The Fair Labor Standards Act (FLSA or the Act) allows employees to sue their employers in federal or state court, on behalf of themselves and others similarly situated, for violations of the Act's federal minimum wage and overtime requirements and child labor protections. These lawsuits – which are commonly brought against employers – are known as "collective actions" and historically have been brought by plaintiffs within a single state or on a nationwide basis. Recent cases have demonstrated that employers are more susceptible to collective actions involving out-of-state plaintiffs in certain jurisdictions over others. Employers who are aware of these jurisdictional distinctions can more strategically defend themselves against FLSA collective actions. In jurisdictions where a court is more likely to dismiss nonresident plaintiffs from a FLSA collective action, employers can successfully limit the scope of the action and, with that, their potential liability and damages.
The Sixth and Eighth Circuits represent two jurisdictions in which courts have dismissed nonresident plaintiffs from FLSA collective actions, based on a lack of "personal jurisdiction" over them. These decisions essentially found that the district courts within one state cannot bind nonresident plaintiffs to a judgment. In Canaday v. Anthem Companies, Inc., 439 F. Supp. 3d 1042 (W.D. Tenn. 2020), the Plaintiff, a Tennessee-based nurse, filed a putative FLSA collective action in the United States District Court for the Western District of Tennessee against her Indiana-based employer, Anthem Companies, Inc., alleging that the employer misclassified her and other similarly situated nurses as employees who were exempt from the FLSA's overtime requirements. Nurses employed by Anthem both inside and outside of Tennessee opted to join the collective action. The district court dismissed the nonresident nurses from the collective action on the grounds that it lacked personal jurisdiction over the nurses who resided outside of Tennessee.
On appeal, the Sixth Circuit Court of Appeals affirmed the district court's finding that it did not have personal jurisdiction over the nonresident nurses' claims against Anthem because the claims did not arise out of or relate to Anthem's conduct in Tennessee. Anthem was not incorporated or headquartered in Tennessee, and the nonresident nurses were not employed, paid, or denied overtime compensation in Tennessee. Although this decision prohibits a FLSA plaintiff from forum shopping throughout the United States, the decision does not eradicate nationwide FLSA collective actions altogether. It is clear from the decision that a plaintiff can still assert a nationwide FLSA collective action in a state where an employer is subject to general jurisdiction, such as the state of a company's incorporation or its headquarters.
In Vallone v. CJS Solutions Group, LLC, 437 F. Supp. 3d 687 (D. Minn. 2020), two Florida-based consultants, Joyce Vallone and Erasmus Ikogor, sued their Florida-based employer in the United States District Court for the District of Minnesota, alleging they and others similarly situated were not paid wages for travel to and from foreign project locations around the United States, including travel to and from projects in Minnesota. As in Canaday, the district court limited the collective to employees who traveled to or from Minnesota for projects or who lived in Minnesota, and dismissed claims by employees who had no connection to Minnesota, on the grounds that it lacked personal jurisdiction over the defendant employer for such claims. Vallone and Ikogor appealed. Utilizing the rationale detailed in Canaday, the Eighth Circuit Court of Appeals affirmed the district court's decision, holding that the district court correctly excluded claims that lacked any connection to Minnesota.
Other federal district court rulings have been contrary to Canaday and Vallone or have been divided on the issue. For example, federal courts within the Ninth Circuit Court of Appeals have generally adopted a more expansive approach to a plaintiffs' out-of-state claims under the FLSA. On the other hand, federal courts within the Second Circuit Court of Appeals have been split on the issue. Given the differing viewpoints of courts on this issue, it is imperative that employers facing nationwide FLSA collective actions closely analyze personal jurisdiction for all plaintiffs asserting claims. Depending upon where a plaintiff chooses to file his or her proposed collective action complaint, an employer may be successful in substantially limiting the scope of the action by arguing that the court lacks personal jurisdiction over some or all of the claims.
Given the varying opinions in the federal courts on this issue, Venable will continue to monitor developments in the case law under the FLSA. Employers are encouraged to contact one of Venable's experienced Labor and Employment attorneys with any questions regarding these recent legal developments.