In what could become an important case for employers faced with FLSA wage and hour collective actions, the United States Supreme Court held that a named plaintiff who rejects an offer of judgment for full relief before any other party joins the action cannot continue to pursue the claims on behalf of the putative class because the dispute between the named plaintiff and employer has become moot.
In Genesis Healthcare, the plaintiff was a registered nurse who brought suit on her behalf, and on behalf of all similarly situated individuals, alleging that her health care employer automatically deducted a thirty minute meal period even though the nurses were regularly required to work through their lunches or perform compensable work during those breaks. When served with the action, the employer made a offer of judgment (i.e., offering to let the court enter judgment against it) for the full amount of the plaintiff’s individual claim ($7,500) plus reasonable and necessary attorney’s fees as determined by the Court. When the plaintiff did not respond to the offer, the employer moved to dismiss the action arguing to the court that the controversy was moot (i.e., there was not longer an actual dispute because the employer conceded judgment). The trial court determined that since the offer fully compensated the plaintiff for her damages and no other party had joined the lawsuit as a party plaintiff, the dispute was moot and dismissed it.
The Third Circuit Court of Appeal reversed the trial court’s judgment observing that while the named plaintiff’s individual claims were moot, her collective action was not and that allowing an employer to strategically pick off named plaintiffs with strategic settlement offers would frustrate the goals of collective actions.
The U.S. Supreme Court majority held that when a named plaintiff rejects (or in this case ignores) an offer of judgment that offers full relief and no other potential plaintiff has joined the FLSA collective action, the dispute is moot and must be dismissed. In an unconventionally written dissent, Justice Kagan (joined by three Justices) criticized the majority opinion for side-stepping the real issue in the case. In Justice Kagan’s opinion, she explained that the real issue in the case was whether an ignored or rejected offer of judgment moots a controversy.
Because the parties stipulated (and the Court assumed) that the offer of judgment constituted full relief thereby mooting the named plaintiff’s individual claim, there are several issues that will need to be resolved by the lower courts. For example, unanswered by Genesis Healthcare is what offer constitutes an offer of full relief in the context of a putative FLSA collective action. Also unresolved is an apparent circuit split as to whether an unaccepted offer of judgment moots an entire dispute in such a case.
You can download a complete copy of Genesis Healthcare Corp. v. Symczyk here.
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