Circuit Courts Endorse Limiting Jurisdiction in FLSA Collective Actions

In two decisions issued on the same day, the Sixth and Eighth Circuits recently joined many district courts across the country in holding that federal courts cannot exercise jurisdiction over Fair Labor Standards Act (FLSA) claims that arise from out-of-state conduct when the defendant is not subject to the court’s general personal jurisdiction.

These decisions flow from the United States Supreme Court’s decision in Bristol-Myers Squibb Co. v. Superior Court of California, 137 S. Ct. 1773 (2017), a mass-tort action in which the Court held that a California state court lacked personal jurisdiction over an out-of-state defendant as to claims of nonresident plaintiffs who had no connection to California. Since the Supreme Court decided Bristol-Myers Squibb, district courts have split on its applicability to both FLSA collective actions and class actions brought under Rule 23 of the Federal Rules of Civil Procedure. The decisions from the Sixth and Eighth Circuits are the first to examine this issue and weigh in on the lower courts’ split.

The Sixth Circuit, in Canady v. The Anthem Companies, Inc., held that when a defendant in an FLSA collective action is not subject to a court’s general jurisdiction, the court cannot exercise specific jurisdiction over claims that do not relate to the defendant’s conduct within the forum state. In its opinion, the court explained that because the defendant was neither incorporated nor headquartered in the forum state, Tennessee, the defendant was not subject to general jurisdiction there. As a result, for a federal court to exercise jurisdiction over this nonresident defendant, there must be a claim-specific and defendant-specific relationship to the forum state.

The Sixth Circuit concluded the reasoning of Bristol-Myers Squibb should apply with equal force to FLSA collective actions because in an FLSA action, as in a mass action, “each opt-in plaintiff becomes a real party in interest, who must meet her burden for obtaining relief and satisfy the other requirements of party status.” Because the defendant did not employ or pay the nonresident plaintiffs in the forum state, their claims were unrelated to the defendant’s conduct in the forum state, and therefore the district court could not exercise jurisdiction over those nonresident plaintiffs’ claims.

Similarly, the Eighth Circuit affirmed a district court’s conclusion that Bristol-Myers Squibb applied to limit the scope of an FLSA action in Vallone v. The CJS Solutions Group d/b/a The HCI Group. In Vallone, the plaintiffs asked the district court to certify a nationwide collective action that included thousands of workers over a period of several years, including workers who neither lived nor worked for HCI (a Florida company) in the forum state, Minnesota. The district court declined to conditionally certify a nationwide collective action, instead conditionally certifying only a limited group of individuals whose work for HCI occurred in Minnesota or who were Minnesota residents.

The Eighth Circuit affirmed the lower courts’ decision to limit the class, agreeing that the district court properly declined to exercise jurisdiction over claims that did not arise out of HCI’s contacts with or conduct in Minnesota. In particular, the court noted that personal jurisdiction must be assessed on a claim-by-claim basis and each failure to pay wages is a separate violation that gives rise to a distinct claim under the FLSA. The Eighth Circuit cited Bristol-Myers Squibb in holding that activities unconnected to a forum do not establish jurisdiction.

The decisions in Canady and Vallone set the stage for a potential split among the circuit courts of appeals as to whether Bristol-Myers Squibb should apply to FLSA collective actions, a question that the Supreme Court ultimately may have to answer. The decisions also make “forum shopping” less attractive in the Sixth and Eighth Circuits, where plaintiffs who file collective actions against nonresident defendants will have a more difficult time achieving conditional certification of nationwide collective actions. As this jurisprudence develops, it will likely impact strategy and options for employers defending putative collective litigation outside of the employer’s home state.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.