WASHINGTON, D.C. - (Mealey's) An employer's offer of judgment in an
amount representing alleged unpaid wages plus attorney fees, costs and
expenses under Federal Rule of Civil Procedure 68 to an employee who brought a
collective action under the Fair Labor Standards Act (FLSA) moots the
collective action when no other individuals had joined the action and there was
no pending motion for collective process, the employer told the U.S. Supreme
Court on Dec. 3, seeking reversal of a Third Circuit U.S. Court of Appeals ruling (Genesis
HealthCare Corp., et al. v. Laura Symczyk, No. 11-1059, U.S. Sup.; See
September 2011, Page 22) (lexis.com subscribers may access Supreme Court briefs for this case.
By reversing the U.S. District Court for the Eastern
District of Pennsylvania's judgment in favor of Genesis Healthcare Corp. and
Eldercare Resources Corp. (collectively, Genesis), the Third Circuit "deprives
the Defendant of the ability to free itself from litigation even when it is
willing to pay complete relief to the sole Plaintiff. Thus, as long as
the Plaintiff refuses to accept full and complete payment, a putative
collective action must continue onward to certification," Ronald J. Mann of Columbia University
in New York
argued for Genesis.
Admission Of Liability?
In response to Justice Ruth Bader Ginsburg's question of
whether the offer included an admission of liability and would have preclusive
effect for all other people similarly situated, Mann responded that "[b]ecause
it was an offer of judgment, if the offer had been accepted, . . . there would
have been a judgment of the Federal Court imposing liability under the statute"
and that "rules of [issue and claim preclusion] would flow from that judgment."
Justice Sonia Sotomayor noted that Genesis in the offer
itself said the offer of judgment was "not to be construed as an admission that
[Genesis is] liable in this action or that respondent has suffered any damage."
Justice Elena Kagan questioned how the individual claim
of Laura Symczyk, the employee who brought the action alleging that Genesis
violated the FLSA by deducting pay for meal breakseven if the employees
performed compensable work during those breaks, was moot since Symczyk did not
accept Genesis' offer of judgment. Judge Ginsburg pointed out that "Rule
68 doesn't say anything about dismissing suits."
Mann responded that "[o]ur position for the mootness is that if
there's no further controversy about the relief that is created by the cause of
action, there's nothing more for the trial court to do." Moreover,
Section 216(b) of the FLSA does not provide that "the case shall not be
dismissed until the court has proceeded to conclusively determine the propriety
of certification," Mann said.
"Under the Fair Labor Standards Act, as opposed to
[Federal Rule of Civil Procedure 23], even after the district judge signs an
order saying . . . we should send notices out to see if we can find some new
plaintiffs, if none of those people have yet appeared before the court and
signed into the case, there is still only one plaintiff," Mann said.
Representing Symczyk, Neal Kumar Katyal of Hogan Lovells
argued that a withdrawn Rule 68 offer could not moot a case. Chief
Justice John G. Roberts Jr. asked whether Symczyk waived the argument that the
offer was not accepted and said that "if in fact we thought we were dealing
with a case in which the Rule 68 offer was not accepted, we might have thought
differently about whether to grant it."
In response to Justice Kagan's question as to what a
court should do when a defendant says that it is willing to satisfy the entire
claim, Katyal said that "in that circumstance it is possible for the court to
enter a default judgment and force relief upon the plaintiff" "so long as the
forcing happened within the time period of Rule 68."
Justice Sotomayor replied that she was "a little troubled
that you have given up or argue that the ability to enter a forced judgment is
permissible under Rule 68. There is nothing in that rule that gives the court
that power, certainly not stated explicitly or even implicitly, because it
talks about an entire procedure of accepting the offer or rejecting it, all of
it in the hands of the parties, none of it until the entry of the judgment in
the hands of the court and only after the plaintiff has accepted the offer in
Katyal noted that within four days after the Rule 68
offer expired, Symczyk asked the District Court to certify the action. Katyal
commented that in cases where "a claim has gone away as moot because the named
representative of the claim has gone away for one reason or another, . . . you
can have a bridge plaintiff who acts to keep the case alive for purposes of
letting the class unfold."
No Court Judgment
Assistant to the Solicitor General Anthony A. Yang,
representing the United States as amicus curiae in support of Symczyk,
argued that Symczyk "has never been compensated for her individual damage
claim, nor has she received a court judgment favorably adjudicating that claim.
It follows that her individual claim remains live, as does this collective
Justice Kagan asked whether "the court has to look at the
class question before rendering judgment for an individual plaintiff," and Yang
responded "[i]n the context of a collective action, yes, because of the
congressional policy that gives plaintiffs a right to proceed collectively."
"That said, the collective process does not have to be a
burdensome one. There are certain small claim, idiosyncratic claims that
a court can simply look at the - the allegations and say, there are not
going to be similarly situated people here."
"But when we have an allegation like we have here, which
there is a widespread policy of deducting 30 minutes a day, notwithstanding the
employer's knowledge that the employers - employees are working through that
lunch break, there is every reason to think that there is a substantial body of
- of employees similarly situated, and it would be an abuse of discretion for
the Court not to proceed at least down that road, provide some discovery,
facilitate class notice. . . . At the end of the case, if there are
more plaintiffs who opt in, then it proceeds as a collective action. If
it remains the single plaintiff, the Court might decide to enter judgment,"
Yang said, adding that "[i]t won't have issue-preclusive effect" because there
has been no adjudication.
Collective Action Filed
Symczyk initiated the instant collective action in
December 2007. In February 2010, Genesis filed an answer to the complaint
and served Symczyk with an offer of judgment under Rule 68 in the amount of
$7,500 in alleged unpaid wages plus attorney fees, costs and expenses. Symczyk
declined to respond.
The District Court, unaware of the offer of judgment,
held a scheduling conference on March 8, 2010. Two days later it entered
an order providing a 90-day initial discovery period. Genesis moved to
dismiss for lack of subject matter jurisdiction.
The District Court "tentatively concluded" that the
defendants' Rule 68 offer mooted the collective action and that it should be
dismissed for lack of subject matter jurisdiction. The court ultimately
dismissed Symczyk's FLSA claim with prejudice and declined to exercise
supplemental jurisdiction over her state law claims. Symczyk appealed.
Reversing, the Third Circuit panel opined that "[a]bsent
undue delay, when an FLSA plaintiff moves for 'certification' of a collective
action, the appropriate course - particularly when a defendant makes a Rule 68
offer to the plaintiff that would have the possible effect of mooting the claim
for collective relief asserted under § 216(b) - is for the district court to
relate the motion back to the filing of the initial complaint."
The panel said that, on remand, Symczyk should move for
conditional certification, and if the court finds that the motion was made
without undue delay, it shall relate the motion back to the date Symczyk filed
her initial complaint. Then, if the court permits the case to move
forward as a collective action and at least one other similarly situated
employee opts in, "then defendants' Rule 68 offer of judgment would no longer
fully satisfy the claims of everyone in the collective action, and the
proffered rationale behind dismissing the complaint on jurisdictional grounds
would no longer be applicable. If, however, the court finds Symczyk's
motion to certify would be untimely, or otherwise denies the motion on its
merits, then defendants' Rule 68 offer to Symczyk - in full satisfaction of her
individual claim - would moot the action."
Genesis is also represented by Christina M. Michael of
Mitts Law, James N. Boudreau of Greenberg Traurig, Michele H. Mallor of Littler
Mendelson and Stephen A. Miller of Cozen O'Connor. All are in Philadelphia.
Symczyk is also represented by Gary F. Lynch of Carlson
Lynch in New Castle, Pa.;
Gerald D. Wells III of Faruqi & Faruqi in Jenkintown,
Pa.; Adina H. Rosenbaum of Public Citizen
Litigation Group in Washington; and Stephen I.
Vladeck in Washington.
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