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The U.S. Supreme Court recently granted review in a Fair Labor
Standards Act (FLSA) case in order to decide whether a case becomes
moot, and thus beyond the judicial power of Article III of the
United States Constitution, when the lone plaintiff receives an
offer from the defendants to satisfy all of the plaintiff's
claims. The Court's eventual answer to that question may have a
significant impact not only in FLSA cases, but in Rule 23 class
actions as well. We previously discussed this issue
here.
The FLSA establishes nationwide rules related to minimum wages,
maximum hours, and overtime pay. Importantly, the FLSA provides
that an employee may file a putative collective action against his
or her employer seeking double damages and attorney's fees for
FLSA violations. Congress established a system whereby other
similarly situated employees may affirmatively opt in to the case.
If the named plaintiff establishes to the district court's
satisfaction that his or her claims present issues common to other
employees, the district court will conditionally certify the case
and allow judicial notice of the case to be sent to other similarly
situated employees, along with an opportunity to opt-in as
plaintiffs.
In the case now before the Supreme Court (Genesis HealthCare
Corp. v. Symczyk, No. 11-1059), a nurse formerly employed by a
large operator of long-term care facilities filed a putative
collective action against her former employer, claiming it had a
nationwide unlawful policy of requiring nurses to work through
their lunch breaks. However, before the plaintiff could file a
motion seeking conditional certification, the employer served a
Rule 68 offer of judgment that would have provided her with
complete relief. Although the plaintiff declined the offer of
judgment, the United States District Court for the Eastern District
of Pennsylvania granted the employer's motion to dismiss,
finding that the offer of judgment had mooted the case.
The United States Court of Appeals for the Third Circuit
reversed. Citing decades-old and closely decided Supreme Court
precedent addressing mootness issues in the Rule 23 class action
context, the appellate court found that the case was not moot
because an employer should not be allowed to "pick off" a
named plaintiff in order to defeat putative collective actions
under the FLSA. Instead, the named plaintiff should be given a
reasonable opportunity to seek conditional certification, which, if
granted, would supposedly give the named plaintiff a right to
represent others that could not be mooted by the satisfaction of
the named plaintiff's individual claim.
The employer petitioned for Supreme Court review. Acting as
counsel for the Chamber of Commerce of the United States of
America, the American Health Care Association, the National
Federation of Independent Business, and the National Center for
Assisted Living, Proskauer filed an amicus brief in support of the
employer's petition emphasizing the mootness issue's
importance to employers throughout the United States. (A copy of
the brief can be accessed here). In doing so, we explained that the
Third Circuit's decision would harm employers who are presently
inundated by a tidal wave of FLSA litigation, exemplified by the
fact that, in the past decade alone, the number of FLSA suits filed
annually has grown by almost 300 percent. Because the FLSA is a
strict-liability statute that requires courts to award
attorney's fees to prevailing plaintiffs, and because the scope
of the FLSA is subject to considerable uncertainty, we explained
that employers that believe they have complied with the statute in
good faith are often forced to settle unmeritorious suits rather
than face the risk of catastrophic judgments. Therefore, the Third
Circuit's decision deprived employers of a reasonable means to
avoid burdensome and protracted FLSA litigation, based primarily on
the Third Circuit's policy judgment that further discovery and
litigation might motivate others to join a suit being prosecuted by
counsel who no longer represents a client with a personal stake in
the case's outcome.
On June 25, 2012, the Supreme Court granted the employer's
petition for review. The case will be briefed and argued on the
merits this coming fall.
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guide to the subject matter. Specialist advice should be sought
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