The U. S. Supreme Court established limitations on personal jurisdiction over non-resident corporate defendants in state court “mass” actions in Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco Cty., 137 S. Ct 1773 (June 17, 2017) (hereafter “BMS”).  BMS’s key holding was that the necessary nexus between an appropriate court for a mass action and a corporate defendant required more than just the company’s connections in the state and the alleged similarity of claims by resident plaintiffs and non-resident plaintiffs.  The practical effect is to limit forum shopping by plaintiffs in large state mass or class actions and to require such suits be maintained only where a corporate defendant has significant contacts to support general jurisdiction.

Because BMS addressed personal jurisdiction in state courts, it did not directly address if the same personal jurisdiction requirements applied to federal court collective and class actions.  Since BMS, a number of federal district courts have addressed whether BMS is a basis for limiting FLSA or other wage hour class and collective claims in federal court.

Finding BMS does limit FLSA or other class and collective actions are four noteworthy decisions.  Mussat v. IQVIA, Inc., 2018 WL 5311903 (N.D. III. Oct. 26, 2018), put the matter most succinctly holding that “Whether it be an individual, mass, or class action, the defendants’ rights should remain constant.”  The District of Massachusetts directed that opt-in notices to drivers in a putative nationwide FLSA collective action be limited to drivers in the forum state, Massachusetts, in Roy v. FedEx Ground Package System, Inc., 2018 WL 6179504 (D. Mass. Nov. 27, 2018).  The court opined that “[n]othing in Bristol-Myers suggests that its basic holding is inapplicable to class actions.”  The court in Practice Management Support Services, Inc. v. Cirque du Soleil, Inc., 301 F. Sup. 3d 840 (N.D. III. 2018), similarly held that “It is not clear how [plaintiff] can distinguish the Supreme Court’s basic holding in Bristol-Myers simply because this is a class action.”  To the same effect is Maclin v. Reliable Reports of Texas, Inc., 1:17-cv-2612 (N.D. Ohio Mar. 26, 2018).

Two courts have held to the contrary.  In Dennis v. IDT Corp., 2108 WL 5631102 (N.D. Ga. Oct. 18, 2018), the court attempted to assert that the difference between state mass torts and federal class actions make BMS inapplicable.  The court argued that BMS was premised on federalism concerns generally not pertinent to federal court nationwide class actions.  Similarly, Hospital Auth. of Metro. Gov’t of Nashville v. Momenta Pharms., Inc., 2018 WL 6378457 (M.D. Tenn. Dec. 5, 2018), refused to grant a motion to dismiss for lack of personal jurisdiction.  The court asserted that defendants possess necessary due process safeguards because of the provisions of Rule 23, Fed. R. Civ. Pro.  That view, however, does not address if there is a sufficient basis for personal jurisdiction, a factor not really considered under Rule 23 and its requirements for determining whether there is a proper basis for a class action and, if so, under which subdivision of Rule 23.  Rule 23 was not designed as the basis for determining if the defendant can properly be held to answer claims in a particular federal court because necessary personal jurisdiction exists. That is an inquiry tested under the requirements of Rule 12 (b) Fed. R. Civ. Pro.

So far, no appellate courts have weighed in on whether the BMS decision applies to class and collective action in federal court.  The better reasoned district court decisions, however, have found that it does.  Accordingly, employers faced by putative wage hour class or collective actions in forums where they do not have significant contacts to justify personal jurisdiction should clearly consider asserting such a defense by early motion.  Should the motion be denied, consideration of a request for interlocutory appeal under 28 U.S.C. § 1292 (b) as presenting “a controlling question of law as to which there is substantial ground for difference of opinion” and where immediate appeal “may materially advance the ultimate termination of the litigation,” might also be appropriate.

While there is no definitive appellate court decision, and there is some disagreement among lower courts, a majority of the district courts that have rendered opinions on the subject are in agreement that the Supreme Court’s holding in BMS is applicable to federal FLSA cases.  These decisions provide strong support to employers who oppose forum shopping plaintiffs in wage-and-hour class and collective actions.

By Michael Kun

On January 1, 2012, the minimum wage for employees working in San Francisco will rise to $10.24 per hour. 

This is, to our knowledge, the first time the minimum wage in any U.S. city has ever exceeded $10 per hour.

Employers with employees in San Francisco will need to make sure that they make appropriate adjustments to their payroll systems and practices to account for the increase.