Federal Circuit Split on Questions of Personal Jurisdiction Over Opt-In Plaintiffs in FLSA Actions Widens with the Seventh Circuit’s Decision in Vanegas v. Signet Builders, Inc.
Kathryn Bennett, Law Clerk
In 2017, the U.S. Supreme Court held in Bristol-Myers Squibb Co. v. Superior Court of California[1] that California state courts did not have personal jurisdiction over hundreds of mass tort action plaintiffs’ claims when general jurisdiction over the defendant was lacking, the plaintiffs were non-residents of the forum state (California), and the non-resident plaintiffs did not suffer any of their alleged injuries in California. In the wake of this decision, lower courts remain divided on whether the Court’s logic in Bristol-Myers Squibb applies to require courts to analyze whether it has personal jurisdiction over each claim raised by any opt-in plaintiffs in collective actions under the Fair Labor Standards Act (“FLSA”), even when personal jurisdiction over the named plaintiff(s)’ claims is not disputed. Now, in Vanegas v. Signet Builders, Inc., the Court of Appeals for the Seventh Circuit has joined a growing number of circuits to hold that the Bristol-Myers Squibb decision does require a claim-by-claim personal jurisdiction analysis of each opt-in plaintiff’s claims under the FLSA.
Vanegas v. Signet Builders, Inc. and the Ongoing Circuit Split Regarding Bristol-Myers Squibb and FLSA Collective Actions
The Supreme Court’s holding in Bristol-Myers Squibb was premised on the due process limits of the Fourteenth Amendment to the United States Constitution on state courts’ exercise of personal jurisdiction in mass tort actions, but the Court noted that it was not opining on whether the Fifth Amendment to the Constitution imposed the same restrictions on the exercise of personal jurisdiction by federal courts. On August 16, 2024, the Court of Appeals for the Seventh Circuit weighed in on this open question in Vanegas v. Signet Builders, Inc.[2] There, the court held that under both the due process requirements of the Fifth Amendment and rules governing effective service of process when a federal statute like the FLSA does not authorize nationwide service, a federal district court must have personal jurisdiction over each opt-in plaintiff’s claims in a collective action under the FLSA in order to decide those plaintiffs’ claims.[3]
In siding with the Third, Sixth, and Eighth Circuit Courts, the Vanegas Court contrasted collective actions under the FLSA with class actions brought pursuant to Fed. R. Civ. P. 23, wherein a named plaintiff acts as the representative for the claims of all other members of the class. In brief, the Seventh Circuit explained that once a Rule 23 class action is certified, and all named and unnamed members of the class become a part of the action automatically (unless they affirmatively opt out of the class), the class essentially litigates the claim as one entity and the court’s jurisdictional focus is on the claim itself. Conversely, once a collective action is conditionally certified under the FLSA, any additional plaintiffs within the scope of the certification must opt-in to the action, and may present their own evidence individually in court. Due to the nature of collective actions under the FLSA, therefore, the Seventh Circuit concluded that each opt-in plaintiff of an FLSA collective action is required to establish that the court has personal jurisdiction over the defendant insofar as their FLSA claims are concerned.
In contrast, the Court of Appeals for the First Circuit has taken the position that neither the Fifth Amendment nor the federal rules of civil procedure governing service of process constrain a federal court’s jurisdiction over an opt-in plaintiff’s FLSA claims, so long as the defendant was appropriately served with a summons under the rules. Further, the dissent in Vanegas noted that the majority’s opinion directly conflicted with the FLSA’s purpose in authorizing collective actions to avoid identical, piecemeal litigation across multiple jurisdictions and the difficulties presented to both potential plaintiffs and named defendants as a result.
Positions of District Courts in the Tenth Circuit
In Warren v. MBI Energy Servs., Inc.,[4] which was decided before any Courts of Appeals had weighed in on the jurisdictional issues presented by Bristol-Myers Squibb to FLSA collective actions, the U.S. District Court for the District of Colorado sided with the current minority position, and held that only the named plaintiff or plaintiffs in an FLSA collective action are required to establish that the court has personal jurisdiction over their claims. The Warren court, like the Vanegas dissent, reasoned that FLSA collective actions are still fundamentally representative in nature, and that a broader reading of Bristol-Myers would frustrate Congress’ intent to enable employees to bring their wage and hour claims as a collective and on behalf of similarly situated workers. Conversely, at least one court in the District of New Mexico has taken the opposite stance and has agreed with the current majority position that Bristol-Myers Squibb requires a claim-by-claim analysis of each opt-in plaintiff’s claims in order to determine whether the court retains personal jurisdiction over the same.[5]
Implications of the Split in the Courts
At least in the Tenth Circuit, the question of Bristol-Myers Squibb decision’s impact on jurisdictional prerequisites to opt-in plaintiffs’ claims under the FLSA remains an open one, and it will be interesting to see if and when the Tenth Circuit Court of Appeals weighs in on the issues addressed by its sister circuits. Regardless, the questions posed by Vanegas and other similar decisions appear ripe for Supreme Court resolution. Campbell Litigation will remain abreast of developments on this issue as the law surrounding it continues to develop within the Tenth Circuit and elsewhere.
[1] Bristol-Myers Squibb Co. v. Superior Court of California, 582 U.S. 255 (2017).
[2] Vanegas v. Signet Builders, Inc., --- F.4th ----, 2024 WL 3841024, at *1 (7th Cir. Aug. 16, 2024).
[3] 29 U.S.C. § 201.
[4] Warren v. MBI Energy Servs., Inc., No. 19-CV-00800-RM-STV, 2020 WL 937420, at *6 (D. Colo. Feb. 25, 2020), report and recommendation adopted in part, No. 1:19-CV-00800-RM-STV, 2020 WL 5640617 (D. Colo. Sept. 22, 2020).
[5] See Bone v. XTO Energy, Inc., 561 F. Supp. 3d 1132, 1138 (D.N.M. 2021) (holding that the Bristol-Myers jurisdictional analysis was required in collective actions rooted in federal law).