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.