On April 16, a divided United States Supreme Court ruled that an employee who filed a Fair Labor Standards Act ("FLSA") case could not pursue a proposed collective action after she received an offer that would have given her full relief. Genesis HealthCare Corp. v. Symczyk, No. 11-1059 (Apr. 16, 2013). In reaching this holding, the Court declined to resolve a circuit split as to whether a full offer (as opposed to acceptance) of judgment is sufficient to render an individual FLSA claim moot, creating uncertainty as to the ultimate viability of using full offers of judgment as a defense to collective actions under the FLSA. Thus, while Symczyk is encouraging for employers, it is not clear whether full offers of judgment will ultimately circumvent FLSA collective actions.
In Symczyk, a registered nurse alleged that her employer, Genesis HealthCare Corp., violated the FLSA by automatically deducting a 30-minute meal break from her daily pay, even when she worked during her break. Before a collective action was certified, the nurse declined the employer’s offer of judgment under Rule 68 of the Federal Rules of Civil Procedure. The trial court determined that the nurse’s rejection of an offer of full relief under the FLSA deprived the court of jurisdiction, and it dismissed as moot the nurse’s proposed FLSA collective action. The Court of Appeals for the Third Circuit reversed, holding that the nurse’s individual claim was mooted by the employer’s offer, but the collective action was not moot. The Third Circuit reasoned that dismissing a collective action due to the mootness of an individual claim would allow employers to avoid FLSA collective actions by "picking off" individual named plaintiffs before courts consider whether a collective action is appropriate.
In a 5–4 opinion, the Supreme Court reversed, holding that a "collective action" cannot continue "once the individual claim is satisfied." The Court assumed that the employer’s offer mooted the nurse’s individual claim because the nurse failed to properly argue the point on appeal. 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." Because the nurse’s claim was mooted before any other employees had opted-in, she had no "personal interest in representing putative, unnamed claimants, nor any other continuing interest that would preserve her suit from mootness." In so holding, the Court distinguished FLSA collective actions from class actions under Rule 23, under which named plaintiffs may proceed if their claim becomes moot before the trial court has an opportunity to rule on class certification. The Court reasoned that unlike class actions seeking injunctive relief, collective actions for monetary relief are not "inherently transitory" and do not evade judicial review.
Importantly, in holding that the mooting of an individual claim moots a proposed collective action, the Court declined to resolve a circuit split as to whether an unaccepted offer of judgment under Rule 68 moots an individual FLSA claim. Thus, the ultimate viability of using full offers of judgment as a defense to collective actions under the FLSA is uncertain. What is certain, however, is that the debate over Symczyk will continue and litigation will center around the issue of whether a full offer of judgment is sufficient to moot an individual FLSA claim. Moving forward, employers are more likely to make offers of judgment to collective action representatives prior to certification in order to attempt to defeat collective actions under the FLSA. Plaintiff’s counsel, on the other hand, will be inclined to file certification motions closer to the filing of the complaint in order to avoid the effect of such offers of judgment.