The Genesis problem: how unaccepted offers of judgment and mootness have complicated Fair Labor Standards Act litigation.

• Author: Enriquez, Matthew C.

1. INTRODUCTION II. BACKGROUND A. Fair Labor Standards Act 1. Section 216(b) and the Authorization of Collective Actions 2. Differences in Certification Between Section 216(b) Collective Actions and Rule 23 Class Actions B. Rule 68 of the Federal Rules of Civil Procedure C. Cases Interpreting Unaccepted Offers of Judgment 1. Sosna Introduces the Relation-Back Doctrine 2. Symczyk Draws Line Between Class and Collective Actions III. ANALYSIS A. The Symczyk Hypothetical B. The Analytical Evolution of Section 216(b) of the Fair Labor Standards Act 1. Hoffman-La Roche, Inc. and Symczyk Limit the Legal Status of Conditionally-Certified Collectives 2. Section 216(b) and Rule 23 Take Separate Forks in the Analytical Road C. An Employer's Defense Strategy: Picking Off Plaintiffs 1. Collective or Class: Rule 68 Highlights Key Differences 2. How the Underlying Purposes of Rule 23 and Section 216(b) Affect Their Interpretation IV. RECOMMENDATION A. A Plaintiff's Strategy for Avoiding Mootness B. Path Dependency and the Court's Precedent C. The Court Should Realign Class and Collective Actions V. CONCLUSION I. INTRODUCTION

   In Genesis Healthcare Corp. v. Symczyk, the Supreme Court assumed, but never decided, that a defendant-corporation's offer of judgment mooted a plaintiff-employee's individual claim that her employer regularly deducted 30 minutes for lunch breaks, even when she and her coworkers worked during those breaks. (1) Justice Kagan dissented, arguing that the majority answered a question that should not have arisen and, in doing so, missed an opportunity to resolve a split among the Courts of Appeals. (2) Although the Court drew a brighter line between Rule 23 class actions and Fair Labor Standards Act (FLSA) Section 216(b) collective actions, (3) it left corporate employers, employees, and attorneys with questions about the sustainability of certain strategies in litigating collective actions. (4) The viability of such strategies will be more evident if the Court directly settles the underlying Symczyk issue in a future case.

   This Note examines the essential issue: whether an unaccepted offer of judgment moots an individual plaintiff's FLSA Section 216(b) claim. (5) Specifically, Part II introduces the FLSA and Section 216(b)'s collective actions mechanism, Federal Rules of Civil Procedure Rule 23 and Rule 68, and courts' evolving jurisprudence regarding Rule 68 mootness in class and collective actions. Part III utilizes Justice Kagan's Symczyk hypothetical to analyze the divergent analysis federal courts have used in evaluating the effect of offers of judgment on plaintiffs' class and collective action claims. (6) Finally, Part IV recommends the Court explicitly declare a plaintiff's claim to be alive and well in the face of an unaccepted offer based on the similar purpose and structure of Rule 23 and Section 216(b).

2. BACKGROUND

   Under Section 216(b) of the FLSA, Congress gave employees the opportunity to collectively litigate against an employer, by bringing a collective action, for violations affecting similarly situated employees. (7) This Part focuses primarily on the historical and evolving jurisprudence surrounding this section of the FLSA. Recently, the Supreme Court acknowledged lower courts' divergent treatment of the intersection of Section 216(b) collective actions, class actions under Rule 23 of the Federal Rules of Civil Procedure (FRCP), and the potential mooting effect of unaccepted FRCP Rule 68 offers of judgment. (8) To lay the foundation for the rest of the Note, the following sections will provide an overview of the FLSA and Section 216(b), FRCP Rule 23, FRCP Rule 68, and courts' handling of Rule 68 mootness principles in Section 216(b) collective actions.

   1. Fair Labor Standards Act

      In 1938, Congress enacted the FLSA to support "the unprotected, unorganized, and lowest paid of the nation's working population." (9) Codified at 29 U.S.C. [section] 201 et seq., the FLSA carries out this purpose through provisions: 1) establishing a minimum wage; (10) 2) setting a threshold of 40 hours per week, beyond which an employer must pay the employee one and a half times the regular hourly rate; (11) 3) requiring employers to keep track of all employees' wages and hours; (12) and 4) authorizing individual employees and the Secretary of the Department of Labor to bring lawsuits against employers in federal court. (13) To understand how lawsuits alleging FLSA violations have developed in court, it is first important to outline the evolution of the legislation as well as how the section authorizing collective actions fits into the legislative purpose and framework of the FLSA.

      1. Section 216(b) and the Authorization of Collective Actions

         When Congress enacted the FLSA, it gave extensive powers to employees by allowing designated representatives to bring actions on behalf of all similarly situated employees. (14) As a result, the courts saw a swell of frivolous lawsuits by plaintiffs who had no interest in the outcome. (15) By 1947, Congress had taken steps to reduce the swell, including eliminating the designated representative option, and adding the requirement that an employee give written consent, i.e. opt-in, to become a party in the lawsuit. (16) In proposing the amendment, Senator Donnell--chair of the Senate Judiciary Committee--explained the rationale for the change:

         '[I]t is certainly unwholesome to allow an individual to come into court alleging that he is suing on behalf of 10,000 persons and actually not have a solitary person behind him, and then later on have 10,000 men join in the suit, which was ... not brought with the actual consent ... of the individuals for whom ... plaintiff filed the suit.' (17)

         Nevertheless, Congress left intact the ability to bring a collective action, and courts continued to enforce the "broad remedial goal of the statute." (18) Courts have found that the collective action mechanism works to the advantage of both employees and employers. (19) Plaintiffs have their cases heard at the same time while defendants avoid the costs of defending multiple lawsuits. (20) The current Section 216(b) authorizes any employee to bring an action against an employer "for and in behalf of himself ... and other employees similarly situated." (21)

      2. Differences in Certification Between Section 216(b) Collective Actions and Rule 23 Class Actions

         To understand the issue in the circuit split, it is helpful to see how collective actions, under Section 216(b) of the FLSA, compare to class actions, under FRCP Rule 23. Similar to collective actions, the Supreme Court has found Rule 23 class actions are in place to benefit both plaintiffs and defendants. (22) Indeed, judicial efficiency, affording plaintiffs opportunities to minimize costs, and encouraging private attorneys to bring these actions were likely central to both Section 216(b) and Rule 23. (23) Although the mechanisms share similar policy goals, they became fundamentally distinct in 1966 when the Supreme Court's Advisory Committee drafted the amendment to Rule 23 that would make its class certification process different from the process under Section 216(b). (24) Moving forward, this functional difference will likely influence a court's analysis of the mootness question. (25)

         Importantly, a Rule 23 class action establishes a definition for a class under which each person fitting the definition becomes a class member. (26) This binds class members to the judgment in the case, regardless of the judgment's favorability. (27) Finally, it is crucial to the analysis of this issue that certification under Rule 23 creates a class with a legal status independent of its named plaintiffs. (28) Unlike Rule 23's automatic class creation mechanism, Section 216(b) requires a person's affirmative, written consent in order to become a plaintiff and be bound by the judgment in the case. (29) In addition to creating particular policy concerns, (30) this opt-in requirement affects the collective legal status during the certification stage. (31) In fact, the Supreme Court held that conditional certification only triggers the notification of other potential plaintiffs, but it does not change the collective legal status. (32) These questions of a class or collective's independent legal status impact the ultimate question of mootness as it relates to singular offers of judgment to named plaintiffs. (33)

   2. Rule 68 of the Federal Rules of Civil Procedure

      FRCP Rule 68 is designed to provide for settlement of cases prior to trial. (34) The relevant sections of Rule 68 state:

      (a) Making an Offer; Judgment on an Accepted Offer. At least 14 days before the date set for trial, a party defending against a claim may serve on an opposing party an offer to allow judgment on specified terms, with the costs then accrued. If, within 14 days after being served, the opposing party serves written notice accepting the offer, either party may then file the offer and notice of acceptance, plus proof of service. The clerk must then enter judgment. (b) Unaccepted Offer. An unaccepted offer is considered withdrawn, but it does not preclude a later offer. Evidence of an unaccepted offer is not admissible except in a proceeding to determine costs. (35) The purpose of Rule 68 is to hasten litigation and foster collaborative settlements. (36) To that end, when a plaintiff receives an offer of complete relief under Rule 68, her claim may be moot because she would no longer have a personal stake in the outcome of the litigation, which would result in the absence of a justiciable case or controversy. (37)

      With that foundational knowledge of Rule 68 in mind, it is easy to see how employers can use an offer of judgment to defend against potential Section 216(b) collective actions. The strategy, known as "Picking off' plaintiffs, involves presenting a Rule 68 offer of judgment to the named plaintiff. (38) According to mootness principles, this offer of judgment would...