Genesis Healthcare Corp. v. Symczyk: A Victory For Employers As Far As It Goes

Yesterday, the United States Supreme Court issued a much anticipated decision in the case of Genesis Healthcare Corporation v. Laura Symczyk. The majority declined to answer the question most practitioners were hoping it would—whether defendants can render a named plaintiff’s claims moot with an offer of judgment—but did hold that, when a named Fair Labor Standards Act (FLSA) plaintiff’s claim becomes moot prior to conditional certification of a collective action, the action itself becomes moot. The decision does not apply to certified Rule 23 class actions, which the Court distinguished from FLSA collective actions; and, for a variety of reasons (including those articulated by the dissent), it is unclear how great an impact it will have on future FLSA collective actions.

The named plaintiff, Laura Symczyk was a registered nurse employed at a Genesis Healthcare facility in Philadelphia, Pennsylvania. In 2009, she brought a claim on behalf of her herself and “all other persons similarly situated” alleging her employer violated the FLSA by automatically deducting 30 minute meal breaks whether or not employees performed compensable work while on break. The defendant answered the complaint and simultaneously served an offer of judgment for what was undisputedly the most the plaintiff could recover. When Symczyk failed to respond, Genesis filed a motion to dismiss, arguing the action was moot because Symczyk no longer had a stake in the outcome, having been offered complete relief on her claim.

The district court agreed, but the Third Circuit Court of Appeals reversed. The Court of Appeals agreed that Symczyk’s claim was moot, but disagreed the collective action was necessarily moot as well. Relying on United States Supreme Court precedent in the Rule 23 class action context, the court concluded that the matter should be remanded to allow the plaintiff to seek conditional certification, which, if granted, should relate back to the date on which the plaintiff filed her complaint. Genesis appealed to the United States Supreme Court, which granted certiorari.

The Court did not weigh in on whether an unaccepted offer of judgment is sufficient to render the plaintiff’s claim moot, an issue that has generated a split among the circuit courts of appeal. Because Symczyk failed to raise the issue below or file a cross appeal, the Court considered itself bound by the appellate court’s conclusion that her individual claim was, in fact, moot.

Turning to the question of whether the collective action was nonetheless justiciable, the Court concluded, without difficulty, that it was not. The Court distinguished Sosna v. Iowa and United States Parole Comm’n v. Geraghty, which rest on the principle that a Rule 23 class acquires “an independent legal status once it is certified . . . .” Unlike a Rule 23 class, the Court said, conditional certification of an FLSA collective action does not create any new legal status for the class or cause additional parties to be joined to the action. Indeed, conditional certification has only one consequence, which is the sending of written notice to employees who do not become parties to the action unless they exercise their own free will and file written consent with the court.

The Court ultimately rejected the rationale articulated by the Court of Appeals: that if defendants are permitted to “pick off” party plaintiffs it will frustrate the objectives of class actions generally. Unlike in Deposit Guaranty Nat. Bank v. Roper, relied upon by the Third Circuit and the plaintiff, Symczyk had no ongoing economic interest in the case and conditional certification of a collective action would not change that fact.

Justice Kagan authored a dissent on behalf of herself and Justices Ginsburg, Breyer and Sotomayor, which characterized the questions resolved by the majority as “imaginary” and based on the false premise that an unaccepted offer of judgment will operate to moot the plaintiff’s individual claim. “As every first year law student learns,” Justice Kagan wrote, an unaccepted offer of judgment, just like an unaccepted settlement offer, has no effect on the plaintiff’s rights. According to the dissent, which is written in a glib style, the question answered by the majority will never arise again, for the simple reason that an FLSA plaintiff’s claim for damages for past statutory violations can never become moot. Indeed, the dissent encourages readers “to relegate the majority’s decision to the furthest reaches of [their] mind[s] . . . .”

In recent years, employers have been subjected to an exponential increase in FLSA collective action litigation. The cases are so expensive to litigate that they routinely settle. Unfortunately, the Supreme Court declined to answer the critical question of whether an offer of judgment operates to moot the plaintiff’s wage claim, even if the plaintiff refuses to accept it. However, at least in those jurisdictions where an unaccepted offer of judgment is sufficient to render the subject claim moot, yesterday’s decision gives employers some clarity and a means to end FLSA litigation early on, by offering the named plaintiffs all of the relief to which they claim they are entitled. Of course, to be effective, an offer of judgment must give the plaintiff every form of relief sought. In cases where the plaintiff seeks broad injunctive relief, such as reclassification, or where subsequent suits are certain, conceding liability may not be a viable alternative.

Whether this litigation tactic has staying power remains to be seen. The Supreme Court’s decision in Genesis Healthcare may cause FLSA collective action plaintiffs to move for conditional certification earlier, before they have an opportunity to conduct discovery to ascertain the existence of other, similarly situated employees, to file claims solely arising under state law, or to bring more hybrid actions. Although this decision does not apply to Rule 23 class actions, the distinction drawn by the Court between actions certified under Rule 23 and FLSA collective actions may have implications beyond the holding of this case.