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.

In 2017, the U.S. Supreme Court issued its ruling in Bristol-Myers Squibb (BMS) , holding the Fourteenth Amendment prevents a state court from adjudicating nonresident 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

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., a large pharmaceutical company, in California Superior Court, alleging that a drug manufactured and sold by the company called Plavix had damaged their health. The complaints all asserted claims under multiple California laws, although the nonresident plaintiffs did not allege their individual claims had any ties to the State, including no allegation that they obtained Plavix through any California source, were injured by Plavix in California, or were treated for their injuries in California.

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 judgment against a non resident defendant over whom the court has “general” (sometimes called “all-purpose”) personal jurisdiction and/or “specific” (sometimes called “case-linked”) personal jurisdiction. “General” jurisdiction exists in the State(s)where the party is considered “at home,” such as where it is incorporated or where its “nerve center” is located. A court with general jurisdiction may hear any claim against that defendant, even if all events underlying the claim occurred outside that State. For 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 those of the California residents (as to which specific jurisdiction was uncontested),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.

The U.S. Supreme Court ultimately reversed, holding the lower court’s approach amounted to a “loose and spurious form of general jurisdiction.” 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.” 

A Majority of Federal Circuit Courts Extend 'BMS' to FLSA Collective Actions

In 2021, the U.S. Court of Appeals for 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 Solutions Group, employees brought an FLSA collective action against the employer in the District of Minnesota, claiming they were entitled to wages for 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… travel to or from a Minnesota jobsite … or who resided in Minnesota.” The court later granted summary judgment for the employer.

The employees appealed that decision, arguing that 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 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, “personal jurisdiction must be determined on a claim-by-claim basis.”

That same year, the Sixth Circuit followed suit with its holding in Canaday v. Anthem Companies. Because nationwide service is not authorized by the FLSA, the two options by which to establish personal jurisdiction over a defendant under Rule 4(k) is if the defendant is subject to the jurisdiction of the state where the district court is located, or the defendant was later joined in the suit and was served 100 miles of less from where the summons was issued. Although the employees argued that only the named plaintiff must comply with Rule 4(k) and, thus, the Fourteenth Amendment, the Sixth Circuit disagreed and observed that a contrary holding would render Rule 4(k)’s requirements “one amended complaint … 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.”

The Third Circuit followed suit in 2022 in Fischer v. Federal Express. There, the plaintiffs argued FLSA collective action opt-in plaintiffs should, like Rule 23 class action members, be exempted from personal jurisdictional requirements. The court disagreed, noting 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, not the individuals who make up the class. An FLSA collective action, by contrast, 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 … .”

In August this year, the Seventh Circuit also joined the trend in expanding the BMS holding to FLSA collectives in Vanegas v. Signet Builders, 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 is the First Circuit, in its 2022 ruling issued in Waters v. Day & Zimmermann NPS, noting BMS was premised upon Fourteenth Amendment limitations on a state court’s exercise of power over a nonresident defendant, not a federal court’s power to adjudicate federal claims against a U.S. citizen.

The defendant argued Rule 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 Rule 4 governs not just service of a summons, but also limits a federal court's jurisdiction after the summons is properly served. The court rejected that argument, finding there was nothing in the Rule to suggest it deals with anything other than service of a summons, or that it restrains a federal court's power once a summons has been properly served, and personal jurisdiction has been established. The court opined the Sixth and Eighth Circuit courts’ holdings to the contrary relied upon “an erroneous reading of Rule 4 … .”

Looking Forward

Although lower federal courts have differing opinions on whether the BMS decision applies to FLSA claims, 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 should consider asserting jurisdictional defenses under BMS where available (or potentially 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 a larger number of plaintiffs potentially creating the appearance of legitimacy to a jury, and an adverse decision applying to a larger class of opt-in plaintiffs.

The case is Bristol-Myers Squibb v. Superior Court of California, San Francisco County, 582 U.S. 255, 264, 137 S. Ct. 1773, 1781, 198 L. Ed. 2d395 (2017).

Reprinted with permission from the December 11, 2024 issue of Law.com. © 2024 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.