Employer Seeks Certiorari On Decision Defeating Effort To Avoid Collective Action By Paying Off Named Plaintiff

On February 17, 2012, Genesis HealthCare Corporation asked the U.S. Supreme Court to review a Third Circuit decision holding that employer defendants could not avoid conditional class certification and dispatch of the class notice by paying the plaintiff all amounts sought by her in the lawsuit. The case is Symczyk v. Genesis Healthcare Corp., 656 F.3d 189 (3d Cir. August 31, 2011), petition for cert. filed, ___ U.S.L.W. ___ (U.S. February 18, 2012) (No. 11-1059). Because the decision directly conflicts with Eleventh Circuit precedent, if the Supreme Court grants certiorari and affirms, that will likely change the law in this circuit.

In Genesis, the employer served the plaintiff with a rule 68 offer of judgment for $7,500, which represented all amounts potentially recoverable by the lone plaintiff. The offer was made before a conditional class certification motion was filed. The offer was rejected but, under settled law, a plaintiff cannot keep a claim alive by rejecting all relief potentially recoverable. The district court held that the plaintiff's claims were moot, and dismissed the suit. The Third Circuit reversed.

The Third Circuit acknowledged that ordinarily a Rule 68 offer for all relief would moot the plaintiff's claims. However, the court reasoned that, in the collective action context, the purposes underlying Rule 68 in resolving claims were being frustrated and were in tension with the purposes of the FLSA's collective action provisions which were intended to avoid piecemeal litigation and provide a mechanism to efficiently resolve similar low value claims that could not be economically litigated as stand-alone claims. The court concluded that "[d]epriving the parties and the court of a reasonable opportunity to deliberate on the merits of collective action conditional certification frustrates the objectives served by [the FLSA]." The court remanded the case to the district court and directed that notice be issued to the class (subject to resolution of other issues not relevant here).

In Genesis, the Third Circuit followed the logic of the Fifth Circuit in Sandoz v. Cingular Wireless, 553 F.3d 913 (2008), which held that employers could not use Rule 68 to "pick off" plaintiffs and avoid a collective action. The Genesis Court, like the Sandoz Court before it, focused on the relation back doctrine and Rule 68. Both issues are largely distractions.

Following the logic in Sandoz, the Third Circuit borrowed jurisprudence from Rule...