Two years ago, I made an Offer of Judgment in a collective action FLSA case where the named plaintiff refused the Offer, which then allowed me to make a motion to dismiss for mootness, which was granted by Honorable Susan Wigenton in the District of New Jersey. Plaintiff’s counsel argued that we were picking off the named plaintiff in an attempt to thwart and diffuse the collective action, where the stakes were geometrically higher. The Court rejected that contention and granted my FRCP 12(b)(1) motion.
After a very recent Ninth Circuit decision, the result I obtained might not be tenable today. This is because the Ninth Circuit has affirmed a ruling where the district court refused to dismiss a collective action in the context of a refused Offer of Judgment, holding that the case is not moot as long as the named plaintiff (who had been offered full relief) was still able to file a timely motion for conditional certification. The case is entitled Pitts v. Terrible Herbst Incorporated.
The plaintiff alleged a failure to pay overtime and couched his case as the garden variety FLSA collective action. In the interim, and before the plaintiff sought conditional class certification, the Company made him an unconditional Offer of Judgment for $900; his computed “actual” damages were only $88. The Offer also included (as they all should) a statement that “reasonable attorneys fees” would be paid in addition to the dollars offered Pitts. That Offer completely satisfied Pitts’ individual claim of $88 and when he failed to accept it, the Company moved to dismiss.
The district court, however, denied the motion, ruling that the Offer did not render moot the class action as a certification motion could still have been timely filed. The Ninth Circuit agreed. The Court held that allowing this tactic would permit a defendant to kill a perhaps otherwise valid class action by picking off or “buying off” the named plaintiff(s) and thereby escaping from a possibly significantly higher liability.
This is a dangerous ruling for employers. In the case I referenced above, the liability could have been significant. We knew that and strategized the Offer of Judgment tactic in a legal “atmosphere” where there was a good deal of favorable case law, although at the district court level. Now, as time passes, the law changes. Given this holding and another holding from the Fifth Circuit a few years ago, the tactic of using Rule 68 to “pick off” the named plaintiff seems to have fallen into disfavor, forcing employers to litigate on the merits.
More often than not, that is not where we want to be.