Seyfarth Synopsis: Furthering a recent trend, a judge in the District of Massachusetts denied a motion for conditional certification because there was no personal jurisdiction over non-Massachusetts entities with respect to the claims of employees who worked outside the state.
As we have discussed previously, several courts have held that plaintiffs in nationwide FLSA collective actions must either sue in the state in which general jurisdiction exists over the defendant corporation (where it is incorporated or has its principal place of business) or limit the case to employees who worked in the state in which the case is brought.
In Chavira v. OS Restaurant Services, LLC et al., Judge Allison Burroughs in the District of Massachusetts continued that trend.
The named plaintiff in Chavira worked for Outback Steakhouse in four Massachusetts locations as a Front of House Manager. The other plaintiffs who joined the case (before the court ruled on conditional certification) worked in other states. Each of the defendants is incorporated and has its principal place of business outside Massachusetts.
The defendants took a three-pronged attack: they asserted a defense of lack of personal jurisdiction in their answer, moved to strike the consent forms filed by the out-of-state opt-ins, and opposed the plaintiff's motion for conditional certification based on the court's lack of personal jurisdiction over out-of-state employees and the lack of evidence concerning in-state employees.
The court granted the motion to strike and denied the motion for conditional certification. Noting that the First Circuit has not addressed the question, the court described two divergent approaches taken by district courts around the country on the personal jurisdiction issue: some courts, with which the Chavira court agreed, have ruled that the Supreme Court's decision in Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco Cty., et al., 137 S. Ct. 1773 (2017) divests courts of personal jurisdiction over out-of-state plaintiffs because there is no connection between the forum state and those plaintiffs' claims. Other courts have held that the plain language of the FLSA does not limit its application to in-state plaintiffs' claims and that the original plaintiff's work location dictates the court's jurisdiction.
The Chavira court pointed to decisions by another District of Massachusetts judge and by judges in the Northern District of Ohio that have reached the same conclusion. And, while not cited by the court, a recent decision in the Middle District of Tennessee similarly concluded that the court lacked personal jurisdiction over non-Tennessee potential plaintiffs where the employer was based in Georgia, and denied a motion for conditional certification.
As to cases coming out the other way and determining that Bristol-Meyers does not divest courts of personal jurisdiction over out-of-state employees, the Chavira court cited decisions from a number of District Courts but did not find them persuasive.
Given the proliferation of nationwide FLSA collective actions in the past decade, the jurisdictional argument addressed in Chavira provides reason for employers to be optimistic about limiting the scope of such actions. When an employer faces a putative collective action in a state in which it is not incorporated and does not have its principal place of business, it should take the following key steps to seek to narrow the size of the collective as much as possible:
- include a lack of personal jurisdiction defense in its answer;
- consider whether to move to strike any pre-conditional certification opt-in forms filed by out-of-state employees; and
- consider whether to oppose the motion for conditional certification as to out-of-state employees, with the full understanding that the court's denial as to out-of-state employees will not have preclusive effect.
Given the still-developing law on this issue, which has not yet been decided by any Court of Appeals, none of these strategies will guarantee success in limiting the scope of the case. And there may be strong countervailing strategic reasons not to pursue the personal jurisdiction argument: the plaintiffs might try to move the case to the state with general jurisdiction over the employer or file a separate collective action.
But for now, cases like Chavira give employers a powerful tool, and may help improve their odds of defeating FLSA certification
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