Though traditional class actions have long been barred under the Fair Labor Standards Act, Congress provided within the statute a provision allowing “collective actions.”  The provision provided a vehicle for groups of employees with similar grievances to be represented by a representative plaintiff.  Though the mechanics functioned slightly differently (i.e., potential plaintiffs in an FLSA collective action must opt-in to the suit, rather than opting out under traditional class action rules), the general premise was the same.  These actions could carry high costs for employers, especially when large numbers of employees were included in the collective action.  One particular strategy which has been developed for dealing with class actions and collective actions is using an “offer of judgment” under Rule 68 of the Federal Rules of Civil Procedure to render moot the lead or representative plaintiff’s claim. 

Essentially, an offer of judgment entails a defendant offering a certain amount as a judgment, plus attorney’s fees and costs, to the plaintiff.  The plaintiff then has a period of time in which to accept the offer.  If the offer goes unaccepted, and the plaintiff obtains a judgment that is not more favorable than the unaccepted offer, the plaintiff, in certain circumstances, may have to pay the costs incurred by the defendant after the offer was made and will have to pay his own costs as well.  In the class or collective action context, offering a full judgment to the lead plaintiff renders the lead plaintiff without an individual interest in the matter, as he or she has been fully compensated for any alleged injury.  The logical antecedent is that, if the representative plaintiff has no stake in the case after the offer, the class or collective group represented cannot proceed without its “leader.”

This so-called “pick off” technique had been the subject of much debate in the legal community.  A circuit split had developed on the issue, and attorneys on both sides of the bar had a keen interest in seeing the split resolved.  As such, close attention was paid to a case featuring such an attempted “pick off” arising out of the Third Circuit, Genesis Healthcare v. Symczyk.  In that case, the Plaintiff, who was a registered nurse in the employ of Genesis, complained that the company had deducted meal breaks from her pay regardless of whether she had an uninterrupted break.  Her suit was filed on behalf of herself and any similarly-situated employees — but not a single other employee opted in to the collective action.  Genesis made a proper offer of judgment, encompassing any and all damages which may have been due to the Ms. Symczyk.  When the Plaintiff failed to act on the offer, Genesis filed a motion to dismiss the suit for lack of subject matter jurisdiction, stating that the offer had rendered the suit moot.  The district court agreed.  The Third Circuit, however, overturned the district court, stating that while the offer of judgment may have satisfied Ms. Symczyk’s individual interest in the suit, her role as representative of other similarly-situated employees was not mooted by the offer.  Genesis appealed to the Supreme Court and set the stage for an opinion many in the community hoped would end the controversy once and for all.

Unfortunately for those attorneys on the edges of their seats, the Supreme Court passed on the larger question of whether the “pick off” technique mooted a class or collective action, and instead booted that issue on a technicality.  In an opinion by Justice Clarence Thomas, the majority stated that the issue of whether an unaccepted offer of judgment to the lead plaintiff moots that individual’s claim was “not properly before the Court.”  The Third Circuit had stated that Ms. Symczyk’s individual claim was moot, and that she had not filed a petition for the court to hear arguments on that point.  Furthermore, she waived the argument by making concessions both in the district court and at the Third Circuit.  Thus, as the argument had been waived, the Court could not reach the issue and had to hold that the claim was moot.

Given that the Court was bound in this case to hold that Ms. Symczyk’s claim was moot, it did consider the status of an FLSA collective action if such a lead plaintiff’s claim was rendered moot.  Ms. Symczyk first argued that her claim could survive because of two prior Supreme Court decisions concerning traditional class actions, which held that some class actions could survive an offer of judgment to a lead plaintiff, as they may have continuing interest in the case, such as shifting fees onto other class members or as a representative.  Furthermore, to dismiss entire actions would frustrate the purposes of collective actions.  The majority rejected the arguments, stating that the cases cited, Deposit Guar. Nat’l. Bank v. Roper and United States Parole Comm’n v Geraghty, concerned class actions which had already been certified.  Under the FLSA, “conditional certification” did not carry the same legal status, and employees who may opt-in to such actions are not members of the class until they choose to be, unlike those in traditional class actions.  Additionally, Ms. Symczyk demonstrated no continuing personal interest in the case as did the plaintiffs in Roper.  Ms. Symczyk’s second argument similarly failed.  It was based on special cases in traditional class actions where the plaintiff’s claims were so transitory in nature that they could not be reviewed in time, such as improper detentions.  The relief sought in those cases was injunctive in nature and thus continued until it was settled, whereas Ms. Symczyk’s suit sought monetary damages.  As such, the law allowing such class actions to continue despite a proposed representative’s interest expiring did not apply in this matter.  In dispensing with these arguments, the Court held that Ms. Symczyk had no interest in representing putative, unnamed class members, and her case was properly dismissed by the district court for lack of jurisdiction.

So where does all this leave employers looking for ways to cope with collective actions?  Though the Court gave some indications in footnotes that auger favorably for the ultimate question on the validity of “pick off” offers to collective action plaintiffs, the law on that issue remains unsettled.  If the ball does bounce employers’ way on the “pick off” issue, the Genesis Healthcare decision should allow employers to use offers of judgment to moot collective actions under that statute.  Under other statutory schemes, including state laws, the effectiveness of the “pick off” technique remains far from settled.  As usual, the best way to avoid costly class litigation is through compliance and a watchful eye.

Daniel Fassio focuses his practice in the area of labor and employment law. He has experience in the defense of clients involving employment and workplace injury matters including claims under Title VII, Title IX, FMLA,
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