Court dockets continue to remain full with lawsuits alleging violations of the Fair Labor Standards Act (FLSA) minimum wage or overtime provisions. Many times these cases are filed on behalf of the named person bringing the lawsuit, as well as other employees similarly situated. These cases brought on behalf of a group are known as collective actions.
In a case decided on April 16, 2013, the United States Supreme Court determined what happens to such a lawsuit when the claims of the person bringing the suit become moot. Genesis Healthcare Corporation v. Symczyk, No. 11-1059 (Apr. 16, 2013). In that case, the employee alleged that her employer had improperly failed to pay her, and others, for time worked during breaks. Before any other employee joined the lawsuit, the employer offered to pay her the full amount of her claim. The employee rejected that settlement offer. Nonetheless, the lower courts held, and on appeal to the Supreme Court the employee did not challenge, that by offering to fully compensate the employee the employer had mooted her claim making her no longer eligible to seek relief for herself. The employee argued, however, that she was still entitled to pursue her lawsuit on behalf of fellow employees with the same types of claims.
Although not all of the Supreme Court Justices agreed, the Court decided that the employee was no longer eligible to pursue claims on behalf of her fellow employees. Because no other employee had yet joined the lawsuit, the only live claim was that of the employee who filed the case. Once her claim was determined to no longer exist, the Court held that there was no longer any present claim remaining to resolve and decided that the whole case was properly dismissed. The Court indicated that the result would have been different if other employees had already joined the litigation before the filing employee’s claim became ineffective.
Four of the nine Justices dissented from the Court’s decision because they reasoned the employee’s own claim did not become ineffective merely because the employer made a settlement offer to pay her full claim. Justice Kagan’s dissenting opinion makes for a colorful read, in which she notes that the majority resolved only “an imaginary question.”
Takeaway: Lawsuits alleging FLSA violations, particularly those seeking collective action status, can involve complicated procedural issues. Employers should take care to consider pertinent strategic options, including potentially offering a settlement to the named plaintiff.