November 18, 2019

November 18, 2019

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No Right, Just Rules: Court Lacks Jurisdiction Over Steakhouse Managers’ Claims

A Massachusetts federal court this week became the latest district court to weigh in on the applicability of the Supreme Court’s decision in Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco Cty, to nationwide collective actions brought under the Fair Labor Standards Act (FLSA).

This time, the court found that Bristol-Meyers does apply to the FLSA, and thus it did not have personal jurisdiction over the defendant employers with regard to the claims of out-of-state opt-in plaintiffs. While courts across the country are divided concerning the applicability of Bristol-Meyers to FLSA collective actions, this case adds to the growing body of cases favorable to employers seeking to limit the scope of collective actions.

In Chavira v. OS Restaurant Services, LLC, et al., the plaintiff sought conditional certification of a nationwide collective of “front of house” Outback Steakhouse restaurant managers, alleging that they had been misclassified as exempt from overtime requirements of the FLSA. In support, the plaintiff filed several affidavits by managers who had opted in to join the case, only one of whom worked at a Massachusetts location. In addition to opposing conditional certification, the defendant employer moved to strike the opt-in consents of managers who had joined the case but did not work at Massachusetts restaurant locations.

In Bristol-Myers, the Supreme Court of the United States determined the limits of personal jurisdiction in cases where the defendant was neither incorporated nor headquartered in the state where the lawsuit was filed. The Supreme Court held that in those instances, courts in the forum state lack specific personal jurisdiction over the defendant where non-resident plaintiffs’ claims arose outside of the forum state.

Outback Steakhouse is headquartered in Florida, so it argued that according to Bristol-Myers the U.S. District Court for the District of Massachusetts did not have specific personal jurisdiction over the claims of opt-in plaintiffs outside Massachusetts. The plaintiff, on the other hand, argued that Bristol-Myers did not apply to FLSA claims.

Although the court expressed “serious concerns regarding the implications of its ruling on the future of FLSA collective actions,” it ultimately agreed with the employer. The court found that the opt-in mechanism of an FLSA collective action is more similar to the multi-plaintiff action brought in Bristol-Myers than it is to the opt-out nature of state law class actions. Courts rejecting the application of Bristol-Myers to FLSA collective actions have found the collective action mechanism to be analogous to the class action mechanism. As a result, the court deemed the Bristol-Myers specific jurisdiction inquiries to be appropriate and applicable in the FLSA context.

The court went on to find that, under Bristol-Myers, the out-of-state opt-in plaintiffs could not show a sufficient connection between Massachusetts and the claims at issue in Chavira, because their claims arose outside of Massachusetts. The court held that the out-of-state opt-in plaintiffs could thus not demonstrate the court’s specific personal jurisdiction over the employer, and therefore struck those opt-in plaintiffs.

Turning to the motion for conditional certification, the court also noted that the affidavits of the out-of-state opt-ins were immaterial, because the affidavits did not speak to the practices of restaurants and employees in Massachusetts – which were the only restaurants or employees over which the court had personal jurisdiction. Thus, because only one affidavit came from a Massachusetts plaintiff, the court found that it could not find that the front of house managers in Massachusetts were sufficiently similar to conditionally certify a collective action. The court explained that while the conditional certification inquiry requires only a “modest factual showing,” the court could not make the “necessary finding on Plaintiff’s representations alone.” The court thus denied the motion for conditional certification, with leave to renew “if Plaintiff is later able to submit information showing other similarly situated employees whose claims against Defendants would not be barred on jurisdictional grounds.”

The Chavira decision provides useful reminders for employers facing nationwide collective actions under the FLSA. First, employers can consider asserting a defense based on personal jurisdiction as soon as it is available. Second, while workplace arbitration agreements receive most of the attention, jurisdictional arguments available under Bristol-Myers are another important tool employers can use to fracture putative nationwide FLSA collective actions. This well-reasoned decision provides employers with further support for this sort of argument.

© 2019 BARNES & THORNBURG LLP

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Peter J. Wozniak Barnes Thornburg Chicago  Labor Employment
Partner

Pete Wozniak is a vigorous advocate who strives to help his clients navigate issues that can be fraught with challenges as painlessly and efficiently as possible. He is a candid and personable counselor, offering his clients direct advice by leveraging his deep experience performing a broad range of outcome critical functions for complex labor and employment matters.

Pete represents clients across a number of industries, including transportation and logistics, restaurants, retail, manufacturing, and temporary staffing. Handling a number of high profile matters, he identifies the...

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Mark Wallin, Attorney, BT, Chicago, Labor Employment
Of Counsel

In order to provide the best counsel, Mark Wallin believes it is his role to understand his clients’ business needs so he can help them determine what resolution will provide the most benefit. His keen ability to understand his clients’ practical concerns allows him to advise on the best path to successfully resolve issues – whether through traditional litigation or negotiated resolution.

In the course of his practice, Mark has focused on providing the highest-level of service to his clients and building long-term relationships. Specifically, he defends employers in a wide range of employment matters including wage and hour class and collective actions, as well as complex, multi-plaintiff and single plaintiff employment discrimination claims brought not only by private plaintiffs but also initiated by the Equal Employment Opportunity Commission (EEOC).

Mark has successfully represented companies of virtually all sizes, litigating matters across multiple areas of the law, from the pleading stage through appeal. He has also represented clients in arbitrations and before administrative bodies.

Mark vigilantly stays abreast of cases, laws, and trends that may impact his clients coming out of the courts, Congress and the state legislature, as well as the U.S. Department of Labor, the EEOC, and state regulatory agencies. He strives to keep a watchful eye on how labor and employment related laws are evolving so as to proactively advise clients.

In addition to his regular legal practice, Mark has undertaken several pro bono cases including trying criminal jury trials in state and federal court, and representing indigent plaintiffs in civil rights matters as part of the federal Trial Bar.

Mark began honing his litigation skill during law school when he interned at the U.S. Attorney’s office for the Northern District of Illinois, where he handled both civil and criminal issues. He also interned for a judge on the U.S. Court of Appeals for the Seventh Circuit, which gave him a unique vantage of seeing the issues from the court’s perspective.

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