As the United State Supreme Court gears up to begin a new term next month, I want to revisit one of the more notable employment law decisions from last year’s term.  The United States Supreme Court issued an opinion that handed a victory to employers and also provided some tactical guidance to those of us who represent employers in lawsuits filed under the Fair Labor Standards Act (“FLSA”).   Before I discuss the case, let me begin with a little bit of an introduction or refresher on the FLSA.

Most of you are at least somewhat familiar with the FLSA.  Among other things, this law provides legal recourse for employees who are not paid the federally mandated minimum wage and for those non-exempt employees who are not paid time and a half for hours worked in excess of forty hours per week.

Lawsuits under the FLSA continue to rise each year.  While in many, if not most, cases the amount in controversy is nominal, if the plaintiff is awarded even one dollar, the plaintiff is entitled to an award of attorneys’ fees.  For a case that proceeds all the way to trial, those fees can easily be well into the range of six figures.  Of course, on top of those amounts the employer will have incurred significant attorneys’ fees and expenses of its own during the course of the litigation.

Not only can a plaintiff file suit under the FLSA for relief he may be entitled to, but the statute also allows a plaintiff to file suit on behalf of himself and other “similarly situated” employees.   This is referred to as a “collective action” under the Act.

Basically, the way that works is the plaintiff alleges in his Complaint that the defendant company violated the Act by failing to pay him overtime and that there are other employees who are “in the same boat”.  The plaintiff does not have to identify them by name, but rather may simply allege that there are others out there who are similarly situated.

There are two stages of “certification” as a collective action progresses.  The first stage is called “conditional certification”, which does not require much of the named plaintiff.  He essentially must only allege that somewhere out there are others who are “similarly situated”, i.e., they have been subjected to the same violations of the FLSA and are entitled to relief under the Act.

If “conditional certification” is granted, then all those who have been identified as being in the class of those similarly situated to the named plaintiff receive official notice of the lawsuit and can choose to “opt in” and become part of the lawsuit as it progress through discovery, including depositions.

After a period of discovery, the case proceeds to the “final certification” stage, which is more stringent and requires “substantial evidence” that the opt-in plaintiffs are similarly situated.  It is at this point that a defendant will typically ask the court to “decertify” and determine that the matter should not proceed to trial as a collective action because the evidence is insufficient that the opt-in plaintiffs are similarly situated.

As you can see, an FLSA collective action is not your run of the mill case.  There are numerous hoops to jump through from both a plaintiff’s and a defendant’s perspective.  It is also a very costly matter to defend even though the amount of alleged owed wages in dispute is often nominal.

The issue before the court in the case of Genesis Health Care v. Symczyk was whether a FLSA collective action case may proceed when the plaintiff’s individual case becomes moot.

In Symczyk, the plaintiff was formerly employed by defendant health care company as a registered nurse.  She sued alleging that the company violated the Fair Labor Standards Act by automatically deducting thirty minutes of time worked per shift for a meal break even when she and her co-workers performed compensable work during those “breaks.”

Defendant filed an answer to the Complaint and simultaneously served an “Offer of Judgment.”  An Offer of Judgment is just what it sounds like.  An Offer of Judgment is a defendant’s offer to allow the plaintiff to take a judgment against it for a certain amount.  If the plaintiff does not accept it within fourteen days, the offer is automatically withdrawn.  If at trial the plaintiff does not recover more than the amount offered by the defendant in the Offer of Judgment, the defendant can recover its costs incurred after the offer was made.

In Symczyk, the defendant’s Offer of Judgment was for $7,500.00 plus reasonable attorneys’ fees, costs and expenses.  Plaintiff failed to accept or respond within the designated time period, so the offer was considered withdrawn.  The defendant immediately filed a motion to dismiss for lack of subject matter jurisdiction.  Defendant argued that it offered plaintiff complete relief on her individual claims, so she no longer had a personal stake in the outcome rendering the action moot.  The plaintiff protested, saying the company was inappropriately trying to “pick off” the named plaintiff before the collective action process could unfold.

Without getting bogged down in the particulars of the Supreme Court’s analysis, the Court noted that if at any point during the litigation the plaintiff loses his personal stake in the outcome, the action cannot proceed and must be dismissed.

It is worth noting that the plaintiff may have made a tactical mistake by not raising the issue of whether an unaccepted offer that fully satisfies plaintiff’s claim as sufficient to render the claim moot.  At trial and on appeal, plaintiff conceded that an offer of complete relief would generally moot plaintiff’s claim because at that point, plaintiff no longer had a personal interest in the outcome.  Given plaintiff’s concessions on this point and because plaintiff did not raise the issue on appeal, the Supreme Court did not have to decide whether the unaccepted offer mooted respondent’s individual claim and immediately moved to the analysis of whether the plaintiff’s collective action remained justiciable based on the collective action allegations and the complaint.

The court concluded that with no other plaintiffs opting in, the suit as a whole became moot when the individual claim became moot because she lacked any personal interest in representing others.

This case serves as a victory for employers and provides some tactical guidance on defending collective action cases.  Under the holding of this case, so long as no other plaintiff has opted in to the lawsuit, a defendant facing an FLSA collective action could early on in the lawsuit determine how much the individual claim is worth and make an Offer of Judgment for that amount.  If the offer is accepted, then the matter will have been resolved quickly and cost-effectively.  If the offer is not accepted, then under this holding a defendant may file a motion to dismiss.

However, it is very important to note that in reaching what Justice Kagan dismissed a"one off" decision, the Supreme Court left the door open as to whether an unaccepted offer that fully satisfies plaintiff’s claim is in fact sufficient to render the claim moot.  The Supreme Court was careful to note that that issue was not raised on appeal, so it did not have to decide it.  Instead, it operated under the assumption that it did and focused on what that meant for the collective action.  I suspect this is not the last we have heard of this issue, but for the time being, it is a tactic that defendants facing these types of lawsuits, which can be extremely expensive, can utilize.