• U.S. Supreme Court Allows Defendants’ Strategy of “Picking Off” Named Plaintiffs in FLSA Collective Action
  • April 22, 2013 | Authors: David N. Anthony; Scott Kelly
  • Law Firm: Troutman Sanders LLP - Richmond Office
  • Today, the U.S. Supreme Court issued its opinion in Genesis HealthCare Corp. v. Symczyk - a long-awaited ruling regarding whether a case becomes moot when the lone plaintiff receives an offer of judgment from a defendant under Fed. R. Civ. P. 68 to satisfy all of the plaintiff’s claims. The Supreme Court unfortunately declined to answer that question. Instead, ruling that plaintiff had previously waived the issue, the high court assumed that defendants’ offer mooted her individual claim. The court ultimately held, however, that “[b]ecause [plaintiff] had no personal interest in representing putative, unnamed claimants, nor any other continuing interest that would preserve her suit from mootness, her suit was appropriately dismissed for lack of subject-matter jurisdiction.”

    In 2009, plaintiff - a nurse in Philadelphia, PA - filed a collective action on behalf of herself and “all other persons similarly situated.” She alleged that defendants had “violated the FLSA by automatically deducting thirty minutes of time worked per shift for meal breaks for certain employees, even when the employees performed compensable work during those breaks.” Plaintiff, who remained the sole plaintiff throughout the proceedings, sought statutory damages. Thereafter, defendants offered plaintiff a Rule 68 offer of $7,500 for alleged unpaid wages, in addition to “such reasonable attorneys’ fees, costs, and expenses . . . as the court may determine.” After plaintiff failed to respond to the offer, defendants filed a motion to dismiss for lack of subject-matter jurisdiction on mootness grounds. The district court granted the motion, but the Third Circuit reversed. Significantly, however, the Third Circuit held that no other potential plaintiff had opted into the suit; that defendants’ offer fully satisfied plaintiff’s individual claim; and that, under its precedents, whether or not such an offer is accepted, it generally moots a plaintiff’s claim.

    Relying on the Third Circuit’s holding that plaintiff’s individual claim was moot, the United States Supreme Court assumed as much and, instead, turned to the question of whether plaintiff’s collective action remained justiciable. First, the court noted that plaintiff’s suit became moot “when her individual claim became moot, because she lacked any personal interest in representing others in this action.” Second, it rejected the plaintiff’s reliance on previous class action decisions under Fed. R. Civ. P. 23 because “Rule 23 actions are fundamentally different from collective actions under the FLSA” and because those cases were “by their own terms, inapplicable to these facts.”

    Justice Kagan penned a strong dissent for the minority. There, she characterized the majority decision as “fit for nothing: Aside from getting this case wrong, it serves only to address a make-believe problem.” In essence, the minority chastised the decision for skipping over the central, threshold question (Did an unaccepted settlement offer moot plaintiff’s individual FLSA claim?) in favor of the subsequent question of whether such mootness precluded judicial review of plaintiff’s collective action. The minority further emphasized its disagreement with the mootness-by-unaccepted-offer theory endorsed by the district court and Third Circuit below.

    Practical Impact

    Given its posture as an FLSA collective action, many class action observers thought Genesis HealthCare would resolve the circuit split over the novel defense strategy of “picking off” named plaintiffs by offering full relief for their claims prior to any certification decision, thereby mooting their claims and eliminating the class action altogether. Yet, it failed to chime in on the threshold issue of whether a rejected, but fully-satisfying, Rule 68 offer moots an individual claim.

    Notwithstanding, Genesis HealthCare provides several significant takeaways. First, despite the minority’s admonition, the Rule 68 offer strategy remains a live issue. Courts of appeals, as noted by the high court, remain divided on the matter (e.g. the Third and Seventh Circuits allow mooting while the Second and Sixth Circuits prohibit it).

    Second, the decision clearly leaves the strategy’s application to class actions (i.e. “picking off” named plaintiffs to destroy the class) on the table. The Third Circuit, in Weiss v. Regal Collections, previously joined the view held by the Ninth, Tenth, and Fifth Circuits that offers of judgment to a named plaintiff do not moot the class action so long as a motion for class certification is filed without undue delay after the offer is made.

    In sum, the “pick off” strategy using Rule 68 remains a viable strategic option for class action defendants. The Genesis HealthCare opinion demonstrated again the impatience of the current Supreme Court majority with class actions and generally litigation founded upon common claims of a group. Along with Wal-Mart Stores, Inc. and Comcast v. Behrend, the decision marks another win in a recent string of high-court victories for class action defendants.