The U.S. Supreme Court will decide whether an employer’s offer of judgment to satisfy all claims of a lone named plaintiff in a putative collective action wage suit renders the case moot — and thus beyond the power of Article III courts. On June 25, the High Court agreed to review Genesis Health Care Corp v Symczyk (Docket No 11-1059), a Third Circuit decision that revived a putative FLSA collective action that was dismissed below after the named plaintiff rejected the employer’s offer of judgment satisfying her claim in full.

In the underlying case, a registered nurse filed an FLSA suit claiming the employer had an unlawful policy of automatically deducting pay for meal breaks without regard to whether employees had actually taken their breaks. She sought to represent similarly situated employees who were also subjected to the auto-deduct policy but she had not yet moved to conditionally certify a class. In response to the complaint, the employer made an offer of judgment to satisfy the plaintiff’s claims in full, as well as attorneys’ fees and costs, but she rejected the settlement. The district court therefore dismissed the action as moot.

Reversing, the Third Circuit ruled that a Rule 68 offer of judgment did not prevent an FLSA collective action from moving forward. The objectives of Sec. 216(b) of the Act would be frustrated if the parties and the court were deprived of a reasonable opportunity to deliberate on the merits of the collective action prior to conditional certification, the appeals court reasoned. The circuit court was concerned that defendants could wield Rule 68 as a sword to avoid further proceedings in collective actions. “When Rule 68 morphs into a tool for the strategic curtailment of representative actions, it facilitates an outcome antithetical to the purposes behind Sec. 216(b),” according to the appeals court. In petitioning the Supreme Court, however, the employer argued that “the willingness of lower courts to elevate ungrounded policy concerns over Article III principles warrants this Court’s immediate attention.”

On Monday, the Court granted motions for leave by the U.S. Chamber of Commerce and DRI, the Voice of the Defense Bar, to file amicus briefs in the case.

Equitable relief under ERISA. Taking up another Third Circuit case, the High Court also will consider the scope of equitable remedies available under ERISA Sec. 502(a)(3). Specifically, the Court will decide, in US Airways, Inc v McCutchen (Dkt No 11-1285), whether ERISA “authorizes courts to use equitable principles to rewrite contractual language and refuse to order participants to reimburse their plan for benefits paid even when the plan’s terms give it an absolute right to full reimbursement.” A ruling by the High Court will resolve a circuit split on the issue.

The case involved a US Airways employee who was seriously injured in a car accident and recovered $110,000 in a lawsuit against third parties. In a subrogation action, the employer sought to recover the entire $67,000 it paid out for medical expenses through its benefit plan in accordance with the plan’s express terms. Because a full reimbursement (without allowance for the employee’s legal costs) would have reduced his net recovery to below the amount that it demanded, the employee filed an ERISA action, seeking “appropriate equitable relief.” The district court ordered the employee to repay the employer in full, but the Third Circuit reversed. In its petition for cert, the employer asserted that ERISA does not authorize courts to rewrite a contract based on equitable principles.

Consumer class action. The Supreme Court also agreed on Monday to consider a class action case — yet another Third Circuit decision — to resolve whether plaintiffs must introduce certain evidence admissible evidence to show that class-wide damages could be awarded before a district court may certify a class. Although a consumer case, a High Court ruling on this question will have clear implications for employment class actions.

The case, Comcast Corp v Behrend (Docket No 11-864), involved an antitrust suit filed against Comcast Corp by a group of cable customers. Certifying the class, a district court found the customers were able to show by a preponderance of evidence that they could demonstrate common proof of impact and of damages. The Third Circuit affirmed. Comcast sought High Court review, contending that the circuit court’s position that “merits arguments” are not properly before the court at the class certification stage “cannot be reconciled with [the Supreme Court’s] decision in Dukes and breaks sharply with the Eighth and Ninth Circuits.”

The Court limited the grant of cert to the following question: “Whether a district court may certify a class action without resolving whether the plaintiff class has introduced admissible evidence, including expert testimony, to show that the case is susceptible to awarding damages on a class-wide basis.”

Source: WKL&B Editorial Staff.