FLSA collective actions remain popular with the plaintiffs’ bar in part because of the availability of attorneys’ fees. Faced with the prospect of expensive litigation, employers many times must make the difficult decision to settle these cases early on, even when they involve minimal damages, by agreeing to pay an amount towards the plaintiffs’ attorneys’ fees (which sometimes can bear little relationship to the amount of back wages sought) in order to avoid a more costly resolution down the road.
One defense to this tactic is to “moot” the case early – prior to it being conditionally certified as a collective action and before significant fees accrue – by offering to pay “full relief.” This approach is analogous to one commonly used in Title III ADA accommodation cases whereby, pursuant to Buckhannon Board. & Care Home, Inc. v. W. Va. Dep’t of Health & Human Res., 532 U.S. 598 (2001), by correcting the alleged barrier a company moots the claim and, as a result, no attorneys’ fees are available. This strategy has received mixed reactions by the courts in FLSA cases, but certain trends have emerged.
- Most courts have held that the offer must be in the form of a Rule 68 offer of judgment, not an informal settlement offer.
- The offer must be specific and include “full relief,” generally meaning alleged back wages, liquidated damages and reasonable attorneys’ fees and costs to date.
- The offer cannot be conditional in nature. For example, one court recently rejected a mootness argument when the offer was conditioned upon the plaintiffs’ submission of affidavits setting forth their overtime calculations, which then would be compared with the employer’s records. Likewise, mootness arguments have been rejected when the offer was conditioned on confidentiality or other settlement terms.
- Courts also have considered the timing of the offer, often refusing to dismiss on mootness grounds where plaintiffs already moved for conditional certification. Other factors, such as the existence of additional claims, are also relevant.
Obviously, making an early offer of “full relief” to moot a FLSA case is not an appropriate strategy in every case, but in the right case and when done properly, it can be an effective means of avoiding protracted litigation and attorneys’ fees.