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Wednesday, April 17, 2013

Genesis Healthcare Corp. v. Symczyk: SCOTUS Rules on Justiciability of "Headless" FLSA Collective Action

Genesis Healthcare Corp. v. Symczyk has been on our Watch List for a while, and on April 16 we got the decision, which may be a big deal (as defense counsel undoubtedly will argue) or it may not (as the dissent argues and as plaintiffs' counsel undoubtedly will argue).

Laura Symczyk brought a FLSA putative collective action against her former employer, Genesis Healthcare. Genesis answered and served a Rule 68 offer to pay Symczyk $7,500, plus attorney fees and costs set by the court. Symczyk ignored the offer, Genesis asked the district court to dismiss the case. The district court did so, holding that it lacked subject-matter jurisdiction because no other plaintiffs had joined the action. 

The Third Circuit reversed, holding that Symczyk's individual case was moot, but that she should have the opportunity to move for conditional certification. If conditional certification were granted, that decision should relate back to the filing of the complaint, thus avoiding the question of mootness.

In a 5-4 decision authored by Justice Thomas, the Supreme Court reversed. 

The Court began by noting that "Article III, §2, of the Constitution limits the jurisdiction of federal courts to 'Cases' and 'Controversies,' which restricts the authority of federal courts to resolving 'the legal rights of litigants in actual controversies.'" Slip op. at 3-4. The Court then held that Symczyk had waived her right to contest that the unaccepted settlement offer mooted her individual claim:
While the Courts of Appeals disagree whether an unaccepted offer that fully satisfies a plaintiff’s claim is sufficient to render the claim moot, we do not reach this question, or resolve the split, because the issue is not properly before us. The Third Circuit clearly held in this case that respondent’s individual claim was moot. Acceptance of respondent’s argument to the contrary now would alter the Court of Appeals’ judgment, which is impermissible in the absence of a cross-petition from respondent. Moreover, even if the cross-petition rule did not apply, respondent’s waiver of the issue would still prevent us from reaching it. In the District Court, respondent conceded that “[a]n offer of complete relief will generally moot the [plaintiff’s] claim, as at that point the plaintiff retains no personal interest in the outcome of the litigation.” Respondent made a similar concession in her brief to the Court of Appeals, and failed to raise the argument in her brief in opposition to the petition for certiorari. We, therefore, assume, without deciding, that petitioners’ Rule 68 offer mooted respondent’s individual claim. 
Slip op. at 5 (citations omitted). Having assumed this point without deciding it, the Court then held that the relation back doctrine did not apply, and the action did not remain justiciable based solely on the collective action allegations made in the complaint.  The Court distinguished cases arising in the Rule 23 class action context, "both because Rule 23 actions are fundamentally different from collective actions under the FLSA ... and because these cases are, by their own terms, inapplicable to these facts."  Slip op. at 6.  

First, the Court held that Symczyk did not retain a personal stake in the case because she had not yet moved for conditional certification before her case became moot.  Slip op. at 7-8.  Second, the Court held that the action was not inherently transitory and likely to evade review because un-joined plaintiffs remain capable of bringing their own actions to enforce their rights.  Slip op. at 8-10. Third, because Symczyk had conceded that her case was moot, she "failed to assert any continuing economic interest in shifting attorney's fees and costs to others," and therefor she could not argue that "the purposes served by the FLSA's collective action procedures ... would be frustrated by defendant's use of Rule 68 to 'pick off' named plaintiffs before the collective-action process had run its course."  Slip op. at 10-11.  

In a spirited dissent, Justice Kagan questioned the underlying premise that the majority opinion "assumed without deciding," that Symczyk's individual case became moot when she rejected Genesis's settlement offer.  
We made clear earlier this Term that “[a]s long as the parties have a concrete interest, however small, in the outcome of the litigation, the case is not moot.” “[A] case becomes moot only when it is impossible for a court to grant any effectual relief whatever to the prevailing party.” By those measures, an unaccepted offer of judgment cannot moot a case. When a plaintiff rejects such an offer—however good the terms—her interest in the lawsuit remains just what it was before. And so too does the court’s ability to grant her relief. An unaccepted settlement offer—like any unaccepted contract offer—is a legal nullity, with no operative effect.  As every first-year law student learns, the recipient’s rejection of an offer “leaves the matter as if no offer had ever been made.” Nothing in Rule 68 alters that basic principle; to the contrary, that rule specifies that “[a]n unaccepted offer is considered withdrawn.” So assuming the case was live before—because the plaintiff had a stake and the court could grant relief—the litigation carries on, unmooted. 
Slip op. at 3 (internal citations omitted).  

Genesis Healthcare raises interesting questions going forward. Is it now "very difficult, if not impossible to prosecute FLSA collective actions," as I predicted here?  Or should we "relegate the majority's decision to the furthest reaches" of our minds, as Justice Kagan counsels?  We are working on a Watch List webinar to discuss these issues, and I will post when I have more information on it.  

In the mean time, the opinion is available here, and SCOTUSblog has its coverage here

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