Supreme Court makes it harder for employers to dispose of FLSA lawsuits

About three years ago, I blogged here about Genesis HealthCare Corp. v. Symczyk, a Supreme Court decision addressing a situation in which a Fair Labor Standards Act collective action could be dismissed if the lead plaintiff rejects a Rule 68 offer of judgment. However, the Supreme Court left open the issue of “whether an unaccepted Rule 68 offer that fully satisfies a plaintiff’s individual claim is sufficient to render that claim moot.”

Well folks, strap in, because yesterday, the Supreme Court answered that question.

The answer is no.

For those of you who care why, here’s the opinion in Campbell-Ewald Company v. Gomez. And here’s the money shot:

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.

While Campbell-Ewald involves claims under the Telephone Consumer Protection Act, its holding applies to FLSA collective actions too. Indeed, the Supreme Court in Campbell-Ewald expressly adopted the rationale expressed in Justice Kagan’s dissent in Genesis HealthCare as the foundation for its holding in Campbell-Ewald. (Although, it left open the possibility that an offer of judgment paired with payment deposited with the court may moot the lead plaintiff’s claim).

Talk about a perfect FLSA storm for 2016 and beyond:

  • FLSA collective actions are on the rise;
  • New salary-level FLSA regulations going into effect later this year will undoubtedly increase the number of potential plaintiffs, related FLSA claims, and collective actions; and
  • Employers hamstrung to pick off a lead plaintiff with an offer of judgment to avoid a larger collective action

All the more reason, if you haven’t already conducted a recent FLSA self-audit with help from employment-law counsel, you need to get on that.

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