IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA
May 19, 2010
LAURA SYMCZYK, PLAINTIFF,
GENESIS HEALTHCARE CORPORATION AND ELDERCARE RESOURCES CORPORATION, DEFENDANTS.
The opinion of the court was delivered by: Baylson, J.
MEMORANDUM RE: MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION
In this action, Plaintiff Laura Symczyk alleges that Defendants Genesis HealthCare Corporation and ElderCare Resources Corporation (collectively, "Defendants") violated the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. ("FLSA"), and Pennsylvania law, by implementing an automatic meal break deduction policy. (Compl. ¶ 1, Docket No. 1.) Symczyk brought the action as a collective action under 29 U.S.C. § 261(b), on behalf of herself and similarly situated individuals. Presently before the Court is Defendants' Motion to Dismiss for Lack of Subject Matter Jurisdiction (Docket No. 12), pursuant to Federal Rule of Civil Procedure 12(b)(1). The pending Motion seeks dismissal based on Defendants' offer of judgment, which, according to Defendant, exceeds all damages Symczyk can recover under the FLSA, in accordance with Federal Rule of Civil Procedure 68 ("Rule 68").
I. Factual and Procedural Background
Symczyk worked as a Registered Nurse at Pennypack Center, and was an employee of Defendants from April 2007 to December 2007. Symcyzk commenced this FLSA collective action on December 4, 2009, which identified the class as comprising "all non-exempt employees of Defendants whose pay is subject to an automatic meal break deduction even when they perform compensable work during their meal breaks." (Compl. ¶ 14, Docket No. 1.)*fn1
On February 18, 2010, Defendants filed an Answer to the Complaint. (Docket No. 8.) The same day, Defendants served Symczyk's counsel with an offer of judgment, pursuant to Rule 68, in the amount of "$7,500.00 in alleged unpaid wages, plus attorneys' fees, costs and expenses as determined by the Court." (Mot. to Dismiss, Ex. A, at 2.) Defendants contend, and Symczyk does not contest, that Symczyk "never responded, effectively rejecting the Offer." (Mot. to Dismiss 2; see also Resp. (Docket No. 19).)
On March 11, 2010, this Court entered an Order providing for "an initial ninety--day period of discovery, at the close of which [Symczyk] will move for conditional certification under § 216(b) of the FLSA." (Docket No. 10, ¶1.) On March 23, 2010, Defendants filed the pending Motion to Dismiss for Lack of Subject Matter Jurisdiction. Subsequently, on April 23, 2010, Symczyk filed an Amended Class/Collective Action Complaint (Docket No. 22), which differed from the Complaint by adding allegations pursuant to Federal Rule of Civil Procedure 23 on behalf of a class seeking relief under Pennsylvania state law. Symczyk's Amended Complaint provides the same definition of the class as the Complaint (Am. Compl. ¶ 20).
II. The Parties' Contentions
Defendants' Motion to Dismiss is based upon their Rule 68 offer of judgment. In support of their Motion, Defendants assert that they offered Symczyk "compensation that is equal to or greater than the potential relief she could obtain at trial." (Mot. to Dismiss 5.) According to Defendants,"a defendant's offer to pay the full amount of the plaintiff's potential recovery . . . renders the plaintiff's claim moot because she loses a legally cognizable interest in the outcome of the litigation," thereby rendering this case subject to dismissal. (Mot. to Dismiss 3.)
In response, Symczyk contends that courts "heavily disfavor" "Defendants' strategic attempt to 'pick--off' the Plaintiff before the Court can meaningfully consider and decide the [§] 216(b) motion." (Resp. 1.) Symczyk argues that "the Third Circuit has considered and rejected the use of such tactic in the context of other representative actions, in particular a Rule 23 class action," and that courts have recognized that there is no distinction between Rule 23 and § 216(b) cases for purposes of "strategic mooting by defendants through the use of a Rule 68 offer of judgment." (Resp. 7.) Symczyk thereby concludes that the Court, rather than dismissing the action as moot, should permit Symyczk to "file a class certification motion, and that motion would 'relate back' to the filing of the complaint, thereby eliminating any concerns that the representative plaintiff lack[s] standing to sue." (Resp. 4--5.)
Defendants reply that dismissal is appropriate even though "this case is an opt--in collective action under § 216(b)," because "the opt--in procedure under § 216(b) is fundamentally different from the opt--out procedure in Rule 23 class actions," and both the "plain language of the FLSA and its legislative history," as well as "the great weight of authority" indicate that Defendants' Offer moots Symczyk's claim. (Mot. to Dismiss 7; see also Reply 2--13 (Docket No. 24).)
Symczyk does not take issue with Defendants' assertion that the damages offered exceed any amount of unpaid wages sought; thus, the only legal question the Court must address is whether the rejected Rule 68 offer renders this case moot and divests this Court of subject matter jurisdiction over the action.
For a motion to dismiss for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1), the plaintiff bears the burden of persuading the Court that subject matter jurisdiction exists. Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1409 (3d Cir. 1991). The Court "may not presume the truthfulness of [P]laintiff's allegations, but rather, must evaluate for itself the merits of the jurisdictional claims." Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005) (internal quotation marks and alterations omitted).
Article III of the United States Constitution limits the jurisdiction of federal courts to "actual cases and controversies." U.S. Const. art. III, § 2. "[A] case is moot when the issues presented are no longer 'live' or the parties lack a legally cognizable interest in the outcome."
L.A. County v. Davis, 440 U.S. 623, 631 (1979) (internal quotation marks omitted). Many Courts, including the Third Circuit, have held that an offer of settlement under Rule 68, if undoubtedly sufficient to compensate the plaintiff for all damages, will result in dismissal for lack of jurisdiction, regardless of whether the offer is accepted. "An offer of complete relief will generally moot the plaintiff's claim, as at that point the plaintiff retains no personal interest in the outcome of the litigation." Weiss v. Regal Collections, 385 F.3d 337, 340 (3d Cir. 2004).*fn2 In cases in which the mootness doctrine applies, subject matter jurisdiction no longer exists and the case is properly dismissed. See L.A. County, 440 U.S. at 631.
As both parties recognize, neither the Supreme Court nor the Third Circuit has addressed the specific question presented by Defendants' Motion to Dismiss, of whether a Rule 68 offer of judgment made to the named plaintiff in a FLSA action moots the collective action claims. (Resp. 5; Reply 2.) Instead, the Third Circuit held in Weiss, a class action commenced pursuant to Federal Rule of Civil Procedure 23 ("Rule 23"), that when the defendants "use the Rule 68 offer to thwart the putative class action before the certification question could be decided," the class action is not mooted, the plaintiff should be permitted to file the certification motion, and "the appropriate course is to relate the certification motion back to the filing of the class complaint." 385 F.3d at 348--49. It is not implausible that Symczyk filed the Amended Complaint, which added allegations of a class seeking relief under Pennsylvania Law, but pursuant to Rule 23, to come under the Weiss holding.
Although the Third Circuit has not determined whether Weiss's "relation back" doctrine applies to FLSA collective actions, numerous other courts have addressed the issue. Symczyk points the Court to a Fifth Circuit decision as well as multiple district court cases from the Second Circuit, which held that Rule 68 Offers of Judgment do not moot the underlying FLSA collective actions.*fn3
In 1980, the Supreme Court explained that allowing a defendant to use a Rule 68 offer of judgment to "pick--off" an individual claimant in a Rule 23 class action "before an affirmative ruling on class certification could be obtained, obviously would frustrate the objectives of class actions; moreover it would invite waste of judicial resources by stimulating successive suits brought by others claiming aggrievement." Deposit Guar. Nat'l Bank, Jackson, Miss. v. Roper, 445 U.S. 326, 339 (1980). In light of this concern, the Fifth Circuit applied the "relation back" doctrine articulated in Weiss to the FLSA collective action at issue, reasoning as follows:
The status of a case as being an "opt in" or "opt out" class action has no bearing on whether a defendant can unilaterally moot a plaintiff's case through a Rule 68 offer of judgment. Although the differences between Rule 23 class actions and FLSA § 216(b) collective actions alter the conceptual mootness inquiry, each type of action would be rendered a nullity if defendants could simply moot the claims as soon as the representative plaintiff files suit. Thus, the policies behind applying the "relation back" principle for Rule 23 class actions apply with equal force to FLSA § 216(b) collective actions.
Sandoz v. Cingular Wireless, LLC, 553 F.3d 913, 920 (5th Cir. 2008).
The opposite conclusion, however, has been reached by numerous other district courts*fn4 in the Second Circuit.*fn5 For example, in Darboe v. Goodwill Industries of Greater New York & Northern New Jersey, Inc., 485 F. Supp. 2d 221 (E.D.N.Y. 2007), the District Court for the Eastern District of New York took care to distinguish Weiss from FLSA collective actions on the basis that, in contrast to a Rule 23 action where "once a class is certified, all those falling within the description of the class certified are deemed a part of the case and will be bound by the outcome unless they take the affirmative action of opting out of the matter," members of a FLSA class must take the "affirmative step of 'opting in' to the action to be a part of the action and bound by its terms." Id. at 223--24. The Darboe court reasoned that this distinction indicated that under the FLSA, "the named plaintiff is deemed to represent himself only," and thus, "application of Rule 68 to moot a single plaintiff's claim creates no conflict with the policy underlying the collective action procedure." Id. at 224
In Briggs v. Arthur T. Mott Real Estate LLC, the district court for the Eastern District of New York reconciled the contrary conclusions reached by various courts, by explaining that "courts have held that a Rule 68 offer of judgment moots an FLSA collective action," in cases in which (1) "no other similarly situated individuals have opted in," and (2) "the offer of judgment satisfies all damages of the plaintiff, plus all costs and attorney's fees." 2006 WL 3314624, at *2. Indeed, all of the district court cases*fn6 cited by Symczyk declined to dismiss a FLSA collective action because other individuals had already opted in to join the collective action,*fn7 it was unclear whether the Rule 68 offer fully satisfied the plaintiff's claims,*fn8 or the plaintiff had already filed a motion for conditional certification under § 216(b).*fn9
The present case does not involve any such facts. Symczyk does not contend that other individuals have joined her collective action. Thus, this case, like each of the district court cases cited by Defendants, which concluded that a Rule 68 offer of judgment mooted the underlying FLSA collective action, involves a single named plaintiff.*fn10 In addition, Symczyk does not contest Defendants' assertion that the Rule 68 offer of judgment fully satisfied her claims. Under the Court's March 11, 2010 Scheduling Order, Plaintiff was given until June 10, 2010 to file a motion of conditional class certification. (Docket No. 10, ¶1.) The Court, however, was unaware when it issued the Scheduling Order that Defendants had already made Symczyk a Rule 68 offer of judgment. In view of the Rule 23 allegations now in the Amended Complaint, the Court will set the same date, June 10, 2010, for Symczyk to file a Motion for Rule 23 Certification, to be accompanied by a brief explaining how this Court retains jurisdiction over this action. The Court has tentatively concluded that Defendants' Rule 68 offer of judgment moots this collective action, and thus, that this collective action should be dismissed for lack of subject matter jurisdiction. In that event, the Court would likely decline, in its discretion, to exercise supplemental jurisdiction over Symczyk's claims under Pennsylvania law, which can be re--filed in state court. Although Symczyk will be given an opportunity to justify continued federal jurisdiction under Rule 23, the Court expresses doubt as to whether Symczyk can make such a showing, because the Rule 23 allegations in the case are limited to the state law claims, and Rule 23 does not itself confer jurisdiction. An appropriate Order follows.