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1 Rule 68 Offers to "Pick Off" the Named Plaintiff: Legal Update, Tactics, and Best Practice Monday, December17, 2012 Presented By the IADC Class Actions and Multi-Party Litigation Committee Welcome! The Webinar will begin promptly at 12:00 pm CST. Please read and follow the below instructions: 1. If you have not already done so, please join the conference call. 2. Mute your phone line. If you do not have a mute button or are on a cell phone, press *1 to mute your phone. 3. If you are on a conference phone, please move all cellular or wireless devices away from the conference phone to avoid audio interference. 4. If you have questions during the presentation, you may utilize the Q&A function at the top of your screen. You may type questions here and it will be sent to the presenter for response. If your question is not answered during the presentation, our presenter will answer questions at the end of the webinar. 5. Visit the Handouts section in the upper-right-hand corner of the screen if you would like to download a copy of this PowerPoint presentation.

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4 Moderator Terri Reiskin Dykema Gossett PLLC Washington, DC

5 Presenters Michael Holland Condon & Forsyth, LLP New York, NY Kurtis Reeg Reeg Lawyers, LLC Saint Louis, MO Rudy A. Englund Lane Powell PC Seattle, WA

6 Fed. R. Civ. P. 68 Offer of Judgment Rule 68(a): At least 14 days before the date set for trial, a party defending against a claim may serve on an opposing party an offer to allow judgment on specified terms, with the costs then accued. If, within 14 days after being served, the opposing party serves written notice accepting the offer, either party may then file the offer. The clerk must then enter judgment. Rule 68(d): If the judgment that the offeree finally obtains is not more favorable than the unaccepted offer, the offeree must pay the costs incurred after the offer was made. 6

7 Use of Rule 68 to Pick Off the Named Plaintiff in a Class Action Theory: If the named plaintiff is offered full relief, his or her claim is mooted. Without a plaintiff, there can be no class. Basis: Doctrines of mootness and standing under Art. III of the U.S. Constitution Practice: Must be prior to pendency of class certification motion 7

8 MOOTNESS AND RULE 23: SPLIT IN THE CIRCUITS No mootness in class action even after plaintiff receives offer of judgment under FRCP 68 where, absent undue delay, plaintiff has moved to certify class. Third, Fifth, Ninth, Tenth Circuits have so held in Weiss v. Regal Collections, 385 F.3d 337, 348 (3d. Cir. 2004); Sandoz v. Cingular Wireless LLC, 553 F.3d 913 (5 th Cir. 2008); Pitts v. Terrible Herbst, Inc., 653 F.3d 1081 (9 th Cir. 2011); Lucero v. Bureau of Collection Recovery, Inc., 639 F3d 1239 (10 th Cir. 2011) Second Circuit has not addressed issue Yourth v. Phusion Projects, LLC, 1:11-cv (N.D.N.Y. Sept. 27, 2012). The outlier: Damasco v. Clearwire Corp., 662 F.3d 891 (7 th Cir. 2011) holding that plaintiff cannot avoid mootness by moving for class certification after receiving an offer of full relief. 8

9 MOOTNESS AND RULE 23: THE STATE OF THE LAW IN OTHER CIRCUITS Remedy: Plaintiffs move for class certification simultaneously with filing of Complaint, then: Parties agree to defer motion for class certification until after completion of discovery; or Parties stipulate that no settlement offer will be made to representative plaintiff, and motion for class certification is withdrawn without prejudice. 9

10 History of Symczyk Litigation Symczyk v. Genesis Healthcare Corp., 656 F.3d 189 (3d Cir. 2011) Symczyk was registered nurse. Allegedly not paid for meal breaks during which she worked. Commenced collective action under Fair Labor Standards Act (29 U.S.C. 216(b)) on behalf of herself and similarly situated individuals. Defendant answered and filed offer of judgment pursuant to F.R.C.P. 68 for $7,

11 History of Symczyk Litigation Plaintiff declined to respond. $7,500 was more than plaintiff would be entitled to recover at trial. Defendant moved to dismiss, arguing that since plaintiff no longer had stake in the action, case was moot. Plaintiff objected to defendant s attempt to pick off named plaintiff before certification motion was filed. Case dismissed in District Court. Reversed on appeal under relation back doctrine, i.e., assuming no undue delay on the part of the plaintiff, motion for certification relates back to the filing of the class Complaint, thus avoiding mootness. 11

12 History of Symczyk Litigation Cert. Petition granted on June 25, Oral argument held on December 3,

13 The Underlying Statute FLSA, 29 U.S.C. 216(b) allows collective action but has opt-in requirement requiring written consent of each employee. [N]o employee shall be a party plaintiff to any such action unless he has given his consent in writing to become such a party and such consent is filed in the court in which such action is brought Amendment to FLSA amended Act to eliminate representative action by plaintiff not themselves possessing claims. Hoffmann-LaRoche, Inc. v. Sperling, 493 U.S. 165, 173 (1989). 7,064 FLSA suits filed in twelve months ending March 31, Source: ABA Journal, October 2012, p

14 Comparison Between FLSA and Rule 23 Offer of complete relief generally moots the plaintiff s claim, as plaintiff retains no personal interest in the outcome of the action. Superficiality of the Similarities between the FLSA and class actions under F.R.C.P. 23. Symczyk, 656 F.3d at 194. Rule 23 has opt out provision (FRCP 23(c)(2)(B)(v)) while FLSA, 29 U.S.C. 216(b) has written opt in requirement. 14

15 How to Save a Putative Class When There Plaintiffs problem: is No Representative Plaintiff 1. Representative plaintiff has no personal interest. 2. No motion for conditional certification filed. 3. No other putative representative asserts claim. Result: A lawsuit without a plaintiff. Solution to the problem: Mootness eliminated by Third Circuit decision in Symczyk that holds, absent undue delay, certification motion relates back to the filing of the Complaint. 15

16 How to Save a Putative Class When There is No Representative Plaintiff Relation back is equitable principle: Prevents defendants from picking off representative plaintiff claims and avoiding certification stage. If the class action device is to work, the courts must have a reasonable opportunity to consider and decide a motion for Certification. Susman v. Lincoln AM Corp., 587 F.2d 866, 870 (7 th Cir. 1978). Query: Can implementation of a Federal Rule of Civil Procedure trump the case or controversy requirement of Article III of the United States Constitution? 16

17 How to Save a Putative Class When There is No Representative Plaintiff Held: We believe the considerations warranting application of of the relation back doctrine to Rule 23 class actions also apply to 216(b) collective actions. Symczyk, 656 F.3d at

18 Symczyk in the Supreme Court Cert. granted June 25, 2012 on one issue: Whether a case becomes moot, and thus beyond the judicial power of Article III, when the only plaintiff receives an offer from defendant to satisfy all plaintiff s claims. 18

19 Genesis Healthcare s Arguments The-case-with-no plaintiff. No one has personal stake in the lawsuit. No case within Article III. No other plaintiff came forth to join lawsuit. Only interests at stake are those of plaintiff s counsel. Personal stake requirement is part of the irreducible minimum that Article III requires. Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, (1982). An appeal to the strict constructionists: to satisfy the case or controversy requirement, controversy must exist not only when case is filed but must continue throughout the litigation. 19

20 Genesis Healthcare s Arguments Distinguish Deposit Guaranty National Bank v. Roper, 445 U.S. 326 (1980) and United States Parole Commission v. Geraghty, 445 U.S. 388 (1980). In Roper, plaintiff had continuing personal stake in litigation by getting others to share costs of litigation if decision denying class certification was reversed on appeal. In Geraghty, no personal stake in litigation but possibility that absent class members had become sufficiently related to plaintiff s interest justified retention of jurisdiction. Geraghty, 445 U.S. at

21 REQUIREMENT OF CASE OR CONTROVERSY ARTICLE III UNITED STATES CONSTITUTION EXCEPTIONS TO MOOTNESS DOCTRINE Deposit Guaranty National Bank v. Roper, 445 U.S. 326 (1980). Credit card holders brought class action suit against national bank which issued credit card, arguing interest rate charged on cards was usurious under Mississippi law. Plaintiffs moved to certify class. Certification denied. Defendant filed offer of judgment to each named plaintiff, tendering in full the amount to which they would be entitled to if they prevailed, including interest and court costs. Plaintiffs declined offer. District Court entered judgment in favor of plaintiffs, over their objection, and dismissed the action. 21

22 Deposit Guaranty National Bank v. Roper The Exception to Mootness No other putative class member (remember no class had been certified) moved to intervene either to litigate merits or appeal the denial of class certification. Bank argued case was moot. Court, per Chief Justice Burger, held no mootness so long as they [named plaintiffs] retained an economic interest in class certification. 445 U.S. at 333. What was the plaintiffs continuing interest in the resolution of the class certification question?... Their desire to shift part of the costs of litigation at those who will share in its benefits if the class is certified and ultimately prevails. Roper, 445 U.S. at 336. Held: denial of class certification is a procedural ruling collateral to the merits of the litigation that is appealable after the entry of final judgment. 445 U.S. at 336. Reason for the rule To deny the right to appeal simply because the defendants has sought to buy off the individual private claims of the named plaintiffs would be contrary to sound judicial administration. Roper, 445 U.S. at

23 Roper s Ruling: The District Court s entry of judgment in favor of plaintiffs over their objection did not moot their private case or controversy, and that the class representative s individual interest in the litigation (i.e. their interest in sharing costs with those who would benefit if the class certification denial was reversed), as opposed to their representative responsibilities to the putative class, was sufficient to permit appeal of the adverse certification ruling. Roper, 445 U.S

24 United States Parole Commission v. Geraghty: The Exception to Mootness United States Parole Commission v. Geraghty, 445 U.S. 388 (1980). Plaintiff, incarcerated inmate, brought putative class action suit on behalf of all federal prisoners challenging validity of the U.S. Parole Commission s Release Guidelines. Class certification denied, summary judgment granted to U.S. and plaintiff released from prison while appeal pending. Did Geraghty s release from prison moot the case? 24

25 Geraghty s Ruling: Could he still appeal the denial of class certification? Held: denial of class certification relates back to the time of the original denial and thus preserves jurisdiction. Geraghty at 401 Geraghty s personal stake in the outcome of the litigation was no different from that of the putative class representative in Roper. Supreme Court holding: An action brought on behalf of a class does not become moot upon expiration of the named plaintiff s substantive claim, even though class certification has been denied. The proposed representative retains a personal stake in obtaining class certification sufficient to assure that Article III values are not undermined. Geraghty, 445 U.S. at

26 Symczyk s Arguments Two aspects of mootness doctrine: The issues presented are no longer live; or The parties lack a legally cognizant interest in the outcome, i.e., a personal stake in the outcome. Baker v. Carr, 369 U.S. 186, 204 (1962). Powell v. McCormack, 395 U.S. 486, 496 (1969). U.S. Parole Commission v. Geraghty, 445 U.S. 388, 396 (1980). 26

27 Symczyk s Arguments (continued) Specific language of Rule 68 does not moot case since [a]n unaccepted offer is considered withdrawn. Symczyk never received a penny how can her claim be moot? Petitioners unaccepted offer was taken off the table, leaving respondent with a claim that was still very much alive (Respondent s brief, page 16). Purpose of Rule 68 is to encourage settlements, not end runs around discovery (Respondent s brief, page 28). 27

28 The Position of the United States as Amicus Curiae Third Circuit was right, but for wrong reasons: Defendant s offer, if unaccepted, does not moot claim. Plaintiff receives nothing. No judgment entered by the District Court satisfying the claim in full. Even if judgment has been entered by Court, it would not moot claim if it were not accepted by the plaintiff. Rationale: If the offer of judgment mooted Symczyk s claim, then the whole collective action may be moot. No judicial power to force plaintiff to involuntarily accept defendant s post-suit settlement offer. If Court concludes plaintiff s claim was moot, grant of certiorari should be vacated as improvidently granted. 28

29 Symczyk s Arguments Other Courts of Appeals agree with Third Circuit in Symczyk to apply relation back doctrine Sandoz v. Cingular Wireless, LLC, 553 F.3d 913 (5 th Cir. 2008) Relation back doctrine inapplicable when plaintiff voluntarily settles claim (Symczyk s settlement was not voluntary so relation back doctrine applied) Weiss v. Regal Collections, 385 F.3d 337 (3d Cir. 2004) Third Circuit properly invoked relation back doctrine 29

30 Supreme Court Argument December 3,

31 Practice Pointers Whether to make Offer of Judgment? Effect of Symczyk on non-flsa litigation? Do you want an early class certification motion? What about case law holding that offering a class full relief moots the class? 31

32 Questions for Presenters? Michael Holland Condon & Forsyth, LLP New York, NY Kurtis Reeg Reeg Lawyers, LLC Saint Louis, MO Rudy A. Englund Lane Powell PC Seattle, WA

33 Rule 68 Offers to "Pick Off" the Named Plaintiff: Legal Update, Tactics, and Best Practice Monday, December 17, 2012 Thank you for Participating! To access the PowerPoint presentation from this or any other IADC Webinar, visit our website under the Members Only page (you must be signed in) and click on Past Webinar Materials, or contact Melisa Maisel at

34 If you would like to contact a speaker about a specific topic or question after the presentation, please use the below contact information. Terri S. Reiskin Michael J. Holland Dykema Gossett PLLC Condon & Forsyth LLP 1300 I St. NW, Suite 300 West Times Square Tower Washington D.C Times Square treiskin@dykema.com New York, NY (202) mholland@condonlaw.com (212) Rudy A. Englund Kurtis B. Reeg Lane Powell PC Reeg Lawyers, LLC 1420 Fifth Avenue, Suite 4100 One North Brentwood Blvd. Seattle, WA Suite 950 englundr@lanepowell.com St. Louis, MO (206) kreeg@reeglawyers.com (314)