Thursday, April 18, 2013
Party's Non-Settlement Moots "Similarly Situated" Labor Case
A sharply divided Supreme Court (5-4, along conventional ideological lines) ruled on Tuesday that when a lone plaintiff sues under the Fair Labor Standard Act on behalf of herself and all others "similarly situated," but then declines to answer a defendant's settlement offer in the case, the case--the entire thing--becomes moot.
The ruling in Genesis Healthcare v. Symczyk deals a significant blow to the FLSA's provision that allows an employee to sue on behalf of all others "similarly situated." That's because the ruling allows a defendant to moot an entire case by offering complete settlement to a lone lead plaintiff--whether the plaintiff accepts it, rejects it, or ignores it. But if the dissent is right, this is a one-off that should never happen again.
Symczyk sued Genesis Healthcare under the FLSA for backpay after Genesis docked its employees' pay for a half-hour lunch each day, even when employees worked through lunch. She sued on behalf of herself and all others "similarly situated." (The FLSA specifically provides for this class-action-like mechanism.) Genesis offered to settle for the full amount of monetary damages, but put a deadline on its offer of 10 days. Symczyk didn't respond, and the trial court dismissed her case. The Third Circuit reversed, but only as to the collective action. The Third Circuit said that the settlement offer mooted Symczyk's individual claim, but that it didn't moot her collective claim on behalf of others "similarly situated."
The Supreme Court ruled the entire case moot. The majority, by Justice Thomas, joined by Chief Justice Roberts, and Justices Scalia, Kennedy, and Alito, assumed, but did not decide, that the Third Circuit was right about Symczyk's individual claim, but it reversed on her collective claim. The Court said that once it assumed that Symczyk's individual claim was moot, the ruling on the collective-action allegations turned on a "straightforward application of well-settled mootness principles." Basically: "the mere presence of collective-action allegations in the complaint cannot save the suit from mootness once the individual claim is satisfied." The Court distinguished the "relation back" cases under Rule 23 class-action doctrine, saying that here "[t]here is simply no certification decision to which resondent's claim could have related back." It also distinguished the "inherently transitory" cases under class-action doctrine, saying that unlike those cases, which were for injunctive relief challenging ongoing conduct, this case was about monetary damages for past conduct. And it said that its ruling wouldn't undermine the purpose of the FLSA's collective-action provision, because the purpose of that provision is different than the purpose of class actions (on which Symczyk relied): the FLSA works differently than class certification--FLSA "conditional certification" simply isn't class certification--and that difference matters.
Justice Kagan wrote an animated dissent for herself and Justices Ginsburg, Breyer, and Sotomayor. She took aim at the majority's assumption that the settlement mooted Symczyk's claim and wrote that if the lower courts could get that right (that is, that Symczyk's claim wouldn't go moot just because she ignored a settlement offer) this case should never happen again. Here's just one among many gems in her dissent:
So 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.
If the lower courts, which are currently split on the question, can work this out as Justice Kagan did, this case will, indeed, never happen again. But in the meantime, the Court's ruling deals a significant blow to FLSA plaintiffs who bring collective action claims in those circuits where a settlement offer moots an individual claim. Even more generally, it's yet another blow to access to justice.