Is a collective action under the Fair Labor Standards Act (FLSA) mooted when the class representative receives a Rule 68 offer of judgment prior to moving for class certification? "No" answered the Third Circuit recently in Symczyk v. Genesis Healthcare Corp., No 10-3178 (3d Cir., 8/31/2011).
Apparently seeing big trouble from an FLSA class action complaint filed by a registered nurse the employer, Genesis Healthcare Corporation, tried to short-circuit it. The nurse, Laura Symczyk, filed the suit alleging that the cmployer violated the FLSA when "it implemented a policy subjecting the pay of certain employees to an automatic meal break deduction whether or not they performed compensable work during their breaks" Before Symczyk could move for conditional certification of the class, the employer tendered a Rule 68 offer of judgment in the full amount claimed by Symczyk plus her attorneys' fees and costs. The company then sucessfully moved to dismiss arguing that the offer of judgment had mooted Symczyk's claim and the suit.
The Third Circuit reversed and relied principally on the "relation-back" doctrine advanced in the Supreme Court's decision in Sosna v. Iowa, 419 U.S. 393 (1975). In Sosna, the Supreme Court ruled that a Rule 23 class action was not mooted where the named plaintiff's claim was extinguished before the district court reached the merits of the class certification. In such instances, the Court ruled, the issue of class certification relates back to the date the complaint was filed.
The FLSA, unlike a Rule 23 class, requires that class members affirmatively opt-in. But the Third Circuit found this a distinction without a difference:
Although the opt-in mechanism transforms the manner in which a named plaintiff acquires a personal stake in representing the interests of others, it does not present a compelling justification for limiting the relation back doctrine to the Rule 23 setting. The considerations that caution against allowing a defendant's use of Rule 68 to impede the advancement of a representative action are equally weighty in either context. Rule 23 permits plaintiffs to "pool claims which would be uneconomical to litigate individually." Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 809 (1985). Similarly, section 216(b) affords plaintiffs "the advantage of lower individual costs to vindicate rights by the pooling of resources." Hoffman-La Roche, 493 U.S. at 170. Rules 23 promotes "efficiency and economy of litigation." Similarly, "Congress' purpose in authorizing section 216(b) class actions was to avoid multiple lawsuits where numerous employees have allegedly been harmed by a claimed violation or violations of the FLSA by a particular employer." Prickett v. DeKalb Cnty., 349 F3d 1294, 1297 (11th Cir. 2003).
When Rule 68 morphs into a tool for the strategic curtailment of representative actions, it facilitates an outcome antithetical to the purposes behind section 216(b).
