Posted on December 2, 2012 at 12:07 am by Lyle Denniston
At 10 a.m. Monday, the Supreme Court will hold one hour of oral argument on the authority of a federal court to decide a workers’ pay case if there is an offer — but it is not accepted — to provide what the lawsuit sought. Arguing in favor of a bar to continuing such a lawsuit will be Ronald J. Mann of New York City, a Columbia University law professor. Arguing against scuttling such a case, with twenty minutes of time, will be former Acting Solicitor General Neal Kumar Katyal. Arguing for the federal government as an amicus on Katyal’s side of the case, with ten minutes, will be Anthony A. Yang, an Assistant to the U.S. Solicitor General. The case is Genesis HealthCare Corp. v. Symczyk (docket 11-1059).
Most of the time, someone who gets sued would rather that had not happened. That, of course, is why many lawsuits get settled: something is worked out, the case ends, and everybody saves time, money, and effort. But is that always a good thing? Maybe not, and that “maybe” has produced a case for the Supreme Court. This can be a tricky thing for federal courts, in particular, because they do not have the authority to decide a case that no longer involves a live controversy, so the issue now before the Court is how to deal with a full offer to settle that was made but not accepted.
The specific issue the Justices are being asked to sort out is what a federal court is to do when a lawsuit has been filed by someone not only for themselves, but for a group of others, too, and an offer is made to provide everything that was being sought by the individual who sued. The lower courts have not agreed on their power to rule in that situation, especially when the settlement offer is not accepted. Often, lawsuits filed on behalf of a group are pursued as class actions, under Federal Rule of Civil Procedure 23. The new case before the Justices, however, is not such a case.
The underlying dispute goes back to two sources: one in the Constitution, and one in the rules that govern how federal courts operate. The Constitution’s Article III, creating federal courts, bars them from deciding any case unless it involves — throughout its time in court — a live controversy; in other words, a real, ongoing dispute. If there is no live controversy, a case becomes “moot,” and thus is legally dead. A Federal Rule of Civil Procedure — Rule 68 — is designed to encourage parties to settle lawsuits in the national courts and, in part, to satisfy Article III. It provides that, fourteen days before a civil case is to go to trial, the sued party can make an offer to settle the case, spelling out the offer’s specific terms. Within the next fourteen days, the suing party can accept the offer and, if that happens, the lawsuit ends. Another part of Rule 68 specifies that, if the offer is not accepted, it is “considered withdrawn.”
In an ordinary case, if there is only one party suing to advance that party’s claim, some federal courts have ruled that if there is an offer to give the suing party everything claimed, that is enough to end the case, whether or not the suing party accepts the offer. The theory, in that situation, is that the suing individual has no remaining interest in the case — in effect, they have won, whether or not they accept the victory. But some courts also have departed from that rule, when the lawsuit was brought on behalf of a group as well as in the suing party’s own personal interest. One reason those courts have done so is a concern that offers to settle to one or more of the individuals in the group may be only a tactic to pick off the opposition, one by one, manipulating the case out of court.
These issues have now reached the Supreme Court in a case filed by a single individual, Laura Symczyk of Philadelphia. For about eight months in 2007, she worked as a registered nurse at the Pennypack Center, a nursing home in Philadelphia. The home is operated by Genesis HealthCare Corp. and a subsidiary, Eldercare Resources Corp. Symczyk filed a lawsuit in federal court in December 2009. She was relying on a provision of the federal Fair Labor Standards Act that governs workers’ wages and hours. The Act allows a worker to sue in what is called a “collective action,” in which the worker sues not only for themselves, but “on behalf of” other workers who share the same workplace grievance. (This was not a Rule 23 class action.)
Symczyk claimed that she and others who worked at the nursing home were the victims of a policy that automatically deducted thirty minutes’ worth of their pay for each shift, for a lunch break. The deduction was made, she contended, whether or not an individual worker actually took an uninterrupted break to eat lunch. Her lawsuit argued that she and others actually did work during their breaks and so were entitled to be paid for the time.
In February 2010, the home’s management offered Symczyk a total of $7,500 for unpaid wages, plus attorney’s fees, costs, and expenses in an amount to be decided by the federal judge. She did not respond to the offer, so the home’s management a month later filed a motion to dismiss the case, arguing that there was no longer any case or controversy because the offer would have given Symczyk all of what she had sought. It argued that, by failing to respond, the nurse had in effect rejected it, so she no longer had a personal stake in the dispute.
Symczyk’s lawyers objected, contending that the management was trying to scuttle the lawsuit before the judge could decide whether to let the case go ahead as a “collective action.” However, the judge dismissed the case, concluding that Symczyk had not claimed that other individuals had joined or would join in the case, and that she had made no claim that the offer was less than she sought. Other workers would not be considered to be a part of the case, the judge found, unless they actually joined it, so Symczyk was representing only her own claim.
The Third Circuit Court overturned that result, and ordered the case back to district court to explore more fully whether other workers at the home would join in. While it accepted that Symczyk had no continuing personal interest, it said it would frustrate the objectives of allowing workers to file collective lawsuits if an employer could pick off the workers one at a time to head off a broader claim. In reaching that result, the Circuit Court relied mainly on lawsuits involving formal class actions under Rule 23, in which there clearly was a group whose interests were at stake, represented by a single individual or at most only a few. From class-action law, the Circuit Court borrowed the theory that, when a class is certified in a genuine class-action lawsuit, the case ”relates back” to the date when the initial suing worker had filed the lawsuit. That result would make all of the nursing home’s workers in the same situation faced by Symczyk eligible to take part in the case from an early point in the case.
Petition for Certiorari
The companies operating the Philadelphia nursing home took the case on to the Supreme Court last February, raising the single issue of whether a federal court loses its Article III power to decide when a single suing party gets an offer from the sued party to satisfy all claims made in the case. The petition argued that the Third Circuit Court, in giving new life to Laura Symczyk’s lawsuit, had mixed up class-action legal doctrine with principles under federal wage-and-hour law.
The Supreme Court, the petition noted, has long been concerned about enforcing Article III’s limitation on federal judicial authority, but it argued that the Third Circuit had now subordinated that concern to “pragmatic concerns about judicial access and statutory policy.” The only ones who would benefit from this result, the companies asserted, are the lawyers involved and future parties who may want to enter the litigation if it continues. More broadly, the petition said that lower courts have grown confused about constitutional limits on their power, and “only this Court can resolve this issue.” Lower courts, in going their own way and following their own precedents in this controversy, the petition said, “have lost sight of the core principles” behind Supreme Court precedents establishing the concept that something additional must be at stake for a case to continue if an offer to settle it in full has been made. Policy considerations relied upon by lower courts in keeping cases alive cannot trump Article III, the companies contended.
The petition was supported by an array of business advocacy groups, health care associations, and a business defense lawyers’ organization.
Symczyk chose not to respond to the companies’ appeal, but the Supreme Court asked for a response. In reacting, her lawyers said the case was only about the concept of “relate back,” and argued that that was a means of keeping alive class action lawsuits and so should also apply to the kind of group legal effort that her lawsuit had brought into court. The case does not lose its legal significance even if a fully satisfying offer has been made, and rejected, the brief in opposition said. That brief also argued that, when the case is understood to be only about the “relate back” issue, there is no conflict in lower court opinions, and no confusion among them.
On the merits, Symczyk’s lawyers argued that, in any discussion of whether judicial resources would be wasted, it is more likely that waste would occur if companies sued by individuals in a group lawsuit are allowed to pick off their challengers one by one, rather than giving the court time to decide whether to let the case proceed on behalf of the group.
The Court granted review of the companies’ petition on June 25.
Briefs on the Merits
The nursing home management’s brief on the merits emphasized the argument that Symczyk’s lawsuit at this point represents only the interests of “bystanders” — lawyers and workers who might or might not join in the case — and that the Constitution’s Article III has never allowed mere onlookers to seek remedies in the courts. “The interests of bystanders, however sincere or vigorous, are no substitute for a personal stake,” the brief argued. And, it added, the only one who had a personal stake in this case — Symczyk herself — has had no remaining interest “for more than two years.”
To get around that limitation, the brief asserted, the Third Circuit exempted collective lawsuits under federal wage-and-hour law “from the personal stake requirement.” At the time Symczyk received an offer to satisfy her in full, the filing said, the federal judge in the case “had taken no steps toward collective process” so the interests of any other workers who hypothetically might join in “are not yet legally cognizable.” In fact, it added, the management’s offer was made even before Symczyk’s lawyers had asked that it proceed as a group claim. The situation, the brief said, would have been different if the judge had already approved proceeding on a collective basis.
The brief’s second key point is that, under the wage-and-hour law’s provision for collective claims, Symczyk herself has no authority to designate other workers as part of her claim. Others become parties to it only if they do so by filing a formal document in court, according to the brief. Each such person must join separately, it said.
Symczyk’s brief on the merits essentially argued that the nursing home management’s grievance is not with the Third Circuit, but with Congress: since the Fair Labor Standards Act was first passed in 1938, the brief noted, Congress has allowed for collective action lawsuits by workers in order to assure a complete remedy for violations of the Act. The offer made to Symczyk, it added, “provided nothing whatsoever for” potential co-workers’ claims about the same violation of their pay rights.
Her brief laid much stress upon the fact that the management’s offer to Symczyk had not been accepted by her at the time the management moved to dismiss the case as “moot.” In effect, by failing even to react to that offer, Symczyk effectively rejected it. The offer remained no more than an offer at that point, because it is a request for a court to grant the worker’s claim and there was no ruling giving her the money she had sought, the brief said. If a mere offer could moot such a case, the filing said, that would convert the unaccepted offer “into a ‘heads we win, tails you lose’ proposition.”
And, by its terms, the offer made here was not even a complete one, according to Symczyk’s lawyers. She had sued on behalf of her co-workers, too, and there was nothing for them in the offer. It was up to the District Court to decide whether the offer would remedy the grievance of Symczyk’s co-workers, and that was never done, the brief noted.
As a final point, her brief suggested that overturning the Third Circuit would, in effect, “constitutionalize” the processing of wage-and-hour collective claims like those that Symczyk took to court.
The nursing home management’s appeal is supported, as was the petition, by business and personnel management associations, health care providers, and by business defense lawyers. On Symczyk’s side are labor organizations, consumer advocacy groups, civil rights organizations, and employment lawyers.
The Obama Administration has entered the case in support of allowing Symczyk’s case to proceed, but it has a quarrel with the Third Circuit’s ruling. The Circuit Court, while arranging for the case to go back to the district court, had ruled that — if this were not a collective action lawsuit — the mere offer of full satisfaction would have made the case moot. That is wrong, the Solicitor General’s merits brief argued, because an offer contains no obligation until it has been accepted. If the suing party does not agree to settle the case, “it remains alive, because a federal court can continue to grant effectual relief,” the brief said.
When a case is one of collective action, the Solicitor General contended, the court lacks the discretion to award a remedy to the suing individual “over her objection. In light of the important statutory function served by collective actions, sound judicial administration requires that the collective-action process proceed unaffected by a defendant’s attempt to ‘buy off’ an unwilling named plaintiff.”
The question of whether an unaccepted settlement offer is sufficient to moot a claim like Symczyk’s, the government brief contended, “is a necessary predicate” to a decision in a case like this, and that question has produced ”divergent results in the courts of appeals.” Thus, it argued, the Justices should uphold the result in the Third Circuit, but by ruling explicitly that Symczyk’s case is not moot. If the Court does not do so, the brief added, it should consider dismissing the case “as improvidently granted,” since the question the government advanced “is so central to the proper Article III analysis.”
If, however, the Court proceeds to a decision, and rules that an unaccepted settlement offer is enough to moot Symczyk’s case, the government brief suggested, then “the collective action here may also be moot.” Still, it went on, Symczyk may have “a sufficient economic interest in collective-action certification to warrant her ongoing role in the certification process” — an issue that it said could be considered when the case returned to District Court.
In recent years, the Supreme Court’s majority has grown increasingly skeptical about group lawsuits, primarily because it perceives that many such cases — especially those filed formally as class actions — are primarily designed to force settlements, without a full opportunity for the sued party to defend itself against the specifics of claims of individuals within the group. The majority believes that that poses a problem of elemental fairness in litigation. Perhaps the most significant issue in this new case, which is not a class-action lawsuit as such, is whether the Court would be more sympathetic to workers’ rights under a specific federal law authorizing them to sue collectively over pay and hours.
The nursing home’s management is obviously making a plea to the skeptical majority, but its case appears to depend upon drawing a fine distinction between the sequence of events that unfolded in this particular case. Its plea comes close to saying that timing is everything: if an offer of full compensation to the suing worker is laid on the table, before a worker even advances a claim for collective relief, that ends the case because the sued party has nothing left to claim. The Court, though, may view that as too formalistic, just as the Third Circuit — although quite sympathetic to the aims of case-ending Rule 68 — did in saying it was in essence making an exception for workers’ collective claims under wage-and-hour law.
But there is a chance, of course, that the Justices will say that this kind of dispute does need to be resolved by fine distinctions, especially when Article III jurisdiction depends on those. When the nursing home management made its offer, to fully compensate Symczyk, the Court might conclude, that was the end of the case since at that very specific moment, there was no approved group, nor even a request for such approval.
Symczyk’s strongest point, in contrast, is that an offer has to be accepted to have any meaning in law. That, too, is a simplistic approach, but it may be seen by the Court as having virtue because it takes seriously the common-sense notion that it takes two to have an agreement. Whether the Justices, in fact, are attracted to that point may depend upon whether they think that it is necessary to make Rule 68 a more forceful way of cutting down litigation in the courts, instead of giving it a somewhat loose interpretation that allows for exceptions.
It may be only of rhetorical import, but Symczyk’s final argument against making a constitutional case out of wage-and-hour litigation would seem to have appeal to a Court that generally is in favor of avoiding using the heavy legal artillery of the Constitution to resolve disputes that can be resolved on lesser grounds.
The Solicitor General’s entry into the case, with its several layers of possible outcomes, had added a complication for the Justices. On the one hand, it has suggested that, if the Court is not willing to go along with the government’s view that an unaccepted offer is never a complete offer for Article III purposes, this case might properly be just wiped off the docket. On the other hand, it has offered ideas for allowing Symczyk to proceed, not only on her own claim but on the potential claim of her co-workers. The government approach has the virtue of flexibility, but the vice of a bit of indecisiveness, and might not have been as helpful as the Solicitor General thought it might.
This case, made simple:
Beginning in 1938, Congress has promised U.S. workers that it will protect their wages and limit their hours of work each week. To reinforce those promises, workers are allowed to file lawsuits claiming, for example, that they did not get paid for time when they had actually worked. The law also allows a single worker to go into court with a lawsuit seeking full pay for that employee, as well as for others who have the same claim. The new case before the Court involves a registered nurse at a nursing home in Philadelphia, who sued over a claim that the management docked all workers for thirty minutes’ worth of pay each shift, for a lunch break, but workers did not actually take the time off from their labors, so they were entitled to pay for that time.
Before the court case went very far, the management of the nursing home offered that single nurse to pay her in full what she claimed she was owed. She did not respond. The management then asked the court to dismiss her case, arguing that she had a promise of a full settlement of what she was asking, and didn’t take it, so she had no ongoing interest in the court case. She resisted having it thrown out, though, arguing that she was representing not only herself, but co-workers who also had been denied full pay. A federal judge dismissed the case for the reasons the management claimed, but a federal appeals court reinstated the case, at least for a further look by the federal judge.
The case has now gone to the Supreme Court, with the nursing home management arguing that, because the nurse did not even ask that the case proceed on behalf of her co-workers, too, the federal judge acted properly in throwing out her case because, when the judge did so, she was the only one with a claim, and she had declined an offer to satisfy that claim. The Justices will now proceed to decide whether a mere offer, even if not accepted, is enough to put an end to such a case. The nurse is resisting that outcome, and she has the support of the federal government, at least in part.
(Disclosure: Professor Ronald Mann, who is arguing in this case, is a contributing writer for this blog, but he appears in this case as part of his professional practice. The author of this post operates independently of any law practice.)