United States: Sixth Circuit Decision May Help Employers Facing FLSA Collective Actions

Employers may finally catch a break from nation-wide and multi-state Fair Labor Standards Act collective litigation. The FLSA permits employees to bring claims individually, or on behalf of similarly situated individuals in a collective action, similar to a class action. These claims can range from failure to pay minimum wages to improper procedures for meal and rest breaks - and these violations add up quickly, making them one of the most expensive types of lawsuits an employer can face. In 2017, however, the United States Supreme Court issued a ruling in Bristol-Myers Squibb Co. v. Superior Court of Cal., 137 S.Ct.1773 (2017), stating that due process did not permit the exercise of personal specific jurisdiction over nonresident consumers' claims in the mass tort context. Since the Bristol-Myers decision, district courts have been split on whether that decision limits a court's exercise of personal specific jurisdiction in FLSA actions to solely those claims arising within the state where the suit is brought.

The Sixth Circuit Court of Appeals is the first court of appeals to consider the issue. See Canaday v. The Anthem Companies, Inc., Case No. 20-5947. The overwhelming majority of district courts within the Sixth Circuit have held that Bristol-Myers divests federal courts of specific jurisdiction over out-of-state opt-in plaintiffs in FLSA collective actions. These courts "reasoned that out-of-state opt-in plaintiffs in an FLSA collective action have even less of a connection to the forum than the out-of-state plaintiffs in the Bristol-Myers mass tort action." Canaday, 439 F. Supp. 3d 1042, 1048-49 (E.D. Tenn. 2020).

Briefing to the Sixth Circuit ended on March 16, 2021. If the Sixth Circuit upholds the underlying decision and thus sides with the majority of the district courts in the circuit, it could chip away at precedent that has left employers and corporations exposed to FLSA litigation on a nation-wide basis.

A Sixth Circuit decision affirming the district court would assist employers with employees in more than one state by providing a creative defense to limit nation-wide FLSA actions to state-by-state groupings.

Originally published Mar 22nd, 2021

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