The Class action lawsuit, along with the Collective Action lawsuit used in FLSA overtime and wage cases, are critical tools for individuals to be able to vindicate their rights.  By taking a small amount of money from a lot of people, a company can make a huge financial difference to its bottom line, without creating a case large enough for any one individual to pursue.

Any lawsuit in today’s world is likely to cost tens of thousands of dollars in attorney time.  That means that attorneys cannot afford to take small cases, particularly on contingency.  Take for example a company who employs 50 people in a call center.  They all make $20 per hour, and are unpaid for five overtime hours a week.  Each person is owed $150 a week.

If this has been going on for a year, this is $15,000 – a lot of money for one person, but hardly worth an attorney spending $50,000 – $100,000 in time.  Meanwhile, the company just saved $750,000.  The class or collective action is now critical.  By taking all of these claims together, an attorney can afford to spend $50,000 or more on a case and can do so on a contingency.

So how does the company respond?  In recent years, the company has simply agreed to pay the $15,000 to the person who first brings the suit before the court can certify a collective or class.  Even if the plaintiff were to reject that settlement offer, some courts have said that the offer moots – makes unnecessary – the claim and dismisses the case.  Not only does that practice end a case already filed, but the threat of it means that attorneys are not willing to take the case in the first instance and the individual plaintiff will never see her $15,000.

That changed this year with the Supreme Court’s opinion in Campbell-Ewald Co. v. Gomez.   This case involved a class action lawsuit to recover for violations of the Telephone Consumer Protection Act.  Gomez was entitled to a mere $1,500.

As a stand-alone case, no attorney would have accepted it.  But Gomez took it as a class action representing more than 100,000 people.  To avoid having to compensate everyone it had injured (and to permit it to continue that practice), Campbell-Ewald made an offer to have the court enter judgment in Mr. Gomez’s favor for the $1,500 and go home.  A prior Supreme Court case, Genesis HealthCare Corp. v. Symczyk, indicated that this was a good strategy.  But at the end of the day, the Supreme Court in a 5-3 decision (with Justice Thomas agreeing in the judgment, but not the majority opinion) held that the plaintiff’s failure to accept the offer does not moot the case.

While there remains an outstanding question as to whether actually giving Mr. Gomez the money would have made a difference, for now attorneys can pursue class and collective actions with the knowledge that the company cannot “pick off” the plaintiff by offering her all the money she seeks.

With the complexity of overtime and wage laws, it is important to only consult with an attorney that has experience with wage and overtime theft. Contact Maduff & Maduff today for help with your employment law needs.