Supreme Court Seal.jpgCo-authored by Richard Alfred and Jessica Schauer

The Supreme Court heard argument in Genesis Healthcare v. Symczyk on Monday.  See Transcript.  While the Supreme Court agreed to hear the case to decide whether putative collective actions under the Fair Labor Standards Act must be dismissed when the named plaintiff’s claim becomes moot, the argument focused on narrow procedural issues that had not been addressed by the court below. 

The named plaintiff asserted claims on behalf of herself and other similarly situated employees alleging that the defendant had failed to pay for work performed during meal breaks in violation of the FLSA.  Prior to conditional certification, the defendant made an offer of judgment under Federal Rule of Civil Procedure 68 covering all of the named plaintiff’s alleged damages.  After the plaintiff failed to accept the offer, the district court dismissed the case, ruling that there was no longer a controversy between the plaintiff and defendant and the case therefore had become moot.  The Third Circuit reversed, ruling that the potential for putative members of the as yet uncertified FLSA collective to join the case allowed it to stay alive, even though no other individual had actually opted in.

At oral argument, the Justices focused intensely on whether the plaintiff’s failure to accept the offer of judgment actually mooted her claims, an issue not decided by the Third Circuit.  Counsel for the plaintiff and an Assistant U.S. Solicitor General (appearing as a friend of the court) argued that the district court should have held a hearing to address the adequacy of the offer of judgment and, if appropriate, entered judgment in the plaintiff’s favor.  While defense counsel termed this a “housekeeping issue,” Justice Kagan observed that “the plaintiff’s claims have not been fully satisfied.  She walked away with nothing.”  Chief Justice Roberts suggested that, had the Court understood the full procedural history of the case, it might not have granted the defendant’s petition for review.

When the Court turned to the specific question for which it had granted certiorari – whether a case becomes moot when the lone plaintiff receives a Rule 68 offer from the defendants to satisfy all of the plaintiff’s claims – several of the Justices expressed concern that “Rule 68 doesn’t say anything about dismissing [the] suit” if a plaintiff rejects an offer for complete relief.  Rather, by its plain language the rule merely allows for cost-shifting in the event that a plaintiff ultimately recovers less than the amount of the unaccepted offer.  Justice Sotomayor opined that only if the proposed judgment were entered as a default judgment in favor of the plaintiff could the matter become moot, and that mere rejection of a Rule 68 offer would not be sufficient.  The liberal justices, led by Justice Ginsburg, further objected to the concept that Rule 68 could be used to shortcut “the normal process of inviting opt-ins to occur” in FLSA cases.  

As we have stated in prior posts, the greater impact of this case on wage and hour litigation arises from the opportunity it provides the Court to discuss the legal differences between a collective action under the FLSA and a class action under Rule 23, an opportunity the Court has not had since its 1989 opinion in Hoffman-LaRoche v. Sperling.  The Court of Appeals relied heavily on two 1980’s Supreme Court decisions, United States Parole Commission v. Geraghty and Deposit Guaranty National Bank v. Roper, that a defendant may not “pick off” a named plaintiff in a class action by making an offer of judgment for plaintiff’s maximum potential recovery.  In so doing, that court failed to recognize the essential differences between a collective action and a class action, including the fact that FLSA plaintiff s must affirmatively opt-in to participate in the action, and the statute of limitations for any individual employee is not tolled until his or her opt-in consent is filed with the court.  If the Supreme Court were to reverse the Third Circuit, it could do so by rejecting the application of those class action cases in the collective action context on the basis that these two procedures, at least in this context, operate differently. 

Yesterday’s argument included only relatively brief discussion of this core issue.  Apparently looking for a way to apply the class action rule, Justice Ginsburg asked whether the fact that § 216(b) of the statute specifically “authorizes . . . the employee [to] seek relief on behalf of himself and others similarly situated” affects the outcome, suggesting that this language represents a Congressional policy in favor of collective actions that might justify allowing claims of opt-in plaintiffs to relate back to an earlier point in the litigation.  Justice Breyer, however, took a different view of § 216(b)’s language, asking “isn’t it a little hard to read this statute as providing that mechanism since what it says is . . . no one shall be a party unless he signs in writing.”  Justice Scalia, harkening back to the theme in his dissent in Hoffman (in which then Chief Justice Rehnquist joined), quipped, “I mean, I must say I’m not terribly impressed by the fact that, you know, if she drops out there is — there is no collective suit for those other people.  There is no collective suit for these other people if she never appeared in the first place.  I don’t know that the law demands that there be a collective suit.  If she doesn’t bring suit or if she brings suit and is given everything she wants, the case is over unless other people have come in.”

Based on the tenor of the Court’s questions, it is not clear whether the Court will reach the issue of whether a putative collective action survives the mooting of the named plaintiff’s claim.  Instead, the Court may decide to limit its ruling to the narrower issue of whether the district court in this case properly found the named plaintiff’s claim to be moot.  We continue to hope, however, that the Court will take this opportunity to provide greater clarity regarding the relationship between Rule 23 and § 216(b).  We will update our readers as events warrant.