CHARLES WARE'S "CLASS ACTION WAREHOUSE": Can Employers "Buy-Out" the Sole Plaintiff Before A Class Action Is Certified?

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Genesis Healthcare Corporation v. Symczyk, Docket No. 11-1059, October Term 2012, Argument: December 3rd, 2012, Supreme Court of the United States (SCOTUS).

Issue: Whether a case becomes moot, and thus beyond the judicial power of Article III, when the sole plaintiff receives an offer from the defendants to satisfy all of the plaintiff's claims.

Can an employer, faced with a purported class action under the Fair Labor Standards Act, avoid litigation by immediately offering a settlement to the sole plaintiff before a class is certified?

The justices of the U.S. Supreme Court tackled that question on Monday during oral arguments in the case of Genesis Healthcare Corp. v. Symczyk.

The matter involves class-action plaintiff Laura Symczyk, who filed a purported class action alleging that her employer, Genesis HealthCare Corp., violated the Fair Labor Standards Act by automatically deducting time for breaks from employees' time sheets, regardless of whether the workers were performing job duties during that time.
    
Before other workers could join Symczyk's suit, Genesis offered her a Rule 68 offer of judgment in the amount of $7,500 for lost wages and other fees, which she did not accept. But a district court ruled that the settlement offer mooted any potential class action and dismissed the case for lack of subject matter jurisdiction.

Rule 68. Offer of Judgment

(a) Making an Offer; Judgment on an Accepted Offer. At least 14 days before the date set for trial, a party defending against a claim may serve on an opposing party an offer to allow judgment on specified terms, with the costs then accrued. If, within 14 days after being served, the opposing party serves written notice accepting the offer, either party may then file the offer and notice of acceptance, plus proof of service. The clerk must then enter judgment.

 

(b) Unaccepted Offer. An unaccepted offer is considered withdrawn, but it does not preclude a later offer. Evidence of an unaccepted offer is not admissible except in a proceeding to determine costs.

 

(c) Offer After Liability is Determined. When one party's liability to another has been determined but the extent of liability remains to be determined by further proceedings, the party held liable may make an offer of judgment. It must be served within a reasonable time—but at least 14 days—before the date set for a hearing to determine the extent of liability.

 

(d) Paying Costs After an Unaccepted Offer. If the judgment that the offeree finally obtains is not more favorable than the unaccepted offer, the offeree must pay the costs incurred after the offer was made.

 

[Fair Labor Standards Act of 1938 (FLSA), Pub. L. 75-718, ch. 676, 52 Stat. 1060, June 25, 1938, 29 U.S.C. §§ 207 and 216(b), ch. 8; Opinion below: Third Circuit U.S. Court of Appeals, No. 10-3178, Filed 08/31/2011; Trial Court: U.S. District Court for the Eastern District of Pennsylvania, Civil No. A09-5782, U.S. Dist. LEXIS 49599 (E.D. Pa., May 19, 2010); Federal Rule Civil Procedure 68 (a) (providing a plaintiff with 14 days to accept an offer); Savings Banks v. O'Neill, Brooklyn 324 U.S. 697, 707 n.18, 65 S. Ct. 895, 89 L. Ed. 1296 (1945)]