In Genesis Healthcare Corp. v. Symczyk, the United States Supreme Court held that a nurse’s Fair Labor Standards Act (“FLSA”) collective action against her former employer became moot after the employer offered her full relief for her individual claims.
In 2009, Laura Symczyk filed a complaint on behalf of herself and “all other persons similarly situated” alleging that Genesis Healthcare violated the FLSA by automatically deducting 30 minutes per day for meal breaks, even on days when an employee did not take a break. When Genesis answered the complaint, it simultaneously served upon Symczyk an offer of judgment under Federal Rule of Civil Procedure 68 for $7,500 for alleged unpaid wages plus “reasonable attorneys’ fees, costs, and expenses.” The offer represented full satisfaction of Symcyzk’s individual claims in the lawsuit. When Symczyk failed to respond to the offer in the allocated time period, Genesis filed a motion to dismiss for lack of subject-matter jurisdiction, claiming that her claim had become moot after she effectively rejected the offer of judgment.
The district court held that the Rule 68 offer fully satisfied Symcyzk’s claims and mooted both the individual and the collective action claims. On appeal, the Third Circuit held that Symczyk’s individual claim was moot but that her collective action was not, explaining that allowing defendants to “pick off” named plaintiffs before certification with calculated Rule 68 offers would frustrate the goals of collective actions.
The Supreme Court reversed. As explained by the Court, in order for a federal court to hear a case, there must be an actual controversy in existence at all stages of review, not merely at the time the complaint is filed. If an intervening circumstance deprives the plaintiff of a “personal stake in the outcome of the lawsuit,” at any point during litigation, the action can no longer proceed. The Court explained that, since Symczyk’s individual claim was found to be moot (a finding that was not appealed) and no other claimant had “opted in,” the collective claims also were moot because there was no one who had a personal interest in representing putative, unnamed claimants.
The Court distinguished an FLSA “opt-in” collective action from “opt-out” class actions, explaining that, once certified, class actions acquire “independent legal status,” such that mooting the named plaintiff’s claim does not moot the class claim. However, certification of a collective action under the FLSA does not create any independent status, nor does it “join additional parties to the action.” Other individuals become parties to the lawsuit only once they have filed a written consent with the court. Thus, when a named plaintiff’s individual claims in a collective action are mooted and there are no opt-in plaintiffs, the collective claims are also properly dismissed as moot.
Q: What are the practical implications of Genesis for employers?
A: The implications of the Supreme Court’s decision in Genesis depend on the facts and circumstances of a particular case. For example, in situations where the number of hours worked by a plaintiff are undisputed and an employer can make an offer in full satisfaction of the plaintiff’s claims, the employer can potentially use a Rule 68 offer in order to avoid collective action certification. However, in cases where the plaintiff’s alleged damages are difficult to determine, employers will have a harder time proposing a Rule 68 offer that fully satisfies the plaintiff’s claims.