A recent federal appellate ruling is likely a relief for some employers on the West Coast, and perhaps beyond. Although the 9th Circuit Court of Appeals’ opinion is only binding in several western states, it nevertheless represents the latest chapter in a growing trend among federal appellate courts. That trend suggests that, when employees undertake a Fair Labor Standards Act collective action lawsuit, the trial court must determine personal jurisdiction on a claim-by-claim basis, where each opt-in plaintiff must have sufficient ties to the employer’s business in that state. If you have questions about these types of lawsuits, it is advisable to consult with an experienced Atlanta collective action lawyer regarding your specific situation.
The plaintiffs in the 9th Circuit case were a group of current and former tipped employees of the restaurant chain Cracker Barrel, who sued their employer for violating the FLSA. Specifically, the servers alleged that the restaurant’s use of tip credits and its payment practices for tipped workers did not comply with the law’s requirements.
The employees sued in federal court in Arizona. In their court papers, the employees asked the court to certify a collective consisting of “all servers who worked for Cracker Barrel in states where it attempts to take a tip credit… over the last three years.”
The restaurant objected to the breadth of the proposed collective and, after losing in the trial court, appealed to the 9th Circuit. The crux of the employer’s argument was, in layman’s terms, “They cannot do that. The U.S. Supreme Court’s 2017 ruling in Bristol-Myers Squibb v. Superior Court of California says that all opt-in plaintiffs must have a sufficient connection to the state where the plaintiffs brought the suit.”
The appeals court agreed with the employer. The court stated that, although the Bristol-Myers case differed (it involved a mass tort lawsuit), the Supreme Court’s decision regarding jurisdiction applied to FLSA collective actions, such as that of the Cracker Barrel servers.
A Plaintiff-by-Plaintiff Analysis of Personal Jurisdiction
The Bristol-Myers ruling required trial courts to look at specific personal jurisdiction on a “claim-by-claim” basis. In practice, in the Cracker Barrel case, the District Court was required to look at each potential opt-in plaintiff one by one, and allow only those servers whose cases bore “a sufficient connection to” Cracker Barrel’s operations in Arizona to opt in.
The 9th Circuit is the fifth federal appeals court to reach this conclusion. The 3d, 6th, 7th, and 8th Circuit courts all came to a similar conclusion, deciding that the Bristol-Myers ruling limited FLSA collective action in this way when it comes to personal jurisdiction. The 1st Circuit, which covers several New England states, is the only federal appeals court to reach the opposite conclusion. (So, if you have (or are facing) a FLSA collective action in Tennessee, existing appellate precedent will require that each opt-in plaintiff have sufficient ties to Tennessee to participate in the case.)
The 11th Circuit court has not addressed the question yet. However, in July of last year, the Northern District of Georgia looked at this precise topic. That case involved a FLSA collective action brought by pizza delivery drivers against their employer, a Pizza Hut franchisee, alleging minimum wage violations. The trial judge, deciding that the arguments made by the majority of appeals courts were “persuasive,” ruled similarly, limiting the collective to just those drivers who had sufficient connections to the franchisee’s business in Georgia.
FLSA collective actions can be complicated cases, with the potential to encompass massive, sprawling arrays of opt-in plaintiffs. Rulings like the Supreme Court’s Bristol-Myers decision and the District Court opinion in the Pizza Hut franchisee lawsuit can offer helpful guardrails for limiting the size and scope of a collective. Given the complexity of these cases and the many gray areas within them, having knowledgeable legal counsel is vital. The skilled FLSA collective action attorneys at Parks, Chesin & Walbert have extensive experience handling these kinds of cases and ensuring that our clients’ rights are protected to the maximum extent of the law. Contact us through this website or at 404-873-8048 to schedule a consultation today.