Co-authored by Richard Alfred and Jessica Schauer Lieberman

The Supreme Court issued a groundbreaking ruling today in Genesis Healthcare Corp. v. Symczyk that brings into clearer focus the fundamental differences between FLSA collective actions and Rule 23 class actions.  The Court, in a 5-4 decision, held that the mere fact that the named plaintiff in an FLSA collective action asserts her claims on behalf of other similarly situated employees “cannot save the suit from mootness once the individual claim is satisfied.”

As we have previously reported [read more here and here), Symczyk was a registered nurse who claimed that her employer failed to pay her and a group of “similarly situated” employees for work they performed during meal breaks.  The employer filed a $7,500 offer of judgment (with attorneys’ fees and costs to be determined by the court) as part of its answer to the complaint.  Symczyk failed to accept the offer within the allotted time, and the offer was therefore deemed withdrawn. 

The district court ruled that, because the unaccepted offer would have fully satisfied her claim – a fact that the plaintiff admitted – there was no true dispute between the parties, and the plaintiff’s claim was moot.  The Third Circuit reversed, relying on case law in the Rule 23 class action context and ruling that the plaintiff’s interest in representing a class in a collective action prevented the case from becoming moot, even though no other employee had yet opted in. 

In reversing the Third Circuit’s decision, the Court declared that “Rule 23 class actions are fundamentally different from collective actions under the FLSA.”  Conditional certification provides potential plaintiffs an opportunity to join the case, but a putative member of the collective has no status in the case prior to filing an opt-in consent form.  For that reason, the Court determined that the plaintiff “had no personal interest in representing others” in the case, and the case as a whole had to be dismissed when her own claim became moot.

The Court, however, bypassed an underlying question by refusing to decide whether an unaccepted offer of judgment truly makes a claim moot.  The majority acknowledge the existence of a circuit split on that point, but ruled that the plaintiff had waived the argument.  That strategy drew the ire of the liberal Justices.  Justice Kagan’s unusually blistering dissent argued that “[a]n unaccepted settlement offer . . . is a legal nullity,” and that the Third Circuit should “[r]ethink [its] mootness-by-unaccepted-offer theory.” 

For now, the viability of the specific strategy utilized by Genesis remains in the hands of the circuit courts, who will be left to determine the circumstances under which an offer of judgment can moot a claim.  However, the case is certain to prove to be a key FLSA precedent, the first since the Supreme Court’s 1989 ruling in Hoffmann-LaRoche v. Sperling, as it draws a much clearer line between class and collective actions than has existed in the past.  That distinction will affect the way collective actions are litigated–from the “certification” process to discovery and ultimately to trial.