Friday, December 14, 2012

Oral Argument in Genesis Healthcare Corp. v. Symczyk

Last week, the Court held oral argument in Genesis Healthcare Corp. v. Symczyk, a Fair Labor Standards Act case.  The issue is whether FLSA defendants can moot cases that might otherwise become collective actions by offering the initial named plaintiff all the relief that she could potentially receive – here, back pay, liquidated damages, and attorneys’ fees.  In this case, Genesis made Symczyk an offer of judgment under FRCP 68 shortly after she filed her complaint; Symczyk did not accept the offer of judgment (a fact that seems not to have been brought to the Court’s attention until after cert. was granted), but the district court nonetheless held that the case was moot. 

It has long been established that defendants cannot defeat class actions by picking off named plaintiffs.  However, FLSA “collective actions” require class members to opt in in writing after the complaint is filed.  (This is the result of a 1947 amendment to the FLSA that was motivated by Congress’s sense that labor unions, among others, were stirring up litigation unnecessarily by bringing class actions against employers.)  Thus, the question is what happens when the defendant makes an offer of judgment between the date the complaint is filed and the date that additional plaintiffs opt in.  The Third Circuit, in an opinion by Judge Scirica, answered this question by drawing inspiration from the class action context, and instructing district courts to allow timely motions for conditional certification of FLSA actions to relate back to the date of the original complaint.  The Third Circuit stressed that the alternative would allow defendants to avoid ever having to face a collective action, while allowing the statute of limitations to run on the potential claims of other similarly situated employees. 

At oral argument, many of the justices seemed skeptical of Genesis’s Article III mootness argument, instead viewing the case as presenting either a statutory issue about the procedure intended by Congress, or else an issue about how district courts ought to exercise their inherent discretion as they manage these cases.  For example, Justice Roberts suggested that district court judges could just avoid ruling on a suggestion of mootness until after they rule on conditional certification.  Similarly, Justice Alito wondered whether plaintiffs who had been presented with an offer of judgment were entitled to a hearing on the adequacy of the offer, apparently implying that the putative collective action could proceed while the parties were awaiting that hearing. 

Two additional points of potential interest:  First, there was some discussion of the effect of last Term’s decision in Knox v. SEIU Local 1000, in which the Court rejected a mootness argument based on the union’s post-cert. offer to reinstate the district court’s decision for the plaintiffs.  Counsel for Genesis argued that Knox was distinguishable based on the fact that those plaintiffs sought prospective relief, whereas Symczyk was entitled only to damages and attorneys’ fees.  (Justice Scalia suggested that Knox might be more broadly distinguishable on slightly different grounds.)  Thus, it seems likely that this case will provide the Court an opportunity a chance to elaborate on that aspect of Knox.  Second, the Solicitor General, arguing in support of Symczyk, began his argument by invoking freedom of contract – specifically, the freedom to reject a settlement agreement, even if it offers all the relief to which one might be entitled, and choose to litigate instead.  This led to a lengthy exchange about the difference between qualifying injuries for purposes of Article III and meritorious claims under the FLSA.  Here, the SG offered a defense of collective FLSA actions based on Congress’s judgment that low-wage, nonunion employees have a legitimate interest in banding together to enforce their rights.  While this point did not seem to immediately gain traction with the justices, employee solidarity in the non-union context seems to imbue this case – otherwise, it would be difficult to explain why Symczyk would have sought to keep this case alive, foregoing the offer of judgment and attendant cash award, rather than taking the money when it was first offered.

-- CG

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