On August 16, 2024, a divided Seventh Circuit panel held that a court needs to establish personal jurisdiction over each individual member of a Fair Labor Standards Act (“FLSA”) collective, further contributing to an existing circuit split on this issue.
In Jose Ageo Luna Vanegas v. Signet Builders, Inc., the plaintiff filed suit in the U.S. District Court for the Western District of Wisconsin, alleging claims of unpaid overtime wages under the FLSA. The district court later conditionally certified an FLSA collective that by definition included employees who did not perform any work for Signetin the State of Wisconsin. The parties disputed the scope of the collective notice. Signet argued that notice should be limited to employees who had worked in Wisconsin; Vanegas argued that notice should be issued to all workers regardless of locale. Signet’s primary argument was straightforward: Signet is incorporated and headquartered in Texas, so the Wisconsin district court had only specific personal jurisdiction over it. Therefore, Signet argued, because general personal jurisdiction did not exist and specific personal jurisdiction could not be established with respect to employees who did not perform work in Wisconsin, out-of-state employees could not bring claims against Signet in Wisconsin—even as part of a conditionally certified FLSA collective. Signet’s argument mirrored similar ones made to courts across the country in cases involving multi-state FLSA collective actions following the Supreme Court’s decision in Bristol-Meyers Squibb Co. v. Superior Court of California, San Francisco County (“BMS”), 582 U.S. 255 (2017). In that case, the U.S. Supreme Court held that California courts did not have jurisdiction over non-California residents’ claims in a “mass action” case where the defendant was neither incorporated in California nor was California the state where the defendant maintained its principal place of business. The Wisconsin district court ordered the broad notice that Vanegas sought, but ultimately certified for the Seventh Circuit the question of whether a court must have specific personal jurisdiction over the claim of each opt-in plaintiff in an FLSA collective action when general personal jurisdiction does not exist.
The Seventh Circuit accepted the interlocutory appeal under 28 U.S.C. § 1292(b) and reversed. The Seventh Circuit majority, joining the Third, Sixth and Eighth Circuits in a split against the First Circuit, held that courts must perform a claim-by-claim analysis with respect to personal jurisdiction in cases involving FLSA claims. This decision was based on the court’s finding that “an FLSA collective action tracks with a mass action [as discussed in BMS]—and is quite unlike a class action [which does not require the same personal jurisdiction analysis with respect to each member of a certified Rule 23 class].” Seventh Circuit Judge Ilana D. Rovner penned a pointed dissent in which she contended that the majority’s decision was unwarranted, and eliminated “a level playing field between employers and employees” in FLSA cases.
How the case will proceed from here is unclear. For instance, Vanegas could petition the Seventh Circuit for a rehearing en banc; petition the U.S. Supreme Court to grant certiorari to resolve the current circuit split; or move forward with notice of the conditionally certified collective being issued only to employees who performed work in Wisconsin and, potentially, pursue the claims of non-Wisconsin employees in other jurisdictions. Regardless, what happens next bears watching as it could have substantial implications on where plaintiffs pursue FLSA collective action claims and how employers defend them.
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