Tuesday, December 30, 2008, 1:14 PM

When Is an FLSA Collective Action Mooted by an Employer Paying an Employee's Claim in Full?

The Fifth Circuit Considers the Subject

The FLSA permits plaintiffs to bring purported collective actions on behalf of other similarly situated employees under its Section 216(b), and the federal rules of civil procedure allow a defendant to make an offer of judgment that would fully satisfy a plaintiff's claim under Rule 68. Under Article III, Section 2of the United States Constitution, federal jurisdiction is limited to "cases" and "controversies", those involving actual disputes not hypothetical or moot cases. According to Black's Law Dictionary, a case is said to be "moot" when "the matter in dispute has already been resolved and hence, one not entitled to judicial intervention unless the issue is a recurring one and likely to be raised again between the parties." This question was presented to and answered by the Fifth Circuit in recent opinion issued in Sandoz v. Cingular Wireless LLC, case number 08-30769.

Plaintiff Sandoz filed her complaint as an opt-in collective action in state court, but defendant Cingular removed the case to federal court and soon made an offer of judgment for $1,000 plus reasonable attorneys' fees. The offer of judgment was not accepted by Sandoz and the parties filed motions to strike the reference to the offer of judgment (Sandoz) and to dismiss the complaint (Cingular). The district court denied all motions, but certified Cingular's interlocutory appeal to the Fifth Circuit on the issue of mooting.

The Fifth Circuit noted only the Eleventh Circuit has address a similar scenario, with the Eleventh Circuit holding that a named plaintiff has no right to represent similarly-situated employees until they opt-in, which is when the action becomes "collective." The district court hearing the Cingular and Sandoz arguments was concerned that a defendant could "pick off" a named plaintiff through an offer of judgment that would "frustrate" the objectives of the FLSA and improperly minimize the use of judicially economical collective actions in favor of individual lawsuits. The Fifth Circuit held that, "when a FLSA plaintiff files a timely motion for certification of a collective action, that motion relates back to the date the plaintiff filed the initial complaint, particularly when one of the defendant's first actions is to make a Rule 68 offer of judgment." According to the Fifth Circuit, the principle of "relation back" ensures that defendants could not "pick off" collection action representatives and thwart plaintiff's access to FLSA collective actions. Thus, while the Fifth Circuit agreed in general with the district court's concerns, it attempted to balance the competing interests of a employer defendant when timely motions to certify were filed. Sandoz had filed the motion to certify 13 months after her complaint, while Cingular made its offer of judgment a month after service of the complaint. On remand, the district court will determine whether the plaintiff timely filed her motion to certify and if necessary, the merits of the motion to certify.

The mooting issue will be one to watch in future (and current) FLSA cases. If an employer can moot an employee's claims under a purported class action early before significant litigation costs have been incurred, we may see more offers of judgment being made.


Blogger Texas Wage-Hour said...

Defendants have tried this tactic for years. Many plaintiffs lawyers simply use the offer of judgment to "solicit" other plaintiffs. Potential plaintiffs who learn that the defendant immediately offered money after the case was filed are often more interested in joining up. At any rate, Sandoz seems to diminish the likelihood of this tactic being employed in the first place.

December 30, 2008 at 8:44 PM  

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