the named plaintiff and unjustly and unfairly stymie the action. The Third Circuit (where I practice) had in fact come down strongly against the use of the Offer as a means of disposing of a case.
Well, maybe things are going to change. The United States Supreme Court has agreed to review this Third Circuit case to determine whether an employer's offer of judgment that fully satisfies the named plaintiff's FLSA claim moots the underlying collective action in a scenario in which the named plaintiff is the only party in the case and before he has moved for a collective action. The case is entitled Genesis Health Care Corp. v. Symczyk.
The plaintiff worked for the Pennyback Center in Philadelphia and alleged that her employer automatically deducted a half-hour for lunch every day, notwithstanding that the employee(s) claimed that they often worked through lunch. The Company answered the Complaint and, simultaneously, filed a $7,500 Offer of Judgment under Rule 68 of the Federal Rules of Civil Procedure. The plaintiff rejected the Offer, although she conceded that it would have completely satisfied her alleged injury/claim.
The federal district court ruled that it had no jurisdiction and dismissed the entire case as moot. The Third Circuit reversed, ruling that this could allow employers to “pick off” the individual named plaintiff(s) before there could a ruling on whether class certification was warranted. Genesis has contended in its cert petition that this case presents “an ideal vehicle” to resolve splits in the federal Circuits as to whether such an unaccepted Rule 68 Offer of Judgment does moot the entire action. The Fourth, Seventh, and Eighth Circuits would find the case moot, the Third, Fifth, Ninth, and Tenth Circuits would not.
Since Article III of the Constitution constrains federal courts to hear only actual “cases and controversies,” the theory is that once plaintiff turns down full relief, her case cannot proceed and as she has not achieved the granting of class certification, there is no case, unless another lead plaintiff is found. This is rather straightforward law, but the Third Circuit seemed to inject a policy basis into its holding, taking strong objection to what it must have perceived as an “unfair” tactic to get out of a class action. The problem with this reasoning is that FLSA collective actions are very different from Rule 23 class actions, where the Third Circuit found its support, because the FLSA lead plaintiff is not the “representative” of other allegedly similarly situated employees who may later join the suit.
I am hopeful that the Company will prevail. I think, under Rule 68, it should. How great would that be?