On January 13, 2022, in Waters v. Day & Zimmermann NPS, Inc., the First Circuit Court of Appeals became the third federal appellate court to address the application of the Supreme Court of the United States’ decision in Bristol-Myers Squibb Co. v. Superior Court of California to Fair Labor Standards Act (FLSA) collective actions. Unlike the Sixth Circuit Court of Appeals and the Eighth Circuit Court of Appeals, however, the First Circuit concluded that a federal court does have personal jurisdiction over claims asserted by nonresident opt-in plaintiffs. The First Circuit’s decision thus creates a split among federal appeals courts and raises the prospect that the Supreme Court will ultimately have to resolve the issue.
The named plaintiff, John Waters, was a former mechanical supervisor for the defendant, Day & Zimmermann, Inc., which provides services to power plants. He filed a complaint in the U.S District Court for the District of Massachusetts alleging that Day & Zimmermann had violated the overtime wage requirements of the FLSA. Subsequently, more than 100 individuals submitted opt-in consent forms seeking to participate in the litigation. Day & Zimmermann moved to dismiss the claims of opt-ins whom it had not employed in Massachusetts, arguing that the court did not have general or specific personal jurisdiction for those individuals’ claims pursuant to the Supreme Court’s decision in Bristol-Myers Squibb v. Superior Court of California.
In that case, as noted by the First Circuit, the Supreme Court held that “in view of the Fourteenth Amendment, state courts cannot entertain a state-law mass action—an aggregation of individual actions—if it includes out-of-state plaintiffs with no connection to the forum state.” Based on that holding, the Sixth Circuit (in Canaday v. The Anthem Companies, Inc.) and the Eighth Circuit (in Vallone v. CJS Solutions Group, LLC) held last year that federal courts lack personal jurisdiction over FLSA collective action claims brought by individuals who are not residents of the forum state.
The First Circuit’s Analysis
The First Circuit determined that the Bristol-Myers Squibb decision did not control the personal jurisdiction analysis for FLSA claims because it involved nonresidents’ state law claims in a state court, in contrast to federal law claims under the FLSA in federal court. Specifically, it explained that the Bristol-Myers Squibb decision “rest[ed] on Fourteenth Amendment constitutional limits on state courts exercising jurisdiction over state-law claims” and thus did not control whether a federal court may exercise jurisdiction over federal claims asserted by nonresident plaintiffs.
The court of appeals then analyzed whether Rule 4 of the Federal Rules of Civil Procedure limited district courts’ jurisdiction by incorporating the Fourteenth Amendment. In Canaday, the Sixth Circuit concluded that Rule 4(k) incorporated the limits on personal jurisdiction imposed by the Due Process Clause of the Fourteenth Amendment. The First Circuit rejected that conclusion, stating that the plain language of Rule 4(k) merely concerns the service of summonses and does not “constrain a federal court’s power to act once a summons has been properly served, and personal jurisdiction has been established.” The First Circuit found support for its reading of Rule 4(k) in the history of changes to Rule 4(k), concluding that although serving a summons in accordance with state or federal law is necessary to establish jurisdiction over a defendant in the first instance, the Fifth Amendment’s constitutional limitations limit the authority of the court after service has been effectuated at least in federal-law actions.
Finally, the First Circuit looked to the congressional intent behind the FLSA and found that the U.S. Congress had intended to provide for broad participation in collective actions under the law. The court therefore concluded that jurisdictional limitations on FLSA collective actions (such as those that the Sixth Circuit and Eighth Circuit imposed) would frustrate Congress’s goal in enacting the FLSA of making the collective action process broadly available to employees. Thus, the First Circuit denied the employer’s motion to dismiss the opt-in claims of the nonresident plaintiffs and allowed those claims to proceed.
One member of the three-judge panel who considered the appeal dissented from the majority’s opinion, not because he disagreed with the majority’s interpretation of Rule 4(k) on the merits, but rather because, in his view, there was “no reason … to decide [the] question at this time.” Noting that the majority’s reading of Rule 4(k) was both novel, in that no other court “(including our own) ha[d] ever read” the Rule as the majority did, and controversial in that it conflicted directly with the way in which two other federal appeals courts and most commentators had read the Rule, the dissenting judge observed that federal courts in the First Circuit will now be required “to change how they have been doing things in many cases, and in all cases that involve state law claims” in order to account for the majority’s idiosyncratic reading of Rule 4(k). According to the dissenting judge, his colleagues in the majority could have avoided the result simply by dismissing the appeal, allowing the case proceed in the district court and then deciding the issue at a later stage in the proceedings, if a decision ultimately proved necessary and was not obviated by subsequent developments in the case.
Employers with operations within the First Circuit’s jurisdiction may see an increase in multistate FLSA collective actions filed in the circuit’s district courts. The First Circuit’s jurisdiction includes U.S. district courts in Maine, Massachusetts, New Hampshire, Puerto Rico, and Rhode Island. Meanwhile, plaintiffs are likely to avoid pursuing such lawsuits within the Sixth Circuit and the Eighth Circuit because of the contrary holdings in Canaday and Vallone. The Sixth Circuit’s jurisdiction includes federal courts in Kentucky, Michigan, Ohio, and Tennessee; the Eighth Circuit has jurisdiction over federal courts in Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota.
The First Circuit’s decision creates a split in appellate-level authority on an issue that has significant consequences for employers and workers. When such a split in authority arises, the chances that the Supreme Court will accept the issue for review in order to resolve the split increases dramatically. The likelihood of Supreme Court review is heightened here where the issue that is the subject of the split has far-reaching consequences for the size and scope of lawsuits under a law that is a frequent source of litigation.