Co-authored by Gerald L. Maatman, Jr. and Scott Rabe
“Sometimes surrender is the best option.” That is how Judge Raymond J. Dearie of the U.S. District Court for the Southern District of New York described how the Rule 68 Offer of Judgment may be used by employers to pay—i.e., “pick off”—individual plaintiffs to defeat a broader and significantly more costly FLSA collective action in his recent opinion in Anjum v. J.C. Penney Co., Inc.. The Anjum decision provides the most fulsome analysis of the current state of the law in the Second Circuit regarding Offers of Judgment made in FLSA cases following the Supreme Court’s important decision last year in Genesis Healthcare Corp. v. Symczyk, which we wrote about here. And the decision provides hope for employers that the Offer of Judgment “pick off” strategy may be used with great effect to eliminate FLSA collective actions early and at far less cost.
Facts Of The Case
In Anjum, defendant J.C. Penney made offers of judgment to all named plaintiffs in a FLSA collective action. The named plaintiffs rejected the offers, and J.C. Penney moved to dismiss the action as moot. After the original offers of judgment were made and rejected, more than fifty new plaintiffs opted-in to the suit. The Court denied J.C. Penney’s motion on two primary bases: (1) the Court found that there was a question of fact as to whether J.C. Penney’s offers of judgment fully satisfied each of the Plaintiff’s claims, and (2) even if complete offers of judgment had been made, the case was not moot because more than 50 opt-ins joined the lawsuit before judgment had been entered, and a matter is not moot, and the Court retains subject matter jurisdiction, until judgment is entered.
Lessons Of The Ruling
Notwithstanding the result in Anjum, the decision provides significant fodder for employers looking to shortcut a potentially onerous and expensive FLSA collective action by using the offer of judgment.
(1) Anjum re-emphasizes that the “pick off” is a legitimate strategy for obtaining dismissal of FLSA actions.
The Court in Anjum not only rejected the notion that a “pick off” strategy is disfavored in the FLSA context, it blessed the strategy as a legitimate means for employers to potentially avoid the significant cost of litigating and settling a FLSA collective action. Employers should, therefore, evaluate the feasibility of an early “pick off” strategy as a means of short-cutting a potentially expansive and costly FLSA collective action.
(2) The “pick off” strategy applies even if a motion for conditional certification is pending.
The Court in Anjum not only endorsed the “pick off” as a valid means of defeating FLSA collective actions, but also opined that the “relation back” doctrine also does not apply in the FLSA context. The “relation back” doctrine stands for the proposition that after class certification is granted, an event in the interim that moots the named plaintiffs’ claims does not moot the entire lawsuit. Anjum re-emphasized what the Supreme Court said in Genesis Healthcare, that the “relation back” doctrine did not apply to FLSA cases because of the fundamental differences between a Rule 23 class and a FLSA collective. But Anjum went even further to state that an offer of judgment could moot a FLSA case even where there was a pending motion for conditional certification. This will likely have broad impact in the FLSA context, as it will prevent Plaintiffs from filing motions for conditional certification shortly after filing a complaint so as to prevent employers from making viable offers of judgment.
(3) Timing is important!!
Anjum also underscores that a Court retains subject matter jurisdiction over a FLSA case even after offers of judgment have been made fully satisfying all Plaintiffs’ claims up until the point the Court enters judgment on the basis of mootness. In other words, after making a complete offer of judgment, an employer must move for dismissal and await judgment from the Court before the matter is mooted. The practical effect of this rule is that opt-ins may continue to join the lawsuit before entry of judgment so as to prevent a finding of mootness. Therefore, to maximize the potential benefit, employers should make offers of judgment sooner than later, before potential plaintiffs are aware of the lawsuit, and if at all possible, before notice is distributed to potential members of the collective, and quickly move to dismiss the action following expiration or rejection of an offer. Employers should also be prepared to make immediate supplemental offers of judgment to opt-ins that join the lawsuit after the original offers have been made to prevent plaintiffs from defeating the motion to dismiss by adding new plaintiffs.