In 2017, the U.S. Supreme Court issued its ruling in Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco County (“BMS”), holding the Fourteenth Amendment prevents a state court from adjudicating non-resident plaintiffs’ state-law claims. Since then, various federal courts have considered whether that ruling extends to prevent a federal court from adjudicating claims brought under the federal Fair Labor Standards Act (“FLSA”) by individuals who live and work outside the court’s jurisdiction—and courts have come to vastly different conclusions. Savvy plaintiffs’-side attorneys are leveraging this split to avoid bringing their FLSA collective action where the employer is located if that jurisdiction is deemed “unfavorable” and instead identifying a putative plaintiff located in a “friendlier” jurisdiction that allows anyone with similar claims to opt-in, regardless of where they live or work.
The BMS Case
Bristol-Myers Squibb Co. is a large pharmaceutical company.
In 2012, a group of nearly 700 plaintiffs—a vast majority of which resided outside California—filed eight separate complaints against Bristol-Myers Squibb Co. in California Superior Court, alleging that a drug manufactured and sold by the company called Plavix had damaged their health. All the complaints asserted claims under California law, including products liability, negligent misrepresentation, and misleading advertising claims. Bristol-Myers Squibb did not develop, create a marketing strategy for, manufacture, label, package, or work on the regulatory approval of Plavix in California. The nonresident plaintiffs did not allege that they obtained Plavix through California physicians or from any other California source; nor did they claim that they were injured by Plavix or were treated for their injuries in California. However, the company maintained five (unrelated) research and laboratory facilities in California and sold Plavix in the State between 2006 and 2012.
Bristol-Myers Squibb Co. moved to quash service of summons on the nonresidents’ claims, asserting lack of personal jurisdiction. The company noted it was incorporated in Delaware and headquartered in New York; thus, jurisdiction was only proper in those States or in the State where the respective plaintiff was injured.
Under the Fourteenth Amendment’s Due Process Clause, state courts only have the power to render a personal judgment against a nonresident defendant over whom the court has personal jurisdiction. Generally, there are two types of personal jurisdiction: “general” (sometimes called “all-purpose”) jurisdiction and “specific” (sometimes called “case-linked”) jurisdiction. A party is subject to the “general” jurisdiction of the courts where the party is considered “at home,” and only a limited set of affiliations with a forum will render a party subject to general jurisdiction in that State (such as being incorporated there or being where the company’s “nerve center” is located). A court with general jurisdiction may hear any claim against that defendant, even if all the events underlying the claim occurred outside that State. In order for a state court to exercise specific jurisdiction, however, the suit must arise out of or relate to the defendant’s contacts with that State.
The lower court denied the motion to quash, holding that because the claims of the nonresidents were similar in several ways to the claims of the California residents (as to which specific jurisdiction was uncontested)—e.g., the resident and nonresident plaintiffs’ claims were based on the same allegedly defective product and the assertedly misleading marketing and promotion of that product—the California court required “a less direct connection” between the defendant’s forum activities and the plaintiffs’ claims “than might otherwise be required” to exert specific jurisdiction. Accordingly, the lower court held the company’s contacts with California permitted the exercise of specific jurisdiction with respect to the nonresidents’ claims.
After years of litigation and winding its way through the Courts, the U.S. Supreme Court reversed, holding that the lower court’s approach amounted to a “loose and spurious form of general jurisdiction.” Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco Cnty., 582 U.S. 255, 264, 137 S. Ct. 1773, 1781, 198 L. Ed. 2d 395 (2017) .The Court reiterated that unless there is an affiliation between the forum state and the underlying controversy, “specific jurisdiction is lacking regardless of the extent of a defendant's unconnected activities in the State.” Id. at 582 U.S. at 264, 137 S. Ct. at 1781. The Court also noted that its ruling would not prevent plaintiffs from pursuing a consolidated action in Delaware or New York, where the courts would have general jurisdiction over the company.
A majority of federal circuit courts extend BMS to FLSA collective actions
In 2021, the Eighth Circuit was the first federal circuit court to decide whether the ruling in BMS extends to opt-in nonresident plaintiffs in FLSA cases. In Vallone v. CJS Sols. Group, LLC, employees who were hired on a per-project basis brought a putative collective action against the employer under the FLSA in the District of Minnesota, claiming they were entitled to wages for out-of-town travel to and from remote project locations anywhere in the United States. The defendant argued the court lacked personal jurisdiction over claims with no connection to Minnesota. The district court agreed, and limited the action to employees “who engaged in out-of-town travel to or from a Minnesota jobsite…or who resided in Minnesota.” The court later granted summary judgment for the employer.
The employees appealed, claiming inter alia that the lower court erred in limiting the scope of the action. Because the Minnesota court had personal jurisdiction over one set of claims that arose based on travel to and from Minnesota, the court could exercise jurisdiction over all travel-time claims against the defendant. The Eight Circuit affirmed the lower court’s ruling, noting that since the FLSA does not provide for nationwide service of process, the court was required to look to Minnesota’s long-arm statute, which extends jurisdiction as far as permitted by the Due Process Clause. Because the employer was a Florida company headquartered in Florida, under BMS, the Minnesota district court could only exercise jurisdiction over the company if there was a connection between the forum state and the specific claims at issue. Further, because each failure to pay wages is a separate violation of the FLSA that gives rise to a distinct claim, “[p]ersonal jurisdiction must be determined on a claim-by-claim basis.” Vallone v. CJS Sols. Group, LLC, 9 F.4th 861, 865 (8th Cir. 2021).
That same year, the Sixth Circuit also considered how a federal court can obtain personal jurisdiction over a nonresident defendant in an FLSA collective action in Canaday v. Anthem Companies, Inc. There, the court noted that one path to obtain jurisdiction under Federal Rule of Civil Procedure 4(k) is for Congress to include a nationwide service of process in the regulatory statute itself, which is the case under The Sherman Act and the False Claims Act—but not the FLSA. The two options by which to establish personal jurisdiction over a defendant under Rule 4(k) is if (i) the defendant is subject to the jurisdiction of a court of general jurisdiction in the state where the district court is located, or (ii) the defendant was later joined as a third party or required party and was served not more than 100 miles from where the summons was issued. The defendant in Canaday was not later joined, so the only remaining question was whether the defendant was subject to jurisdiction in Tennessee. Like Minnesota’s long-arm statute in Vallone, the Tennessee long-arm statute authorizes its courts to exercise personal jurisdiction “[o]n any basis not inconsistent with the constitution of...the United States.” The defendant was based in Indiana, not Tennessee, so general jurisdiction was not an option. Citing BMS, the court held specific jurisdiction also did not exist, likening an FLSA collective action to the mass action at issue in BMS, wherein 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. Accordingly, the court held, where nonresident plaintiffs opt into a putative collective action under the FLSA, a court may not exercise specific personal jurisdiction over claims unrelated to the defendant's conduct in the forum State.
Although the employees argued that only the named plaintiff must comply with Rule 4(k) and, thus, the Fourteenth Amendment, the Sixth Circuit disagreed. Acknowledging the opt-in plaintiffs had no service obligations under Rule 4(k) after the defendant appeared in the case in response to the named plaintiff’s service of the complaint, the court noted that reality does not eliminate Rule 4(k)’s requirement that the defendant be amenable to the territorial reach of that district court for that claim, holding:
Otherwise, Civil Rule 4(k)’s territorial constraints would come to naught. These core limitations on judicial power would be one amended complaint—with potentially new claims and new plaintiffs—away from obsolescence. That is not how it works. Even with amended complaints and opt-in notices, the district court remains constrained by Civil Rule 4(k)’s—and the host State's—personal jurisdictional limitations.
Canaday v. Anthem Companies, Inc., 9 F.4th 392, 400 (6th Cir. 2021).
The Third Circuit followed suit in 2022 in Fischer v. Federal Express Corp. There, the court also rejected the putative FLSA plaintiffs’ argument analogizing the FLSA collective action to a Rule 23 class action and asserting that opt-in plaintiffs' claims in FLSA actions should be exempted from the personal jurisdictional requirement in the suit. The court noted that in class actions, the class “acquires an independent legal status” upon certification; accordingly, the relevant entity for purposes of the litigation after certification is the class as a whole (as exemplified by the named plaintiff), not the individuals who make up the class. An FLSA collective action, on the other hand, proceeds “as a kind of mass action, in which aggrieved workers act as a collective of individual plaintiffs with individual cases.” Thus, the court held, “courts need personal jurisdiction over a defendant with respect to all plaintiffs’ claims in FLSA actions….” Fischer v. Fed. Express Corp., 42 F.4th 366, 380 (3d Cir. 2022), cert. denied, 143 S. Ct. 1001, 215 L. Ed. 2d 137 (2023).
In August this year, the Seventh Circuit also joined the trend in expanding the BMS holding to FLSA collectives in Vanegas v. Signet Builders, Inc., noting each member of collective action remains an individual plaintiff with the obligation to establish that there was a connection between the forum and their individual claim.
The First Circuit refuses to extend BMS
The only federal Circuit Court to determine BMS does not extend to FLSA collective actions was the First Circuit in its 2022 ruling issued in Waters v. Day & Zimmermann NPS, Inc. There, the defendant moved to dismiss the claims of the current and former employees who had opted in to an FLSA collective action in district court in Massachusetts but, who, unlike the named plaintiff, had worked for the company outside of the State. The First Circuit affirmed the district court’s denial of the motion to dismiss, noting BMS was premised upon Fourteenth Amendment limitations on a state court’s exercise of power over a nonresident defendant, and not a federal court’s power to adjudicate federal claims against a U.S. citizen.
The defendant argued Federal Rule of Civil Procedure 4(k)(1) incorporates the Fourteenth Amendment's limits on the jurisdiction of federal courts wherever a federal statute does not provide for nationwide service of process (such as the FLSA). In other words, the defendant claimed (as the court held in Canaday) that Rule 4 governs not just service of a summons, but also limits a federal court's jurisdiction after the summons is properly served.
However, the First Circuit ruled that although Rule 4 provides that personal jurisdiction can be “establishe[d]” by “[s]erving a summons” so long as any of its three criteria are met, there was nothing in the Rule’s text to suggest it deals with anything other than service of a summons, or that it restrains a federal court's power to act once a summons has been properly served, and personal jurisdiction has been established. The court opined that the Sixth and Eighth Circuit courts’ holdings to the contrary relied upon “an erroneous reading of Rule 4….” Waters v. Day & Zimmermann NPS, Inc., 23 F.4th 84, 97 (1st Cir. 2022), cert. denied, 142 S. Ct. 2777, 213 L. Ed. 2d 1016 (2022).
Looking forward
Although lower federal courts have differing opinions on whether the BMS decision applies to FLSA claims of non-resident opt-in plaintiffs, the vast majority of Circuit Courts to have considered the issue have determined that it does. However, FLSA plaintiffs are not currently restricted from bringing suit against an employer within the First Circuit—no matter where the employer maintains its principal place of business or where it is incorporated—so long as at least one FLSA violation at issue occurred within the court’s jurisdiction. The Second, Fourth, Fifth, Ninth, and D.C. Circuit Courts have yet to weigh in on the issue, and district courts within these jurisdictions are split.
But that may not be the case for long. The growing trend among federal courts is to extend BMS and require that each plaintiff in an FLSA action, whether they are a named plaintiff or a later-joined opt-in, must establish the court’s personal jurisdiction over the defendant with respect to their individual claims.
In the meantime, employers defending against an FLSA collective action in a jurisdiction where the Circuit Court has not affirmatively held BMS inapplicable should consider asserting jurisdictional defenses under BMS where available. Such consideration should take into account how employer-friendly the courts and jury pools are in the relevant jurisdictions, as well as strategic considerations in balancing the costs of simultaneously defending similar lawsuits in multiple states against the risks of (i) a larger number of plaintiffs potentially creating the appearance of legitimacy to a jury, and (ii) an adverse decision applying to a larger class of opt-in plaintiffs.
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A highly regarded problem-solver, Chris represents businesses and their executives across a broad spectrum of industries, focusing his practice on the defense of complex employment litigation, high-stakes commercial lawsuits ...
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Theanna advises employers on a wide range of employment matters and aggressively represents clients in litigation surrounding federal and state employment discrimination claims and wage and hour issues. Theanna has extensive ...
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Authors
- Jessica N. Agostinho
- Walter J. Andrews
- Ian P. Band
- Ryan M. Bates
- Christy E. Bergstresser
- Theanna Bezney
- Jesse D. Borja
- Brian J. Bosworth
- Jason P. Brown
- M. Brett Burns
- Daniel J. Butler
- Christopher J. Cunio
- Jacqueline Del Villar
- Kimberlee W. DeWitt
- Robert T. Dumbacher
- Raychelle L. Eddings
- Elizabeth England
- Juan C. Enjamio
- Karen Jennings Evans
- Geoffrey B. Fehling
- Jason Feingertz
- Katherine Gallagher
- Ryan A. Glasgow
- Sharon S. Goodwyn
- Meredith Gregston
- Eileen Henderson
- Kirk A. Hornbeck
- J. Marshall Horton
- Roland M. Juarez
- Keenan Judge
- Suzan Kern
- Elizabeth King
- Stephen P. Kopstein
- Torsten M. Kracht
- James J. La Rocca
- Kurt G. Larkin
- Jordan Latham
- Tyler S. Laughinghouse
- Crawford C. LeBouef
- Michael S. Levine
- Michelle S. Lewis
- Brandon Marvisi
- Lorelie S. Masters
- Reilly C. Moore
- Michael J. Mueller
- J. Drei Munar
- Alyce Ogunsola
- Christopher M. Pardo
- Michael A. Pearlson
- Adriana A. Perez
- Kurt A. Powell
- Robert T. Quackenboss
- D. Andrew Quigley
- Michael Reed
- Jennifer A. Reith
- Amber M. Rogers
- Alexis Zavala Romero
- Zachary Roop
- Adam J. Rosser
- Katherine P. Sandberg
- Elizabeth L. Sherwood
- Cary D. Steklof
- C. Randolph Sullivan
- Veronica A. Torrejón
- Debra Urteaga
- Emily Burkhardt Vicente
- Kevin J. White
- Holly H. Williamson
- Susan F. Wiltsie