Supreme Court Holds Employer's Settlement Offer Can
"Short Circuit" FLSA Lawsuit
by Grant T. Collins - Friday, April 26, 2013
http://www.felhaber.com/supreme-court-holds-employers-settlement-offer-can-short-circuit-flsalawsuit/
In Genesis HealthCare Corp. v. Symczyk, No. 11-1059 (April 16, 2013), the U.S. Supreme
Court ruled that an employee could not continue pursuing her Fair Labor Standards Act
(“FLSA”) collective action after her employer made an “offer of judgment” (a type of settlement
offer) that would pay her entire claim.
Factual Background
In 2009, RN Laura Symczyk filed a lawsuit on behalf of herself and "all other persons similarly
situated" claiming that her employer violated the FLSA by automatically deducting a 30-minute
meal break from her daily pay. In response, the employer made an offer of judgment under
Federal Rule of Civil Procedure 68, which provides that if the offer is not accepted, and if the
ultimate judgment in the case does not exceed the offer, the party rejecting the offer must pay
all the subsequent costs incurred by the other side. The employer’s offer in this instance was
$7,500 for alleged unpaid wages as well as "such reasonable attorneys' fees, costs, and
expenses . . . as the Court may determine.”
Symczyk failed to respond to the offer one way or the other, so the employer asked the court to
dismiss the case. The employer argued that the claim was now moot because the employer
offered Symczyk complete relief on her individual damages claim. The trial judge agreed, noting
that since no other individuals had actually joined the suit, the employer’s offer of judgment fully
satisfied Symczyk's claim. The judge felt that Symczyk should not be allowed to continue
litigating when she was already being offered everything she was seeking.
The Third Circuit Court of Appeals disagreed, however, noting that while Symczyk's claim might
have been moot, the claims of the proposed class were not completely satisfied. The Appeals
Court concluded that a defendant is not permitted to use an offer of judgment to "short-circuit
the class action process." This might seem a bit odd since there were no other members of the
class, but under the terms of the court’s previous rulings, there was still time for other people to
“opt in” to the litigation. Therefore, technically not all of the claims were resolved by the offer of
judgment.
Supreme Court Decision
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The case was appealed to the U.S. Supreme Court, who agreed with the original ruling that
dismissed the case. They ruled that since Symczyk’s individual case became moot, she no
longer was an adequate representative of the class of persons harmed by the challenged
employment practice. With nobody else able to step up and fill that role, the case had to be
dismissed.
One of the questions that the Supreme Court left open was whether an offer of judgment that is
not accepted by the other side should be allowed to end the litigation. It seems reasonable to
say that if the lead claimant is offered everything she is seeking, she shouldn’t be allowed to
reject the offer and keep suing. On the other hand, should employers be able to short circuit the
entire action simply by satisfying the lead claimant's claim? Courts differ on this issue, and the
Eighth Circuit (in which Minnesota sits) has not yet weighed in.
Bottom Line
The employer’s approach in this case might be useful in some instances to avoid protracted
litigation. However, it is not certain whether the federal courts in Minnesota would approve such
a tactic, and it is very possible that employers would not want to make such offers because they
could be seen as tacit admissions that they did in fact violate the FLSA.
220 South 6th St, Suite 2200, Minneapolis, Minnesota 55402 | [email protected] | 612-339-6321 | 800-989-6321
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