A recent decision from the U.S. Supreme Court has left employment attorneys scratching their heads about the future of collective actions under the Fair Labor Standards Act.

In a 5 to 4 decision the Court held that, by extending an offer of judgment to the named plaintiff in a wage-and-hour collective action, an employer mooted her FLSA claims even where the plaintiff did not accept the offer.

A Pennsylvania-based nurse, Laura Symczyk, claimed that she and her fellow employees had 30 minutes of time automatically deducted from each shift even if they continued to work. When her employer, Genesis Healthcare, answered the complaint, it also served Symczyk with an offer of judgment pursuant to Federal Rule of Procedure 68 for $7,500 for alleged unpaid wages, in addition to “such reasonable attorneys’ fees, costs and expenses … as the Court may determine,” which purportedly fully satisfied her claim. Symczyk failed to respond to the Rule 68 offer within the allotted ten days and the employer then moved to dismiss the suit, arguing that it was moot. The plaintiff no longer possessed a personal stake in the outcome of the litigation, the employer argued. A federal district court agreed.

On appeal, the 3rd Circuit reversed. The panel agreed with Symczyk that the employer should not be allowed to strategically “pick off” a lone named plaintiff and effectively end a FLSA collective action before certification.

But the Supreme Court reversed. Writing for the majority, Justice Clarence Thomas noted that it had been undisputed that the Rule 68 offer fully satisfied Symczyk’s individual claim. He further noted that Symczyk had conceded below that an unaccepted Rule 68 offer that fully satisfies a plaintiff’s claim rendered the plaintiff’s individual claim moot. Accordingly, the Court was assuming that issue without deciding it. Based on that assumption, the Court held that the plaintiff “has no personal interest in representing putative, unnamed claimants, nor any other continuing interest that would preserve her suit from mootness.”

“A straightforward application of well-settled mootness principles compels our answer. In the absence of any claimant’s opting in, respondent’s suit became moot when her individual claim became moot, because she lacked any personal interest in representing others in this action,” the Court held. Distinguishing the nature of an FLSA collective action from a true class action suit, the justices said that “the mere presence of collective-action allegations in the complaint cannot save the suit from mootness once the individual claim is satisfied.”

Parties to a collective action must file written consent with the court to join the suit so that even conditional certification under the FLSA does not produce a class with an independent legal status, or join additional parties to the action, the Court clarified.

As to concerns that employers could mimic Genesis Healthcare’s strategy to pick off plaintiffs, the majority effectively shrugged. “[A] full settlement offer addresses plaintiff’s alleged harm by making the plaintiff whole.”

Justice Elena Kagan authored a spirited dissent, writing that the majority “resolve[d] an imaginary question, based on a mistake the courts below made about this case and others like it.”

Justice Kagan – supported by Justices Ruth Bader Ginsburg, Stephen Breyer and Sonia Sotomayor – said that an unaccepted offer cannot moot a case. “When a plaintiff rejects such an offer – however good the terms – her interest in the lawsuit remains just what it was before. And so too does the court’s ability to grant her relief. An unaccepted settlement offer – like any unaccepted contract offer – is a legal nullity, with no operative effect.” Therefore, she said, the “majority’s decision is fit for nothing” and “serves only to address a make-believe problem.”

To read the decision in Genesis Healthcare v. Symczyk, click here.

Why it matters: The full impact of the decision remains to be seen. The majority opinion affirms one employer strategy for avoiding the fertile area of FLSA litigation – making a full offer of judgment and then moving to dismiss the suit as moot. This tactic could lead to plaintiffs seeking certification earlier in the case, which would allow them to get notice of the suit to other potential plaintiffs and join additional parties to avoid dismissal. But the Court failed to weigh in on a pivotal point: whether the plaintiff’s claim becomes moot if the employer offers a full settlement and the employee fails to respond. According to the dissent, nothing happens and the suit continues. With a split in the federal appellate courts already in place, the issue will likely continue to play out until the justices agree to consider the issue again.