Tuesday, April 16, 2013

Suprem Court Holds That Employer's Offer Moots FLSA Class Action Prior To Certification

Supreme CourtToday's second Supreme Court decision, Genesis Healthcare v. Symczyk, dealt with pre-certfication FLSA class actions.  The Court (in another 5-4 decision), held that when the employer offered a settlement that would satisfy all of the named plaintiff's claims, the class action is moot.  There appeared to be factual questions about whether the settlement would've actually satisfied all the claims, but that issue was not challenged.  This holding wasn't a surprise given the Court's precedent on dismissing class actions; the few exceptions to pre-certification mooting were a stretch here.  That said, the dissent strongly pointed out many of the problems that this line of reasoning poses for plaintiffs.  The Court's syllabus:

Respondent brought a collective action under the Fair Labor Standards Act of 1938 (FLSA) on behalf of herself and “other employees similarly situated.” 29 U. S. C. §216(b). After she ignored petitioners’ offer of judgment under Federal Rule of Civil Procedure 68, the District Court, finding that no other individuals had joined her suit and that the Rule 68 offer fully satisfied her claim, concluded that respondent’s suit was moot and dismissed it for lack of subject-matter jurisdiction. The Third Circuit reversed. It held that respondent’s individual claim was moot but that her collective action was not, explaining that allowing defendants to “pick off” named plaintiffs before certification with calculated Rule 68 offers would frustrate the goals of collective actions. The case was remanded to the District Court to allow respondent to seek “conditional certification,” which, if successful, would relate back to the date of her complaint.

Held: Because respondent had no personal interest in representing putative, unnamed claimants, nor any other continuing interest that would preserve her suit from mootness, her suit was appropriately dismissed for lack of subject-matter jurisdiction. Pp. 3–12.

     (a) While the Courts of Appeals disagree whether an unaccepted Rule 68 offer that fully satisfies a plaintiff’s individual claim is sufficient to render that claim moot, respondent conceded the issue below and did not properly raise it here. Thus, this Court assumes, without deciding, that petitioners’ offer mooted her individual claim. Pp. 3–5.

     (b) Well-settled mootness principles control the outcome of this case. After respondent’s individual claim became moot, the suit became moot because she had no personal interest in representing others in the action. To avoid that outcome, respondent relies on cases that arose in the context of Rule 23 class actions, but they are inapposite, both because Rule 23 actions are fundamentally different from FLSA collective actions and because the cases are inapplicable to the facts here. Pp. 5–11.

          (1) Neither Sosna v. Iowa, 419 U. S. 393 , nor United States Parole Comm’n v. Geraghty, 445 U. S. 388 , support respondent’s position. Geraghty extended the principles of Sosna—which held that a class action is not rendered moot when the named plaintiff’s individual claim becomes moot after the class has been duly certified—to denials of class certification motions; and it provided that, where an action would have acquired independent legal status but for the district court’s erroneous denial of class certification, a corrected ruling on appeal “relates back” to the time of the erroneous denial. 445 U. S., at 404, and n. 11. However, Geraghty’s holding was explicitly limited to cases in which the named plaintiff’s claim remains live at the time the district court denies class certification. See id., at 407, n. 11. Here, respondent had not yet moved for “conditional certification” when her claim became moot, nor had the District Court anticipatorily ruled on any such request. She thus has no certification decision to which her claim could have related back. More fundamentally, essential to Sosna and Geraghty was the fact that a putative class acquires an independent legal status once it is certified under Rule 23. By contrast, under the FLSA, “conditional certification” does not produce a class with an independent legal status, or join additional parties to the action. Pp. 7–8.

          (2) A line of cases holding that an “inherently transitory” class-action claim is not necessarily moot upon the termination of the named plaintiff’s claim, see, e.g., County of Riverside v. McLaughlin, 500 U. S. 44 , is similarly inapplicable. Respondent argues that a defendant’s use of Rule 68 offers to “pick off” a named plaintiff before the collective-action process is complete renders the action “inherently transitory.” But this rationale was developed to address circumstances in which the challenged conduct was effectively unreviewable because no plaintiff possessed a personal stake in the suit long enough for litigation to run its course, and it has invariably focused on the fleeting nature of the challenged conduct giving rise to the claim, not on the defendant’s litigation strategy. Unlike a claim for injunctive relief, a damages claim cannot evade review, nor can an offer of full settlement insulate such a claim from review. Putative plaintiffs may be foreclosed from vindicating their rights in respondent’s suit, but they remain free to do so in their own suits. Pp. 8–10.

          (3) Finally, Deposit Guaranty Nat. Bank v. Roper, 445 U. S. 326 , does not support respondent’s claim that the purposes served by the FLSA’s collective-action provisions would be frustrated by defendants’ use of Rule 68 to “pick off” named plaintiffs before the collective-action process has run its course. In Roper, where the named plaintiffs’ individual claims became moot after the District Court denied their Rule 23 class certification motion and entered judgment in their favor based on defendant’s offer of judgment, this Court found that the named plaintiffs could appeal the denial of certification because they possessed an ongoing, personal economic stake in the substantive controversy, namely, to shift a portion of attorney’s fees and expenses to successful class litigants. Here, respondent conceded that petitioners’ offer provided complete relief, and she asserted no continuing economic interest in shifting attorney’s fees and costs. Moreover, Roper was tethered to the unique significance of Rule 23 class certification decisions. Pp. 10–11.

656 F. 3d 189, reversed.

     Thomas, J., delivered the opinion of the Court, in which Roberts, C. J., and Scalia, Kennedy, and Alito, JJ., joined. Kagan, J., filed a dissenting opinion, in which Ginsburg, Breyer, and Sotomayor, JJ., joined.




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This is definitely not a good time to be a plaintiff, especially as it relates to class and collective actions. SCOTUS has been chipping away at employee rights, and I fear "when" the D.R. Horton case makes it to the SC there is a high likelihood collective employee action will take another hit. Hmm, I wonder if anyone on the Court is planning to retire soon....

Posted by: Kendall Isaac | Apr 17, 2013 9:38:31 AM

One interesting aspect of the opinion: unlike with class actions, the Court held on pg. 8 here that even after a plaintiff gets conditional certification, the defendant can still moot the claim with an offer of judgment. That's key, because it allows any defendant to wait until conditional certification is granted or denied to moot the claim, and is yet another tool for fighting collective action on behalf of workers.

Posted by: Dave | Apr 18, 2013 7:38:27 AM

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