“Sometimes surrender is the best option.” That is how Judge Raymond J. Dearie of the Eastern District of New York begins his opinion in Anjum v. J.C. Penney Co., Inc., before denying J.C. Penney’s motion to dismiss a putative Fair Labor Standards Act (FLSA) collective action based on the company’s offer to pay the claims of four named plaintiffs with offers of judgment under Federal Rule of Civil Procedure 68—a strategy often referred to as “picking off.” Even though the court rejected J.C. Penney’s picking off attempt in this case, the judge’s opinion in Anjum recognizes the validity of this tactic and provides some practical lessons for defense counsel looking to successfully pick off an FLSA collective in the Second Circuit.
In Anjum, four named plaintiffs filed an FLSA collective action against J.C. Penney alleging various wage and hour claims under the FLSA and the New York Labor Law (NYLL). The timing of the following events proved critical to the court’s determination of the motion to dismiss. First, J.C. Penney made offers of judgment to each of the four named plaintiffs. Second, after receiving the offers but before rejecting them, the plaintiffs filed a motion for conditional certification of their FLSA collective action. Third, one day after filing its motion for conditional certification, the plaintiffs rejected the offers. Fourth, J.C. Penney moved to dismiss the action as moot. Finally, while both motions were pending, approximately 50 would-be plaintiffs opted into the action.
In denying J.C. Penney’s motion, the court explained that even though J.C. Penney’s offer to the named plaintiffs appears to have included the maximum amount to which they were entitled under the FLSA, there were open questions as to the appropriateness of the damages period used to calculate the offer, the failure to offer a separate award for pre-judgment interest, and the failure to fully account for separate liquidated damages under New York Labor Law (in addition to the FLSA liquidated damages). While Judge Dearie indicated that he believed that these issues could have been resolved with subsequent briefing, their existence “foreclose[d] the possibility that the Rule 68 offer extinguished this controversy at the time J.C. Penney made the offer.” In other words, finding open questions as to whether the offers were completely adequate, the offer of judgment – and the plaintiffs’ rejection of that offer – did not render the case moot.
In addition, the court expressly addressed the question left open by the Supreme Court in Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523 (2013), which we previously blogged about, of whether and when an unaccepted offer can moot a case. The Anjum case decidedly holds that an employer’s offer of judgment “does not extinguish the live controversy unless and until the court actually enters judgment.”
The court also rejected J.C. Penney’s attempt to strike the 50 opt-in plaintiffs who joined the action while the motion for conditional certification was pending. Judge Dearie explained that the statutory text of the FLSA simply does not require conditional certification as a prerequisite to joining the action as an opt-in. The court’s acceptance of these 50 additional opt-ins, none of whom received Rule 68 offers of judgment, was yet another reason for denying J.C. Penney’s motion.
If there’s one takeaway from Anjum, it’s that timing is everything. The Anjum cases sends a clear signal to employers—if you want to pick off claims and thwart a potential class or collective action, you need to act quickly. Given Anjum’s finding that a case will not be moot until a judge considers a motion to dismiss and enters a judgment, employers will want to make an expeditious offer to pay the named plaintiffs’ claims and follow it with a motion to dismiss. Employers may also want to be prepared to make supplemental or follow-up offers to opt-in plaintiffs who join before the motion to dismiss is determined. Although this is only the determination of one judge in one district in New York, the opinion’s guidance may help counsel in other jurisdictions execute successful pick-off attempts.
