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Plan: 'pick off' plaintiff to scuttle collective action

The National Law Journal
December 3, 2012

Onn December 3, the U.S. Supreme Court is hearing argument in Genesis Healthcare Corp. v. Symczyk. The case involves an uneasy juxtaposition of constitutional law and the Federal Rules of Civil Procedure in a suit based on a major statute, the Fair Labor Standards Act (FLSA). At first glance, it appears to raise merely an arcane jurisdictional issue under Article III in the setting of a representative action. On closer examination, however, Genesis poses a serious challenge to the viability of group litigation to enforce important workers' rights to minimum wages and overtime pay. Thus, employee and employer advocates will be watching the matter closely.

Laura Symczyk is a nurse. She alleged that her former employer, Genesis, automatically took a meal break deduction regardless of whether she actually performed compensable work during this period, in violation of the FLSA. As the statute permits, she sued for damages "on behalf of herself and others similarly situated." Genesis answered Symczyk's complaint and simultaneously served a Rule 68 offer of judgment for "$7,500 in alleged unpaid wages, plus attorneys' fees, costs and expenses as determined by the Court," in full satisfaction of her own claim.

At this point, Symczyk had not had the opportunity to move for "conditional certification" of the collective action (the FLSA analogue to a Rule 23(b)(3) class action); nor had she had time to conduct discovery to obtain proof that others stood in her position. Finally, no additional employees had yet become parties. (Putative members of an FLSA collective do not achieve party status unless they consent to "opt in" to the lawsuit — in contrast to Rule 23 class members, who must "opt out" to avoid being bound.) This was predictable because preliminary certification triggers the court's duty to notify likely ignorant employees of their prerogative to join the action.

Symczyk failed to accept the offer, causing it to be "considered withdrawn" under Rule 68(b). Genesis then moved to dismiss the suit, on the basis that Symczyk no longer had a "personal stake" in the outcome, as she had been proffered full relief. The judge granted the defense motion. Ultimately, the U.S. Court of Appeals for the Third Circuit reversed and remanded.

Borrowing from Rule 23 jurisprudence, the appeals court held, and Symczyk argues, that notwithstanding possible mootness of the named representative's claim, discovery, conditional certification (obtainable on a quite modest showing) and notice should be allowed to proceed. Doctrinally, this approach rests on the fiction that the later motion to certify "relates back" to the complaint's filing, when Symczyk's claim was clearly live. Substantively, it embodies the position that permitting FLSA defendants to "pick off" would-be collective plaintiffs by offering to settle with them individually for their (generally) small damages would undermine both congressional intent to let workers band together to vindicate their rights and sound judicial administration.

Symczyk posits a "parade of horribles," were her victory to be rescinded. "[P]laintiffs will rush to provide (inevitably haphazard) notice to the other similarly situated employees they can identify"; defendants will hasten to make offers of judgment before any opt-ins rear their heads. The threat of such strategic behavior, she argues, will serve neither courts nor litigants.

Interestingly, the petitioners' brief relies mainly on technical arguments, seeking to distinguish class action decisions that have cut representative plaintiffs considerable slack in the mootness area. Perhaps Genesis is playing it safe, trying to sidestep the implications (or atmospherics) of what might seem to some "sharp practice" under Rule 68. Or it may simply be capitalizing on the high court's current interest in justiciability. The justices have granted certiorari in a Hague Convention case, Chafin v. Chafin, raising a mootness issue frontally. The subject has also arisen in the pending Fisher v. University of Texas, which deals with the issue of affirmative action.

By contrast, the U.S. Chamber of Commerce's amicus brief on behalf of the petitioners stresses the negative practical effects that it perceives would arise from affirmance. Noting the tremendous increase in FLSA complaints, the Chamber contends that employers "are often forced to settle unmeritorious collective actions rather than…risk catastrophic judgments," including mandatory counsel fees. The Chamber opines that when problems really exist, defendants will find it too expensive to "buy off" all of the injured workers, who will press forward with similar claims.

Genesis may be decided on relatively narrow grounds. It appears that the district court still must determine the amount of fees, giving Symczyk some stake in the action. In addition, as the solicitor general urges, the judge should at least have entered judgment in her favor: Dismissal, far from satisfying her claim, really gave her nothing at all. In that event, employers will have been at least temporarily thwarted — while workers will have dodged a bullet.