Labor & Employment Law

Use Of Offer Of Judgment in FLSA Collective Actions To Dismiss Case

By Mark E. Tabakman, Esq.

A FLSA litigation can drag on for an interminable time, drain legal and company resources and ultimately end up in settlement discussions where the biggest issue for negotiations are the plaintiffs' attorneys legal fees. There is an effective, tried and true manner to bring a FLSA collective action to a dispositive and less costly favorable resolution for a defendant. That is the Offer of Judgment under Federal Rule of Civil Procedure 68.
Under Rule 68, after some time has elapsed in the case, the employer can offer a full remedy, which in a FLSA case means computing wages allegedly owed back three years from the date the plaintiff(s) entered the case and then doubling that amount to account for liquidated damages. The plaintiffs have ten calendar days to accept the offer. If he/they do not, the employer can file a motion under Federal Rule of Civil Procedure 12(b)(1) to dismiss the case on mootness grounds.
Thus, the employer can use this procedure offensively to bring an end to the case. Courts in a number of federal circuits have dismissed cases on these grounds. In a variation on the theme, in Smith v. T-Mobile USA Inc., the Ninth Circuit Court of Appeals held that two former sales employees, who had accepted Offers of Judgment, lacked standing to appeal a lower federal court's decision to deny class certification to all Company hourly employees because they failed to retain a personal stake in the litigation and their cases were moot.
I believe this is a viable and cost effective manner for a defendant-employer to resolve a FLSA case. There may yet be a parallel state case filed, but the state law may be more favorable to the employer, such as not having liquidated damages or an 'extra' third year on the statute of limitations. It also puts pressure on a plaintiff to make a choice and take a gamble---should they accept the offer or expose their case to the chance of complete dismissal. The proper answer for the plaintiff depends on whether he and his counsel have made an accurate computation of his damages.
 

Full post as published by Wage & Hour - Development & Highlights on July 10, 2009 (boomark / email).