Courts Restrict Choice of Forum for FLSA Collective Actions

In multiple rulings within the last week, courts have applied the precedent set by a prior Supreme Court ruling that forbids cases from “forum shopping” to dismiss FLSA collective actions. These rulings give employers a potentially powerful tool to protect against litigation intentionally filed in an unfavorable jurisdiction.

A few years ago, the Supreme Court dismissed a mass tort action regarding 600 different product liability claims filed primarily by non-Californians in a California state court. It held that California did not hold subject matter jurisdiction over the case. This instituted two rules for establishing a state’s jurisdiction over a case these were:

• The defendant is subject to the state’s general jurisdiction, such as if it was incorporated in said state.
• The claims made particularly arose from the actions of the defendant within the forum.

This ruling essentially limits certain types of collective litigation to claims that center within a particular state. Otherwise, if a plaintiff intends to litigate a nationwide case, it would need to be filed within the home forum of a defendant.

This is an enormous boon for defendants in many cases as, under the previous rules, a plaintiff could pick and choose between forums to file an action in a location where the law was particularly unfavorable to a defendant. This could happen in a remote forum where few claimants even reside.

Since this ruling, numerous employers have claimed that a collective nationwide FLSA action must be litigated within the home state of the employer or be limited to the forum where they were brought. Though such arguments have not fared as well for Rule 23 class actions, they have begun to see success when dealing with FLSA collective actions.

In federal district courts, these arguments have seen mixed success across the country; however, as recently as last week, the Ninth Circuit Court has applied this precedent and vacated certification of a case regarding Rule 23. Soon after this, the Sixth Circuit Court chose to distinguish Rule 23 cases and held that this new precedent will apply to collective FLSA actions. 

What all this means for employers is simple, plaintiffs in FLSA collective actions will now be limited in their ability to shop between forums regardless of their relation to the matter and choose one that suits the interests of their case. This stands to reduce the costs of employers who would otherwise need to litigate matters in remote and quite likely highly unfavorable jurisdictions.