Browne v. PAM Transport Inc

US DISTRICT COURT

WESTERN DIST ARKANSA:

FILED

IN THE UNITED STATES DISTRICT COURT OCT 16 2018

WESTERN DISTRICT OF ARKANSAS

FAYETTEVILLE DIVISION DOUGLAS F. YOUNG, □□□□□

By Deputy Clerk

DAVID BROWNE; ANTONIO CALDWELL; and

LUCRETIA HALL, on behalf of themselves

and all those similarly situated PLAINTIFFS

V. CASE NO. 5:16-CV-5366

P.A.M. TRANSPORT, INC. DEFENDANT

OPINION AND ORDER

Currently before the Court are Plaintiffs David Browne’s, Antonio Caldwell’s, and

Lucretia Hall’s Motion to Strike or Otherwise Invalidate Defendants’ Attempted Rule 68

Offer of Judgment (Doc. 65) and Memorandum of Law in Support (Doc. 65-1), and

Defendant P.A.M. Transport Inc.’s (“PAM”) Brief in Response (Doc. 66). For the reasons

given below, Plaintiffs’ Motion is DENIED.

Plaintiffs’ operative complaint in this case asserts claims against PAM under the

Fair Labor Standards Act (“FLSA”) and the Arkansas Minimum Wage Law (“AMWL”). See

Doc. 7. The case was brought as a putative collective action under the FMLA and a

putative class action under Fed. R. Civ. P. 23. See id. In May of 2017, this Court

conditionally certified the collective action, see Doc. 19, and around three thousand

individuals subsequently opted in as plaintiffs in the collective action, see generally Docs.

21-39, 42-46. The deadline for Plaintiffs to move for class certification under Rule 23 is

October 19, 2018. See Doc. 79.

On May 31, 2018, PAM conveyed an offer of judgment to Plaintiffs under Fed. R.

Civ. P. 68. Rule 68 provides a mechanism by which “a party defending against a claim

may serve on an opposing party an offer to allow judgment on specified terms,” which, if

accepted, must then be entered by the Clerk of the Court. See Fed. R. Civ. P. 68(a). But

unlike with ordinary settlement offers, if an offer of judgment under Rule 68 is rejected

and then “the judgment that the offeree finally obtains is not more favorable than the

unaccepted offer, the offeree must pay the costs incurred after the offer was made.” See

Fed. R. Civ. P. 68(d).

Plaintiffs contend that PAM’s May 31 offer of judgment is invalid, because it

purports to bind putative Rule 23 class members even though this Court has not yet

certified any Rule 23 class. This contention rests on two related arguments: first, that a

putative class member is not an “adverse party” as required by Rule 68,' and second,

that the Court cannot enter judgment on behalf of absentee class members. The Court

has been unable to find any binding authority that squarely addresses these issues. But

the Court thinks the greater weight of persuasive authority runs counter to Plaintiffs’

arguments here.

Putative class members may not be legally bound by putative class

representatives before a class is certified. See Standard Fire Ins. Co. v. Knowles, 568

U.S. 588, 593 (2013). But this does not mean defendants against putative class actions

may not make class-wide settlement offers before a class has been certified. Rule 23

permits certified class actions to be settled so long as the Court conducts certain steps

designed to provide affected class members notice and an opportunity to be heard

regarding the proposed settlement, including conducting a hearing on the matter and

1 Rule 68 was restyled in 2007 to refer to “an opposing party” rather than “the adverse

party.” This change was intended to be purely stylistic—not substantive. See Advisory

Committee Note on 2007 Amendment to Fed. R. Civ. P. 68.

finding that the proposed settlement “is fair, reasonable, and adequate.” See Fed. R.

Civ. P. 23(e). Thus, federal district courts (including this one) routinely preside over cases

in which parties to putative class actions reach tentative pre-certification settlement

agreements that are subject to certification and court approval under Rule 23(e).

Plaintiffs cite five cases that explicitly or implicitly recognize that Rule 68 offers of

judgment are invalid when made only with respect to individual claims (rather than to the

claims of the putative class as a whole) while the issue of class certification is pending.

See Silva v. Nat'l Telewire Corp., 2000 WL 1480269, at *1 (D.N.H. Sept. 22, 2000) □□□□□□

would be inappropriate to compel the plaintiff to settle his individual claim against the

defendant while the issue of class certification is pending.”); see also Greisz v. Household

Bank (Ill.), N.A., 176 F.3d 1012, 1015 (7th Cir. 1999); Ambalu v. Rosenblatt, 194 F.R.D.

451, 453 (E.D.N.Y. 2000); cf. Abrams v. Interco Inc., 719 F.2d 23, 25-26 (2d Cir. 1983)

(discussing plaintiffs’ concern that accepting individual offers of judgment after denial of

class certification might waive issue of class certification for appeal); Caston v. Mr. T’s

Apparel, Inc., 157 F.R.D. 31, 32-33 (S.D. Miss. Aug. 25, 1994) (recognizing that

representatives of a putative class have a fiduciary obligation towards members of the

putative class even where the class has not been officially certified). However, none of

these cases say anything about the propriety of Rule 68 offers of judgment that are made

not only with respect to individual plaintiffs but also to the putative classes they seek to

represent.

Plaintiffs also cite to one case holding that when a Rule 68 offer of judgment is

made after an FLSA collective action is certified but before the deadline has expired for

additional plaintiffs to opt in, that Rule 68 offer is not binding as to plaintiffs who had not

yet opted in at the time the offer was made. See Morales-Arcadio v. Shannon Produce

Farms, 237 F.R.D. 700, 701-02 (S.D. Ga. 2006). But that is not the procedural posture

where we find ourselves in the instant case. Here, the opt-in period had already expired

when PAM made its Rule 68 offer, so there would be no inconsistency with Morales-

Arcadio in holding PAM'’s offer valid with respect to the individual and opt-in Plaintiffs in

this case.

PAM, for its part, cites several cases holding that it is not improper to enforce Rule

68 offers of judgment that are made with respect to an entire putative class (rather than

only to individual plaintiffs). The reasoning provided in these cases is that when an offer

of judgment is made to an entire putative class, any potential conflict between the

mandates of Rules 23 and 68 is eliminated so long as the court certifies a class, provides

notice to its members, and conducts a fairness analysis under Rule 23(e) before

accepting and entering the proposed judgment. See, e.g., Gilmore v. USCB Corp., 323

F.R.D. 433, 436 n.6 (M.D. Ga. 2017); Spice v. Blatt, Hasenmiller, Leibsker & Moore, LLC

2017 WL 4129743, at *2 (N.D. Ind. Sept. 19, 2017); Kaymark v. Uren Law Offices, P.C.,

2017 WL 1136108, at *1 (W.D. Pa. Mar. 27, 2017); Johnson v. U.S. Bank Nat'lAss’n, 276

F.R.D. 330, 334 (D. Minn. 2011); McDowall v. Cogan, 216 F.R.D. 46, 51 (E.D.N.Y. 2003).

This Court agrees with the reasoning of those cases. This Court also agrees with

Professors Wright, Miller, and Marcus that “in class actions the court has an independent

duty under rule 23(e) to decide whether a settlement is acceptable, and Rule 68 cannot

remove that authority and duty.” 12 Charles Alan Wright, Arthur R. Miller, & Richard L.

Marcus, Federal Practice and Procedure § 3005 (3d ed. 2014). In other words, if Plaintiffs

were to accept a Rule 68 offer of judgment from PAM that purports to bind putative class

members, this Court would not enter the agreed-to judgment unless and until it certified

the proposed class(es) and followed the procedures set forth in Rule 23(e) for approval

of class settlement agreements.

So as to the question of whether any putative class members will be bound, unfairly

or otherwise, by a judgment in their absence—they will not be. Similarly, as to the

question of whether putative class members are “opposing parties” for purposes of Rule

68—either they will have become “opposing parties” who are actually-certified class

members that received notice and an opportunity to be heard by the time any class

settlement is approved under Rule 23(e), or otherwise they will not be bound the

judgment. It seems, then, that the real question lurking beneath all of this might be

whether it would be proper for Plaintiffs to be required to pay PAM’s costs under Rule

68(d) if they were ultimately to obtain a judgment that is less favorable than PAM’s pre-

class-certification Rule 68 offer. However, Plaintiffs have not explicitly framed the matter

that way, and no motion for costs is presently before the Court. Thus that issue is not

ripe at this time. But on the issue that /s presently ripe, the Court finds it would not be

appropriate to “strike or otherwise invalidate” PAM’s Rule 68 offer of judgment.

IT IS THEREFORE ORDERED that Plaintiffs’ Motion to Strike or Otherwise

Invalidate Defendants’ Attempted Rule 68 Offer of Judgment (Doc. 65) is DENIED.

IT IS SO ORDERED on this bh day of October, 2018.

0 BROOKS

Ineo DISTRICT JUDGE