Supreme Court Rules FLSA Collective Action Is Moot When The Individual Plaintiff's Claims Are Resolved Before Certification

by Perkins Coie
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On April 16, 2013, the U.S. Supreme Court concluded, in a 5-4 decision, that when the individual plaintiff in a "collective action" under the Fair Labor Standards Act (FLSA) resolves her own claims before certification, the case is moot and must be dismissed.  Genesis Healthcare Corp v. Symczyk, No. 11-1059 (U.S. 2013).

Background

Symczyk sued Genesis, claiming that the company violated the FLSA by not paying for meal periods even when she worked during those periods.  In addition to suing for herself, she sought a collective action on behalf of other similarly situated employees.  The collective action process under the FLSA is different than the class action process under Federal Rule of Civil Procedure 23 (Rule 23).  In a typical Rule 23 class action, if the trial court determines that a class action is appropriate, all class members are automatically included in the lawsuit unless they affirmatively "opt out" of it.  Under the FLSA, however, if the trial court determines that a collective action is appropriate, notice is given to all potential plaintiffs and they must affirmatively "opt in" to join the lawsuit.  If they do not, they are not parties to the collective action. 

In Symczyk's case, before the trial court determined whether a collective action was appropriate, and before any other employee joined the lawsuit, Genesis gave her an offer of judgment under Rule 68 that would have paid her everything she claimed to be owed, along with her reasonable attorneys’ fees and costs.  She did not accept that offer and, instead, sought to continue the lawsuit.  However, under the law of the Third Circuit, where the case arose, an unaccepted offer of judgment in the full amount that is owed resolves a plaintiff's individual claims.  Based on that principle, Genesis argued that the remaining collective action was moot and asked the trial court to dismiss it.  The trial court agreed and dismissed the entire lawsuit, without entering a judgment in favor of Symczyk for the amount of the offer.

On appeal, the U.S. Court of Appeals for the Third Circuit reversed, reasoning that, even though Symczyk's own claim was resolved by the unaccepted offer of judgment, she had an interest in pursuing the collective action on behalf of the other employees and that interest was enough to keep the case alive.  The Supreme Court agreed to review the matter.

In the Supreme Court

In an opinion by Justice Thomas for a five-member majority, the Supreme Court concluded that because Symczyk's individual claim was resolved before the trial court certified the proceeding as a collective action, the case became moot and was properly dismissed.  The Court did not, however, rule on the underlying question of whether the Third Circuit precedent is correct that an unaccepted offer of judgment resolves a plaintiff's individual claims.  Justice Thomas noted that there is a split among the circuits on that question, but he stated that it was not necessary to resolve that split because Symczyk had waived the issue below and the issue had not been properly raised for review.

Justice Kagan, on behalf of the four justices in the minority, filed a strongly worded dissent, criticizing the majority for not addressing what she regarded to be the central question:  whether an offer of judgment that would provide complete relief to the plaintiff resolves the plaintiff's claims even though it is unaccepted.  Justice Kagan went on to say that she believes that the correct answer to that question is an emphatic "no."  Therefore, in Justice Kagan's view, the majority decision was based on a fallacy and has little relevance to FLSA collective actions.

Implications for the Future

The Genesis decision leaves many questions unanswered.  The first is the one identified by Justice Kagan:  whether an unaccepted offer of judgment nevertheless disposes of the plaintiff's individual claims if it would grant complete relief.  If that question is ultimately answered in the way the Third Circuit has answered it, that decision would have very wide-reaching ramifications.  There is no definitive decision on this point in the Ninth Circuit.

Others questions include:

  • In a similar setting under the FLSA, would the same result follow after the trial court certified the collective action?  Justice Thomas' language seems to support an argument that it would.
  • For a Rule 23 class action, would the same reasoning apply before a class is certified?  Justice Thomas did not question earlier decisions holding that after a class is certified under Rule 23, it has a separate legal standing of its own such that resolution of the claims of the individual named plaintiff does not moot the class action.  But what about before certification?  The Ninth Circuit has squarely held that a defendant cannot moot a putative class action by "picking off" the named plaintiff with an unaccepted precertification settlement offer.  Pitts v. Terrible Herbst, Inc., 653 F.3d 1081, 1090-91 (9th Cir. 2011) (unaccepted Rule 68 offer does not moot a class action).  However, the Ninth Circuit's rationale may have been undercut by Justice Thomas' reasoning.

At the very least, the fact that an FLSA collective action can be mooted by resolving the individual plaintiff's claims may provide a useful defense strategy in appropriate cases.

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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