Categories: Collective Actions

Making FLSA collective actions go away quickly just got harder in Texas.  In a recent decision in December 2008, the Fifth Circuit Court of Appeals (with jurisdiction over Texas) significantly limited the availability of a valuable defensive tactic regularly asserted by defendants in FLSA collective actions – the offer of judgment under Federal Rule of Procedure 68. Prior to the Court’s ruling, defendants were often able to reduce their liability under the FLSA by preemptively offering a settlement to class representatives, satisfying theirclaims in full. By doing so, the representative’s claims were deemed moot; and, the representative was unable to proceed in his or her capacity for the class of employees. This principle has been accepted by a wide spectrum of federal courts.

 However, in Sandoz v. Cingular Wireless, 553 F.3d 913 (5th Cir. 2008) the Fifth Circuit determined this approach was available in only limited circumstances. The Court recognized the practice created an “incentive for employers to use Rule 68 as a sword, ‘picking off’ representative plaintiffs and avoiding ever having to face a collective action.” Further, it was acknowledged that the tactic had the potential to “frustrate” the objectives of the FLSA, while sustaining duplicative individual lawsuits under the Act. According to its ruling in Sandoz, a claim would be deemed “moot” only if the representative failed to file a timely motion to certify the class of employees; or, the motion to certify is denied.

While the ultimate consequence of Sandoz has yet been realized by employers, it is certain the offer of judgment tactic in FLSA collective actions has been dealt a serious blow in the Fifth Circuit. 

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