Sixth Circuit Limits the Scope of Collective Actions
Executive Summary: The Sixth U.S. Circuit Court of Appeals (the federal appeals court with jurisdiction over Kentucky, Michigan, Ohio, and Tennessee) recently held that Fair Labor Standards Act (FLSA) lawsuits filed on behalf of employees in multiple states can only proceed when the court has proper jurisdiction over the employer defendant.
Wage and hour lawsuits filed under the FLSA are frequently filed as collective actions. The collective action procedure makes it possible for a named plaintiff to bring a lawsuit on behalf of other similarly situated employees. In such cases, the plaintiff’s goal is to bring the lawsuit on behalf of the largest possible group of employees. Indeed, it is not uncommon for a plaintiff to seek conditional certification for a collective action that would include all similarly situated employees nationwide. The Sixth Circuit’s recent holding in Canaday v. Anthem Companies, Inc. will now make it more difficult for plaintiffs to include in FLSA lawsuits employees who reside outside the state where the lawsuit was filed.
In the Anthem case, which was pending in federal court in Tennessee, the district court conditionally certified a collective action that included employees in multiple states. The plaintiff notified these employees of the lawsuit and gave them an opportunity to opt-into the lawsuit. Dozens of employees who live outside of Tennessee opted-into the case. Nonetheless, the Sixth Circuit held that it was improper for the out-of-state employees to join the case on jurisdictional grounds.
A court may exercise two types of personal jurisdiction over a corporation—general jurisdiction and specific jurisdiction. General jurisdiction may be exercised where the corporation is domiciled or headquartered. Since Anthem’s principal place of business was in Indiana, not Tennessee, the court did not have general jurisdiction over Anthem.
A court may exercise specific jurisdiction over a corporation if the plaintiff’s claim arises out of or is closely related to the defendant’s contacts with the forum state. The Sixth Circuit applied the U.S. Supreme Court’s decision in Bristol-Myers Squibb Co. v. Superior Court to show the non-resident opt-in plaintiffs did not have sufficient connections with Tennessee for the court to have jurisdiction over the claims. Hence, only employees who resided in Tennessee could join the case as opt-in plaintiffs.
The court’s decision in Anthem will make it more difficult for plaintiffs in the Sixth Circuit to include out-of-state employees in collective actions. Except in cases where the court has general jurisdiction over the corporate defendant, it will be unlikely that out-of-state employees can join as plaintiffs.
If you have any questions regarding this decision or other labor or employment issues impacting employers in the Sixth Circuit, please contact the authors of this Alert, Frank Day, partner in our Memphis and Nashville offices at fday@fordharrison.com, or Erica Johnson, associate in our Memphis office at ejohnson@fordharrison.com. Of course, you can always contact the FordHarrison attorney with whom you usually work.
