Supreme Court Upholds Dismissal of Putative Collective Action Based on Rule 68 Offer

By Reed L. Russell and Craig S. Dawson

On April 16, 2013, in Genesis Healthcare Corp., et al., v. Symczyk, the United States Supreme Court held that, where the lone plaintiff’s individual claim in an FLSA collective action becomes moot, the entire collective action must be dismissed for lack of subject-matter jurisdiction.

The respondent in Symczyk, a registered nurse, brought a collective action against her former employer on behalf of herself and other similarly-situated employees. She alleged that the petitioners violated the FLSA by automatically deducting 30-minute meal breaks from the employees’ time worked each shift, even when the employees performed compensable work during those breaks. Upon answering the complaint, and prior to any other plaintiffs opting in to the lawsuit, the petitioners served upon the respondent an offer of judgment under Federal Rule of Civil Procedure 68. The offer included $7,500 for alleged unpaid wages, in addition to attorneys’ fees and costs, and purportedly constituted full relief for the respondent’s individual claim for damages. The respondent was given ten days to consider the offer, after which time the offer would be deemed withdrawn.

When the respondent failed to respond to the offer within the ten-day period, the petitioners filed a motion to dismiss for lack of subject-matter jurisdiction. The petitioners argued that, having rejected the offer for full relief, the respondent no longer had a personal stake in the outcome of the suit and, therefore, the action was moot. The respondent countered that the petitioners were inappropriately attempting to “pick off” the named plaintiff before the collective action could get off the ground, and that such strategic offers of judgment frustrate the goals of collective actions. While the district court dismissed the action for lack of subject-matter jurisdiction, the Third Circuit agreed with the respondent and reversed the district court’s ruling. Notably, however, the Third Circuit only did so after acknowledging that no other potential plaintiff had opted into the suit, the petitioners’ offer fully satisfied the respondent’s individual claim, and that such an offer generally moots a plaintiff’s claim under Third Circuit precedent.

The Supreme Court reversed the Third Circuit’s ruling, however, holding that the collective action should have been dismissed. The Court explained that, “[i]f an intervening circumstance deprives the plaintiff of a ‘personal stake in the outcome of the lawsuit,’ at any point during litigation, the action can no longer proceed and must be dismissed as moot.” While the Court acknowledged a circuit split as to whether an unaccepted offer that fully satisfies a plaintiff’s claim is sufficient to render the claim moot, the Court declined to decide that issue for two reasons. First, both the district court and Third Circuit concluded that the respondent’s individual claim was moot. Second, the respondent had conceded before both lower courts that an offer of complete relief generally renders a claim moot, and the respondent failed to raise an argument to the contrary in her brief in opposition to the petition for certiorari. The Court, therefore, “assume[d], without deciding, that petitioners’ Rule 68 offer mooted respondent’s individual claim.”

The Court went on to apply “well-settled mootness principles” in finding that the respondent’s action could not survive based on the collective-action allegations in her complaint. As stated by the Court, “[i]n the absence of any claimant’s opting in, respondent’s suit became moot when her individual claim became moot, because she lacked any personal interest in representing others in this action.” The Court rejected reliance on precedent evaluating mootness principles in Rule 23 class actions, explaining that “Rule 23 actions are fundamentally different from collective actions under the FLSA” and because the cases relied on were factually inapposite.

The Court explained that FLSA collective actions, even if a court grants “conditional certification,” create no independent legal status for a class like a Rule 23 certification decision does, because “conditional certification” merely authorizes notice to potential collective action members, who must still file consents to join the case in order to become parties. Thus, even a conditionally certified collective action would not prevent mooting out a sole plaintiff’s claim. The Court also rejected application of the theory that mooting a named plaintiff’s claim does not necessarily moot the action if the class claim is “inherently transitory.” The Court reasoned that this theory was developed to apply to claims that were unreviewable because the conduct at issue was “fleeting” (like temporary pre-trial detention), not because of defendants’ litigation strategy, such as using Rule 68 offers to moot individual claims.

The Court’s holding is significant not only for the issues it addressed regarding FLSA collective actions, but also for those it declined to decide. Significantly, the Court declined to resolve the circuit split regarding whether an unaccepted offer of judgment is sufficient to moot an action, and the dissent argued that evidence of an unaccepted offer cannot be introduced to demonstrate mootness. As such, employers should carefully evaluate how Rule 68 offers have been treated in their jurisdictions. Further, employers should consider what collateral effects this decision could have on the behavior of plaintiffs’ counsel, including whether it causes counsel to be more aggressive in probing the employer’s workforce for potential opt-in plaintiffs prior to filing suit, particularly with the prevalence of social media. Finally, the Court’s repeated statements regarding the difference between Rule 23 class actions and FLSA collective actions warrant a careful examination of the Court’s recent Rule 23 jurisprudence and its impact on FLSA collective actions more generally.

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