Authored by Steve Shardonofsky

What happens when an object with greater mass collides with a smaller object?  Yes, the smaller object typically bears the brunt of the force and splits into two or more pieces.  According to a recent decision by Judge Keith Ellison of the Southern District of Texas, this is exactly what happens when Fifth Circuit precedent collides with the Supreme Court’s groundbreaking ruling in Genesis Healthcare Corp. v. Symczyk (see our prior blogs regarding that case here and here).

In Silva v. Tegrity Personnel Services, Inc., Judge Ellison ruled that Genesis Healthcare partially overturned prior Fifth Circuit precedent, making it easier for employers in Texas, Louisiana, and Mississippi to pick-off FLSA collective actions even when a Rule 68 offer of judgment is not accepted.  Like peering back into the planetary collisions of the early universe, this case give us a glimpse into the early aftermath of Genesis Healthcare.  Cosmologist and wage/hour practitioners should continue reading…

Case Background and Analysis:

Paula Silva sued her former employer on behalf of herself and other similarly-situated employees to recover unpaid overtime wages under the FLSA.  She also brought an FLSA retaliation claim.  Another employee, filed a notice of consent and opted into the lawsuit the same day that Silva filed the lawsuit.  On June 19, 2013, Tegrity made Rule 68 offers of judgment to the two employees.  The employees did not accept the offers.  Instead, on June 28, Silva filed a motion to conditionally certify her FLSA collective action.  That same day, four additional plaintiffs filed consent notices to join the lawsuit.  Each of them also received offers of judgment from Tegrity.  In July 2013, the Defendants filed a motion to dismiss for lack of subject matter jurisdiction, arguing that the unaccepted offers of judgment had expired (or would soon expire) and therefore those offers rendered the plaintiffs’ claims moot and divested the Court of subject matter jurisdiction.

Judge Ellison analyzed prior Fifth Circuit precedent and considered how Genesis Healthcare “alters the landscape.”  In Sandoz v. Cingular Wireless LLC, the Fifth Circuit held in 2008 that an employee who received a Rule 68 offer of judgment could still pursue conditional FLSA certification—even when no other plaintiffs had joined the case.  The Fifth Circuit found that when a plaintiff timely files a motion for FLSA conditional certification, the motion “relates back” (as it does under Rule 23 class certification) to the date the employee filed the initial complaint.  Judge Ellison explains in Silva that under Sandoz, if the court grants the motion to certify, then a prior Rule 68 offer to the individual plaintiff would not fully satisfy the claims of the class members and therefore would not moot the plaintiff’s claims.  But if the court denies the motion, the offer of judgment would render the individual plaintiff’s claims moot.

But according to Judge Ellison, the Supreme Court’s Genesis Healthcare ruling rejects the Fifth Circuit’s “relation back” theory—primarily because Rule 23 class actions are fundamentally different from collective actions under FLSA:

Symczyk did no favors to FLSA plaintiffs in the Fifth Circuit.  The decision left untouched the part of Sandoz that plaintiffs do not like and abrogated the part that plaintiffs do like.  That is, while Symczyk left open the possibility that the Sandoz court got mootness wrong . . . for now, Sandoz is good law and dictates that, in the Fifth Circuit, unaccepted offers can moot FLSA claims.  In contrast, whereas Sandoz offered a life raft in the form of the relation-back doctrine to plaintiffs whose personal FLSA claims were mooted by Rule 68 offers, Symczyk effectively overruled that half of Sandoz.  Sandoz and Symczyk put together would seem to require that this Court hold for defendants.

In a surprising twist, however, Judge Ellison concluded that Silva’s claims were not moot because the offer of judgment did not include any damages for her FLSA retaliation claim and therefore did not fully satisfy her damages.  Judge Ellison also refused to decide whether the Rule 68 offers to the other opt-in plaintiffs mooted their claims, since Silva could proceed with certification of her FLSA collective action.  Instead, he urged the Defendants to renew their motion at the summary-judgment stage, when “the Court will be able to rule on whether Plaintiffs’ claims were mooted with the benefit of additional evidence.”

Implications For Future Wage/Hour Cases:

The Silva case is a welcomed ruling for employers in the Fifth Circuit, who now have additional ammunition to pick-off FLSA collective actions.  Here are some practical takeaways from the decision:

  • Although the Court in Genesis Healthcare did not explicitly decide whether an unaccepted offer of judgment truly makes a claim moot, it explicitly rejected any reliance by prior courts on Rule 23 cases to make that determination, and thus overruled the “relation-back” doctrine in Sandoz.
  • When taken together, Sandoz and Genesis Healthcare allow unaccepted Rule 68 offers to moot plaintiff’s FLSA claims.
  • The portion of the Fifth Circuit’s Sandoz case that remains viable holds that unaccepted Rule 68 offers can moot a plaintiff’s FLSA collective action, as long as any offer satisfies the damages that the plaintiff and any opt-in plaintiff could recover.
  • Defendants who wish to make a Rule 68 offer of judgment must adhere to the strict substantive and procedural requirements for making such offers.  Otherwise if the offer of judgment is deficient in some respect, as in the Silva case, an unaccepted offer will not moot the plaintiff’s claims.