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April 19, 2013

Supreme Court Dismisses FLSA Collective Claims Where Individual Claims Were Moot

On April 16, 2013, the U.S. Supreme Court issued a decision that may have implications for how employers approach collective actions under the Fair Labor Standards Act (“FLSA”). Genesis Healthcare Corp. et al v. Symczyk, (S. Ct. Docket No. 11-1059).  The Court, by a 5-4 decision, dismissed a collective FLSA action as moot based on the employer’s offer of judgment under Rule 68 of the Federal Rules of Civil Procedure.

The plaintiff in Genesis Healthcare brought a collective action FLSA claim against the employer for failure to pay wages for compensable time.  When answering the complaint, the employer simultaneously served upon the plaintiff an offer of judgment under Rule 68.  The Rule 68 offer included compensation for all alleged unpaid wages as well as “such reasonable attorneys’ fees, costs, and expenses… as the Court may determine.”  Although the plaintiff did not accept the offer, the employer moved to dismiss the case as moot since it had offered complete relief on plaintiff’s individual claim and no other plaintiffs had joined the suit.

On appeal, the Third Circuit agreed that the plaintiff’s individual claim was moot; however, it held that the collective action was not moot and remanded the case to the District Court to allow the plaintiff to seek to join other plaintiffs in the case.

The Supreme Court reversed the Third Circuit’s ruling and held that in a FLSA collective action, where a lone plaintiff’s claim has been determined to be moot and that plaintiff has no personal interest in continuing the collective action, the entire collective action is moot. Significantly, the Supreme Court based its ruling on the Third Circuit’s determination that the plaintiff’s individual claim was moot.  In accepting the Third Circuit’s determination in this regard, the Court avoided having to decide whether an unaccepted offer that fully satisfies a plaintiff’s claim is sufficient to render the claim moot. 

Take Away for Employers

The Court’s Genesis Healthcare decision is limited to its particular facts and does not resolve the split in the circuits as to whether an unaccepted Rule 68 offer of judgment to an individual plaintiff renders a FLSA collective action moot.  The decision thus provides limited relief to employers within jurisdictions -- including the jurisdiction of the Second Circuit Court of Appeals (which includes New York and Connecticut) -- which have ruled that an unaccepted Rule 68 offer of full relief does not render an action moot.

While the Court’s decision in Genesis Healthcare is not as far reaching as many employer’s would have hoped, employers nonetheless should continue to evaluate whether a Rule 68 offer or other offer of make whole relief is an effective strategy to resolve or limit FLSA collective actions.

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Please do not hesitate to contact us should you have any questions concerning this ruling or the FLSA generally.