By: Jason E. Reisman and Seth Spiegal, Obermayer Rebmann Maxwell & Hippel LLP


            In a setback for employers concerned about the possibility of facing an FLSA collective action, the Third Circuit recently ruled that an employer’s offer of judgment to an FLSA plaintiff in the full amount of the plaintiff’s claim, prior to the plaintiff’s moving for conditional certification, does not moot the collective action.  This holding eliminates the viability of an employer’s tactic of “picking off” named FLSA plaintiffs in an attempt to foreclose pursuit of a collective action.  The case did provide, however, a small victory for employers.  Resolving a split among district courts, the Court held that a plaintiff at the conditional certification stage must make at least a “modest factual showing” that other employees are similarly situated in order to pursue a collective action.  See Symczyk v. Genesis Healthcare Corporation, 10-3178 (3d Cir., Aug. 31, 2011)    

            The plaintiff, Symczyk, brought an FLSA collective action on behalf of herself and others similarly situated.  The employers immediately made an offer of judgment under Federal Rule of Civil Procedure 68 for $7,500.00 in alleged unpaid wages plus attorneys’ fees, costs, and expenses.  Although Symczyk did not dispute the adequacy of the offer, she did not respond, allowing the offer to lapse.  The district court then scheduled a discovery period prior to the plaintiff’s moving for conditional certification.  The employer moved under Federal Rule of Civil Procedure 12(b)(1) to dismiss for lack of subject matter jurisdiction, arguing that following the rejection of the offer of judgment, Symczyk no longer had a personal stake or legally cognizable interest in the outcome of the action.  The district court found that the individual FLSA claim mooted the collective action and dismissed the case.    


            Symczyk appealed.  The Third Circuit framed the issue as “whether a collective action brought under § 216(b) of the FLSA becomes moot when, prior to moving for conditional certification and prior to any other plaintiff opting in to the suit, the putative representative receives a Rule 68 offer.”


            The Third Circuit explained that in general, where an offer of complete relief is made, whether or not it is accepted, “no justiciable controversy remains.”  It noted, however, that “conventional mootness principles do not fit neatly within the representative action paradigm.”  The Court cited its own case of Weiss v. Regal Collections, 385 F.3d 337 (3d Cir. 2004), which addressed the identical issue in the context of Rule 23 class actions.  In Weiss, the Third Circuit held that an offer of judgment in full satisfaction of the named plaintiff’s claim, prior to moving for class certification, does not moot the Rule 23 class action.  The Weiss court determined that, where a defendant makes a Rule 68 offer to an individual’s claim that has the effect of mooting possible class relief asserted in the complaint, the class certification motion “relates back” to the filing of the original complaint, and the district court retains jurisdiction over the matter.  The Symczyk court described the “relation back” doctrine as “an equitable principle” that “has evolved to account for calculated attempts by some defendants to short-circuit the class action process and … prevent a putative representative from reaching the certification stage.” 


            In Symczyk, the plaintiff cited Weiss and contended that for the purposes of the application of the “relation back” doctrine, no material distinction between Rule 23 and
§ 216(b) existed.  The employer attempted to distinguish the two doctrines.  It pointed out that unlike in a Rule 23 action, where the named plaintiff putatively represents a class as soon as the case is filed, a named plaintiff in an FLSA collective action must affirmatively “opt in.”  Thus, according to the employer, an FLSA named plaintiff “whose individual claim has been mooted by a Rule 68 offer of judgment before anyone has opted in to the action cannot purport to possess a personal stake in representing the interests of others.”  The Third Circuit rejected the employer’s position.  While conceding that the argument “has some surface appeal,” the Court found that the employer’s argument “incentivizes the undesirable strategic use of Rule 68 that prompted our holding in Weiss.”  It held that, if the mootness inquiry in the 216(b) context “were predicated inflexibly on whether any employee has opted in to an action at the moment a named plaintiff receives a Rule 68 offer, employers would have little difficulty preventing FLSA plaintiffs from attaining the ‘representative’ status necessary to render an action justiciable notwithstanding the mooting of their individual claims.”  Explaining further, the Court found that the policy of Rule 23 – allowing plaintiffs to pool claims that would be uneconomical to litigate individually – was similar to that of § 216(b), which affords plaintiffs “the advantage of lower individual costs to vindicate rights by the pooling of resources.” 


            The Court cited with approval the Fifth Circuit’s decision in Sandoz v. Cingular Wireless LLC, 553 F.3d 913 (5th Cir. 2008), which addressed this issue and held that in enacting § 216(b), Congress did not intend to create an “anomaly” by allowing employers “to use Rule 68 as a sword, ‘picking off’ representative plaintiffs and avoiding ever having to face a collective action.”   

            As an additional justification for its holding, the Court found that the “relation back” doctrine “helps safeguard against the erosion of FLSA claims by operation of the Act’s statute of limitations.”  It pointed out that, for an opt-in plaintiff, the FLSA action commences only upon filing of a written consent.  The Court rationalized that protracted disputes over the propriety of dismissal in light of Rule 68 offers may deprive potential opt-ins whose claims are in danger of being barred by the statute of limitations. 

            The Court summarized its holding:  “Absent undue delay, when an FLSA plaintiff moves for ‘certification’ of a collective action, the appropriate course – particularly when a defendant makes a Rule 68 offer to the plaintiff that would have the possible effect of mooting the claim for collective relief asserted under § 216(b) – is for the district court to relate the motion back to the filing of the initial complaint.”

            In a small consolation for employers, the Court resolved in the employer’s favor the question of which standard a plaintiff must meet to demonstrate that potential class members are “similarly situated” at the conditional certification stage.  It noted that courts within the Third Circuit have been split over whether a plaintiff is required to make merely “substantial allegations” in the pleadings or a “modest factual showing” of similarly-situated status following limited discovery.  The Third Circuit adopted the latter standard, requiring the plaintiff to produce “some evidence, beyond pure speculation, of a factual nexus between the manner in which the employer’s policy affected her and the manner in which it affected other employees.”  The Court concluded that the “modest factual showing” standard worked in harmony with the opt-in requirement “to cabin the potentially massive size of a collective action.” 

            For an employer in the Third Circuit, Symczyk removes what was a potentially important tool in its FLSA arsenal.  The employer may no longer thwart a collective action by making an offer of judgment that would fully satisfy the demand of the named plaintiff.


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