A conflict is brewing in the federal courts over whether a defendant’s offer to settle a collective action FLSA case for full relief can moot the case and effectively deprive the court of jurisdiction. Plaintiff’s lawyers view this tactic as a trick aimed at “picking off” class members to avoid a larger suit, while defendants argue that the courts should not be used to stir up litigation once a party’s claim has been fully satisfied. Put simply, why continue a lawsuit once the plaintiff has won everything he or she could collect?
In a recent decision out of North Carolina, a federal judge has waded into this mix by dismissing an overtime case filed against United Mortgage. The defense counsel sent the attached letter to the plaintiffs’ counsel offering to not only fully compensate the named plaintiffs, but to pay any claims submitted with an accompanying affidavit explaining the details of any alleged unpaid work. The plaintiffs declined the offer and the judge dismissed the case.
The plaintiffs have appealed to the Fourth Circuit, which will no doubt lead to an important appellate decision affecting all FLSA collective actions. The last time a circuit court weighed in on this issue, the Fifth Circuit held that offers of judgment did not deprive a court of jurisdiction except in very limited circumstances, and greatly limited the use of the technique in obtaining dismissal. Hopefully, common sense will carry the day and those who would reject a win in favor of running up attorneys fees won’t be rewarded.