Genesis HealthCare Corp. v. Symczyk (11-1059)
In a putative collective action, Laura Symczyk alleged that Genesis HealthCare Corporation violated the Fair Labor Standards Act by automatically deducting break time from her and other employees’ pay, regardless of whether they performed compensable work during their breaks. Before any other plaintiffs joined the action, Genesis made an offer of judgment for full relief of Symczyk’s claims. Symczyk did not accept the offer, but the district court dismissed the case because the offer of judgment left Symczyk without a personal stake in the litigation. Symczyk argues that she continues to have a personal stake and that the interests of plaintiffs yet to join the action creates jurisdiction. Genesis argues that a complete offer to satisfy a lone plaintiff’s claim renders the case moot. In resolving the question presented, the Supreme Court will decide whether an unaccepted offer of judgment can render a case moot and whether courts may consider the interests of unnamed, hypothetical parties in determining whether the parties have a personal stake in the litigation. The decision will affect collective-action trial practices for both plaintiffs and defendants, including plaintiffs’ use of the discovery process to join class members and defendants’ use of individual offers of judgment to forestall or avoid collective actions.
Does a purported collective action become moot, and thus beyond the judicial power of Article III, when the lone plaintiff in the case receives a complete offer of judgment from the defendants and all other potential plaintiffs have not yet joined the case?
Between April and December 2007, Laura Symczyk worked as a Registered Nurse at a healthcare facility in Philadelphia, Pennsylvania. See Symczyk v. Genesis HealthCare Corp., 656 F.3d 189, 190 (3d Cir. 2011). In December 2009, Symczyk initiated a putative collective action in the United States District Court for the Eastern District of Pennsylvania on behalf of herself and all similarly situated individuals against the facility owners, Genesis HealthCare Corporation and ElderCare Resources Corporation (“Genesis”). See id. Symczyk alleged that Genesis violated section 216(b) of the Fair Labor Standards Act (“FLSA”) by automatically deducting meal break time from the pay of certain employees, including her, regardless of whether the employees performed compensable work during their breaks. See id. In February 2010, Genesis served Symczyk with an offer of judgment under Federal Rule of Civil Procedure 68 (“Rule 68”) for $7,500 in her alleged unpaid wages plus attorneys’ fees, costs, and expenses. See id. Symczyk did not dispute the adequacy of the offer, but declined to respond. See id. at 190–91.
In March 2010, Genesis filed a motion to dismiss Symczyk’s lawsuit for lack of subject matter jurisdiction. See id. at 191.The district court tentatively granted the motion in May 2010, finding that Genesis’s offer mooted the collective action, which no one other than Symczyk had yet to join. See id. The court accepted Genesis’s argument that Symczyk effectively rejected its offer by failing to respond within the 14 days allowed under Rule 68, and that Symczyk, as the lone plaintiff, no longer had a personal stake or legal interest in the case, necessary for the court’s subject matter jurisdiction under Article III of the Constitution. See id. On appeal, the Third Circuit reversed, finding that Symczyk was entitled to move for conditional certification of her collective action (i.e., by showing similarly situated plaintiffs could opt in) before Genesis could moot the case through an offer of judgment. See id. at 192, 201. The Third Circuit reasoned that it would be unfair and inefficient to allow defendants to prevent the formation of collective actions by “picking off” plaintiffs with offers of judgment before they could move for certification. See id. at 196–97.
After the Third Circuit denied rehearing, Genesis appealed to the Supreme Court. See Brief for Petitioners, Genesis HealthCare Corp. and ElderCare Resources Corp. at 6. The Supreme Court granted certiorari on June 25, 2012 to determine whether a case becomes moot when the lone plaintiff receives an offer from the defendants to satisfy all of its claims. See id. at i, 7.
This case presents the Supreme Court with the opportunity to consider whether a purported collective action brought under section 216(b) of the Fair Labor Standards Act ("FLSA") becomes moot when the lone plaintiff receives a complete offer of judgment from the defendants under Rule 68 before any other potential plaintiffs have joined the case. Genesis argues that an offer to pay the lone plaintiff’s claims in full moots the case and eliminates Article III jurisdiction. See Brief for Petitioners, Genesis HealthCare Corp. and ElderCare Resources Corp. at 7. Symczyk counters that an unaccepted offer of judgment does not moot a case and that a complete offer of individual relief cannot moot a collective action. See Brief for Respondent, Laura Symczyk at 8–9. The Supreme Court’s resolution of the question presented may implicate employment litigation practices and underlying labor rights.
Employment Litigation Practices
The U.S. Chamber of Commerce and others in support of Genesis argue that complete offers of judgment are an essential tool for defendant employers to avoid burdensome FLSA collective actions. See, e.g., Brief of Amici Curiae U.S. Chamber of Commerce et al. in Support of Petitioners at 6–12. The Chamber of Commerce especially emphasizes the tremendous financial pressure for employers to settle even unmeritorious collective actions. See id. Nevertheless, ACA International (“ACA”) believes that defendant employers will not exploit offers of judgment to “pick off” plaintiffs and prevent the formation of meritorious collective actions. See Brief of Amicus Curiae ACA International in Support of Petitioners at 7–13. ACA explains that making repeated offers of judgment may often be more expensive and inefficient for defendants than having all claims resolved together in a single collective action. See id.
Symczyk’s supporters agree that collective actions promote efficiency, but assert that employers will indeed exploit offers of judgment to “pick off” and “buy off” individual plaintiffs to prohibit collective action formation. See, e.g., Brief of Amici Curiae National Employment Lawyers Association et al. in Support of Respondent at 14–15. According to the National Employment Lawyers Association (“NELA”), such tactics encourage repetitive litigation rather than collective settlement, thereby straining judicial resources. See id. The Impact Fund argues that repetitive litigation may not even occur for employees’ small value claims, where the cost of litigation is only worthwhile on a collective scale, leaving employers with a windfall for illegal conduct. See Brief of Amici Curiae Impact Fund et al. in Support of Respondent at 26–28.
Genesis’s supporters argue that the individual employee’s interests and labor rights at stake are completely satisfied in putative collective actions by complete offers of judgment before certification. See, e.g., Brief of ACA at 13. The only interests not satisfied, according to Genesis’s supporters, are those of plaintiff’s lawyers. See, e.g., Brief of U.S. Chamber of Commerce at 6. The U.S. Chamber of Commerce also stresses the effectiveness of existing government enforcement of the FLSA, which tends to focus on the most meritorious cases and creates strong incentives for employer compliance. See id. at 12–15.
NELA and others in support of Symczyk counter that government enforcement of the FLSA is not enough to ensure compliance. See Brief of NELA at 15–17. NELA asserts that FLSA violations are common and that private FLSA collective actions are a necessary tool to empower workers and improve working conditions. See id. at ii. According to NELA, if an employer can “pick off” the lead plaintiff in an FLSA collective action by making a complete offer of judgment, vulnerable employees will be even less likely to assert their rights and initiate their own lawsuit, which could be prohibitively expensive. See id. at 10–13. Indeed, in urging affirmance of the Third Circuit’s decision in the case, the United States expresses concern that defendants could otherwise “buy off” named plaintiffs to prevent the formation of important FLSA collective actions. See Brief of Amicus Curiae United States in Support of Affirmance at 9.
In sum, this case presents the Supreme Court with an opportunity to determine whether a putative FLSA collective action becomes moot when the defendants make a complete offer of judgment to the lone plaintiff. The Court’s ruling may substantially affect future employment litigation and settlement practices, as well as underlying employee rights and employer conduct.
Genesis and Symczyk dispute whether Symczyk has any personal stake in the litigation and whether the interests of hypothetical future parties are sufficient to prevent mootness.
Symczyk’s Personal Stake in the Litigation
During pretrial and before discovery, Genesis made Symczyk an offer of judgment pursuant to Federal Rule of Civil Procedure 68. See Brief for Petitioner at 4. Although the offer of judgment provided complete relief of all of Symczyk’s claims, Symczyk did not accept the offer. See id. at 4–5. In order to be a case or controversy under Article III, Section 2 of the United States Constitution, litigants must have a “personal stake in the outcome of the controversy” and “adverse legal interests." See Flast v. Cohen, 392 U.S. 83, 100–01 (1968) (internal citations omitted) (quoting Baker v. Carr, 369 U.S. 186, 204 (1962); Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240–41 (1937)). Because the offer would satisfy all of Symczyk’s claims, Genesis argues that Symczyk has no personal stake in the controversy. See Brief for Petitioner at 14. Without a personal stake, Genesis argues that Symczyk has no standing and the case is moot. See id.
Symczyk responds that because the offer was not accepted, it cannot render her claims moot. See Brief for Respondent at 12. Symczyk contends that if an unaccepted offer can render a case moot, the mere act of making an offer of judgment would moot any claim. See id. According to Symczyk, this would create a paradox: her case would be moot because of an unaccepted offer of relief, yet she would not be able to receive the relief that rendered her case moot. See id. at 13. If the mere offer of judgment rendered her case moot, then the district court would be stripped of jurisdiction to enter judgment in her favor. See id. Symczyk further argues that even if she could accept the offer, requiring either acceptance or dismissal is inappropriate in the case of multiparty actions, because it would deny as-yet unnamed parties relief. See id.
Furthermore, Symczyk argues that she does in fact have a continuing personal stake in the litigation proceeding as a collective action. See Brief for Respondentat 44. Symczyk contends that, like the litigants in Deposit Guar. Nat’l Bank v. Roper, she has a continuing economic stake in the litigation because Genesis’s offer of judgment did not fully resolve the issue of attorney fees. See id. at 44–45; 445 U.S. 326, 334 n.6 (1980). Moreover, Symczyk claims that the litigation proceeds she stands to receive are an incentive award for her services to her class. See Brief for Respondentat 46. Dismissing the case prior to joining class members would foreclose her ability to collect such an award. See id. Her economic interests aside, Symczyk also argues that, like the plaintiff in U.S. Parole Comm’n v. Geraghty, she has a personal stake in obtaining class certification to ensure that Article III values are not undermined. See id. at 47–48; 445 U.S. 338, 404 (1980).
The Interests of Nonparties
Satisfaction of a representative party’s claims is not sufficient to render a collective action moot, so long as other interested parties’ claims remain unsatisfied. See Geraghty, 445 U.S. at 397. Here, because the offer of judgment satisfies Symczyk’s personal stake in the litigation and no other parties have been joined, Genesis argues that there are no remaining unsatisfied claims. See Brief for Petitioner at 14, 18. According to Genesis, the only remaining potential parties are Symczyk’s counsel and as-yet unnamed hypothetical claimants. See id. Genesis argues that the interests of these claimants should not be considered and contends that the Third Circuit misapplied Roper and Geraghty to incorrectly conclude that the court may base jurisdiction on the interests of potential parties. See id. at 18.
Genesis asserts that neither Roper nor Geraghty indicate that the interests of hypothetical future plaintiffs are made relevant merely by filing a complaint. See Brief for Petitioner at 18. According to Genesis, Roper only recognized a personal stake for the named parties, not for hypothetical parties. See id. at 19–22. Genesis understands Roper to show that the named parties’ personal stake was in class certification itself because certification could shift attorney fees and expenses to other as-yet unnamed class members. See id. at 21. In Geraghty, the district court previously denied class certification, and Genesis argues that Geraghty should not extend to recognize the interests of absent class members before any ruling on a motion for collective process. See id. at 23–24.
Furthermore, Genesis notes that both Roper and Geraghty concerned class actions under Federal Rule of Civil Procedure 23, not FLSA actions. See Brief for Respondent at 18–19. Genesis claims that the procedural differences between class actions and FLSA actions make any analogy between these cases and the case at hand inappropriate. See id. According to Genesis, FLSA actions are fundamentally different from Rule 23 actions because the representative class member plays a much narrower role in a FLSA action than in a Rule 23 action. See id. at 26. Genesis notes that in a Rule 23 action, class members may be joined without any action on their part, but under § 216(b), potential parties must consent in order to be joined. See id. at 26–27. Because § 216(b) requires concerted action by potential parties, Genesis claims that the court should not consider the interests of parties who have not consented. See id. at 27–28; 29 U.S.C. § 216(b). Furthermore, Genesis argues that the policy considerations that underlie Rule 23 actions do not apply to FLSA actions because unlike judgments in Rule 23 actions, a judgment in an FLSA action is not binding on class members in a future action. See Brief for Petitioner at 27–28.
Symczyk argues that even if an unaccepted offer could moot an action, it should not in this case because this case is a collective action. See Brief for Respondent at 19. Symczyk contends that merely satisfying the named parties’ claims does not dispose of the interests of unnamed parties—even if the unnamed parties are unknown at the time the offer of judgment is made. See id. at 19–20. Symczyk notes that in City of Riverside v. McLaughlin, the Supreme Court held that there are some circumstances in which jurisdiction exists even when the interests of the named parties were rendered moot prior to class certification. See 500 U.S. 44, 52 (1991). Symczyk argues that such circumstances exist in this case because § 216(b) of the FLSA authorizes plaintiffs to bring actions on behalf of themselves and similarly situated employees. See Brief for Respondent at 21; 29 U.S.C. § 216(b). Alternatively, Symczyk argues that once the certification and opt-in process has concluded, the claims of future parties should relate back to the filing of the original complaint. See Brief for Respondent at 30.
Symczyk also contends that Genesis’s rule would defeat the legislative purpose of FLSA actions. See Brief for Respondent at 25–26. According to Symczyk, Congress expressed a clear policy preference that FLSA actions be undertaken collectively. See id. at 21, 32. She argues that because class members cannot be joined in an FLSA action without their consent, giving those potential plaintiffs sufficient opportunity to join is particularly important and furthers Congress’s preference for collective FLSA actions. See id. at 25–26.
This case will determine whether an unaccepted offer of judgment for complete relief of a lone plaintiff’s claims renders a putative collective action moot. Symczyk argues that she continues to have a personal stake and that jurisdiction can also stem from the interests of as-yet unnamed plaintiffs she hopes to join to the action. Genesis argues that an offer to satisfy fully a lone plaintiff’s claim renders the case moot, thus stripping the court of jurisdiction. The decision could greatly affect pretrial practice in collective actions. It may limit the ability of plaintiffs to use discovery to determine the existence of other similarly situated individuals, and it will determine whether defendants can avoid a collective action by satisfying the claims of individual plaintiffs before they can join other members of their class.
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- Human Resource Executive Online, Tom Starner: U.S. Supreme Court's HR Docket (Oct. 17, 2012)
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