U.S.S.C. to Hear FLSA Appeal of “Terrible” 3d Cir. Decision

The Internet is buzzing with discussions of the Supreme Court’s decision to uphold the Affordable Care Act today. Many, many lawyers far better versed than I are typing their little hearts out as I write this post and I’m happy to leave the analysis in their capable hands. Instead, I’m writing about another important decision announced earlier this week.

On Monday, the Court announced that it had granted certiorari to hear the appeal of a decision by the Third Circuit Court of Appeals. The case, Genesis HealthCare Corp. v. Smyczyk, was filed as an FLSA collective action. Before any other plaintiffs joined the suit, the defendant tendered an offer of judgment pursuant to Rule 68 of the Federal Rules of Civil Procedure, and argued that its offer of full relief had mooted the claim of the single named plaintiff. The district court agreed and dismissed the case.

On appeal, the Third Circuit reversed, finding that defendant-employers could not use Rule 68 to avoid liability in a collective-action claim. In so finding, the Third Circuit joined the Ninth Circuit, which had issued a similar decision only a couple of weeks earlier in Pitts v. Terrible Herst, Inc. I (respectfully) dubbed them the “Terrible Decisions” and wrote a fairly lengthy post about why I think the cases rely on flawed logic and shaky legal analysis.

Most troubling aspect of the Third Circuit’s decision from an employer’s perspective is that it can make it virtually impossible to resolve an FLSA collective action until after a class has been certified and notice sent to putative class members. By then, of course, many employers have expended a tremendous amount of money on fees to defend the case. And the result will be unchanged even if the employer concedes liability and agrees to pay the plaintiff the full amount of his claim, plus liquidated damages, plus fees! Payment of the full amount potentially recoverable by the plaintiff will not end the case, according to the Third Circuit’s decision.

Thus, employers would have no choice but to continue to litigate even after full payment has been tendered. Sounds a bit like extortion, wouldn’t you say?

For context, you may want to read more about the Third Circuit’s decision in my previous post, 3d Cir. Agrees With “Terrible” Decision, or my equally critical commentary about the Pitts decision. Then, if you’re a die-hard like me, you can download the certiorari briefs on the SCOTUS Blog. And, while you’re there, maybe you’ll be tempted to read what some of those brilliant minds have to say about the Court’s health-care ruling. Or, if you’re like me, you could just peruse the incredibly cleverly worded titles.

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