On April 16, 2013, the Supreme Court of the United States decided Genesis HealthCare Corp. v. Symczyk, a case that will be of interest to many employers. In its 5-4 decision, the Supreme Court reversed the Third Circuit Court of Appeals, finding that the employer's offer of judgment to the individual named representative of a collective action filed under the Fair Labor Standards Act (FLSA) in response to her individual claim justified dismissal of the collective action because no other individual had yet opted into the case. In this case, Symczyk, a nurse employed by Genesis HealthCare Corporation, initiated an action against Genesis on behalf of herself and other similarly situated employees, alleging that the company violated the FLSA by deducting 30 minutes from her pay for a meal break, even though she claimed to have often performed compensable work during that break.
When Genesis answered the complaint, it simultaneously made a Rule 68 offer of judgment to Symczyk in the amount of $7,500 for unpaid wages, as well as "such reasonable attorneys' fees, costs, and expenses & as the Court may determine." Genesis further indicated that if Symczyk did not accept the offer within 10 days of service, the offer would be deemed withdrawn. Symczyk did not respond to the offer.
Both the trial court and the Third Circuit Court of Appeals found that the offer of judgment fully satisfied Symczyk's claims, rendering her claim moot, even though she did not accept the offer. The court of appeals, however, determined that the trial court inappropriately dismissed Symczyk's collective action, finding that a dismissal of the collective action would encourage calculated attempts by some defendants to pick off named plaintiffs with strategic Rule 68 offers of judgment before certification, thus frustrating collective actions.
The Supreme Court assumed for purposes of its decision that Symczyk's claim was moot, despite her failure to actually accept the offer of judgment, because that was the finding of both the court of appeals and the trial court, and Symczyk had not cross-appealed to the Supreme Court on that issue. The Supreme Court noted that there is a split among the circuits as to whether an individual's failure to accept an offer of judgment can make moot the individual's claim and decided not to address that particular issue.
In Genesis, the Supreme Court found that since Symczyk's claim was moot because she failed to accept the offer of judgment, she no longer had an interest in the potential collective action. The court held that the mere presence of collective-action allegations in a complaint cannot save the suit from mootness once the individual claim is satisfied if no one else has opted into the suit as a plaintiff at that time. The Supreme Court held that cases arising in the context of Rule 23 class actions are inapposite, because Rule 23 actions are fundamentally different than collective actions under the FLSA. Thus, because the individual named representative's claim had been satisfied through the employer's offer of judgment and no other individuals had yet opted into the case, the Supreme Court held that the collective action under the FLSA should be dismissed.