Thursday, January 21, 2016

SCOTUS calls a balk on attempted class-action pick-offs

It’s been almost three years since the Supreme Court decided, in Genesis HealthCare Corp. v. Symczyk, that an employer moots an FLSA collective action when the named plaintiff rejects an offer of judgment that would have satisfied all of the claims brought in the case.

Or did it?

Yesterday, in Campbell-Ewald Co. v. Gomez [pdf], SCOTUS did an about face, stating that Genesis HealthCare held no such thing, reaching the opposite conclusion:
An unaccepted settlement offer or offer of judgment does not moot a plaintiff’s case.
Come again?

The court concluded that the Genesis HealthCare majority had assumed, but had not held, “that an offer of complete relief pursuant to Rule 68, even if unaccepted, moots a plaintiff’s claim.”

The Court then went on to adopt, as its rule of law, the rationale of the Genesis HealthCare’s dissenting opinion:
When a plaintiff rejects such an offer—however good the terms—her interest in the lawsuit remains just what it was before. And so too does the court’s ability to grant her relief. An unaccepted settlement offer—like any unaccepted contract offer—is a legal nullity, with no operative effect. As every first-year law student learns, the recipient’s rejection of an offer leaves the matter as if no offer had ever been made. Nothing in Rule 68 alters that basic principle; to the contrary, that rule specifies that “[a]n unaccepted offer is considered withdrawn.” So assuming the case was live before—because the plaintiff had a stake and the court could grant relief—the litigation carries on, unmooted.
In other words: Ignore Genesis HealthCare. We were wrong. The law actually is the opposite.

Campbell-Ewald, is a consumer case, not a wage-and-hour case. But, given that it obliterates Genesis HealthCare (a wage-and-hour case) by formally adopting its dissent as its rule, employers should forsake any hope that they can moot a class or collective action by offering to make the named plaintiff(s) whole.

As wage-and-hour lawsuits continue to be the bane of employers (as noted by Doug Hass at his Day Shift blog), employers will have to go back to the drawing board to attempt to limit the costs of these expensive and time-consuming lawsuits.

Image via Giphy