In Genesis Healthcare v. Symczyk, decided April 16, 2013, the U.S. Supreme Court held that a group, or collective, action to recover unpaid wages can be mooted by an employer’s offer to have judgment entered against it for the full amount of the lead plaintiff’s unpaid wages and reasonable attorney’s fees, if the court overseeing the case agrees that the amount of the offer is sufficient to fully resolve the employee’s claim. In other words, if an employee brings an action under the Fair Labor Standards Act (commonly called the FLSA) to recover unpaid wages for him/herself and co-workers, the employer can stop the lawsuit in its tracks by making the employee an offer to have judgment entered against it for the amount that that individual employee is owed. To have this effect, the offer must meet two requirements. First, the offer must be large enough to satisfy the court overseeing the case that it fully resolves – moots – the employee’s claim, so that the employee will have no continuing economic interest in the outcome of the lawsuit. Second, the offer must be made before the collective action has been certified by the court, a process that typically takes weeks or months.
The Supreme Court did not have before it the question of what constitutes an offer of complete relief that moots the individual claim. There is some dispute among the Circuit Courts of Appeals over this issue, and we should expect the issue to come before the U.S. Supreme Court at some point in the future. But, where the court overseeing the lawsuit agrees that the employer’s offer is one of complete relief that moots the individual employee’s claims, the result of this new Supreme Court decision is that the whole lawsuit must be dismissed.
In this scenario, the dismissal will NOT be a ruling on the merits of the non-named employees’ claims. Individual employees can still file their own lawsuits. Or, another employee can step forward and file a new collective action to replace the first action. Alternatively, if another employee steps forward before the case is dismissed, there can be a motion to amend the complaint to designate a new lead plaintiff and thereby prevent a dismissal. Of course, if either of these events occur, the employer could make another offer of judgment to the new named plaintiff to again try to moot the lawsuit. The result may be an exercise in frustration for the parties and the courts.
The analysis set forth in this article is provided for general understanding only and should not be considered legal advice. Counsel should be consulted regarding any specific wage claims or other claims under the FLSA.