Can an Offer of Judgment Divest a Class Representative of Standing? Supreme Court to Decide

On Monday, December 3, 2012, the United States Supreme Court will hear oral argument in Genesis Healthcare Corp. v. Symczyk, 2012 WL 609478 (Jun. 25, 2012), a case that may decide an issue of great import in the class action arena: whether a class representative may continue to pursue a class action where the defendant offers to fully satisfy the class representative’s claims. While the case appears to relate only to jurisdictional standing under Article III, it may have broader effects on class and other group litigation.

Laura Symczyk is a nurse for Genesis Healthcare. She sued her employer, Genesis Healthcare, in a collective action for violation of the Fair Labor Standards Act (FLSA) for charging her automatic meal break deductions when she claimed she had not taken meal breaks. (While the FLSA prohibits class actions, it permits collective actions.) Genesis answered the complaint and made a Rule 68 offer of judgment, offering to satisfy all of Symczyk’s claims. Symczyk had not yet moved for certification of her collective action. She refused to accept the offer. 

So Genesis moved to dismiss the suit on the basis that Symczyk no longer had a “personal stake” in the outcome as she had been offered all the relief she was seeking. The district court granted the motion, but the Third Circuit Court of Appeals reversed and remanded. See 656 F.3d 189 (3rd Cir. 2011). Though Symczyk’s claim is based on the FLSA, the Third Circuit relied on class action jurisprudence in holding that a defendant should not be permitted to “pick off” class representatives by offering to settle with them because doing so would undermine the representative purposes of group litigation.

Recognizing the potential impact of Symczyk on class litigation, the Sixth Circuit Court of Appeals has stayed its decision in a similar case — Hrivnak v. NCO Portfolio Management, Inc. A decision by the Supreme Court may resolve the current split in authority concerning the effect of a pre-certification offer of judgment in class litigation. Compare Damasco v. Clearwire Corp., 662 F.3d 891 (7th Cir. 2011) (“we believe the [relation-back] exception created by [the Third, Fifth, Tenth and Ninth] circuits is unnecessary. To allow a class, not certified as a class action and with no motion for class certification even pending, to continue in federal court when the sole plaintiff no longer maintains a personal stake defies the limits of federal jurisdiction express in Article III”), Rhodes v. E.I. du Pont deNemours, 636 F.3d 88 (4th Cir. 2011) (“when a putative class plaintiff voluntarily dismisses the individual claims underlying a request for class certification, . . . we hold that we lack jurisdiction to decide the issue [of class certification]”), and Anderson v. CNH U.S. Pension Plan, 515 F.3d 823 (8th Cir. 2008) (“because the claims of all named plaintiffs against Pactiv were satisfied before the district court's ruling on class certification, and there is no showing that any future claims by retirees would evade review, it appears that the case against Pactiv should have been dismissed by the district court.”) with Pitts v. Terrible Herbst, Inc., 653 F.3d 1081. 1091-92 (9th Cir. 2011) (an offer of full satisfaction to a class representative does not moot the class aspect of the case because any subsequent certification would “relate back” to the filing of the complaint), Lucero v. Bureau of Collection Recovery, Inc., 639 F.3d 1239, 1247-50 (10th Cir. 2011) (same); Sandoz v. Cingular Wireless LLC, 553 F.3d 913, 920-21 (5th Cir. 2008) (same), and Weiss v. Regal Collections, 385 F.3d 337, 344-45 (3rd Cir. 2004) (same).

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