Tuesday, December 4, 2012

Does an unaccepted offer of judgment moot a wage and hour case? Genesis HealthCare Corp. v. Symczyk

Let’s say an employee sues you, claiming that you withheld certain wages owed under the Fair Labor Standards Act. In addition to defending the lawsuit, you make her what is called an “offer of judgment” to make her whole for all wages she claims she is owed (including any liquidated damages and attorneys’ fees). Does the offer render her lawsuit—that she not only brought on her own behalf, but also sought on behalf of a class of similarly situated co-workers—moot? Alternatively, does the fact that she sought relief on behalf of others keep her lawsuit alive, despite the fact that she no longer has any personal skin in the game?

Yesterday, the Supreme Court took up this important issue in Genesis HealthCare Corp. v. Symczyk. The precise issue the Court considered during yesterday’s oral argument is as follows:

Whether a case becomes moot … when the lone plaintiff receives an offer from the defendants to satisfy all of the plaintiff’s claims.

In the case below, the 3rd Circuit offered a succinct explanation of the doctrine of mootness, its role in federal court cases, and how an offer of judgment impacts it:

Article III of the United States Constitution limits the jurisdiction of the federal courts to “actual ‘Cases’ and ‘Controversies.’” When the issues presented in a case are no longer ‘live’ or the parties lack a legally cognizable interest in the outcome, the case becomes moot and the court no longer has subject matter jurisdiction. An offer of complete relief will generally moot the plaintiff’s claim, as at that point the plaintiff retains no personal interest in the outcome of the litigation. Thus, whether or not the plaintiff accepts the offer, no justiciable controversy remains when a defendant tenders an offer of judgment under Rule 68 encompassing all the relief a plaintiff could potentially recover at trial. (internal quotations omitted).

Genesis HealthCare is not the Supreme Court’s first rodeo on the issue of offers of judgment in class actions. In Deposit Guar. Nat'l Bank v. Roper, the Court previously expressed its concern about the use of offers of judgment to strategically “pick off” claimants:

Requiring multiple plaintiffs to bring separate actions, which effectively could be “picked off'” by a defendant’s tender of judgment before an affirmative ruling on class certification could be obtained, obviously would frustrate the objectives of class actions; moreover it would invite waste of judicial resources by stimulating successive suits brought by others claiming aggrievement.

How did the Court address these issues in yesterday’s oral argument, and what do the Court’s questions tell us about how the Court may rule in the case?

  • The left wing of the Court hit the employer’s counsel hard on the perceived underlying unfairness of dismissing an entire collective action based on the inactivity of one member of the class.
  • The right wing of the Court hit the plaintiff’s counsel hard on the underlying procedural issues, and the inability of a named plaintiff to do anything to affect the interests of potential class members who have yet to join the lawsuit.

The outcome of this case is difficult to gauge based on the oral argument, because both potential sides of the Court attacked the underlying issues so differently. Again and again, however, this pro-business Court has revealed itself to be pro-employee in its recent employment rulings. Reading the tea leaves, I predict that the Court rules against the employer and concludes that the unaccepted offer of judgment did not moot the collective action in this case.

A copy of the oral argument transcript is available for download [pdf] from the Supreme Court’s website.