Edwards Wildman Client Advisory - Supreme Court Punts On Deciding Validity Of Pick-Off Strategy In FLSA Collective Actions

    On April 16, 2013, the U.S. Supreme Court issued its 5-4 decision in Genesis Healthcare Corp. et al. v. Symczyk, a collective action brought under the Fair Labor Standards Act (“FLSA”). Symczyk alleged that her employer violated the FLSA by automatically deducting 30 minutes of time per shift for meal breaks, regardless of whether or not the employee actually took such breaks. As a “collective action” under the FLSA, she brought her complaint on behalf of herself and other, similarly situated employees. It was expected that the Supreme Court would decide the current circuit split regarding whether an unaccepted offer of judgment under Federal Rule of Civil Procedure 68 can moot an FLSA claim. Instead, the majority held that, because Symczyk had waived the issue, the Court would “assume, without deciding,” that Genesis’ Rule 68 offer mooted Symczyk’s individual claim. As a result, the question of whether a pre-certification Rule 68 offer moots a plaintiff’s individual FLSA claim will remain open for future litigation.

    Background of the Case

    Symczyk was a registered nurse at a nursing home owned by Genesis. Her complaint, brought as a collective action on behalf of herself and other similarly situated employees, alleged that Genesis violated the FLSA by automatically deducting a 30-minute meal break time from employees’ wages regardless of whether the employee had taken a meal break or worked during that time. Before any additional employees could join in the collective action, Genesis served Symczyk with an offer of judgment pursuant to Rule 68, which would have fully satisfied her individual claim.

    Under Rule 68, if a plaintiff accepts such an offer of judgment, the case is over. If a plaintiff rejects the offer or fails to respond within Rule 68’s fourteen-day time period, an employer will often move to dismiss the case as moot because the employee no longer has a personal stake in the outcome of the litigation since the offer of judgment would have fully satisfied her individual FLSA claim. This is commonly called a “pick off.” If this happens before any additional employees have joined the collective action (as it did here), the case is over because the only plaintiff has been “picked off” and removed from the litigation. The district court dismissed the case, ruling that it lacked subject matter jurisdiction since the case was moot when the only plaintiff (Symczyk) no longer had a personal stake in the outcome of the litigation. The Third Circuit Court of Appeals reversed, holding that the offer of judgment did not require dismissal of the FLSA collective action and it remanded the case to allow Symczyk the opportunity to move for conditional certification of the collective action.

    Split Among the Federal Courts of Appeals and the Supreme Court’s Opinion

    The Federal courts of appeals are split on the validity of this “pick off” strategy but, despite acknowledging this “disagreement” among the circuits, the Supreme Court declined to address whether an unaccepted offer that fully satisfies an individual plaintiff’s claim is sufficient to render that claim moot. Specifically, the Third, Fourth, and Seventh circuits have held that, when an offer of judgment fully satisfies the claim, it can moot an FLSA collective action while the Second and Sixth circuits have held the opposite. Instead of addressing this conflict, however, the Supreme Court held that Symczyk had waived the issue and, as a result of the waiver, the Court assumed that the Rule 68 offer mooted her individual FLSA claim.

    The dissenting opinion, authored by Justice Kagan and joined by Justices Ginsburg, Breyer, and Sotomayor, called the majority’s assumption “bogus” and thought that the Supreme Court should have decided the main question – whether an unaccepted Rule 68 offer moots a plaintiff’s individual FLSA claim. Notably, since the majority opinion almost guarantees future litigation on this issue, the four dissenting justices appear to disagree with the theory that an “unaccepted settlement” offer can moot an individual FLSA claim.

    The Court also distinguished FLSA collective actions from class actions brought pursuant to Federal Rule of Civil Procedure 23, stating that “Rule 23 actions are fundamentally different from collective actions under the FLSA.”

    What Happens Now

    Since the Court failed to resolve the current circuit split on whether an unaccepted Rule 68 offer of judgment can moot a plaintiff’s individual FLSA claim and, as a result, prevent certification of a collective action, additional litigation on this issue is sure to ensue. Stay tuned.

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