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Supreme Court rules FLSA class-action properly dismissed as moot

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in Employment Law,Human Resources

by Patrick F. Hulla and A. Craig Cleland, Esqs., Ogletree Deakins

The U.S. Supreme Court has ruled that a class-action lawsuit filed by a worker under the Fair Labor Standards Act (FLSA) was properly dismissed because the ­worker’s suit was moot when she failed to accept an offer of judgment from her employer.

The offer was a dollar amount that the law entitled her to—no more and no less. According to the Court, “the worker had no personal interest in representing putative, unnamed claimants, nor any other continuing interest that would preserve her suit from mootness.”

Thus, the Court ruled, “the mere presence of collective-action allegations in the complaint cannot save the suit from mootness once the individual claim is satisfied.” In other words, once the employer offered to pay her what it might legally owe her, she could no longer pursue claims on behalf of other, unnamed workers. (Genesis Healthcare, et al. v. Symczyk, No. 11–1059, Supreme Court, 2013)

An offer not accepted

In 2009, Laura filed a lawsuit on behalf of herself and “all other persons similarly situated,” arguing that her employer violated the FLSA. Laura’s employer made an offer of judgment under Federal Rule of Civil Procedure 68, including a payment for alleged unpaid wages, attorneys’ fees, costs and expenses.

It stipulated that if Laura did not accept the offer within 10 days, it would be deemed withdrawn. Laura never responded.

Her employer filed a motion to dismiss, arguing that because it offered her complete relief on her individual damages claim, she no longer had a personal stake in the outcome of the suit, rendering her action moot.

The trial judge dismissed the suit, concluding that no one else had joined the suit and that the Rule 68 offer of judgment fully satisfied Laura’s individual claim.

The 3rd Circuit Court of Appeals agreed that the Rule 68 offer mooted Laura’s claim, but it reversed the lower court’s finding that the collective action is not moot. The court explained that “strategic” use of Rule 68 offers before certification could “short-circuit the class action process.”

High Court: Class-action moot

In the Supreme Court’s decision, Justice Clarence Thomas noted that to invoke federal court jurisdiction, a plaintiff must show that he or she has a legally recognized interest or personal stake in the outcome. A corollary to this requirement is that an actual controversy must exist at all stages of review and not merely when the complaint is filed. Otherwise, the action must be dismissed as moot.

The Court assumed—and Laura conceded—that Laura’s individual claim was moot.

Instead, the Court focused on whether her class-action claims were valid. Since no other claimants had opted in, Thomas concluded, Laura’s suit “became moot when her individual claim became moot, because she lacked any personal interest in representing others in this action.” Thus, Laura’s case was appropriately dismissed as moot.

What it means for employers

Several trends may emerge from this decision. First, for collective actions in their infancy, expect more plaintiffs to move for conditional collective-action certification to be filed shortly after complaints are filed.

To avoid the court’s ruling, more and more of these cases are likely to be pleaded as hybrid class and collective actions.

Likewise, to avoid the Rule 68 bar, plaintiffs will likely begin filing more cases in state court under state law.

Now, it would be ideal if the U.S. Supreme Court would consider the incompatibility of hybrid cases, which may be more attractive if substantially more wage-and-hour claims filed in federal court include an analogous state law claim. Perhaps the court was hinting at this eventuality by stating “Rule 23 actions are fundamentally different from collective actions under the FLSA.”

Several times the majority contrasted Rule 23 class actions (Rule 23 of the Federal Rules of Civil Procedure cover most class actions) and FLSA collective actions as “fundamentally different” creatures. For example, the Court noted that collective actions are about “joining co-plaintiffs” (and, by implication, not about representing absent class members), that conditional certification’s “sole” significance is sending court-approved notice and that, whatever it means, conditional certification is “not tantamount to” class certification.

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Patrick F. Hulla is co-chair of Ogletree Deakins’ Class Action Practice Group and a shareholder in the firm’s Kansas City office. A. Craig Cleland is co-chair of Ogletree Deakins’ Class Action Prac­­tice Group and a shareholder in the firm’s Atlanta office.

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