Borup v. The CJS Solutions Group, LLC

District Court, D. Minnesota·Decided October 8, 2019·No. 0:18-cv-01647·Unknown

Opinion

UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA

Timothy C. Borup, Case No. 18-cv-1647 (PAM/DTS) Individually and on behalf of all others similarly situated,

Plaintiff, ORDER v.

The CJS Solutions Group, LLC, d/b/a/ The HCI Group,

Defendants. ______________________________________________________________________

INTRODUCTION Plaintiff Timothy C. Borup moves to strike or otherwise invalidate the purported Rule 68 Offer of Judgment Defendant CJS Solutions Group, LLC (“HCI”) made on June 12, 2019. Relying upon authority from this District and from other circuits and districts, Borup argues that—whatever the mechanism used—the Court must invalidate HCI’s offer of judgment as premature in the context of a putative class and collective action. Offering competing authority, HCI contends the Court must wait to decide the issue later, if it has to decide it at all. Although a Rule 68 offer of judgment offered solely to the named plaintiff in a putative class and collective action does not neatly square with the rules governing those types of actions, there is no reason to declare HCI’s offer ineffective as the concern Borup raises does not exist and so will not come to roost. RELEVANT BACKGROUND Borup alleges that HCI misclassified him and other “at the elbow” consultants as independent contractors and accordingly failed to provide appropriate overtime pay. He filed on behalf of himself and a putative FLSA collective, and (2) a violation of the Minnesota Fair Labor Standards Act, filed on behalf of himself and a putative Minnesota class. The case has proceeded at something short of breakneck speed. Stays, the result of both stipulation and the revelation of an undisclosed, related case in the Southern District of New York, as well as discovery issues, have stalled the normal case

progression. On June 12, 2019, HCI served Borup with a Rule 68 Offer of Judgment on his individual claim. The pertinent terms of the Offer provide: That Judgment be entered in Plaintiff’s favor in the above-captioned case for a total sum of ten thousand and twenty five dollars and zero cents ($10,000) [sic], as well as any amount for costs of suit, attorneys’ fees, and any and all other accrued costs that might be recoverable against Defendant in this action, to be determined by the Court. This Offer includes all valid claims for damages that Plaintiff has alleged against Defendant, as well as compensation for costs and reasonable attorneys’ fees accrued up to the date of this Offer (to the extent that (a) reasonable attorneys’ fees are included in “costs” recoverable for certain of Plaintiff’s causes of action; and (b) Plaintiff has incurred any attorneys’ fees).

Decl. of T. Joseph Snodgrass, June 21, 2019, Ex. F, at 1. The Offer further requires that “as a condition of this Offer, Plaintiff agrees to execute a mutually agreeable Settlement Agreement and Release for the purpose of releasing any and all claims against Defendant.” Id. at 1-2. Before the fourteen day period to accept HCI’s Offer of Judgment elapsed, Borup filed the present motion to strike or otherwise invalidate the Offer.1 That period elapsed,

1 In a footnote, HCI demurs that it “has received no assurances that Mr. Borup’s counsel, Mr. Snodgrass, shared HCI’s offer with his client[,]” the “most basic tenant [sic] of settlement conduct[.]” Def.’s Opp. Pl.’s Mot. Strike 1 n. 1, Dkt. No. 106. HCI does not explain why opposing counsel should need to assure it that he is satisfying his ethical duties to his client. Nor will this Court infer misconduct absent even a scintilla of evidence. Mr. Snodgrass has assured the Court that he did in fact convey the offer to his client. July 25, 2019 Hr’g Tr. 5, Dkt. No. 121. If HCI is concerned that Mr. Snodgrass however, before the hearing on the motion took place. Because Borup did not accept the Offer within the fourteen days, it is considered unaccepted and withdrawn. Fed. R. Civ. P. 68(a)-(b). ANALYSIS At least 14 days before trial, a defendant may offer to allow judgment to be

entered against it for a specific amount, including the costs then accrued. Fed. R. Civ. P. 68(a). If the offeree declines, and subsequently obtains a judgment “not more favorable than the unaccepted offer, the offeree must pay the costs incurred after the offer was made.” Id. at 68(c). The “plain purpose of Rule 68 is to encourage settlement and avoid litigation . . . . The Rule prompts both parties to a suit to evaluate the risk and costs of litigation, and to balance them against the likelihood of success upon trial on the merits.” Marek v. Chesny, 473 U.S. 1, 5 (1985). Borup makes several arguments as to why HCI’s purported Rule 68 Offer of Judgment should be stricken or invalidated. But his argument that the Court should do

so now, rather than during a hearing to determine costs, as would be the normal course, rests on a single key premise. If the Court fails to act now, Borup’s theory goes, the Offer will create an intractable conflict between his personal interests and his obligations as a representative of the putative class. This is so because the Offer, exclusive of costs and attorney’s fees, is greater than any personal award he could hope to obtain at a trial on the merits. He now faces significant pressure to settle, lest he bear the burden of all costs incurred subsequent to the Offer, which may outstrip any award in his favor.

has breached a legal or ethical duty, it should raise those concerns in the proper format—and do so “above the line.” HCI disagrees and argues that the matter is not ripe for decision and that the Court lacks the power to grant the relief Borup desires. The Court will not grant Borup’s motion. This is so not because the Court lacks the power to do so or because the matter is unripe. Rather, the sword of Damocles dangling over Borup’s head does not present the disproportionately coercive threat he

claims—or that HCI likely hoped it would. I. The Divided Authority The issue presented by the parties is not new. Almost every federal court to consider a Rule 68 offer of judgment to only the putative representative in the context of a class or collective action has concluded that, although Rule 68 may not directly conflict with either Rule 23 or the FLSA, they cannot be said to exist harmoniously. At the very least, Rule 68 offers seemingly undermine the purpose of class and (to a lesser extent) FLSA collective actions and the unique oversight role that courts have in such cases. Despite this consensus, courts have addressed motions like Borup’s very

differently. These courts and their approaches may be categorized into three “camps.” Gilmore v. USCB Corp., 323 F.R.D. 433, 434 (M.D. Ga. 2017); Jack Starcher, Note, Addressing What Isn’t There: How District Courts Manage the Threat of Rule 68’s Cost- Shifting Provision in the Context of Class Actions, 114 Colum. L. Rev. 129, 131 (2014). The first camp grants the motion to strike a Rule 68 offer of judgment served upon a putative class representative before certification. This is the approach most frequently followed in this District. See, e.g., Johnson v. U.S. Bank Nat’l Ass’n, 276 F.R.D. 330 (D. Minn. 2011); Portz v. St. Cloud State Univ., Civ. No. 16-1115 (JRT/LIB), 2017 WL 450548 (Apr. 19, 2017), R&R adopted by 2017 WL 3588757 (D. Minn. Aug. 20, 2017); Lamberson v. Fin. Crimes Serv., LLC, Civ. No. 11-98 (RHK/JJG), 2011 WL 1990450 (D. Minn. Apr.

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