I have myself successfully utilized the Offer of Judgment procedure in FLSA cases and often blogged about these so-called "pick off" actions. Now the Supreme Court has weighed in. The Court has (perhaps) dealt a significant blow to the ability of class action defendants to "pick off" named plaintiffs by offering them complete relief for their individual claims and thereby mooting the remainder of the class action. In Campbell-Ewald v. Gomez, No. 14-857 (U.S. Jan. 20, 2016), a 6-3 majority held that an unaccepted offer of judgment made to a named plaintiff pursuant to Federal Rule of Civil Procedure 68, standing alone, does not moot the plaintiff's claim and deprive the trial court of Article III subject-matter jurisdiction.
While the Court's decision blunts a strategy that has enjoyed increasing popularity with defendants to try to shed themselves of class actions there is yet left the possibility that Rule 68 offers can still be employed as a defense or, rather, an offensive weapon for an employer in a FLSA case.
In the context of class action litigation, defendants have used Rule 68 offers of judgment as a tool for picking off representative plaintiffs, mooting the remainder of the case and forcing courts to dismiss for lack of jurisdiction. The Campbell-Ewald case arose as a purported class action for violations of the Telephone Consumer Protection Act. Before Plaintiff Gomez could move for class certification, the defendant made a Rule 68 offer of judgment to pay Gomez $1,503 for each text message he received, together with costs and a stipulated injunction against sending text messages in violation of the TCPA. When Gomez did not accept the offer, the defendant contended that his claim was moot and the case should be dismissed for lack of subject-matter jurisdiction.
The Supreme Court held that the Offer of Judgment had expired when not accepted after 14 days in accordance with Rule 68 and thus could not affect the continued viability of Gomez's claim. "An unaccepted settlement offer – like any unaccepted contract offer – is a legal nullity with no operative effect." Accordingly, the Court held that an unaccepted offer of judgment does not moot a plaintiff's case or affect the ability of a district court to adjudicate it.
The Takeaway
Despite the Court's holding in Campbell-Ewald, Rule 68 offers still may play a key role in terminating class actions. Even if an offer of complete relief is not enough to moot a case, actual payment of complete relief pursuant to that offer may be able to. Tellingly, the majority in Campbell-Ewald did not reject this notion. Thus, maybe, if a class action defendant actually tendered payment into court and allowed the entry of judgment in favor of the single plaintiff, the case would be moot. Although this is an open issue, a good strategy in a FLSA case may be to make a Rule 68 offer of judgment, pay the damages into court and offer to pay "reasonable" attorney fees. The attorney fees are either settled between the lawyers or determined by the court.
In other words, it is still worth trying it and hoping for the best!
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