Employment & Labor Insider

Employers defending collective actions under the Fair Labor Standards Act just scored a major win in the U.S. Court of Appeals for the Second Circuit.

In Provencher v. Bimbo Foods Bakeries Distribution LLC, a three-judge panel of the Second Circuit held that federal courts cannot exercise personal jurisdiction over the claims of out-of-state opt-in plaintiffs in FLSA collective actions unless either those claims arise from the defendant’s contacts with the forum state, or the employer is otherwise subject to general personal jurisdiction there.

With this ruling, the Second Circuit joins the growing list of appellate courts limiting the scope of nationwide FLSA collective actions filed in states where the employers are not “at home.”

Background

The plaintiffs in Provencher were Vermont-based delivery drivers who alleged that Bimbo Foods Bakeries Distribution, LLC, and Bimbo Bakers USA, Inc., improperly classified them as independent contractors and failed to pay overtime under the FLSA. They sued in Vermont and sought to pursue their claims as a collective action on behalf of similarly situated drivers in Vermont, Connecticut, and New York.

The Bimbo companies are incorporated in Delaware with headquarters in Pennsylvania. They opposed notice to the Connecticut and New York workers, arguing that the federal court in Vermont did not have personal jurisdiction over the claims asserted by those workers because the claims did not arise from Bimbo’s Vermont-related conduct.

The district court disagreed, and authorized notice to workers in all three states. However, before the case proceeded any further, the Second Circuit agreed to hear the arguments on interlocutory appeal and ultimately reversed the lower court.

The Second Circuit’s analysis

The panel emphasized that the FLSA does not authorize nationwide service of process. As a result, federal courts hearing FLSA cases generally may exercise personal jurisdiction only to the same extent permitted by the forum state’s long-arm statute and constitutional due process principles.

Because the companies were neither incorporated nor headquartered in Vermont, the plaintiffs relied on specific personal jurisdiction, which requires each claim to arise out of or relate to the company’s contacts with Vermont.

The panel concluded that the claims of Connecticut and New York drivers lacked the required connection to Vermont. Although the plaintiffs alleged that the companies used similar compensation and classification practices across multiple states, the court held that a uniform corporate policy alone does not create the necessary jurisdictional nexus.

In reaching that conclusion, the court relied heavily on the 2017 U.S. Supreme Court decision in Bristol-Myers and rejected several arguments raised by the plaintiffs:

• The court rejected the argument that the Fifth Amendment to the U.S. Constitution supported broader federal court jurisdiction in FLSA actions, explaining that although Congress could authorize nationwide service of process under the FLSA, it has not done so.
• The court also declined to analogize FLSA collective actions to Rule 23 class actions, emphasizing that FLSA collective actions remain a mosaic of individual claims rather than a single unitary class claim.
• Finally, the court rejected the argument that personal jurisdiction needs to exist only as to the named plaintiffs once the company has been properly served, explaining that proper service alone does not give a court authority over every claim that may be added later.

The court ultimately held that district courts must establish personal jurisdiction over the defendant with respect to the claims of the individuals who will receive notice and potentially opt in to the collective action.

Good news for employers

The Second Circuit now joins the U.S. Courts of Appeal for the Third, Sixth, Seventh, Eighth, and Ninth circuits, including a Ninth Circuit decision successfully argued by Constangy, in limiting the geographic reach of FLSA collective actions where personal jurisdiction is lacking. Only the First Circuit has adopted a contrary position on the jurisdictional issue, and it is possible that the First Circuit might reconsider now that six sister circuits have taken a contrary position.

For employers, the ruling could significantly narrow the scope of nationwide FLSA collective actions filed in jurisdictions where the company is not incorporated or headquartered. Employers may now have stronger grounds to oppose nationwide notice, challenge out-of-state opt-in claims, and reduce the size of proposed collectives at the outset of litigation.

At the same time, the issue is not fully settled nationwide because the First Circuit has reached a different conclusion, and the Fourth, Fifth, Tenth, and Eleventh circuits have yet to weigh in, leaving open the possibility of future appellate developments or eventual Supreme Court review.

Tips for employers

Employers operating across multiple states should expect plaintiffs to respond by filing FLSA collective actions in jurisdictions tied more directly to the employer’s principal place of business or state of incorporation. Employers defending FLSA collective actions should evaluate early whether challenges based on lack of personal jurisdiction may limit the scope of proposed nationwide collectives.

In jurisdictions following the majority rule, employers may have viable grounds to do the following:

• Oppose nationwide notice
• Limit opt-in plaintiffs to workers connected to the forum state
• Seek dismissal of out-of-state opt-in claims
• Strategically evaluate forum-related defenses at the outset of litigation.

The decision also underscores the continued importance of carefully evaluating worker classification practices and complying with minimum wage and overtime requirements across jurisdictions, particularly for employers with multi-state operations.

If you have a question about a wage and hour matter, or need FLSA-related guidance, please contact any member of Constangy’s Wage and Hour Compliance & Litigation Practice Group.