By any definition, it's a crisis: your client receives a summons and complaint for a putative class action in Federal court.
Can you close down the case in the starting gate by just giving the named plaintiff what he or she wants -- filing a Rule 68 Offer of Judgment for all requested relief, plus attorneys fees and costs?
For several decades, the answer has been "probably not." But in the next Supreme Court term, that may change.
The case to watch is Genesis HealthCare Corporation v. Symczyk, and to appreciate its importance, we have to go back to the dawn of the class action era.
In the spring of 1980, the United States Supreme Court decided two important class action cases in a single day. The first was Deposit Guar. Nat'l Bank of Jackson v. Roper. Roper involved a putative class action of a group of credit card holders against their issuing bank. Following denial of plaintiffs' motion for class certification, the defendant bank tendered a Rule 68 offer which did not include attorneys' fees. Could the plaintiff still appeal the denial of class certification?
Yes, the Supreme Court found. The named plaintiff had a surviving concrete interest in Article III terms -- the interest in spreading the costs of the litigation among the class through the common fund doctrine. The defendants had left that interest undisturbed by failing to include attorneys fees in their Rule 68 offer. Although a good pick-off move is essential in baseball, it isn't permitted in Federal class action litigation: "[r]equiring multiple plaintiffs to bring separate actions, which effectively could be 'picked off' by a defendant's tender of judgment before an affirmative ruling on class certification could be obtained, obviously would frustrate the objectives of class actions; moreover it would invite waste of judicial resources by stimulating successive suits brought by others claiming aggrievement."
United States Parole Comm'n v. Geraghty, decided the same day as Roper, was a prisoner class action. The plaintiff's motion for class certification was denied, and while his appeal was pending, he was released. Did that moot the appeal? A narrowly divided Supreme Court held "no," finding that the named plaintiff had a "right" to obtain class certification which survived traditional mootness and was enough for Article III purposes. Justice Lewis Powell led a four-Justice dissent which included Chief Justice Burger -- who wrote Roper -- and future Chief Justice Rehnquist, who concurred in the Roper result.
In the years since Roper and Geraghty, the Federal and state courts have struggled to figure out what it all means, and how far the precedents should be extended. Only last year, the Illinois Supreme Court decided a precursor of Symczyk's issue presented, Barber v. American Airlines, Inc. Barber was a putative class action challenging the defendant's initial refusal to refund a baggage carriage fee when the plaintiff cancelled the flight. A few days after the complaint was filed, the defendant relented, and refunded the money. The Illinois Supreme Court held that defendant's action mooted the putative class action, holding that there was no such thing in Illinois law as the "pick off" exception to mootness for class actions.
Which brings us at last to Symczyk. Symczyk arises under the Fair Labor Standards Act. FLSA litigation has been a major growth area for the plaintiff's bar in the last ten years -- annual filings were up 300% from 2001 to 2011, and increased 15% in just the last year of that period. Filings are increasing for two reasons: an award of attorneys' fees is mandatory, and the FLSA is a strict liability statute whose scope is mostly unresolved. Section 216(b) of the FLSA (29 USC 216(b)) permits representative actions, but there is a crucial difference between FLSA litigation and traditional Rule 23 class actions -- employees must opt-in, rather than opting-out. Congress banned Rule 23 class actions under the FLSA in 1947.
Symczyk was a registered nurse. She sued under the FLSA, challenging her employer's alleged practice of deducting meal break times from her paycheck whether or not she had an uninterrupted break. Before plaintiff filed a class certification motion -- and before anyone had opted in -- defendants offered her everything she wanted pursuant to Rule 68 -- recovery, fees and costs. Then they moved to dismiss. The district court dismissed, but the Third Circuit reversed, extending Roper and Geraghty to FLSA actions and holding that the eventual certification of a class -- even if it happens after the case has been effectively mooted -- relates back to the date of filing.
Symczyk's cert petition presents two important questions: (1) do Roper and Geraghty apply to representative actions under the FLSA, in addition to traditional Rule 23 class actions; and (2) do Roper and Geraghty, even in the Rule 23 world, apply to class complaints where a class certification motion has not yet been filed? With respect to the first question, the petition argued that the 9th and 11th Circuits -- which have distinguished the FLSA from Rule 23 -- are squared off with the 3rd and 5th Circuits. As to the second, broader question, the petition argued that the 3rd, 5th, 9th and 10th Circuits, which hold that a late-filed class certification motion relates back to the filing of a complaint, are in conflict with the 4th, 7th and 8th Circuits, which allow a "pick-off" move. In the opposition to certiorari, plaintiffs distinguished between cases involving Rule 68 offers of judgment and voluntary settlements, but in the reply, defendants pointed out that plaintiffs had never explained why the distinction made a difference. Both the United States Chamber of Commerce and the Defense Research Institute have joined the litigation, supporting the defendants.
So where is all this likely to wind up? Although it's always a perilous enterprise to predict where SCOTUS is going, I have some difficulty picturing the Supreme Court that decided Wal-Mart Stores, Inc. v. Dukes affirming the Third Circuit. If there is a reversal, I see three possibilities, each a progressively bigger earthquake for class action practice:
- The Supreme Court holds that Roper and Geraghty do not apply to FLSA representative suits;
- The Supreme Court holds that Roper and Geraghty do not apply even to traditional Rule 23 class actions where a settlement or offer of judgment is served before the class certification motion is filed, effectively legalizing the "pick-off"'; and
- The Supreme Court overrules Geraghty.
Appellate Strategist will be following Symczyk closely as the litigation proceeds.