Supreme Court Will (Finally) Rule On Offer of Judgment Procedure Used To Moot FLSA Collective Actions
These are happy times for management side lawyers, I predict. The U.S. Supreme Court has heard oral arguments on the issue of whether utilizing the Rule 68 FRCP Offer of Judgment procedure to, essentially, “pick off” the lead, named plaintiff in a FLSA collective action ends up undermining the validity of the entire class if that lead plaintiff turns the Offer down and the Court then dismisses the case for mootness. The case is entitled Genesis HealthCare Corp. et al. v. Laura Symczyk and comes out of the Third Circuit..
This is a strategy that I have successfully employed, twice, in New Jersey, and that numerous other employers have done. Some contend this is a way for the employer to get out “cheap” and acting “unfairly” in a FLSA collective action. When the Third Circuit held in Genesis that this tactic was not appropriate, I have refrained from using it again. I feel, however, that the Supreme Court is going to rule that the approach is permissible and that it is sanctioned by and under the Federal Rules of Civil Procedure.
The underlying case involved allegations that the automatic meal break deduction policy served to deny employees of compensation for lunch breaks allegedly missed but nevertheless deducted. The Company made a $7,500 offer that would have made the lead plaintiff whole for any of her missed lunches. The federal district court ruled that the case was moot and dismissed it, but the Third Circuit held that the lawsuit’s “status” as a class/collective action injected a new variable into the calculus, as the lead plaintiff would still have some stake in the matter as the representative of all those similarly situated.
If the Supreme Court rules for the Company, it will be a boon to employers. Defending FLSA collective actions is an extraordinarily expensive proposition (assuming the employer wins) and a doubly expensive exercise if the employer loses, as it is a fee shifting statute. If the Court upholds the Third Circuit, however, employers will be barred from using this tool/weapon as a means of resolving FLSA cases at an early, cost effective point in the proceedings.
Why would the Court want to issue a ruling that only serves to facilitate protracted, inordinately expensive litigation and further crowding of already crowded dockets.
I don’t think it does.