SCOTUS Will Decide Whether Rule 68 Offers Moot FLSA Collective Actions

The U.S. Supreme Court granted cert on June 25, 2012 in Genesis Healthcare Corp. v. Symczyk to resolve a federal circuit split on whether an FLSA collective action is mooted when the lone plaintiff receives from defendants an offer of judgment under Federal Rule of Civil Procedure 68 that satisfies the plaintiff’s claims.  Under Rule 68, a defendant may offer judgment against it on specified terms.  If the offer is accepted, judgment is entered on the terms offered.  If the offer is not accepted, plaintiff is liable for post-offer costs if the plaintiff fails to ultimately obtain a judgment more favorable than the offer.    

In contrast to Rule 23 class actions, representative actions under the FLSA require similarly situated plaintiffs to opt-in to the lawsuit.  Therefore, until additional parties opt-in, a plaintiff in an FLSA collective suit does not represent others.  Because of this, some federal courts have held that employers may effectively moot an FLSA collective action by making an offer under Rule 68 to resolve the plaintiff’s claims before other plaintiffs opt in to the lawsuit.

However, in Genesis, the Third Circuit declined to moot plaintiff’s FLSA collective action following a Rule 68 offer.  In reaching its decision, the court relied on Supreme Court authority declining to moot an appeal in the Rule 23 context that held:

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 . . .

Genesis Healthcare Corp. v. Symczyk, 656 F.3d 189, 195 (3d Cir. 2011) (citing Deposit Guar. Nat’l Bank v. Roper, 455 U.S. 326, 339 (1980)).  Finding this same rationale applicable to plaintiff’s FLSA representative action, the Third Circuit declined to dismiss plaintiff’s claims.

Employers should be on the lookout for the Supreme Court’s decision this term.  In addition to providing guidance on the effect of Rule 68 offers, the Supreme Court’s decision in Genesis may also offer valuable insight into the distinction between FLSA collective actions and Rule 23 class actions.