Today in a 5-4 decision, the Supreme Court held that an offer of judgment that fully satisfies the claims of a named plaintiff in a FLSA collective action may eliminate the case if the offer of judgment moots the plaintiff’s claims. In Genesis Health Care Corporation v. Symczyk, the plaintiff had declined a Rule 68 offer of judgment made by the defendant. Specifically, the defendant had offered $7,500 back wages and an amount of attorney’s fees and costs to be determined by the court. The offer was left open for ten days. The plaintiff did not accept the offer. The district court held that because the offer was for the full amount of the plaintiff’s claim, no controversy remained, thus depriving the court of subject matter jurisdiction. On appeal, the Third Circuit agreed that the plaintiff’s claim was moot but reversed the district court, holding that such attempts to “pick off” a named plaintiff’s claim in a collective action would frustrate the goals of such actions.
In its decision, the Supreme Court reversed the Third Circuit. First, the court expressly held it was not deciding the issue of whether the offer of judgment in this case actually mooted the claim. Rather, the court held that issue was not raised before it and instead its decision was based on the assumption that the named plaintiff’s claim was in fact moot. The court continued by holding that where the claims of a named collective action plaintiff are mooted by an offer of judgment, such plaintiff has no personal interest in representing putative, unnamed claimants and the case should be dismissed. The court left undecided the issue of exactly what would constitute mootness in this context.
The dissent seized on this failure to squarely address the mootness issue as follows:
The Court today resolves an imaginary question, based on a mistake the courts below made about this case and others like it…. Embedded within that question is a crucial premise: that the individual claim has become moot, as the lower courts held and the majority assumes without deciding. But what if that premise is bogus?
The dissent suggests that because the majority failed to address the mootness issue, the entire decision essentially is meaningless.
The ultimate impact of the court’s decision remains to be seen. On one hand, the Supreme Court seems to be ratifying the strategy of decapitating a collective action through the Rule 68 offer of judgment so long as it completely satisfies the named plaintiff’s claims. On the other hand, the Court left unanswered the crucial question of what constitutes mootness for this purpose. Until the Supreme Court weighs in on that question, it will be left for the lower courts to decide.
Certainly the lesson of this case is that defendants now may have a powerful tool, ratified by the Supreme Court, for potentially eviscerating a FLSA collective action. However, defendants who consider this approach should beware the thorny threshold issues of: 1) whether their offer of judgment in fact provides full relief to the plaintiff; and, 2) whether, in the context of a collective action, such an offer will be construed as mooting the named plaintiff’s claims.