The Second Circuit has just narrowed how far FLSA collective actions can reach. The court ruled that a court can’t hear the claims of out-of-state plaintiffs unless the employer is essentially “at home” in that state or has agreed to be sued there. In general, FLSA collective actions that try to stretch nationwide will now face significant limitations. The decision applies the Supreme Court’s 2017 Bristol-Myers Squibb v. Superior Court of California personal-jurisdiction analysis to FLSA collectives. In doing so, the Second Circuit lines up with the Third, Sixth, Seventh, and Eighth Circuits. This leaves the First Circuit as the only holdout on the other side of a growing circuit split. That split could eventually land at the Supreme Court.
What this means for Out-of-State Litigants
Practically, this means a nationwide FLSA collective actions can only go forward in a New York, Connecticut, or Vermont federal court if the employer is incorporated or headquartered there. Or, the employer must have otherwise consented to that court’s jurisdiction over all the claims. This includes claims with no connection to that state. Notably, courts will be watching for whether collective actions under the FLSA have opt-in plaintiffs who can individually prove jurisdiction. Each opt-in plaintiff now has to show independently that the forum court actually has jurisdiction over their particular claim. As a result, this directly affects FLSA collective actions. The court was candid about the point of this. It aims to shut down forum shopping. In forum shopping, plaintiffs’ counsel pick whichever circuit has the most favorable case law and try to sweep in a nationwide class regardless of where the employer is actually based.
The case itself arose when two Vermont-based delivery drivers sued a national bakery chain in Vermont federal court. They alleged that the company had misclassified both Vermont and out-of-state drivers as independent contractors and stiffed them on overtime. Because the bakery wasn’t headquartered or incorporated in Vermont, the court held it had no power to adjudicate the claims of the drivers who worked outside Vermont. Therefore, those claims had to be dismissed. In light of this, collective actions under the FLSA may often be dismissed for lack of jurisdiction in similar fact patterns.
With the Second Circuit now in the majority camp, the First Circuit’s opposing view looks increasingly isolated. It is also likely to carry less weight with courts outside New England. Unless the First Circuit changes course, the Supreme Court may ultimately need to step in to resolve the split. This would set one nationwide standard for how FLSA collectives can be brought. Thus, expect FLSA collective actions to face new and evolving legal challenges ahead.
Practical Effect of Ruling
For employers, the upside is real — this gives companies sued in the Second Circuit a stronger jurisdictional argument against sprawling, nationwide collectives. But it’s not a clean win in every case. Defeating a nationwide action in one forum can just push plaintiffs to refile copycat suits in other states. Or it can lead them to bring the nationwide claim in the employer’s home state, where BMS offers no protection at all. Clearly, nationwide FLSA collective actions will now be met with new jurisdictional hurdles for employers to leverage.