In Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523 (2013), the Supreme Court of the United States last month ruled that an offer of judgment, which the parties agreed was sufficiently generous to satisfy the sole individual plaintiff’s wage and hour claim, rendered a plaintiff’s entire collective action moot even though the plaintiff did not accept the offer.
The Fair Labor Standards Act (“FLSA”), which establishes federal minimum wage and overtime laws, allows employees to file lawsuits on behalf of not only themselves, but “other employees similarly situated.” 29 U.S.C. § 216. Laura Symczyk filed such a lawsuit against her former employer, Genesis, on behalf of herself and other similarly situated persons. Symczyk alleged that Genesis unlawfully deducted 30-minutes for meal breaks from employees’ compensation regardless of whether employees worked during the 30-minute meal breaks.
When her former employer answered the complaint, it also served an offer of judgment on Symczyk, proposing payment of $7,500 to her to settle her claim. In this regard, Rule 68 of the Federal Rules of Civil Procedure permits a defending party to make an offer to the suing party to settle the lawsuit which places some risk on the offered party if the offer is rejected. Specifically, if the offer is not accepted and the suing party ultimately recovers less than the amount in the offer, the suing party must pay certain of the defending party’s costs dating back to when the offer was made. Whether to utilize this proposition in litigation is a strategy call for a defending party and its counsel.
When Symczyk did not accept the offer, but admitted it was sufficient to satisfy her individual claim, Genesis filed a motion to dismiss Symczyk’s case for lack of subject matter jurisdiction. Genesis argued that because no other “similarly situated” employees had joined the lawsuit and Genesis undisputedly offered Symczyk “complete relief on her individual damages claim,” Symczyk’s FLSA claim was moot. Id. at 133 S. Ct. at 1527.
The United States Supreme Court agreed with the district court and dismissed Symczyk’s action for lack of subject matter jurisdiction, ruling that once Symczyk’s claim was determined to be moot, her collective action was moot, and therefore no justiciable issues remained.
Genesis’s Rule 68 Offer of Judgment served its strategic purpose in this case. Moreover, the Supreme Court’s decision bolsters the use of Rule 68 offers to defend against individual FLSA lawsuits filed as collective actions although, unfortunately, in FLSA actions costs which a successful defendant can recover do not include attorney’s fees.
If you have questions regarding Rule 68 Offers of Judgment or Fair Labor Standards Act claims, please contact Eric Holshouser or Katie Kelly.