On July 26, 2022, the Third Circuit Court of Appeals issued an opinion in Christa Fischer, et al. v Federal Express Corp., et al., affirming a decision from the Eastern District of Pennsylvania barring two opt-in plaintiffs from joining a putative collective action under the Fair Labor Standards Act (FLSA).
The district court had rejected the two plaintiffs’ membership in the putative class because their claims had no connection to Pennsylvania. In affirming the district court’s ruling, the Third Circuit held that, in FLSA collective actions, “every plaintiff . . . who seeks to opt-in to the suit must demonstrate his or her claim arises out of or relates to the defendant’s minimum contacts with the forum state.”
As a result of its ruling, the Third Circuit joins the Sixth Circuit and Eighth Circuit in concluding that the Supreme Court’s holding in Bristol-Myers Squibb Co. v Superior Court of California, 137 S. Ct. 1773 (2017) (BMS) applies in the context of FLSA collective actions where the proposed collectives include plaintiffs who reside outside the state in which the action is pending and the venue is not one where the corporate defendant is subject to general jurisdiction.
Canaday and Vallone – and now Fischer – stand for the proposition that nationwide FLSA collective actions can proceed only in states where the employer “resides” (ie, where it is incorporated or has its principal place of business), and that the scope of FLSA collectives filed outside of such states will be limited to employees who actually performed work in the state where the lawsuit is filed.
Notably, the First Circuit reached the opposite conclusion earlier this year and declined to extend BMS to FLSA collective actions, but currently remains the only Circuit Court of Appeals to have adopted this position. Additionally, earlier this summer, the Supreme Court declined to hear petitions seeking review of the rulings by the First and Sixth Circuits, ensuring that – for the time being – the Circuit split will continue.
For employers with presences in multiple states, the Third Circuit’s opinion in Fischer, along with the previous similar holdings from the Sixth and Eighth Circuits, provide a potential means to limit the size and scope of FLSA collective actions – at least outside the First Circuit. However, these opinions do not eliminate the prospect of nationwide FLSA collective actions; they merely limit the viability of such actions to states where the employer is subject to general jurisdiction (and may simply increase the likelihood that employers will face such suits in those courts).
At the very least, employers can be more confident that, if they are forced to defend against a nationwide FLSA collective action, it will likely be on their “home turf.”