- within Compliance topic(s)
Seyfarth Synopsis: The Second Circuit held that courts must dismiss out-of-state plaintiffs from FLSA collective actions unless the defendant is “essentially at home” in the forum state or consents to the suit in that venue.
In a significant decision that will affect the scope of FLSA collective action litigation, the Second Circuit has held that courts may not adjudicate claims of out-of-state plaintiffs unless the defendant-employer is “essentially at home” in the forum state or consents to the suit there.
The case involves the interpretation of a 2017 Supreme Court decision, Bristol-Myers Squibb Co. v. Superior Court of California (“BMS”), and deepens a circuit split that may end up at the Supreme Court in the near future. The Second Circuit joins the Third, Sixth, Seventh, and Eighth circuits in applying BMS to FLSA collective actions, with the First Circuit being the lone circuit to disagree.
This means that nationwide FLSA collective actions can only proceed in New York, Connecticut, or Vermont federal courts if the employer is “at home” in the forum state—that is, incorporated or headquartered there—or has otherwise consented to the court’s jurisdiction over all claims, including those unrelated to the forum state. Under the Second Circuit’s ruling, each employee participating in an FLSA collective action must independently establish that the court has jurisdiction over their claim. As the court acknowledged, its decision puts a halt to forum shopping, where litigants pick a court to bring nationwide claims “to capitalize on discrepancies between precedents in different circuits.” Plaintiffs no longer can subject employers to nationwide FLSA collective actions in federal courts within the circuit merely because the employer happens to do business in that state.
In this case, two Vermont delivery drivers sued a nationwide bakery in Vermont federal court, claiming that Vermont and out-of-state delivery drivers were all misclassified as independent contractors and owed unpaid overtime under the FLSA. Because the bakery was not based in Vermont, the Vermont federal court lacked the power to hear the claims of the out-of-state delivery drivers, which therefore must be dismissed.
With the Second Circuit joining the majority on this issue, the First Circuit’s contrary position is now an even greater outlier that will likely have less persuasive power on courts outside the First Circuit. Unless that court reverses its position and joins the majority soon, the Supreme Court may have to weigh in to resolve the circuit split and bring nationwide uniformity to FLSA collective action litigation.
Although this decision provides employers sued in the Second Circuit greater ability to oppose nationwide collective actions, employers must be mindful of potential consequences. Successfully preventing a nationwide action from proceeding in one state may invite a flood of copycat lawsuits in other states, or (more likely) a nationwide suit in the employer’s home state where it cannot invoke BMS. Nonetheless, the decision provides additional strategic options when facing putative FLSA collective actions.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
[View Source]
