Pitts v. Terrible Herbst, Inc. (9th Cir. 10-15965 8/9/1) FLSA/Class Action

By Alexis Gutierrez

  • Wage/Hour Class Action Decision applying federal procedural law and NV state law.
  • Take-Away: Defendant employer could not “pick off” representative plaintiff to end class action lawsuit. A defendant may “moot” a class action through an offer of settlement only if he satisfies the demands of the class; an offer to one cannot moot the action because it is not an offer to all.

Summary Of Decision:

In April 2009, Gareth Pitts filed a class action complaint in Nevada state court against his employer, Terrible Herbst, Inc. (“Terrible”). The complaint alleged that Terrible failed to pay Pitts and other similarly-situated employees overtime and minimum wages and listed three causes of action: (1) a collective action for violations of the Fair Labor Standards Act (“FLSA”) (Count 1); (2) a class action for violations of Nevada labor laws (Count 2); and (3) a class action for breach of contract (Count 3). Terrible removed the case to federal court in May 2009.

In July 2009, Terrible made Pitts an offer of judgment pursuant to the Federal Rules. Under the terms of this offer, Terrible agreed “to allow judgment to be taken against it in the total amount of $900.00, plus costs and a reasonable attorney’s fee.” Although Pitts claimed only $88.00 in damages for himself, he refused Terrible’s offer. Thereafter, Terrible argued that the—albeit rejected—offer (for more than the claimed amount) should prevent the representative plaintiff from proceeding with his suit. The Circuit Court rejected this argument, reasoning:

A defendant may moot[1] a class action through an offer of settlement only if he satisfies the demands of the class; an offer to one cannot moot the action because it is not an offer to all.

  • Once a district court has certified a class, mooting the putative class representative’s claim will not moot the class action because, upon certification, the class acquires a legal status separate from the interest asserted by the class representative so that an Article III controversy now exists between a named defendant and a member of the certified class.
  • Even if a district court has not yet addressed the class certification issue, mooting the putative class representative’s claims will not necessarily moot the class action because some claims are so inherently transitory that the trial court will not have even enough time to rule on a motion for class certification before the proposed representative’s individual interest expires; an inherently transitory claim will certainly repeat as to the class, either because the individual could nonetheless suffer repeated harm or because it is certain that other persons similarly situated will have the same complaint.
  • As such, if the named plaintiff can still file a timely motion for class certification after receiving an offer of judgment for full amount of his individual claim, the named plaintiff may continue to represent the class until the district court decides the class certification issue; if the district court certifies the class, then certification relates back to the filing of the complaint and once the class has been certified, the case may continue despite full satisfaction of the named plaintiff’s individual claim because an offer of judgment to the named plaintiff fails to satisfy the demands of the class.

[1] The “mootness doctrine,” which is embedded in Article III’s case or controversy requirement, requires that an actual, ongoing controversy exist at all stages of federal court proceedings; whether the dispute between the parties was very much alive when suit was filed cannot substitute for the actual case or controversy that an exercise of a court’s jurisdiction requires.

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