Supreme Court Considers Whether Offer of Judgment Moots Collective Action

Supreme Court Considers Whether Offer of Judgment Moots Collective Action

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) ( 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 in Washington 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 writing."

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 action."

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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