Motion to Dismiss Class Action Based on Rule 68 Offer of Judgment to Plaintiff Premature Because Court had not yet Ruled on Plaintiff Motion to Certify Class Action New York District Court Holds
Plaintiff filed a class action against her employer, Buth-Na-Bodhaige, for violations of the federal Fair Labor Standards Act (FLSA) arising out of its alleged failure to pay managers overtime and misclassification of its managers as “exempt” employees. Rubery v. Buth-Na-Bodhaige, Inc., 494 F.Supp.2d 178, 179 (W.D.N.Y. 2007). Plaintiff asked the court to conditionally certify a collective action under FLSA and to certify a class action, but the motions were stayed pending a ruling on certain dispositive motions. Id. Plaintiff then renewed her motions for class action treatment, and defense attorneys responded with a Rule 68 offer of judgment, id. Plaintiff did not accept the offer, and subsequently filed more than 50 consent forms executed by putative class members that authorized plaintiff to proceed on their behalf. Id. The defense argued that the offer of judgment divested the district court of jurisdiction over plaintiff’s FLSA claims and moved to dismiss the class action, id., at 179-80. The district court denied the motion.
The federal court explained that, because its jurisdiction is limited to actual cases and controversies, “[w]hen a defendant offers a plaintiff all of the relief she seeks, the plaintiff’s personal stake in the litigation is vitiated, and the issues presented are no longer considered to be ‘live.’” Rubery, at 180 (citing Fox v. Board of Trustees of State University of New York, 42 F.3d 135, 140 (2d Cir.1994)). The complaint is therefore subject to dismissal because “there is no justification for taking the time of the court and the defendant in the pursuit of minuscule individual claims which defendant has more than satisfied.” Rubery, at 180 (quoting Abrams v. Interco Inc., 719 F.2d 23, 32 (2d Cir.1983) and citing Central States Southeast & Southwest Areas Health & Welfare Fund v. Merck, 433 F.3d 181, 197-198 (2d Cir.2005)). In the Second Circuit, district courts have held that a defense offer of judgment to pay damages in full warrants dismissal of the complaint even if the offer has been rejected. Id. However, this rule does not apply if the offer of judgment “fails to satisfy ‘all damages for all plaintiffs,’ such as where the amount owed to plaintiff is in dispute, or where additional plaintiffs have opted in and not been extended offers of judgment.” Id. Additionally, courts are “mindful of the inherent danger that motions to dismiss grounded on a Rule 68 offer may be wielded as a strategic weapon to frustrate the FLSA’s very object-ensuring that every employee receives ‘a fair day’s pay for a fair day’s work.’” Id., at 180-81 (quoting A.H. Phillips v. Walling, 324 U.S. 490, 493 (1945))
In light of the guiding principles set forth in the court’s opinion, the district court concluded that the defense motion to dismiss was premature because it was made prior to the court’s decision on whether to grant class action status to the case. Rubery, at 181. Accordingly, it denied the motion without prejudice. Id.