Labor And Employment Insight: Supreme Court Ruling In Genesis Generates Discussion On Employer FLSA Strategy

by Stinson Leonard Street

The U.S. Supreme Court held yesterday in Genesis Healthcare Corp. v. Symczyk that if a sole plaintiff's putative Fair Labor Standards Act (FLSA) collective action claim is mooted, the entire case must be dismissed. Unfortunately, the Supreme Court avoided deciding whether plaintiff Laura Symczyk's claim was moot in the first place, leaving up in the air the question of whether employers can end a lawsuit by making full offers of judgment to lead plaintiffs.

Ms. Symczyk sought to bring an FLSA collective action on behalf of herself and all similarly situated employees based on Genesis's practice of automatically deducting 30 minutes of time worked per shift for meal breaks. With its answer, Genesis served an offer of judgment that, if accepted, would have fully satisfied Ms. Symczyk's claim. The offer included $7,500 for alleged unpaid wages, plus "such reasonable attorneys' fees, costs, and expenses … as the Court may determine." Ms. Symczyk did not accept the offer. Genesis thereafter moved to dismiss the case for lack of subject matter jurisdiction. The U.S. District Court for the Eastern District of Pennsylvania granted Genesis's motion, finding that the full offer of judgment mooted Ms. Symczyk's suit. The U.S. Court of Appeals for the Third Circuit reversed. Importantly, the Third Circuit agreed that an offer of judgment of the type in this case generally moots a plaintiff's case, but held that the putative collective action was not moot because allowing employers to "pick off" the lead plaintiff would frustrate the goals of collective actions.

The Supreme Court reversed the Third Circuit's judgment in a 5-4 decision authored by Justice Scalia. Finding that Ms. Symczyk had not appealed the Third Circuit's mootness holding—and that, further, she had waived the mootness issue—the Court assumed without deciding that Ms. Symczyk's individual claim was moot. The Court then held that, because Ms. Symczyk's claim was moot and there were no other plaintiffs in the lawsuit, the case must be dismissed. The Court emphasized the difference between Federal Rule of Civil Procedure 23 class actions and FLSA collective actions. A putative class that is certified under Rule 23 acquires its own legal status. By contrast, conditional certification under the FLSA does not produce a class with independent legal status; the only consequence of FLSA conditional certification is that court-approved written notices are sent to potential plaintiffs who may join in the action.

In a spirited dissent, Justice Kagan argued that the Court's opinion was founded on an "unfounded assumption"—namely, that Ms. Symczyk's claim was, in fact, moot. In Justice Kagan's view, the unaccepted offer of judgment did not moot Ms. Symczyk's claims and the case remained justiciable. She cautioned the circuit courts against endorsing the Third Circuit's "mootness-by-unaccepted-offer theory."

While the Supreme Court's opinion may open the door for employers to try to resolve claims with a lead plaintiff quickly, the question of whether a full offer of judgment actually does moot a putative FLSA collective action claim remains unanswered. Employers should continue to be proactive in both efficiently resolving potential FLSA complaints and in internally auditing their wage and hour practices to avoid reaching the point of a complaint.

The full text of the Genesis opinion can be found here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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