No Personal Jurisdiction Over Out-Of-State Employees’ Claims To Certify FLSA Collective Action, Pennsylvania Court Rules

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In Weirbach v. Cellular Connection, LLC, a federal district court in Pennsylvania declined to conditionally certify a nationwide collective action under the Fair Labor Standards Act (FLSA) because it found it did not have personal jurisdiction over the claims of employees who lived and worked outside of Pennsylvania.

While district courts are sharply divided on whether they can exercise personal jurisdiction over out-of-state employees asserting claims under the FLSA, the issue has assisted some employers defending nationwide collective actions.

In Weirbach, after finding the plaintiffs had made the “modest factual showing” warranting conditional certification of a collective action, the court turned to whether it found personal jurisdiction over the claims of employees who lived and worked outside of Pennsylvania.

As a general rule, a court has personal jurisdiction over a plaintiff’s claim if it has “general jurisdiction” or “specific jurisdiction” over the defendant. The parties conceded the district court did not have “general jurisdiction” over the company. On whether it had “specific jurisdiction” over the company, the district court had to decide if a recent U.S. Supreme Court decision limiting the reach of a state court’s “specific jurisdiction” over out-of-state plaintiffs applied to an FLSA collective action. In that case, Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco Cty., the Supreme Court held that a California state court did not have “specific jurisdiction” over the claims asserted by out-of-state plaintiffs in a product liability mass action because the conduct and harm they allegedly suffered occurred outside of California. In other words, the out-of-state plaintiffs’ claims did not arise out of or relate to the defendants’ contacts in California.

Noting the district courts are split on whether Bristol-Myers applied to FLSA collective actions, the district court ultimately concluded Bristol-Myers applied because the circumstances presented by a mass action could not be meaningfully distinguished from those presented by a FLSA collective action. First, it rejected those district courts that likened a FLSA collective action to a class action, where class members’ claims are decided on a representational basis, and distinguished it from a mass action, where the plaintiffs file and prosecute their claims on an individual basis. Like a plaintiff in a mass action, the court reasoned, a plaintiff who opts-in to a collective action is accorded the status of a party plaintiff and is asserting their own individual claims. Second, it rejected those district courts that found a FLSA collective action, which proceeds as a single lawsuit, is different from a mass action, which often proceeds as multiple lawsuits. The issue in both, the court reasoned, involves “whether individual party plaintiffs could maintain their claims against a common defendant.” Third, it rejected those district courts that have suggested the imposition of a territorial limit on an FLSA collective action is at odds with Congress’ purpose in enacting the FLSA. Employees, the court reasoned, “would not be shut out of court” as they could pursue nationwide collective actions filed in a state where a court would have “general jurisdiction” over their employer or pursue statewide collective actions filed in the states where they worked or lived. Further, Congress’ failure to include a provision authorizing nationwide service of process in the FLSA, when it had included such a provision in the Clayton Act years earlier, suggested that Congress intended to limit where nationwide collective actions could be brought, it said.

The district court acknowledged the Supreme Court in Bristol-Myers was motivated in part by the concern that, if it expanded a state court’s jurisdictional reach, the state could impinge on the sovereignty of another state that may have an interest in the dispute. By contrast, in a nationwide collective action, there can be no concern in this regard as the United States is the sole sovereign. While the absence of such a concern made its decision a “close call,” the district court concluded it was not dispositive. It therefore held it did not have “specific jurisdiction” over the claims of employees who neither worked nor lived in Pennsylvania because these claims did not arise from or relate to the company’s activities in Pennsylvania.

Whether a district court can exercise personal jurisdiction over FLSA claims asserted by out-of-state employees remains a hotly disputed issue. To date, at least 12 district courts have held they cannot and at least 14 district courts have held they can. No appellate court has weighed in on the issue. Based on the reasoning of the district court in Weirbach, employers can marshal strong arguments that a district court does not have personal jurisdiction over out-of-state employees and may well be able to limit the scope of a nationwide collective action.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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