It is no secret to employers that "collective actions" or class actions are extremely costly, time-consuming and draining. The Supreme Court, however, recently authorized a practical approach for employers to defend against and to contain these costly matters filed under the Fair Labor Standards Act ("FLSA").
In Genesis HealthCare v. Symczyk, - S. Ct. - - , 2013 WL 1567370 (April 16, 2013), a registered nurse filed a Complaint in the Eastern District of Pennsylvania alleging that the Defendant violated the FLSA by automatically deducting thirty minutes of time worked per shift for meal breaks, whether or not a worker took a full, uninterrupted break. The FLSA allows a worker with a complaint like this to sue, not only for herself, but for her co-workers that were treated the same way, in what is called a "collective action" - very similar to a class action, but with some differences.
When the Defendant answered Plaintiff's Complaint here, they simultaneously offered her $7,500.00 in unpaid wages, plus attorneys' fees, costs and expenses pursuant to Federal Rule of Civil Procedure 68. The Defendant gave Plaintiff ten days to accept its offer. When she failed to respond, the employer asked the Court to dismiss her lawsuit because it offered her everything that she sought, and therefore, she had no continuing interest in the litigation. Because she no longer had a personal stake in the outcome of the lawsuit, the Defendant argued that the lawsuit was moot.
While the District Court agreed and dismissed the action, the Third Circuit reversed. It held that while the Plaintiff's individual claim was moot - by virtue of the Defendant's Rule 68 Offer - the collective action on behalf of her co-workers was not.
The Supreme Court agreed with the District Court and found that Plaintiff had no remaining "personal interest" in the litigation by virtue of the Defendant's offer of $7,500.00 plus attorneys' fees and costs. The Supreme Court held that the kind of "collective action" that the Plaintiff tried to pursue cannot continue once the individual's claim is satisfied. And, unless other co-workers had actually come forward to participate in the litigation, nothing survived the settlement offer that the employer made to Plaintiff and that she passed up.
Practically speaking, this decision is a blueprint for employers to eliminate the lead worker among a group whose pay has been similarly effected by making an early and substantial offer of judgment. The approach is simple: the complaining worker can be offered the pay she was seeking, given a hard deadline, and if the deadline passes with no acceptance of the offer, ask the Court to dismiss the case before any other workers join in, and the case is over. This strategic approach may not fit all cases, but it can be very effective for employers in containing costs.