Genesis HealthCare Corp. v. Symczyk: SCOTUS Allows Pick-Off of Named Plaintiff for $7500; Justice Kagan Is Not Impressed
The Supreme Court has issued the most recent installment in its serial neutering of class and representative actions. See Genesis HealthCare Corp. v. Symczyk, 569 U.S ___ (2013) (slip opinion available here). Justice Clarence Thomas wrote the 5-4 majority opinion that staked out a holding contrary to longstanding authority prohibiting class and collective action defendants from “picking off” named plaintiffs.
The Symczyk plaintiffs had alleged that their employer arbitrarily subtracted 30 minutes from employees’ daily aggregate clocked-in time to account for meal breaks, irrespective of whether any breaks were actually taken, which resulted in employees not receiving overtime pay they were entitled to. The employer/defendant offered the named plaintiff $7500 to abandon the suit. When the plaintiff didn’t respond to the offer, the defendant asked the federal trial court to dismiss the case as moot, since the settlement offer met or exceeded any amount that the plaintiff would be able to recover in an individual lawsuit. Slip op. at 1-2.
The majority opinion first acknowledges (and declines to resolve) a Circuit split before concluding that the Supreme Court was simply without the power to address the issue: “The Third Circuit clearly held in this case that respondent’s individual claim was moot. 656 F. 3d, at 201. Acceptance of respondent’s argument to the contrary now would alter the Court of Appeals’ judgment, which is impermissible in the absence of a cross-petition from respondent.” Slip op. at 5. The immovable constraint of the mootness issue not being properly before the court thus had the fortuitous consequence of allowing the Third Circuit’s ruling to stand, to the effect that the $7500 offer had in fact mooted the case. By contrast, the Third Circuit had also ruled that, even though the plaintiff’s personal claim was moot, the case could nonetheless go forward if other employees opted into the FLSA collection action. On this point, the majority found itself fully empowered to overrule the Third Circuit, and did so. See slip op. at 10-11.
The dissent took the position long-codified in class and representative action case law that a mere offer to pay off a named plaintiff does not suffice to “moot” a case, the essence of which concerns the numerous other employees who are not the named plaintiff. The dissent presented a lengthy and pragmatic hypothetical, where fictional plaintiff Ms. Smith is presented with a settlement offer, which she declines in favor of moving forward with a representative action. After stating unequivocally that such a scenario could not serve to moot Smith’s claims, Justice Kagan added a twist to the hypo to highlight the absurdity of the result in this case:
[S]uppose the defendant additionally requests that the court enter judgment in Smith’s favor—though over her objection—for the amount offered to satisfy her individual claim. Could a court approve that motion and then declare the case over on the ground that Smith has no further stake in it? That course would be less preposterous than what the court did here; at least Smith, unlike Symczyk, would get some money. But it would be impermissible as well.
Slip op. dissent at 6-7 (Kagan, J.).
Although the underlying legal analysis is entirely unrelated to doctrines applicable to the Federal Arbitration Act (FAA) or satisfaction of Federal Rule 23’s predominance requirement, the Symczyk majority is composed of precisely the same justices as AT&T Mobility v. Concepcion and Wal-Mart v. Dukes.