PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
MA’LISSA SIMMONS, on behalf of
themselves and all others similarly
situated; MONTERRUS MARSHALL, on
behalf of themselves and all others
similarly situated; YOLANDA
CARRAWAY, on behalf of
themselves and all others similarly
situated; DELANA PRUITT, on behalf
of themselves and all others
similarly situated,
Plaintiffs-Appellants,
v.
No. 09-2147
UNITED MORTGAGE AND LOAN
INVESTMENT, LLC; ARTHUR E.
KECHIJIAN; LARRY E. AUSTIN;
AUSTIN INVESTMENTS, L.P.;
KECHIJIAN INVESTMENTS, L.P.;
UMLIC CONSOLIDATED, INC.;
UMLIC-SEVEN CORPORATION;
UMLIC HOLDINGS, LLC; UNITED
MORTGAGE HOLDINGS, LLC; UNITED
MORTGAGE LOAN AND INVESTMENT,
LLC,
Defendants-Appellees.
Appeal from the United States District Court
for the Western District of North Carolina, at Charlotte.
Graham C. Mullen, Senior District Judge.
(3:07-cv-00496-GCM)
2 SIMMONS v. UNITED MORTGAGE AND LOAN
Argued: October 27, 2010
Decided: January 21, 2011
Before MOTZ and KEENAN, Circuit Judges, and
HAMILTON, Senior Circuit Judge.
Affirmed in part; vacated and remanded in part by published
opinion. Senior Judge Hamilton wrote the opinion, in which
Judge Motz and Judge Keenan joined.
COUNSEL
ARGUED: Narendra K. Ghosh, PATTERSON HARKAVY,
LLP, Chapel Hill, North Carolina, for Appellants. Kevin V.
Parsons, SMITH, PARSONS & VICKSTROM, PLLC, Char-
lotte, North Carolina, for Appellees. ON BRIEF: Ann E.
Groninger, PATTERSON HARKAVY, LLP, Charlotte, North
Carolina; Burton Craige, PATTERSON HARKAVY, LLP,
Raleigh, North Carolina, for Appellants. Aaron M. Christen-
sen, SMITH AND CHRISTENSEN, LLP, Charlotte, North
Carolina, for Appellees.
OPINION
HAMILTON, Senior Circuit Judge:
The primary question presented in this appeal is whether
the district court erred in holding that the contents of a partic-
ular letter from defense counsel to counsel for the plaintiffs,
as clarified by a follow-up letter from defense counsel thirteen
days later, rendered moot the plaintiffs’ claims for unpaid
overtime wages in a collective action under the Fair Labor
SIMMONS v. UNITED MORTGAGE AND LOAN 3
Standards Act (FLSA), 29 U.S.C. §§ 201-219, such that a live
case or controversy no longer existed with respect to such
claims, requiring their dismissal for lack of subject matter
jurisdiction. We answer this question in the affirmative, and
therefore, vacate the district court’s dismissal of the plaintiffs’
FLSA claims and remand for further proceedings consistent
with this opinion.
I
Defendant United Mortgage and Loan Investment, LLC
(United Mortgage), headquartered in Charlotte, North Caro-
lina, is in the business of buying and servicing distressed
mortgages, business loans, and consumer loans. Defendants
Arthur Kechijian and Larry Austin are both corporate officers
of United Mortgage. At various times, United Mortgage
employed Ma’lissa Simmons, Monterrus Marshall, Yolanda
Carraway, and Delana Pruitt (the Named Plaintiffs) as Junior
Asset Managers.
As a general rule, the FLSA prohibits an employer from
requiring "any of his employees" to work more than forty
hours per workweek unless the employee receives overtime
compensation "at a rate not less than one and one-half times
the regular rate at which he is employed." 29 U.S.C.
§ 207(a)(1). However, "any employee employed in a bona
fide executive, administrative, or professional capacity . . . (as
such terms are defined and delimited from time to time by
regulations of the Secretary [of Labor] . . .)," is exempt from
this general rule. Id. at § 213(a)(1). "An employer bears the
burden of proving that a particular employee’s job falls within
[this] exemption." Darveau v. Detecon, Inc., 515 F.3d 334,
337 (4th Cir. 2008). An employer who violates the FLSA’s
overtime provision is "liable to the employee or employees
affected in the amount of their . . . unpaid overtime compensa-
tion . . . and in an additional equal amount as liquidated dam-
ages . . . ." 29 U.S.C. § 216(b).
4 SIMMONS v. UNITED MORTGAGE AND LOAN
On October 17, 2007, the Named Plaintiffs filed their initial
complaint (the Complaint) in North Carolina state court
against United Mortgage, Arthur Kechijian, and Larry Austin
(the Original Defendants). The Complaint alleged the Original
Defendants: (1) paid their Junior Asset Managers as "salaried
‘exempt’ employees,"; (2) routinely required Junior Asset
Managers to work in excess of forty hours per week; (3) "re-
fused to pay them for hours worked in excess of 40 hours per
week,"; (4) in August 2004, began requiring Junior Asset
Managers to fill out time cards documenting the hours they
had worked; and (5) following an investigation by the United
States Department of Labor in 2006, instructed Junior Asset
Managers to stop filling out the time cards. (J.A. 24). Under
the heading "FIRST CLAIM FOR RELIEF," the Complaint
alleged "[t]he position of Junior Asset Manager does not meet
the standards for exemption under the FLSA, 29 U.S.C.
§ 213(a)(1)" and alleged the Original Defendants violated the
FLSA by willfully: (1) failing to pay the Named Plaintiffs and
other similarly situated employees overtime wages for hours
worked in excess of forty hours per week; (2) regularly and
routinely requiring the Named Plaintiffs and other similarly
situated employees to work off the clock; (3) failing to make,
keep, and preserve accurate time records sufficient to deter-
mine the wages and hours of the Named Plaintiffs and other
similarly situated employees; and (4) other practices. Addi-
tionally, the Complaint alleged that the Original Defendants
were "employer[s]," within the meaning and definition of the
FLSA, 29 U.S.C. § 203(d), and that the Named Plaintiffs were
"employee[s]" of the Original Defendants, within the meaning
and definition of the FLSA, id. at § 203(e).
The Named Plaintiffs brought this portion of the case as an
opt-in collective action, pursuant to 29 U.S.C. § 216(b), on
behalf of themselves and "on behalf of all persons . . . who
were, are, or will be employed by United Mortgage in the
position of Junior Asset Manager on or after the date that is
three years before the filing of this complaint." (J.A. 20). Spe-
cifically, 29 U.S.C. § 216(b) provides that an FLSA action for
SIMMONS v. UNITED MORTGAGE AND LOAN 5
overtime compensation "may be maintained against any
employer . . . in any Federal or State court of competent juris-
diction by any one or more employees for and in behalf of
himself or themselves and other employees similarly situ-
ated." Id. However, unlike in a class action filed pursuant to
Federal Rule of Civil Procedure 23 or a comparable state
court rule, in a collective action under the FLSA, a named
plaintiff represents only himself until a similarly-situated
employee opts in as a "party plaintiff" by giving "his consent
in writing to become such a party and such consent is filed in
the court in which such action is brought." Id. See Sandoz v.
Cingular Wireless, LLC, 553 F.3d 913, 919 (5th Cir. 2008)
("[U]nlike in a Rule 23 class action, in a FLSA collective
action the plaintiff represents only him- or herself until
similarly-situated employees opt in."). Also notable is the fact
that, in an action to recover unpaid overtime and liquidated
damages under the FLSA, "[t]he court in such action shall, in
addition to any judgment awarded to the plaintiff or plaintiffs,
allow a reasonable attorney’s fee to be paid by the defendant,
and costs of the action." 29 U.S.C. § 216(b).
As relief, the Named Plaintiffs sought, on behalf of them-
selves and any opt-in collective action plaintiffs, "the amount
of their respective unpaid wages and overtime compensation,
and liquidated damages, as provided by the FLSA, 29 U.S.C.
§ 216(b); injunctive relief requiring defendants to cease and
desist from their violations of the FLSA described herein and
to comply with the FLSA; and such other legal and equitable
relief as the Court deems just and proper." (J.A. 27). Addi-
tionally, the Named Plaintiffs sought to recover, on behalf of
themselves and the opt-in collective action plaintiffs, "their
attorneys’ fees and the costs, as provided by the FLSA, 29
U.S.C. § 216(b)." Id.
Based upon the same set of facts underlying the Named
Plaintiffs’ FLSA claims, under the heading "SECOND
CLAIM FOR RELIEF," the Complaint alleged the Original
Defendants violated various provisions of the North Carolina
6 SIMMONS v. UNITED MORTGAGE AND LOAN
Wage and Hour Act (NCWHA), N.C. Gen. Stat. § 95-25.1 et
seq. Pursuant to Rule 23 of the North Carolina Rules of Civil
Procedure, this part of the case was styled as a purported class
action in which the Named Plaintiffs sought to represent a
class of "all persons . . . who were, are, or will be employed
by United Mortgage in the position of Junior Asset Manager
on or after the date that is two years before the filing of this
complaint (the ‘NCWHA Class Period’)."1 (J.A. 21). The
Complaint specifically alleged the Original Defendants will-
fully violated the NCWHA by: (1) failing to pay the Named
Plaintiffs and other members of the NCWHA Class their
earned wages for all hours worked; (2) by failing to pay the
same persons overtime pay; (3) by failing to make, keep, and
preserve accurate time records sufficient to determine their
wages and hours; (4) by failing to provide them lawful notice
of company policies and practices concerning compensation
or notice of any changes in such policies and practices; and
(5) by other practices. With respect to relief, the Named Plain-
tiffs sought to recover, on behalf of themselves and the other
members of the NCWHA Class, "damages in the amount of
their unpaid earned compensation, plus liquidated damages,
as provided by the NCWHA, N.C. GEN. STAT. § 95-25.22."
(J.A. 28). Recovery of attorneys’ fees and costs, as provided
by the NCWHA, were also sought.
The Original Defendants timely removed the case to the
United States District Court for the Western District of North
Carolina. After removal, on November 26, 2007, the Original
Defendants moved to dismiss the NCWHA claims, pursuant
to Federal Rule of Civil Procedure 12(b)(6), on the ground
that the Complaint alleged that all overtime claims are cov-
ered by the FLSA, but failed to allege that any plaintiff
worked unpaid overtime during the brief window of time
when "the applicable minimum wage under the Fair Labor
1
For ease of reference, we will refer to the class of persons just
described as "the NCWHA Class."
SIMMONS v. UNITED MORTGAGE AND LOAN 7
Standards Act [was] less than the minimum wage provided
. . ." under North Carolina law. N.C. Gen. Stat. § 95-
25.14(a)(1)(b). According to the Original Defendants, under
North Carolina General Statute § 95-25.14(a)(1) and all cases
involving claims for unpaid overtime interpreting that statute,
they are exempted from liability for unpaid overtime under
the NCWHA, because the Named Plaintiffs and the other
members of the NCWHA Class are covered by the FLSA.
The Original Defendants’ Rule 12(b)(6) motion also sought
dismissal of the Complaint to the extent it sought recovery for
violations of the record keeping and notice requirements of
the FLSA and the NCWHA, on the ground that neither statute
provided a private cause of action for such violations.
On December 19, 2007, the parties held a conference pur-
suant to Federal Rule of Civil Procedure 26(f). See Fed. R.
Civ. P. 26(f) (requiring, inter alia, that at least 21 days before
a scheduling conference is to be held or a scheduling order is
due under Federal Rule of Civil Procedure 16(b), the parties
must confer to consider "the possibilities for promptly settling
or resolving the case . . ."). An exchange of e-mails between
opposing counsel then took place over the next couple of
weeks. The e-mails show that the Original Defendants
requested a settlement demand from the Named Plaintiffs; the
Named Plaintiffs agreed to work on preparing such a demand;
and the Named Plaintiffs requested the Original Defendants to
produce documentation reflecting the hours worked and wage
information for each of the Named Plaintiffs in order to aid
in preparation of such demand. On January 18, 2008, the
Original Defendants produced time sheets for the period of
April 4, 2004, through May 19, 2006, with respect to Named
Plaintiffs Ma’lissa Simmons, Monterrus Marshall, and
Yolanda Carraway. However, the Original Defendants pro-
duced no such time sheets for Named Plaintiff Delana Pruitt
nor wage information for any of the Named Plaintiffs.
Between January 28, 2008, and March 20, 2008, the
Named Plaintiffs filed notices that a total of six persons had
8 SIMMONS v. UNITED MORTGAGE AND LOAN
consented to be opt-in plaintiffs in their collective action
under the FLSA.2 On March 26, 2008, the Named Plaintiffs
filed an amended complaint (the Amended Complaint). The
Amended Complaint named seven additional defendants,3
asserting each was an employer within the meaning and defi-
nition of the FLSA and the NCWHA, and deleted claims for
injunctive and other remedial relief. Otherwise, the Amended
Complaint was substantially identical in substance to the
Complaint.
In response, on April 15, 2008, the Original Defendants and
the newly named defendants (collectively the Defendants)
moved to dismiss the Amended Complaint, pursuant to Fed-
eral Rule of Civil Procedure 12(b)(6), upon substantially the
same grounds as the first motion to dismiss. The Named
Plaintiffs then filed notices that three more persons had con-
sented to be opt-in plaintiffs in their collective action under
the FLSA, bringing the total of opt-in plaintiffs to nine by
May 6, 2008.4 For ease of reference, we will refer to all nine
as "the Opt-in Plaintiffs."
Of significant relevance to the issues on appeal, counsel for
the Defendants sent (via electronic mail, United States mail,
and facsimile) a letter dated May 16, 2008, to counsel for the
2
Such persons were Vance Williams, Marlena Brooks, Lisa Samuels,
Donald Barnes, Anthony Papas, and William Kelly. The Named Plaintiffs
also filed an opt-in consent form with respect to each of these persons. See
29 U.S.C. § 216(b) ("No employee shall be a party plaintiff to [a collective
action under the FLSA] unless he gives his consent in writing to become
such a party and such consent is filed in the court in which such action is
brought.").
3
The seven new defendants were Austin Investments, LP, Kechijian
Investments, LP, UMLIC Consolidated, Inc., UMLIC Holdings, LLC,
UMLIC-Seven Corp., United Mortgage Holdings, LLC, and United Mort-
gage Loan and Investment, LLC.
4
Such persons were Kathy Raymer, Andre Moser, and John Mays, Jr.
The Named Plaintiffs also filed an opt-in consent form with respect to
each of these persons.
SIMMONS v. UNITED MORTGAGE AND LOAN 9
Named Plaintiffs. In the first sentence, counsel for the Defen-
dants stated that he was "writ[ing] for the purpose of resolv-
ing this case for all parties." (J.A. 158). In the second
sentence, he reported that his clients had authorized him,
"without admitting legal liability or fault, to offer each opt-in
plaintiff full relief in this case." Id. No specific mention was
made regarding the Named Plaintiffs or an offer of judgment.
The balance of the letter stated as follows:
Each opt-in plaintiff will be compensated fully upon
receipt of an affidavit stating the dates on which
overtime was worked, the total hours they worked
each week of their employment up to the date of
their termination, the total amount of back pay they
claim is owed to them, and a statement explaining
how the calculation of overtime amounts claimed
was done. My clients will also pay taxable costs and
reasonable attorney’s fees supported by time records
properly describing the work done and the hours rea-
sonably worked which can be either agreed upon by
the parties or submitted to the Court for resolution.
This offer requires that the parties enter a settle-
ment agreement specifying that all claims will be
waived and released, this action will be dismissed
with prejudice, the settlement will be kept confiden-
tial and there will be no admission of liability or dis-
closure of the settlement terms. I will provide you
with the information my client has that is necessary
to prepare the affidavits.
This offer of full relief moots this case since there
no longer remains any active case or controversy
between the parties. This offer remains open for five
days after receipt on May 23, 2008. Thereafter, if
this offer is not accepted, I will file a motion to dis-
miss the case as moot.
10 SIMMONS v. UNITED MORTGAGE AND LOAN
Id.
On May 21, 2008, the Named Plaintiffs moved for condi-
tional collective action certification of their FLSA claims,
pursuant to 29 U.S.C. § 216(b). As part of such motion, the
Named Plaintiffs sought court-facilitated notice to other
potential collective action members and an order that the
Defendants "disclose the names, addresses, email addresses,
telephone numbers and Social Security numbers of all poten-
tial collective action members." (J.A. 98). From here forward,
we will refer to the Named Plaintiffs and the Opt-in Plaintiffs
collectively as "the Plaintiffs."
In a letter dated May 29, 2008, responding to a May 23,
2008 letter by counsel for the Plaintiffs, counsel for the
Defendants stated that the offer of settlement in the May 16,
2008 letter included liquidated damages and pertained to the
Named Plaintiffs as well as all of the Opt-in Plaintiffs. Also
on May 29, 2008, pursuant to Federal Rule of Civil Procedure
12(b)(1), Defendants moved to dismiss the entire case for lack
of subject matter jurisdiction. According to the Defendants,
the district court no longer possessed subject matter jurisdic-
tion, because they "ha[d] offered to satisfy Plaintiffs’ claims
in their entirety," leaving no "live case or controversy requir-
ing litigation." (J.A. 123).
The next day, on May 30, 2008, the district court granted
Defendants’ motion to dismiss the NCWHA claims in the
Amended Complaint for failure to state a claim upon which
relief can be granted, pursuant to Federal Rule of Civil Proce-
dure 12(b)(6). Based upon the plain language of the NCWHA,
the district court determined that the NCWHA does not apply
to litigants who "also seek liability under the FLSA." (J.A.
135). The district court determined that North Carolina’s
minimum wage was not higher than the federal minimum
wage during any time when three of the Named Plaintiffs or
any of the Opt-in Plaintiffs were employed by United Mortgage.5
5
The Plaintiffs do not dispute this determination on appeal.
SIMMONS v. UNITED MORTGAGE AND LOAN 11
Moreover, the district court determined that, while United
Mortgage employed Named Plaintiff Delana Pruitt during
January 2007, when North Carolina’s minimum wage was
higher than the federal minimum wage, the Amended Com-
plaint did not allege that she actually worked any overtime
during that month.
On June 2, 2008, the Plaintiffs moved to amend/correct
their motion for conditional certification of the FLSA collec-
tive action and for court-facilitated notice to potential collec-
tive action members to report that, in accordance with Local
Rule 7.1(A), counsel for the Plaintiffs had conferred with
counsel for the Defendants regarding the motion, but that
Defendants refused to consent to the motion.
On June 9, 2008, Plaintiffs moved for reconsideration of
the district court’s order dismissing their NCWHA claims
and, in the alternative, sought leave to file a second amended
complaint which sought to include William Kelly, Andre
Moser, and Marlena Brooks as named plaintiffs and contained
a more specific allegation regarding Named Plaintiff Delana
Pruitt’s employment. The district court subsequently denied
this motion in toto.
On September 14, 2009, the district court granted Defen-
dants’ motion to dismiss the Plaintiffs’ FLSA claims for lack
of subject matter jurisdiction. In this regard, the district court
determined that "Defendants[’] offer of judgment to all Plain-
tiffs and would-be opt-in Plaintiffs was for full relief, includ-
ing attorney’s fees and taxable costs," (J.A. 225-26), and that
"[c]oncern over the Defendants’ ability to ‘pick-off’ Plaintiffs
has been allayed by the blanket nature of the offer of judg-
ment. Both the actual Plaintiffs and would-be Plaintiffs have
been offered relief in whole." (J.A. 226). The district court
also denied the Plaintiffs’ motion for conditional certification
of the FLSA collective action and for court-facilitated notice
to potential collective action members on the ground that the
Plaintiffs’ FLSA claims were moot prior to the Plaintiffs fil-
12 SIMMONS v. UNITED MORTGAGE AND LOAN
ing such motion, and therefore, it no longer possessed subject
matter jurisdiction to certify the collective action. Apparently
relying upon the same reasoning, the district court also
refused to allow the motion to be amended.
This timely appeal followed. On appeal, the Plaintiffs chal-
lenge the Rule 12(b)(1) dismissal of their FLSA claims and
the Rule 12(b)(6) dismissal of their NCWHA claims.
II
The primary question presented in this appeal is whether
the district court erred in holding that the contents of the letter
dated May 16, 2008, from the Defendants’ counsel to the
Plaintiffs’ counsel, as clarified by a follow-up letter from the
Defendants’ counsel thirteen days later, rendered the Plain-
tiffs’ FLSA claims moot, such that a live case or controversy
no longer existed with respect to such claims, thus requiring
their dismissal for lack of subject matter jurisdiction. We
review a district court’s dismissal for lack of subject matter
jurisdiction de novo. Pitt County v. Hotels.com, L.P., 553 F.3d
308, 311 (4th Cir. 2009). Moreover, "[w]e review a district
court’s jurisdictional findings of fact on any issues that are not
intertwined with the facts central to the merits of the plain-
tiff’s claims under the clearly erroneous standard of review
. . . ." U.S. ex rel. Vuyyuru v. Jadhav, 555 F.3d 337, 347-48
(4th Cir. 2009). See also Matter of Block Shim Dev.
Company-Irving, 939 F.2d 289, 291 (5th Cir. 1991) (in appel-
late review of dismissal of case as moot, review of factual
findings is under clearly erroneous standard in light of the
entire record as a whole). "A finding is ‘clearly erroneous’
when although there is evidence to support it, the reviewing
court on the entire evidence is left with the definite and firm
conviction that a mistake has been committed." United States
v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948).
At the heart of the question presented is the doctrine of
mootness. "[T]he doctrine of mootness constitutes a part of
SIMMONS v. UNITED MORTGAGE AND LOAN 13
the constitutional limits of federal court jurisdiction . . . . [A]
case is moot when the issues presented are no longer ‘live’ or
the parties lack a legally cognizable interest in the outcome."
United States v. Hardy, 545 F.3d 280, 283 (4th Cir. 2008)
(internal quotation marks and citations omitted). See also Iron
Arrow Honor Soc’y v. Heckler, 464 U.S. 67, 70 (1983)
("Federal courts lack jurisdiction to decide moot cases
because their constitutional authority extends only to actual
cases or controversies."). "Mootness has been described as
‘the doctrine of standing set in a time frame: The requisite
personal interest that must exist at the commencement of the
litigation (standing) must continue throughout its existence
(mootness).’" Arizonans for Official English v. Arizona, 520
U.S. 43, 68 n.22 (1997) (quoting U.S. Parole Comm’n v.
Geraghty, 445 U.S. 388, 397 (1980)).
"A case can become moot either due to a change in factual
circumstances, or due to a change in the law." BankWest, Inc.,
v. Baker, 446 F.3d 1358, 1364 (11th Cir. 2006) (alteration
marks, internal quotation marks, and ellipses omitted). See
also Ross v. Reed, 719 F.2d 689, 693-694 (4th Cir. 1983) ("If
intervening factual or legal events effectively dispel the case
or controversy during pendency of the suit, the federal courts
are powerless to decide the questions presented."). "Generally
speaking, one such [factual] circumstance mooting a claim
arises when the claimant receives the relief he or she sought
to obtain through the claim." Friedman’s, Inc. v. Dunlap, 290
F.3d 191, 197 (4th Cir. 2002). Here, the district court held that
the Plaintiffs’ FLSA claims became moot due to a change in
factual circumstances. According to the district court, such
change occurred when, "[o]n May 16, 2008, Defendants sent
the Plaintiffs an offer of judgment providing for full relief for
all parties, including attorney’s fees and taxable costs—the
offer was also open to the would-be opt-in Plaintiffs." (J.A.
224) (emphasis added). Ultimately, the district court held "the
Defendants[’] May 16, 2008 offer of judgment mooted the
action, depriving this Court of subject matter jurisdiction;
14 SIMMONS v. UNITED MORTGAGE AND LOAN
therefore, this case is dismissed." (J.A. 225) (emphasis
added).
The Plaintiffs make several arguments challenging this
holding. Chief among them is that the contents of the May 16,
2008 letter did not comply with Federal Rule of Civil Proce-
dure 68, which rule provided, at all times relevant to this
action, that:
More than 10 days before the trial begins, a party
defending against a claim may serve on an opposing
party an offer to allow judgment on specified terms,
with the costs then accrued. If, within 10 days after
being served, the opposing party serves written
notice accepting the offer, either party may then file
the offer and notice of acceptance, plus proof of ser-
vice. The clerk must then enter judgment.
Fed. R. Civ. P. 68 (2008) (emphasis added).6 The balance of
Rule 68 provides that, in the event the plaintiff refuses the
offer of judgment and then ultimately recovers less at trial
than the offer amount, the plaintiff must pay the litigation
costs incurred by the defendant from the time of the offer of
judgment. Id. "The plain purpose of Rule 68 is to encourage
settlement and avoid litigation." Marek v. Chesny, 473 U.S. 1,
5 (1985). In furtherance of this purpose, an offer of judgment
made pursuant to Rule 68 must specify a definite sum or other
relief for which judgment may be entered and must be uncon-
ditional. 12 Charles Alan Wright, Arthur R. Miller, & Richard
L. Marcus, Federal Practice and Procedure § 3002, p. 92 (2d
ed. 1997). This is because the plaintiff must know unequivo-
6
Federal Rule of Civil Procedure 68(a), as amended effective December
1, 2009, provides that at least fourteen days before the date set for trial,
a party defending against a claim may serve on an opposing party an offer
to allow judgment on specified terms with the costs then accrued. Neither
version of Rule 68 requires an admission of liability by the defendant. 1A
Fed. Proc. § 51:29 (L. Ed., current through Sept. 2010).
SIMMONS v. UNITED MORTGAGE AND LOAN 15
cally what is being offered in order to be responsible for
refusing such offer. Arkla Energy Res. v. Roye Realty &
Developing, Inc., 9 F.3d 855, 867 (10th Cir. 1993).
Even when considering the clarifications made by the May
29, 2008 letter to the effect that the Defendants’ May 16,
2008 offer included liquidated damages under the FLSA and
pertained to the Named Plaintiffs as well as the Opt-in Plain-
tiffs, we agree with the Plaintiffs that the May 16, 2008 letter
did not constitute a Rule 68 offer of judgment. First, the May
16, 2008 letter provided for a five day window to accept the
Defendants’ offer rather than a ten day window as provided
by the applicable version of Rule 68. Second, rather than
making an unconditional offer of judgment on specified
terms, the letter conditioned the offer upon the Plaintiffs sub-
mitting affidavits stating "the dates on which overtime was
worked, the total hours they worked each week of their
employment up to the date of their termination, the total
amount of back pay they claim is owed to to them, and a
statement explaining how the calculation of overtime amounts
claimed was done." (J.A. 201). Third, rather than offer to have
judgment entered against them as the district court found, the
plain language of the letter offered only that the Defendants
would "enter a settlement agreement specifying that all claims
will be waived and released . . . ." Id. The district court’s find-
ing that the May 16, 2008 letter offered for judgment to be
entered against the Defendants was clearly erroneous. Fourth,
in contrast to the public nature of an unsealed judgment
entered pursuant to Rule 68, the May 16, 2008 letter required
the Plaintiffs to keep the fact of settlement and the terms of
the settlement confidential. See McCauley v. Trans Union,
402 F.3d 340, 342 (2d Cir. 2005) (plaintiff is not obligated to
accept a Rule 68 offer of judgment conditioned on settlement
being kept confidential and judgment under seal; party
engaged in litigation is not entitled to confidentiality); 12
Charles Alan Wright, Arthur R. Miller, & Richard L. Marcus,
Federal Practice and Procedure § 3002 (2d ed. Supp. 2010)
(offer of judgment requiring confidential settlement rather
16 SIMMONS v. UNITED MORTGAGE AND LOAN
than court judgment seeks something not authorized by Rule
68).
While we agree with the Plaintiffs that the May 16, 2008
letter, as clarified by the May 29, 2008 letter, did not consti-
tute a Rule 68 offer of judgment, such agreement does not
mean an automatic win for the Plaintiffs. This is because the
doctrine of mootness is constitutional in nature, and therefore,
not constrained by the formalities of Rule 68. Nonetheless, for
several reasons, we hold the Defendants’ settlement offer, as
set forth in the May 16, 2008 letter and as clarified by the
May 29, 2008 letter, did not render moot the Plaintiffs’ FLSA
claims for overtime wages. The first reason is that the offer
for "full relief in this case" did not offer for judgment to be
entered against the Defendants, but rather only offered for the
parties to enter into a settlement agreement. Had the Plaintiffs
been allowed to litigate fully their FLSA claims and had they
fully prevailed on such claims, the district court would have
entered a judgment against the Defendants for full relief with
respect to those claims. From the view of the Plaintiffs, a
judgment in their favor is far preferable to a contractual prom-
ise by the Defendants in a settlement agreement to pay the
same amount. This is because district courts have inherent
power to compel defendants to satisfy judgments entered
against them, Spallone v. U.S., 493 U.S. 265, 276 (1990);
Grissom v. The Mills Corp., 549 F.3d 313, 319 (4th Cir.
2008), but lack the power to enforce the terms of a settlement
agreement absent jurisdiction over a breach of contract action
for failure to comply with the settlement agreement. As ably
explained in the well respected treatise Federal Practice and
Procedure:
Settlements often do not involve the entry of a
judgment against the defendant, as compared to a
judgment of dismissal, so that from the plaintiff’s
perspective the willingness of the defendant to allow
judgment to be entered has substantial importance
since judgments are enforceable under the power of
SIMMONS v. UNITED MORTGAGE AND LOAN 17
the court. Indeed, should a settlement not embodied
in a judgment come unraveled, the court may be
without jurisdiction to proceed in the case, which
often becomes a breach of contract action for failure
to comply with the settlement agreement. Even if the
court retains jurisdiction, plaintiff is left to litigate a
breach of contract action or, perhaps, to continue liti-
gating the claims sought to be settled.
12 Charles Alan Wright, Arthur R. Miller, & Richard L. Mar-
cus, Federal Practice and Procedure § 3002, p. 90 (2d ed.
1997) (footnote omitted).
Given the fact that, from a plaintiff’s perspective, a judg-
ment entered by a court in his favor carries a substantial
advantage over the same amount of recovery via a defen-
dant’s contractual promise to pay the same amount embodied
in a settlement agreement, we are not surprised that the case
to which the Defendants point us as the circuit precedent man-
dating that the district court dismiss the Plaintiffs’ FLSA
claims as moot involved an offer of judgment. The case is
Zimmerman v. Bell, 800 F.2d 386 (4th Cir. 1986). Of rele-
vance here, in Zimmerman, a plaintiff, alleging securities
fraud, filed a class action against the directors of the defen-
dant corporation on behalf of herself and other shareholders
of that corporation. Id. at 387-88. The district court denied the
plaintiff’s motion for class certification. Id. at 388. The direc-
tors then offered judgment to the plaintiff "in the amount of
$3,281.25 plus costs, the maximum amount of damages
claimed by [the plaintiff] individually in her answers to inter-
rogatories." Id. The plaintiff rejected the offer. Id. The direc-
tors then moved to dismiss the plaintiff’s individual claims for
lack of a live case or controversy. Id. The district court
granted the motion, and the plaintiff appealed. Id. On appeal,
we affirmed the district court’s dismissal. Id. After recogniz-
ing the plaintiff sought "relief from the dismissal of her indi-
vidual claims after defendants offered judgment," we held:
18 SIMMONS v. UNITED MORTGAGE AND LOAN
Since class certification had been denied, and defen-
dants had offered [the plaintiff] the full amount of
damages ($3,281.25) to which she claimed individu-
ally to be entitled, there was no longer any case or
controversy. See Abrams v. Interco, Inc., 719 F.2d
23 (2d Cir. 1983). [The plaintiff’s] personal stake in
the outcome had disappeared, and federal courts do
not sit simply to bestow vindication in a vacuum.
Id. at 390 (emphasis added). Notably, the Abrams case cited
in support of our disposition also involved an offer of judg-
ment. Abrams, 719 F.2d at 25. In sum, the failure of the
Defendants to make their attempted offer for full relief in the
form of an offer of judgment prevented the mooting of the
Plaintiffs’ FLSA claims.
The second reason the May 16, 2008 letter did not render
the Plaintiffs’ FLSA claims moot is the conditional nature of
the offer. As previously noted, rather than making an uncon-
ditional offer of judgment on specified terms, the letter condi-
tioned the offer upon the Plaintiffs submitting affidavits
stating "the dates on which overtime was worked, the total
hours they worked each week of their employment up to the
date of their termination, the total amount of back pay they
claim is owed to them, and a statement explaining how the
calculation of overtime amounts claimed was done." (J.A.
201). Moreover, the offer stated that the Defendants would
provide the Plaintiffs the information the Defendants pos-
sessed "that is necessary to prepare the affidavits." Id. These
conditions to be fulfilled by the Plaintiffs as well as the
Defendants’ offer to provide unspecified information raised
many unanswered questions, which made the offer ambigu-
ous, and thus ineffective at mooting the Plaintiffs’ FLSA
claims. What if the hours and dates of overtime claimed by
the Plaintiffs did not match with whatever records were to be
provided by the Defendants?7 And, what if the Defendants did
7
Remember, at this point, the only employment records the Defendants
had turned over to the Plaintiffs were time sheets for the period of April
4, 2004, through May 19, 2006, for Named Plaintiffs Ma’lissa Simmons,
Monterrus Marshall, and Yolanda Carraway.
SIMMONS v. UNITED MORTGAGE AND LOAN 19
not believe that the Plaintiffs had sufficiently explained how
the calculation of overtime amounts claimed was done? The
May 16, 2008 letter, even as clarified by the May 29, 2008
letter, left these questions unanswered. In defense of the
vagaries inherent in their offer of settlement, the Defendants
complain that they had no choice but to present their offer in
this manner because the Plaintiffs had failed to make a settle-
ment demand as the Defendants had requested early in the
case. Unfortunately for the Defendants, such complaint mat-
ters not to a mootness inquiry. Indeed, the fact that, at the
time of the May 16, 2008 letter, the parties had yet to agree
upon the scope of the Plaintiffs’ alleged damages under the
FLSA, supports the conclusion that the Plaintiffs’ FLSA
claims were not moot. In other words, the parties still had
work to do in order to figure out what amounts the Plaintiffs
were allegedly owed under the FLSA. In sum, although the
May 16, 2008 letter, as clarified by the May 29, 2008 letter,
claimed to be offering the Plaintiffs "full relief in this case,"
the conditional nature of the offer rendered the offer vague,
and therefore, ineffective in mooting the Plaintiffs’ FLSA
claims.8 Cf. Basha v. Mitsubishi Motor Credit of America,
Inc., 336 F.3d 451, 454-55 (5th Cir. 2003) (describing as
vague offer of judgment in suit under Fair Debt Collection
8
We note that the absence of an amount certain with respect to the
Plaintiffs’ attorneys’ fees in the May 16, 2008 letter does not, in any man-
ner, contribute to our holding that such letter offered the Plaintiffs less
than full relief. This is because, when as here, the defendants have offered
to pay the plaintiffs their reasonable attorney’s fees as determined by the
district court, the plaintiffs have been offered full relief in regard to attor-
neys’ fees under the FLSA. 29 U.S.C. § 216(b) (providing that, in an
action for violation of the FLSA’s overtime provision, the court "shall, in
addition to any judgment awarded to the plaintiff or plaintiffs, allow a rea-
sonable attorney’s fee to be paid by the defendant . . ."); see O’Brien v.
Ed Donnelly Enters., Inc., 575 F.3d 567, 575 (6th Cir. 2009) (affirming
Rule 12(b)(1) dismissal of FLSA claims as moot based upon offer of judg-
ment, because "Defendants’ offer to pay the reasonable attorneys’ fee as
determined by the court is consonant with the statutory language which
requires that the court ‘allow’ the reasonable fee when it awards a judg-
ment to a FLSA plaintiff").
20 SIMMONS v. UNITED MORTGAGE AND LOAN
Practices Act, which offer of judgment agreed to pay statutory
damages but left amount of additional actual damages to later
agreement by attorneys as to reasonable compensation for
plaintiff’s claimed actual damages, and holding such offer of
judgment was invalid under Rule 68 for failure to properly
quantify damages); Clark v. Sims, 28 F.3d 420, 424 (4th Cir.
1994) (adhering to "principle that mere settlement negotia-
tions may not be given the effect of a formal offer of judg-
ment"); Arkla Energy Resources, 9 F.3d at 867 (10th Cir.
1993) (defendant cannot invoke Rule 68 with ambiguous offer
of judgment).
The third and final reason the May 16, 2008 letter, as clari-
fied by the May 29, 2008 letter, did not render the Plaintiffs’
FLSA claims moot is the requirement of confidentiality. If the
Plaintiffs fully litigated and prevailed on their FLSA claims
in the district court, they would be entitled to an unsealed
judgment in their favor, without obligation on their part to
keep the fact of such judgment confidential. Therefore, the
Defendants’ offer of settlement’s requirement that the Plain-
tiffs agree to keep the entire settlement confidential placed a
condition on the balance of the offer. This circumstance pre-
vented the mooting of the Plaintiffs’ FLSA claims. Cf.
McCauley, 402 F.3d at 342 (plaintiff not obligated to accept
a Rule 68 offer of judgment conditioned on settlement being
kept confidential and judgment under seal; party engaged in
litigation is not entitled to confidentiality).
In sum, the fact that the Defendants’ offer to settle the
Plaintiffs’ FLSA claims (as contained in the letter dated May
16, 2008, and as clarified by the follow-up letter thirteen days
later) did not offer for judgment to be entered against the
Defendants, was ambiguous as to the amounts of actual and
liquidated damages to be recovered, and was conditioned
upon an agreement by the Plaintiffs to keep the settlement
confidential, prevented the mooting of the Plaintiffs’ FLSA
claims. Accordingly, we hold the district court erred by dis-
missing the Plaintiffs’ FLSA claims for lack of subject matter
SIMMONS v. UNITED MORTGAGE AND LOAN 21
jurisdiction, vacate the district court’s order dismissing such
claims and corresponding judgment, and remand such portion
of this action for further proceedings consistent with this opin-
ion.9 We also vacate the district court’s order denying the
Plaintiffs’ motion for conditional collective action certifica-
tion of their FLSA claims and their amended version of such
motion, because the district court denied these motions upon
its erroneous belief that the Plaintiffs’ FLSA claims had
already been rendered moot. On remand, we direct the district
court to reconsider these motions in light of our holding that
the May 16, 2008 letter, as clarified by the May 29, 2008 let-
ter, did not render the Plaintiffs’ FLSA claims moot.
III
The Plaintiffs next challenge the district court’s Rule
12(b)(6) dismissal of their NCWHA claims, as alleged in the
Amended Complaint, on the basis that the Amended Com-
plaint does not allege that any plaintiff worked overtime after
December 2006, when the minimum wage in North Carolina
was more than the federal minimum wage.10 An order grant-
ing dismissal under Rule 12(b)(6) is reviewed de novo taking
"the factual allegations in the complaint as true." Bass v. E.I.
DuPont de Nemours & Co., 324 F.3d 761, 764 (4th Cir.
2003). On a Rule 12(b)(6) motion, a "complaint must be dis-
missed if it does not allege ‘enough facts to state a claim to
relief that is plausible on its face.’" Giarratano v. Johnson,
521 F.3d 298, 302 (4th Cir. 2008) (emphasis in original)
9
In light of our holding that the Defendants’ offer to settle the Plaintiffs’
FLSA claims did not moot the Plaintiffs’ FLSA claims, we need not and
do not consider the Plaintiffs’ alternative argument in challenge to the dis-
trict court’s Rule 12(b)(1) dismissal of their FLSA claims that, when the
claims of the named plaintiffs in a proposed collective action are mooted
before the named plaintiffs have had a reasonable opportunity to move for
collective action certification, an offer of full relief to the named plaintiffs
does not moot the action.
10
The distinction affects when claims under the NCWHA are effectively
preempted by the FLSA, pursuant to provisions of the NCWHA.
22 SIMMONS v. UNITED MORTGAGE AND LOAN
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). "In Twombly, The Supreme Court upheld a Rule
12(b)(6) dismissal because the complaint did not allege suffi-
cient facts showing a claim was plausible rather than merely
conceivable." Monroe v. City of Charlottesville, Va., 579 F.3d
380, 386 (4th Cir. 2009). Thus, "[i]n reviewing a motion to
dismiss an action pursuant to Rule 12(b)(6) . . . [a court] must
determine whether it is plausible that the factual allegations in
the complaint are ‘enough to raise a right to relief above the
speculative level.’" Andrew v. Clark, 561 F.3d 261, 266 (4th
Cir. 2009) (quoting Twombly, 550 U.S. at 555). "[T]he court
need not accept the legal conclusions drawn from the facts,
and need not accept as true unwarranted inferences, unreason-
able conclusions, or arguments." Monroe, 579 F.3d at 385-86
(quotation marks and alteration marks omitted).
The Plaintiffs argue the district court erred in granting Rule
12(b)(6) dismissal of their NCWHA claims, because the fol-
lowing allegations in the Amended Complaint create the clear
inference that Named Plaintiff Delana Pruitt worked overtime
hours in January 2007: (1) "Defendants employed plaintiff
Delana Pruitt as a Junior Asset Manager from June 2006 to
February 2007."; (2) "During this time Defendants routinely
required plaintiff Pruitt to work in excess of 40 hours per
week."; (3) "Defendants failed to compensate plaintiff Pruitt
for the hours she worked in excess of 40 hours per week.";
and (4) "Plaintiff Pruitt has sustained substantial losses from
Defendants’ failure to pay her earned wages and overtime."
(J.A. 69). According to the Plaintiffs, to hold these allegations
are insufficient to raise the reasonable inference that Named
Plaintiff Delana Pruitt had worked overtime hours during the
month of January 2007 is to return to the technical rules of
code pleading that prevailed before the Federal Rules of Civil
Procedure.
We hold the allegations regarding Named Plaintiff Delana
Pruitt just quoted from the Amended Complaint are insuffi-
cient to raise a right to relief above the speculative level. The
SIMMONS v. UNITED MORTGAGE AND LOAN 23
broad allegation that the Defendants routinely required
Named Plaintiff Delana Pruitt to work in excess of forty hours
per week from June 2006 to February 2007, is insufficient to
raise the inference above the speculative level that she always,
and therefore, actually worked more than forty hours per
week during any week in January 2007. Accordingly, we hold
the district court did not err in dismissing the Plaintiffs’
NCWHA claims pursuant to Rule 12(b)(6), and therefore,
affirm the district court’s dismissal of such claims.
IV
Lastly, the Plaintiffs challenge the district court’s denial of
their motion for leave to file a second amended complaint
pursuant to Federal Rule of Civil Procedure 15(a)(2), which
provides that "a party may amend its pleading only with the
opposing party’s written consent or the court’s leave. The
court should freely give leave when justice so requires." Fed.
R. Civ. P. 15(a)(2) (2008). "A district court may deny a
motion to amend when the amendment would be prejudicial
to the opposing party, the moving party has acted in bad faith,
or the amendment would be futile." Equal Rights Center v.
Niles Bolton Assocs., 602 F.3d 597, 603 (4th Cir. 2010). We
review the district court’s denial of a Rule 15(a)(2) motion to
amend for abuse of discretion. Id. "Although leave to amend
should be freely given when justice so requires, a district
court has discretion to deny a motion to amend a complaint,
so long as it does not outright refuse to grant the leave without
any justifying reason." Id. (internal quotation marks, alter-
ation marks, and citation omitted). Here, the district court
refused to grant the Plaintiffs leave to file their proposed sec-
ond amended complaint without giving any justifying reason.
Accordingly, we vacate the district court’s order denying the
Plaintiffs leave to file their proposed second amended com-
plaint. On remand, the district court is free to revisit its ruling
in this regard, and, if the district court again denies leave to
amend, we instruct the district court to put its rationale for
such denial on the record.
24 SIMMONS v. UNITED MORTGAGE AND LOAN
V
In conclusion, we: (1) vacate the district court’s order dis-
missing the Plaintiffs’ FLSA claims and corresponding judg-
ment, and remand that portion of the case for further
proceedings consistent with this opinion; (2) vacate the dis-
trict court’s order denying the Plaintiffs’ motion for condi-
tional collective action certification of their FLSA claims and
their amended version of such motion, and remand this por-
tion of the case for further proceedings consistent with this
opinion; (3) affirm the district court’s dismissal of the Plain-
tiffs’ NCWHA claims; and (4) vacate the district court’s order
denying the Plaintiffs leave to file their proposed second
amended complaint, and remand for further proceedings con-
sistent with this opinion.
AFFIRMED IN PART;
VACATED AND REMANDED IN PART