Articles from October 2013

Ninth Circuit Follows Kagan’s Genesis Healthcare Dissent

In her stinging dissent in Genesis Healthcare Corp. v. Symczyk, Justice Kagan stressed that the majority opinion, which held that an FLSA collective action can be terminated if the class representative is “picked off” by a settlement offer that fully resolves her claims, should not be used as precedent for future cases: “Feel free to relegate the majority’s decision to the furthest reaches of your mind: The situation it addresses should never again arise.” Justice Kagan specifically referred to the case’s odd posture, wherein neither party contested the premise that an unaccepted Rule 68 settlement offer serves to moot the plaintiff’s individual action, a premise the dissenting justices found to be incorrect.

In Diaz v. First American Home Buyers Protec. Corp., No. 11-57239 (9th Cir. Oct. 4, 2013) (slip opinion available here), the Ninth Circuit considered whether an unaccepted Rule 68 offer would moot a Rule 23 class action prior to a ruling on class certification. Noting a circuit split on this issue, Diaz examined Justice Kagan’s reasoning in Genesis and found it to be the “correct approach,” concluding that “an unaccepted Rule 68 offer that would have fully satisfied a plaintiff’s claim does not render that claim moot.” Slip op. at 14. The Diaz court thus vacated the district court order dismissing the putative class action.

While Diaz distinguished Genesis on the ground that Justice Kagan identified, other courts have distinguished Genesis as being wholly inapplicable to Rule 23 class actions. See, e.g., Craftwood II, Inc. v. Tomy Int’l, Inc., No. 12–1710 (C.D. Cal. July 15, 2013) (“[Genesis] does not cover class actions, nor does it even address how a rejected offer could moot a claim.”); Chen v. Allstate Ins. Co., No. 13-0685 (N.D. Cal. June 10, 2013) (holding that Genesis has no application to Rule 23 class actions); see also, Kensington Physical Therapy, Inc. v. Jackson Therapy Partners, LLC, No. 11-02467 (D. Md. Oct. 2, 2013) (same). These cases indicate that Justice Kagan’s dissent has already proven to be quite influential in limiting Genesis’ impact. However, considering that Diaz has exacerbated an unresolved circuit split (by siding with the Second Circuit against the Sixth and Seventh Circuits), it will shock no one if the Supreme Court takes up this issue again in the near future.

Additional Subclass Certified in Brinker, 17 Months After Landmark Ruling

In Brinker v. Superior Court, the court affirmed certification of a rest break subclass, reversed certification of an “off-the-clock” subclass and remanded for reconsideration the question of meal period subclass certification in light of clarifications of law provided in that decision. Last Thursday, Judge Dato granted certification of the meal period subclass (tentative ruling available here). 

Judge Dato’s class certification decision focused on “the plaintiff theory of liability and proof, not on alternative approaches a defendant might prefer were being pursued.” The plaintiffs’ main theory of meal period liability is that Brinker’s meal period policies, particularly its written policy, violate California law. Focusing on that theory, Judge Dato held that the validity of Brinker’s meal period policy is a classwide issue subject to common proof.

Judge Dato’s decision is in line with other post-Brinker decisions (which he cites) such as Bradley v Networkers International LLC (2012) 211 Cal.App.4th 129 and Faulkinbury v. Boyd Associates, Inc. (2013) 216 Cal.App.4th 1129, which also read Brinker as focusing on plaintiffs’ theory of liability and, in particular, whether they allege that a policy violates California law. Whether in fact a policy violates California law is not part of the certification analysis – it is a merits issue. Brinker, Bradley and Faulkinbury all follow this approach. In addition, to show that common issues did not predominate, Brinker argued that there is wide variation in how meal period policies were implemented and applied. Judge Dato, relying on Bradley, stated that whether there is a lack of company-wide policy that violates California law is also a classwide issue subject to common proof.