SCOTUS makes "picking off the plaintiff" in FLSA collective actions a lot harder

Let's start with some recent history. Remember back in 2013, when the Supreme Court decided Genesis Healthcare Corp. v. Symczyk (Lawffice Space coverage here)? Let me give you a brief recap.

Justice Ginsburg authored the opinion
in Campbell-Ewald Co. v. Gomez

An employee initiated a FLSA wage and hour claim with the intention of making it a collective action. The employer made an offer of judgment (under Fed. R. Civ. P. 68), which would have given the plaintiff all of the damages to which he claims he was entitled. The employer then argued, welp, I guess the employee's case is moot because he can't possibly collect any additional damages through litigation; and, if his case is moot, then the whole lawsuit should be tossed because there are no other employees in the collective action yet.

The Supreme Court decided the case, but with a major assumption. The Court assumed - without actually deciding - that the Rule 68 offer of judgment mooted the lead employee's case. From there, the Court concluded that if the employee's claim was moot, then the whole case should be dismissed because no other employees had joined the collective action at that point in time.

The Court left the question of whether the offer of judgment actually mooted the case for another day. Yesterday was that day. The Court issued its opinion in Campbell-Ewald Co. v. Gomez.

The background facts of the case are very different. The case involves an offer of judgment in the context of the Telephone Consumer Protection Act (TCPA) and unwanted text messages. However, the holding is clear and it will obviously apply to federal litigation generally:

We hold today, in accord with Rule 68 of the Federal Rules of Civil Procedure, that an unaccepted settlement offer has no force. Like other unaccepted contract offers, it creates no lasting right or obligation. With the offer off the table, and the defendant’s continuing denial of liability, adversity between the parties persists . . . . In sum, an unaccepted settlement offer or offer of judgment does not moot a plaintiff ’s case.

This will make it much harder for an employer to "pick off the plaintiff" (as the strategy was called) in class or collective actions. In other words, employers facing wage and hour collective actions can not just offer to pay the lead plaintiff's damages. However, the strategy still has some viability, if the employer offers the lead plaintiff damages and (s)he accepts it. 

Update: I should note that there is some discussion in the case of ways to circumvent the ruling. For example, the majority states "We need not, and do not, now decide whether the result would be different if a defendant deposits the full amount of the plaintiff ’s individual claim in an account payable to the plaintiff, and the court then enters judgment for the plaintiff in that amount." Justice Alito's dissent notes "The defendant might hand the plaintiff a certified check or deposit the requisite funds in a bank account in the plaintiff ’s name." It sounds like some questions remain . . . .

3d Circuit on FLSA Pleading Requirements

Wage and hour plaintiffs often have a tough time pleading with specificity. They know that their employer makes them take calls on their lunch break, or will call them back to work without punching in, or the time clock automatically deducts a set amount of time even when a break was not as long as the automatic deduction - but the employees often don't track exact dates and times.

In Davis v. Abington Mem. Hosp. (precedential opinion here), the Third Circuit addressed the level of specificity required in a complaint. Allegations that an employee "typically" worked a 40-hour week and "frequently" worked hours outside of her shift or during meal breaks, standing alone, are not enough to state an overtime claim. The employee must specify that she worked 40 hours in a week, and then worked extra hours beyond 40 in that week.

Even with this requirement, the pleading standard is hardly demanding:

[W]e do not hold that a plaintiff must identify the exact dates and times that she worked overtime. For instance, a plaintiff’s claim that she “typically” worked forty hours per week, worked extra hours during such a forty-hour week, and was not compensated for extra hours beyond forty hours he or she worked during one or more of those forty-hour weeks, would suffice.

The Third Circuit noted that this issue has "divided courts around the country." So if you're outside of the Third Circuit, check for local precedent on this issue.

Attorney-Expert Correspondence Not-So-Discoverable After All

In September 2010, the Superior Court of Pennsylvania surprised attorneys across the state by holding that correspondence between an attorney and an expert witness who the attorney intends to call at trial is discoverable. The case was Barrick v. Holy Spirit Hospital of the Sisters of Christian Charity. The decision was extremely unpopular in some circles, and the Superior Court abruptly withdrew the decision for reconsideration about a year ago.

Last Wednesday, the Superior Court issued its eagerly anticipated opinion on reconsideration... a complete 180:

[W]e hold that [a party's] subpoena seeking documents from [the opposing party's] expert witness was beyond the scope of Pa.R.C.P. 4003.5, without first showing cause as to why such a discovery request was needed. Furthermore, the written communication between counsel and an expert witness retained by counsel is not discoverable under the Pennsylvania Rules of Civil Procedure to the extent that such communication is protected by the work-product doctrine, unless the proponent of the discovery request shows pursuant to Pa.R.C.P. 4003.5(a)(2) specifically why the communication itself is relevant. As such, we also hold that Pa.R.C.P. 4003.3 immunizes from discovery any work product contained within the correspondence between [the attorney] and [the expert witness].

Barrick v. Holy Spirit Hosp. of Sisters of Christian Charity, 2011 PA Super 251 (Pa. Super. Ct. Nov. 23, 2011). I think there will be quite a few Pennsylvania attorneys (and expert witnesses) breathing a sigh of relief.

This time around, the split was 8-1 (and even the "1" was a concurring in part).

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.

Dismissing Weak Claims

Sexual harassment week continues. Last post I addressed What is Sexual Harassment? The gist was that successful sexual harassment claims are harder to establish than some people think. Today’s post comes at it from the other angle: getting rid of the bad claims (“bad” as in baseless) is also harder than some people think.

While reading Herman Cain stories, I often see comments paraphrased as, “if Cain didn’t sexually harass anyone, then why did they settle?” I find that people are often shocked at how hard it is to get rid of bad claims. Employers can't just send a letter to the judge: "Dear Judge, this is one of them there 'baseless' lawsuits. Please dismiss posthaste." And we're done! Sorry, it doesn't happen like that.

I’ll state again that I don’t know what happened with Cain. But let’s assume for the sake of argument that the claim against him was completely baseless – no evidence, silly claim, would have been a garbage lawsuit. How does an employer get rid of such a claim without settling?

Agency Investigation

- Before filing a lawsuit, the employee must go to the EEOC or equivalent state agency (for my PA readers, the PHRC).

- The agency conducts an investigation. The employer will produce information, affidavits, conduct interviews, etc.

- The employer may be called on to participate in negotiations or mediation.

- If the agency finds no evidence of discrimination or harassment, the agency will drop the case . . . but issue a “Right to Sue” letter to the employee.

At this point, months if not years have gone by. And only now does the lawsuit even begin.

Litigation

- If the employee files a Complaint that is obviously silly – or, even assuming everything in the complaint is true, still doesn’t constitute sexual harassment – the employer can move to dismiss the case. Even this involves drafting a motion to dismiss and a brief in support of it (with proper legal research and case citations).

Maybe, the case ends here. What about cases in which the employee’s complaint makes vague allegations, or just makes up a bunch of stuff with no evidence? The employer must then:

- Draft an Answer

- Written discovery: answering a bunch of questions from the plaintiff (interrogatories); identifying, reviewing, and providing documents to the plaintiff; and then serving the plaintiff with the employer’s own interrogatories and requests for production of documents.

- Depositions: Days worth of depositions in which attorneys question the plaintiff, witnesses, other employees (don’t forget the costs of hiring a court reporter to be there every day!).

- Summary judgment: If there’s still no evidence, the employer can file a motion for summary judgment with statement of material facts and brief in support (including legal research).

Phew, assuming there is no evidence and the motion for summary judgment is successful, it’s finally over (unless the employee appeals)! But only after years and easily tens of thousands of dollars in legal fees.

Still wondering why an employer might settle a bad claim? Next post: Settlement or Severance.

Image: EEOC Headquarters from Wikimedia Commons under Attribution-Share Alike 3.0 Unported license, by AgnosticPreachersKid.

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.

Third Circuit Adopts "Later Served" Removal Rule

Under certain circumstances, a defendant who gets sued in state court can "remove" the case to federal court. Under federal law, defendants have 30 days from the date the plaintiff serves "the defendant" to file the notice of removal.  28 U.S.C. §§ 1441, 1446. But what happens when there are multiple defendants? When does the 30-day timer start?

In Delalla v. Hanover Ins., 100 U.S.P.Q.2d 1392 (3d Cir. Oct. 12, 2011), the Third Circuit answered that very question. Per the Court's opinion:

We conclude that the later-served rule represents a better reading of the language § 1446(b) and results in more equitable treatment to later-served defendants. We join the Sixth, Eighth, Ninth, and Eleventh Circuits in adopting the later-served rule.

And what's the later-served rule? "[E]ach defendant has a thirty day period to file a notice of removal that ends thirty days after that defendant is served" (emphasis added).

The alternative, is the "first-served" rule, adopted by the Fourth and Fifth Circuits: "[T]he thirty day period ends thirty days after the first defendant is served" (emphasis added). Yup folks, it's a good 'ol fashioned circuit split! I suspect the Supreme Court will take a look at this issue one of these days. For now, parties just need to know their circuit.

Image: Third Circuit seal used in commentary - Not Official Use.

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.