By Amy Traub, Michael Kun, and Anna Kolontyrsky
As employers know, not only are FLSA collective actions more prevalent than ever, but they can be costly to defend or resolve. In an attempt to bring quick closure to such cases, somedefendants have attempted to settle such claims with the individual plaintiff alone through a Rule 68 offer of judgment before a class has been conditionally certified.
This strategy has come under attack. And the United States Supreme Court will now determine whether it is permissible.
The United States Supreme Court has elected to review a Third Circuit decision holding that an employer could not avoid conditional class certification by offering to resolve the named plaintiff’s claims. The case, Symczyk v. Genesis Healthcare Corp., 656 F.3d 189 (3d Cir. August 31, 2011), petition for cert. filed, ___ U.S.L.W. ___ (U.S. February 18, 2012) (No. 11-1059), is bound to have a significant impact on the litigation strategy in FLSA collective actions.
In Symczyk, the plaintiff, a registered nurse, claimed that her employer violated the FLSA when it implemented a policy that imposed an automatic meal break deduction regardless of whether workers had performed compensable work during that time. The plaintiff sought a total of $7,500, including both her unpaid wages, as well as her attorneys’ fees, costs, and expenses of litigation.
The employer promptly served the plaintiff with a Rule 68 offer of judgment for $7,500, the full amount she could possibly recover. Even though the offer was rejected, the employer argued that an offer to accord all relief that a plaintiff demands renders a case moot, unless the plaintiff retains some additional stake in the litigation. Since the plaintiff had not had a chance to move for conditional certification and, consequently, no other workers had yet opted in, the district court held that the plaintiff’s claims were moot, and dismissed the suit.
The Third Circuit reversed that decision and remanded the case. The court acknowledged that Rule 68 was designed “to encourage settlement and avoid litigation,” but noted that in the context of a collective action, “Rule 68 can be manipulated to frustrate rather than to serve these salutary ends.” Instead of mooting the action, the Third Circuit found that the “relation back” doctrine should have been employed. Analogizing the case to a Rule 23 class action where the claims of class members relate back to the filing of the complaint even though the certification of the class occurs much later, the court noted that once a Rule 23 class has been certified, mooting a class representative's claim does not moot the entire action. Under the “relation back” doctrine, the court ruled that the plaintiff should have been allowed to file a motion for certification of the collective action as if it had been filed at the time the suit began. Consequently, a Rule 68 offer of judgment on her claims alone would not have mooted the claims of the other putative collective action members, if at least one other plaintiff opted in.
In its petition for certiorari to the Supreme Court, Genesis argued that a direct conflict exists between “decisions of the Fourth and Eighth Circuits (holding that settlement before certification renders a case moot) and decisions of the Third, Ninth, and Tenth Circuits (holding that certification after settlement can vitiate mootness by ‘relation back’ to the complaint).”
Genesis further argued that the “key question … is whether it makes sense to extend … [the] treatment of mootness in class actions to a context like the FLSA in which the individual plaintiff has no representative relationship to the absent parties.”
In answering this “key question,” the Supreme Court will certainly shape the litigation strategies of plaintiffs and defendants alike in FLSA collective actions. A ruling that an offer of full relief moots an FLSA collective action would certainly operate to lead more defendants to make Rule 68 offers at the outset of the case, as Genesis did. It would also likely lead to plaintiffs’ counsel filing suit using multiple plaintiffs, to make this practice less enticing to defendants, or in their filing motions for conditional certification earlier to try to thwart the effects of such an offer by identifying other individuals to effectively replace the named plaintiff.
And if the Court affirms the Third Circuit decision, one of defendants’ strategies to bring an early end to FLSA collective actions will be lost.