U.S. Supreme Court Delivers Win to Employees by Nixing Defense “Pick-off” Strategy

Today, in Cambell-Edwald Co. v. Gomez, the U.S. Supreme Court delivered a blow to what was becoming an increasingly popular tactic by the defense bar— mooting class actions with Rule 68. Today’s ruling has big implications for wage and hour cases.

So what is the Rule 68-mooting tactic all about?

In a class action, one or a few people file a case on behalf of a “class” of similarly-situated people. Class actions are most useful in cases where the amounts owed to each person might be relatively small, but large in the aggregate. Wage and hour cases often exemplify this situation.

For example, maybe a restaurant didn’t pay its employees time and a half for overtime hours. Each person might be owed only a few thousand dollars in unpaid overtime. It might not be economically viable for one person to bring a claim to recover just his own money. But, if the case can be done as a class action on behalf of all of the workers, then the amount of unpaid wages suddenly becomes big enough to pursue.

Enter Civil Procedure Rule 68. Rule 68 lets a defendant make an “offer of judgment” to a plaintiff. Basically, it is a way for a defendant to say, “ok, you win. I will pay you _____ and the case is over.” If the plaintiff agrees and accepts the offer, the case is over for the plaintiff, and they get whatever is promised in the offer of judgment.

Some defendants have been using Rule 68 to “pick off” named plaintiffs in class actions. Basically, the tactic works like this:

First, the defendant makes a Rule 68 offer of judgment to the named plaintiff for the entire amount that the plaintiff is owed. In a case where each plaintiff isn’t owed much money, this is easy for defendants to do.

Next, if the plaintiff doesn’t accept the offer, the defendant tells the court “we tried to give the plaintiff everything they could possibly win. Therefore, there is no reason to continue with the case.” In other words, the case is “moot.”

In a class action, if a Rule 68 offer of judgment “moots” the named plaintiff’s claims, then could the plaintiff possibly be able to proceed on behalf of other class members? Some courts said no—the case is over, and it cannot go on as a class action. The tactic gained some traction because, in Genesis Healthcare Corp. v. Symczyk, the Supreme Court refused to definitively answer whether the tactic was viable.

The U.S. Supreme Court destroys the Rule 68-mooting tactic.

The Rule 68-mooting tactic seems to be banished. The Supreme Court has now clearly said that an unaccepted offer of judgment has no bearing on whether a case can proceed: “an unaccepted settlement offer has no force. Like other unaccepted contract offers, it creates no lasting right or obligation. With the offer off the table, and the defendant’s continuing denial of liability, adversity between the parties persists.”

This is a victory for wage and hour plaintiffs and employees. Rule 68 offers may still be a useful tactic for employers, but they cannot use unaccepted offers to destroy class actions.

For more information, contact Andy Biller, Of Counsel to Markovits, Stock & DeMarco and author of Wage and Hour Information Resource; (614) 604-8759.

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