Genesis Healthcare Corp. v. Symczyk: Losing Small Sure Beats Losing Big

Guest post by Thomas D. Rowe, Jr., Elvin R. Latty Professor Emeritus, Duke University School of Law

A spectre is haunting aggregate litigation--the spectre of “pick-off” offers.

To begin close to the beginning: Somewhat incredibly, the law in the Seventh Circuit has long been that a putative class representative who receives but does not accept a full-satisfaction Rule 68 offer of judgment suffers mooting of the action, with the consequence that the case is dismissed for lack of subject-matter jurisdiction and the plaintiff takes nothing.¹ To be fair, these were cases in which class certification had been denied; and not all federal courts agree with the Seventh Circuit that the plaintiff with a claim mooted by an unaccepted full-satisfaction offer loses outright.²

Readers not already immersed in the arcana of formal Rule 68 offers of judgment may need a bit of background before I get to the spectre posed by the Supreme Court’s recent decision in Genesis Healthcare Corp. v. Symczyk.  Federal Rule of Civil Procedure 68 permits a party defending against a claim to serve “an offer to allow judgment on specified terms, with the costs then accrued.”  If the opposing party accepts within 14 days, the court clerk must enter judgment.  The kicker (and the incentive for defendants to make formal offers of judgment, not just offer terms in settlement negotiations) is that if the offeree doesn’t accept and obtains a judgment that “is not more favorable than the unaccepted offer, the offeree must pay the costs incurred after the offer was made.”