Authored by Noah Finkel
As noted by this blog on several occasions, including most recently here, the U.S. Supreme Court and several appellate courts have grappled with the question of whether and to what extent a defendant facing a class or collective action can moot a case by offering a plaintiff complete relief under Rule 68 or in a settlement offer. Today the Supreme Court made clear in Campbell-Ewald Co. v. Gomez that an unaccepted offer of complete relief under Rule 68 does not render a case moot and thus does not end a purported class or collective action.
To be sure, the Court’s ruling narrows the grounds on which a defendant can obtain an early dismissal of a class or collective action by making a Rule 68 offer of complete relief to the class representative. As our colleagues explain here, the Court has now held that if a class representative rejects or declines to accept the offer, then “basic principles of contract law” mean that the offer has no force, and the class representative’s claim is not mooted. Indeed, under the express terms of Rule 68, an unaccepted offer of judgment expires after 14 days. (If an offer is accepted, then that may be a different story—particularly if the case is a collective action and not a class action, as discussed here.)
But does this make the mootness maneuver moot? No—and especially not in wage-hour cases, where in several classes of cases a defendant-employer readily can determine the maximum amount of a class representative’s claim for damages. As this blog has explained here, there is a better way for a defendant-employer to moot a class action, and that is by making a tender of complete relief to the plaintiff/class representative without reliance on Rule 68. Do not even reference a settlement agreement or release. Rather, make the tender unconditional. As many courts have held, if the plaintiff/class representative has been provided with all relief sought in the lawsuit for him or herself, and this is done before a class is certified or opt-in plaintiffs join a collective action, then there is no longer a live controversy between the parties on the merits and the court no longer has subject matter jurisdiction over the claim. Indeed, today’s opinion expressly noted that “[w]e need not, and do not, now decide whether the result would be different if a defendant deposits the full amount of the plaintiff’s individual claim in an account payable to the plaintiff … .”
What about the attorneys’ fees that the plaintiff’s counsel incurred in bringing the putative class or collective action? Depending on the statute, those might not need to be included. Under the FLSA, for example, only a “prevailing plaintiff” is entitled to attorneys’ fees, and if a case is dismissed as moot, the plaintiff did not prevail.
A tender of complete relief is not for every case. There are several reasons why a defendant employer would not seek to moot a wage-hour case by making such a payment. Many regular-rate cases, failure to pay overtime or minimum wage claims, tip credit matters, certain off-the-clock theories, and other pleadings that contain specifics on the amount of alleged underpayments may be amenable to calculating a plaintiff’s maximum recovery, but calculating “complete relief” in many wage-hour cases may not be so clear. In other types of cases, the amount needed to pay complete relief may be calculable but exorbitant. And in all cases, there is a risk that other potential plaintiffs may be waiting in the wings, and a tender of full relief to the first current or former employee who files a claim can lead others to make similar claims—leading to an endless and expensive game of whack-a-mole. Ultimately, each employer in each case needs to decide the propriety of the mootness maneuver on a case-by-case basis, weighing the cost of an offer (or offers) of complete relief against the cost of defending a collective or class action. As Justice Kagan warned in her dissent in Genesis Healthcare v. Symczyk—the Supreme Court’s most recent foray into the mootness issue before today—“don’t try this at home.”