The Supreme Court found that a potential collective action pursuant to the Fair Labor Standards Act became moot when the only plaintiff received an offer of judgment representing full relief for plaintiff's claim.

The plaintiff initiated a collective action on behalf of herself and all similarly situated individuals, alleging that the employer violated the Fair Labor Standards Act by implementing a policy subjecting certain employees to an automatic meal break deduction without regard to whether the employee performed compensable work during their break. Prior to the plaintiff's filing a motion for conditional certification and prior to any other potential plaintiff opting-in to the collective action, the employer submitted an offer of judgment to the plaintiff's attorney for the wages requested plus attorneys' fees, costs and expenses, which would be determined by the court. After the plaintiff failed to respond to the offer of judgment, the employer filed a motion to dismiss, arguing that the plaintiff "no longer had a personal stake or legally cognizant interest in the outcome of this action," which is required for subject matter jurisdiction under Article III of the United States Constitution. The plaintiff opposed the employer's motion, arguing that the employer was attempting to strategically "pick off" the named plaintiff before the court could consider a motion to certify the collective action. The district court, however, dismissed the lawsuit, holding that the offer of judgment fully satisfied the plaintiff's claim and, therefore, mooted her lawsuit.

On appeal, the Third Circuit reversed the lower court's decision and reasoned that "[d]epriving the parties and the court of a reasonable opportunity to deliberate on the merits of collection action 'conditional certification' frustrates the objectives served" under the Fair Labor Standards Act. As a result, the court held that "[a]bsent undue delay, when an FLSA plaintiff moves for 'certification' of a collective action, the appropriate course—particularly when a defendant makes a Rule 68 offer to the plaintiff that would have the possible effect of mooting the claim for collective relief asserted under [the FLSA]—is for the district court to relate the motion back to the filing of the initial complaint." Accordingly, the Third Circuit instructed the district court on remand to consider whether the plaintiff's potential motion for conditional certification was made without undue delay and, if no delay is found, should have the motion relate back to the initial filing of the complaint. In addition, if the court certifies the collective action and at least one other similarly situated employee opts in, then the employer's offer of judgment "would no longer satisfy the claims of everyone in the collective action, and the proffered rationale behind dismissing the complaint on jurisdictional grounds would no longer be applicable."

The Supreme Court, however, reversed the decision and concluded that the individual plaintiff's claim became moot after the offer of judgment was presented. The Court further noted that the plaintiff did not have a personal interest in representing putative, unnamed claimants or any other continuing interest that would preserve her lawsuit from mootness. In so holding, the Supreme Court rejected the notion that such a settlement would insulate such claims from review, reasoning that "[w]hile settlement may have the collateral effect of foreclosing unjoined claimants from having their right vindicated in respondent's suit, such putative plaintiffs remain free to vindicate their rights in their own suits [and]…are no less able to have their claims settled or adjudicated following respondent's suits than if her suits had never been filed at all." Significantly, the Supreme Court noted that both the District Court and the Third Circuit found that the individual plaintiff's claim was rendered moot and, as a result, it declined to opine on whether this finding was correct as a matter of law and, further, declined to resolve the circuit split on this issue.

Case Law Alert, 3rd Quarter 2013