Hunton Employment & Labor Perspectives

In Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco Cty., 137 S. Ct. 1773 (June 17, 2017), the U.S. Supreme Court established limitations on personal jurisdiction over non-resident defendants in “mass actions,” a litigation strategy often utilized by plaintiffs’ class action attorneys to sue corporations in plaintiff-friendly jurisdictions that have little to no connection with the underlying dispute.  The Supreme Court determined that the requisite connection between the corporate defendant and the litigation forum must be based on more than a combination of the company’s connections with the state and the similarity of the claims of the resident plaintiffs and the non-resident claimants.  The ruling directed the dismissal of 592 non-California claims from 33 other states.  As a result, the ruling supports the view that plaintiffs cannot simply “forum shop” in large class and collective actions and instead must sue where the corporate defendant has significant contacts for purposes of general jurisdiction or limit the class definition to residents of the state where the lawsuit is filed.

The Supreme Court’s decision was limited to personal jurisdiction issues in state courts, and the Court specifically declined to decide whether the same analysis would apply to federal court actions.  As a result, the lower courts have been left to decide the increasingly important question of whether, and to what extent, the Supreme Court’s analysis applies to class and collective actions pending in federal court.  The case law in the FLSA context has been particularly sparse.  In Maclin v. Reliable Reports of Texas, Inc., 1:17-cv-2612 (N.D. Ohio Mar. 26, 2018), the U.S. District Court for the Northern District of Ohio became one of the first federal courts to apply the Supreme Court’s Bristol-Myers analysis to nationwide FLSA collective actions.  There, the court dismissed non-Ohio residents from a putative nationwide collective action because the defendant-employer was headquartered in Texas and therefore did not have sufficient contacts with Ohio to justify the exercise of personal jurisdiction over the defendant with respect to the non-Ohio class members.

As with most personal jurisdiction issues, the Court’s analysis is somewhat tedious, but the key takeaway is that a multi-state or nationwide FLSA collective action can only be brought in the state where the defendant is “at home” – i.e., where it is incorporated and/or where its headquarters are located.

It remains to be seen whether other federal courts will agree with and adopt the Maclin Court’s holding.  If so, the Maclin decision could prove to be a beneficial litigation tool to prevent forum shopping in multi-state and nationwide FLSA collective actions.