On April 16, 2013, in a 5-4 decision, the United States Supreme Court held that a Fair Labor Standards Act ("FLSA") collective action may not proceed when the lone named plaintiff's individual claim becomes moot. This case may be helpful for employers defending collective actions by giving defendants an opportunity for early dismissals in some cases.
In Genesis Healthcare Corp., et al. v. Symczyk, Plaintiff, a former employee, sued on behalf of herself and "other employees similarly situated" alleging that her employer violated the FLSA because of its alleged policy and practice of automatically deducting time for meal breaks. Plaintiff alleged time was deducted from paychecks even when employees worked through their lunch break.
During litigation, Genesis offered Plaintiff $7,500 to pay the unpaid wages she alleged were owed her. Plaintiff failed to respond to the offer. The District Court dismissed Plaintiff's claim as moot after it concluded that (1) the offer, if accepted, would have fully satisfied Plaintiff's individual claim, and (2) no other putative class member had opted into the lawsuit. However, the Third Circuit reversed.
The Supreme Court reinstated the District Court's decision concluding that because Plaintiff's individual claim was moot due to the $7,500 offer, "she lacked any personal interest in representing others in this action." The Court further noted that while the FLSA authorizes an aggrieved employee to bring an action on behalf of him or herself and "other employees similarly situated," the mere presence of collective action allegations in the complaint will not save the suit from mootness once that individual claim is satisfied.
This decision may have greater implications favoring employers. For example, if an employer establishes, early in litigation that the representative plaintiff has no claim for damages (e.g., because the employee is exempt, was paid all wages, etc.) before any putative members opt into the lawsuit, the employer may have success in dismissing the case and avoiding conditional certification; thus ending the case at an early stage. Of course, as in Symczyk, employers may also explore the option in making an offer early in litigation to a representative plaintiff with the possibility of early dismissal of the entire collective action.
If you have further questions about the FLSA or other wage and hour laws, please contact Robert J. Hingula or another member of our Labor and Employment group.