CHICAGO - A divided federal appeals panel said a Wisconsin builder doesn’t have to face a nationwide federal labor law class action, saying such actions to the state in which the work at the heart of the case was done.
Jose Luna Vanegas sued Texas-based Signet Builders in federal court in Wisconsin, alleging his employer overworked and underpaid him and other holders of H-2A guestworker visas. Luna Vanegas, who built livestock barns in three states, including Wisconsin, challenged Signet’s classification of his work as agricultural and therefore ineligible for overtime pay under the Fair Labor Standards Act.
Although a federal judge granted Signet’s motion to dismiss, a U.S. Seventh Circuit Court of Appeals panel reversed that decision. Luna Vanegas then moved for conditional class certification, seeking to establish the right to notify potential class members about joining the suit. That led to a dispute about the scope of that notice, during which U.S. District Judge James Peterson agreed there is no requirement that federal district court have specific jurisdiction over claims of each opt-in plaintiff for FLSA class actions.
The appellate panel accepted an appeal from Signet to address that particular question.
Judge Amy St. Eve wrote the majority opinion, filed Aug. 16; Judge Doris Pryor concurred. Judge Ilana Rovner dissented.
“Two key cases assessing personal jurisdiction in other forms of aggregate litigation help frame the issue here,” St. Eve wrote, pointing to a 2017 U.S. Supreme Court opinion, Bristol-Myers-Squibb v. Superior Court of California, San Francisco County, which established the state’s courts couldn’t consider a mass action of claims related to a prescription blood thinner from nearly 600 people who didn’t live in California.
St. Eve also referenced a 2020 Seventh Circuit opinion, Mussat v. IQVIA, which clarified the distinction between mass action and class action, specifically based on protections for absentee plaintiffs and facilitation of representative litigation.
But the case against Signet is a mass action, St. Eve wrote, adding the Bristol-Myers-Squibb precedent “requires a claim-by-claim personal jurisdiction analysis in the FLSA context,” an position she said echoes in opinions from the First, Sixth and Eighth circuit federal appeals courts.
She also incorporated Congress’ FLSA amendment introducing the opt-in provision under which Luna Vanegas sought to add plaintiffs. St. Eve explained the idea was ensuring people bringing FLSA litigation either logged individual claims or joined mass litigation within 120 days. Class actions, meanwhile, require representative plaintiffs who must prove jurisdiction and other measurables, but can be joined further into legal proceedings by people who meet certain criteria, at potentially a lower threshold than the named plaintiffs.
The majority rejected an argument from Luna Vanegas – one accepted in Rovner’s dissent – raising the scope of Fifth Amendment limitations on the jurisdiction of federal courts. St. Eve said “the 14th Amendment, not the Fifth, does all the jurisdictional work in this case” and further refused to allow extension of personal jurisdiction over related claims from different parties.
“The district court’s personal jurisdiction reaches only those claims that Wisconsin’s specific jurisdiction embraces,” St. Eve wrote. “The bulk of these will, like Luna Vanegas’, involve work performed in Wisconsin — though we leave it to the district court to decide if others fit the bill.”
The majority ultimately asserted a district court needs personal jurisdiction over every plaintiff suing under the FLSA; said federal court rules call on new plaintiffs outside of Wisconsin to serve summons to Signet in order to join the mass action; and noted “a nationwide collective of Signet’s workers could proceed in Texas, which enjoys general jurisdiction over Signet, with no loss of efficiency” as compared to Luna Vanegas’ current lawsuit.
In her dissent, Rovner said the majority opinion undoes Congress’ attempt to level the playing field between employees and employers.
“I worry for the workers the FLSA was meant to protect,” Rover wrote, “those who, by the very nature of their allegations, will almost certainly be unable to pursue relief on their own, and who rely on the collective action mechanism to have their rights vindicated at all.”
Rovner said the FLSA amendment was about undercutting lawsuits from organizations, such as labor unions, rather than individual workers, while also eliminating “one-way intervention” through the opt-in provision, which forced people to join lawsuits in their early stages.
“It is unsurprising that for almost 80 years no court questioned whether opt-in plaintiffs needed to individually establish personal jurisdiction over the defendant,” Rovner wrote, a point the majority attacked by noting the relevant timeframe begins with the 2017 Bristol-Myers-Squibb ruling.
The majority reversed Judge Peterson’s opinion and remanded the complaint.
The case drew interest from outside employment law groups, including the National Employment Lawyers Association, which filed an amicus, or friend of the court, brief in support of Luna Vanegas' lawsuit.
Christine Webber, co-chairwoman of the National Employment Lawyers Association Class & Collective Actions Practice Group, released a statement on the opinion: “There is a clear trend to block nationwide FLSA collective actions unless they are brought where there is general jurisdiction over the defendant. The alternative is to bring multiple separate cases, which adds to the workload of judges in multiple states and increases the cost of litigation for both parties.”
Signet is represented by Wright Close & Barger, of Houston. Lead attorney Bradley W. Snead did not respond to a request for comment.