On Tuesday, the U.S. Supreme Court concluded that once a named plaintiff in a Fair Labor Standards collective action case was offered full compensation for her individual claims, the entire case was mooted when no other named plaintiffs had joined the lawsuit. This 5-4 decision provides employers with a strategic opportunity to defeat FLSA collective action cases brought by a single or small number of named employees.
In Genesis Healthcare Corp. v. Symczyk, the defendant in the lawsuit made an early Rule 68 offer of judgment to the plaintiff that fully satisfied her individual claims for unpaid wages. When she did not respond to the offer, the defendant sought dismissal of the claim on subject matter jurisdiction grounds. The Supreme Court reversed the Third Circuit's opinion that this tactic could not defeat the entire collective action case. The Court distinguished FLSA collective action claims from Rule 23 class action cases, where the offer of judgment would not affect the class portion of the claim.
The Supreme Court relied on technical distinctions between "opt out" class and "opt in" collective action claims, noting that the offer of judgment could only defeat the claim if it is made prior to the plaintiff moving for conditional certification of the collective parties. Also, because the offer of judgment included payment of the plaintiff's attorneys fees, there was no additional relief she could have personally obtained through continuation of the collective action.
This tactic could be used by employers to end collective action class action claims filed by one or a small number of plaintiffs without having the broader issues of liability for pay practices addressed. If the employer is willing to pay all wages claimed by the named parties, the attorneys pursuing the collective action must find other current or former employees to continue the case. Plaintiffs' lawyers may also begin adding requests for injunctive relief to their claims, in an attempt to show that the offer of judgment does not provide complete legal relief.
Many FLSA collective action claims are based on allegations made by a single disgruntled employee. Based on this decision, considering a Rule 68 offer will become a standard part of the employer's early response to FLSA collective action claims.