The Supreme Court held today that a collective action under the Fair Labor Standards Act may not continue if a defendant, prior to conditional certification, has mooted the named plaintiff's case through an offer of full relief. Four dissenting justices, however, contend that because such an offer never renders a case moot, the majority opinion has no precedential value.
A brief explanation of the procedural peculiarities in Genesis Healthcare Corp. v. Symczyk that allowed such a dispute to occur: after the plaintiff, a former Genesis Healthcare nurse, filed her complaint for statutory damages under the FLSA, Genesis served a Rule 68 offer of judgment that would have satisfied the plaintiff's individual claim in full. The plaintiff did not accept the offer. Genesis then moved to dismiss the complaint for lack of subject matter jurisdiction, on the ground that the offer of full relief had mooted the plaintiff's claim. The district court agreed and granted the motion.
The Third Circuit reversed, holding that although the plaintiff's individual claim was moot, her collective action was not. The panel reasoned that allowing defendants to "pick off" named plaintiffs with Rule 68 offers would frustrate the goals of collective actions.
The Supreme Court, in today's 5-4 decision split along party lines, assumed, without deciding, that the plaintiff's individual claim was moot. The majority opinion, written by Justice Thomas, acknowledged a circuit split as to whether an unaccepted offer that fully satisfies a plaintiff's claim renders the claim moot. The majority declined to resolve the split, however, on the grounds that the plaintiff did not challenge the mootness determination at the district court, in the Third Circuit, or in her opposition to the petition for certiorari, but instead raised the issue for the first time in her merits brief to the Supreme Court.
The Court then held that because it had to assume that the plaintiff's claim was moot, the plaintiff could not maintain her FLSA collective action. In reaching this decision, the Court distinguished several Rule 23 cases on which the plaintiff relied, relying in part on differences between Rule 23 class actions and FLSA collective actions. Thus, class action plaintiffs may, in turn, be able to distinguish Genesis Healthcare in fending future "pick off" attempts.
The most powerful ammunition for class counsel, however, will be Justice Kagan's extraordinary dissent. In a tone that bordered on the snarky, Justice Kagan accused the majority of resolving "an imaginary question, based on a mistake the courts below made" in deciding that the plaintiff's individual claim was moot. Justice Kagan, noting that the district court had dismissed the plaintiff's claim as moot even though the plaintiff had never received any money from Genesis, wrote that the logic espoused by Genesis, the district court, and the Third Circuit was "wrong, wrong, and wrong again." Asserting that an unaccepted settlement offer has no legal effect, Justice Kagan offered "a friendly suggestion to the Third Circuit: Rethink your mootness-by-unaccepted-offer theory. And a note to all other courts of appeals: Don't try this at home."
Justice Kagan then argued that the majority could and should have considered the mootness question despite the concessions and determinations below. She wrote that not only did the Court have discretion to overlook the plaintiff's failure to seek review of the Third Circuit's determination (since, after all, the plaintiff won in the Third Circuit), but the mootness question also was "inextricably intertwined" with the question the Court decided (whether individual mootness prevents a collective action from going forward).
Justice Kagan argued that because a plaintiff is free to reject a settlement offer—even one that offers full relief—without mooting her claim, individual claims for damages in an FLSA case can never become moot. As a result, she concluded, the Court decided a nonexistent issue. "Feel free," she wrote, "to relegate the majority's decision to the furthest reaches of your mind: The situation it addresses should never again arise."
In at least one respect, Justice Kagan's logic may be faulty. Unless and until the circuit split is resolved in favor of her position, some courts, including district courts following Third Circuit precedent, will continue to find individual FLSA claims moot when the defendant has offered full relief. And in those cases, Genesis Healthcare will require courts to prevent the collective action from proceeding. We can agree with the dissent, however, that far from resolving an FLSA certification question in a manner that might have had broad implications for Rule 23 class actions, Genesis Healthcare leaves much unresolved regarding "pick off" attempts in both contexts.
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