Thursday, September 8, 2011

Employer Can't Moot FLSA Claim by "Picking Off" Lead Plaintiff - COTW #57

In Symczyk v. Genesis Healthcare Corp., 2011 WL 3835404 (3d Cir. Aug. 31, 2011), the Third Circuit addressed tension between two established legal principles arising in collective FLSA claims. The result is a tough ruling for employers. Let's start with the two established principles:

1. Under the Fair Labor Standards Act (FLSA), an employee may initiate a "collective action" on "behalf of himself . . . and other employees similarly situated." It starts with a lead plaintiff and then other employees can opt in.

2. Under Federal Rule of Civil Procedure 68, a defendant may make an offer of judgment. When that offer "encompass[es]  all the relief a plaintiff could potentially recover at trial," then "the case becomes moot and the court no longer has . . . jurisdiction."

So, what's the "tension?" Well, an employer can tender an offer to the lead plaintiff for full relief, thereby mooting his claim. If no other plaintiffs have opted in yet, then the employer has essentially ducked a collective action by just "picking off" the lead plaintiff. An employer can make a collective action go away (at least temporarily) for the cost of one plaintiff.

In Symczyk, the Third Circuit took that tool out of the employers' arsenal. Instead of dismissing the whole claim as moot, the Court held that new plaintiffs may opt in and their claims would "relate back" to the lead plaintiff's complaint. In practice, the district court should permit the case "to move forward as a collective action" and if "at least one other similarly situated employee opts in, then defendants' Rule 68 offer of judgment would no longer fully satisfy the claims of everyone." Therefore the complaint should no longer be dismissed.

For additional coverage check out my Think Before You Click: Strategies for Managing Social Media in the Workplace co-author, Molly DiBianca's post: 3d Cir. Agrees with "Terrible" FLSA Decision.

HT: The Legal Intelligencer, Employer Can't Short-Circuit Suit by 'Picking Off' Lead Plaintiff.

Posted by Philip Miles, an attorney with McQuaide Blasko in State College, Pennsylvania in the firm's civil litigation and labor and employment law practice groups.