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Is Genesis Really a New Beginning for Rule 68 Offers of Judgment in FLSA Matters?

Posted in FLSA

When the Supreme Court recently decided Genesis Healthcare Corp. v. Symczyk, 11-1059 (U.S. Apr. 16, 2013) employment attorneys across the country immediately jumped to the conclusion that they had the Court’s stamp of approval to use Rule 68 offers of judgment to foreclose individual and collective actions under the Fair Labor Standards Act (“FLSA”).  Unfortunately, upon closer analysis of the case, Genesis does not provide such a clear path.

In Genesis, the employer served a Rule 68 offer of judgment with its answer, offering $7,500 in unpaid wages in addition to reasonable attorneys’ fees and costs to be determined by the court.  The offer stipulated that the employee had to respond within 10 days or the offer would be withdrawn.  When the employee did not respond (and thus did not accept the offer of judgment), Genesis moved to dismiss the employee’s individual and collective FLSA claims.  Even though the employee had not been paid anything pursuant to the offer of judgment, Genesis argued that because the employee had been offered complete relief, she no longer had a personal stake in the lawsuit, and thus the court lacked subject matter jurisdiction over both her claim and the collective action.  The district court agreed with Genesis (noting that no other plaintiff had yet joined the collective action) and the Third Circuit reversed.

So, when the Supreme Court sided with the district court, employers immediately thought they had a solid precedent for making such offers of judgment to foreclose not only individual FLSA cases but also collective actions.  Not so fast.  In Genesis, the employee conceded a very crucial issue at the lower court level–whether an unaccepted offer of judgment that would fully satisfy an individual’s FLSA claims moots the plaintiff’s individual claims (due to lack of subject matter jurisdiction).  The Supreme Court did not reach that issue because it was not in controversy.  And the Circuit Courts are split.  The Third, Fourth and Seventh Circuits have held that an unaccepted offer of judgment that fully satisfies plaintiff’s claims render such claims moot.  The Second and Sixth Circuits have held that it does not.  The other Circuits have not addressed it.

So the only thing that is clear from Genesis is that if an individual FLSA claim is moot, and no additional plaintiff has joined the FLSA suit, the collective claims are also moot.  Some pundits are predicting that the Court has signaled to other Circuits that they should fall in line with the Third Circuit—and find that an unaccepted offer of judgment that would fully satisfy a claim moots the individual claim.  However, that outcome remains to be seen.