FLSA Collective Action Trimmed Because Court Lacked Specific Jurisdiction

A Minnesota federal district court recently denied FLSA conditional certification over the claims of workers who were not assigned to a Minnesota project at issue or not Minnesota residents due to specific jurisdiction considerations. Vallone et al. v. The CJS Solutions Group, LLC, No. 19-1532 (D. Minn. Feb. 5, 2020).

The court based its decision on a 2017 U.S. Supreme Court decision that held that due process requires a court to have specific jurisdiction over a defendant in a mass action only if the action arises out of or relates to that defendant’s contacts with the forum.

The plaintiffs in Vallone assisted physicians, nurses, and others with transitioning to new computerized patient-management systems in hospitals and other health care facilities nationally. The defendant-company is headquartered and has its principal place of business in Florida. The named plaintiffs traveled to facilities in Minnesota and hospitals in Missouri and New York. The plaintiffs claimed the company did not lawfully pay them for time spent traveling from remote locations to worksites during the workday or for a cancelled day of training for the Minnesota project that required some workers to travel to Minnesota.

The plaintiffs sought conditional certification of “all hourly paid, non-exempt, W-2 employees … whose time was neither paid under the [FLSA]” (1) while engaging in travel wherein the travel was undertaken during the employee’s normal working hours; or (2) for the cancelled training day in Minnesota for workers who did not live in the area.

The defendant-company argued, under Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017), that the District of Minnesota Court lacked specific jurisdiction over the company as to any putative plaintiff who worked outside the state of Minnesota. Because the plaintiffs in an FLSA collective action must opt-in to be included in a lawsuit, similar to a mass action, the opt-in plaintiffs’ claims establish the underlying controversy against the defendant, the court in Vallone reasoned. The court held that only if the claims arise out of or relate to the defendant’s contacts with Minnesota can it constitutionally exercise jurisdiction over the defendant.

Many courts are applying Bristol-Myers in the FLSA collective action context. Defendants in such actions should consider whether a potential collective may be limited at the conditional certification stage or earlier. Moreover, they should evaluate whether narrowing the size of the collective is possible right away so that they may properly raise the defense in their responsive pleadings. Please contact a Jackson Lewis attorney with any questions.

Seventh Circuit Denies Full Court Review of Class Notice Question

The U.S. Court of Appeals for the Seventh Circuit has denied en banc review of a ruling that created a new framework for when employees who have entered into arbitration agreements receive collective action notices.

Earlier this year, in a case of first impression, the Seventh Circuit developed a required framework for a district court to evaluate a plaintiff’s request that the court authorize notice to putative class members who have entered into arbitration agreements with their employer.  The Seventh Circuit vacated the district court’s order issuing notice and remanded for the lower court to apply the new standard. (A detailed summary of this ruling can be accessed here)

We will be watching closely to evaluate how the district court in this case and other cases applies the Seventh Circuit’s new framework. Please contact a Jackson Lewis attorney with any questions about this case.

Two More Significant Rulings for TCPA Litigation – Eleventh and Seventh Circuits Narrowly Interpret ATDS

In back-to-back decisions bound to have significant impact on Telephone Consumer Protection Act (TCPA) class action litigation, the Eleventh and Seventh Circuit Courts recently reached similar conclusions, narrowly holding that the TCPA’s definition of Automatic Telephone Dialing System (ATDS) only includes equipment that is capable of storing or producing numbers using a “random or sequential” number generator, excluding most “smartphone age” dialers. Each court expressly rejected the Ninth Circuit’s more expansive interpretation from a ruling in 2018, concluding that the TCPA covers any dialer that calls from a stored list of numbers “automatically”. These decisions are significant as most technologies in use today only dial numbers from predetermined lists of numbers.

Please find the rest of this article on our Workplace Privacy, Data Management & Security Report here.

The Supreme Court and the Future of the TCPA

In a decision that may have significant impact on businesses that face Telephone Consumer Protect Act (“TCPA”) related class action litigation, the Supreme Court recently accepted certiorari of a petition to rule on the constitutionality of the TCPA. The Court agreed to review a ruling of the Fourth Circuit which held that a TCPA exemption……

Please find the rest of this article on our Workplace Privacy, Data Management & Security Report here.

CCPA Data Breach Class Action Litigation Begins

As reported by Bloomberg Law, data breach class action litigation has begun under the California Consumer Privacy Act (CCPA). Filed in the Northern District of California, San Francisco Division, a putative class action lawsuit against Hanna Andersson, LLC and its ecommerce platform provider, Salesforce.com, alleges negligence and a failure to maintain reasonable safeguards, among other things, leading to a data breach.

Please find the rest of this article on our Workplace Privacy, Data Management & Security Report here.

Seventh Circuit Issues New Standard on Class Notice to Employees who Signed Arbitration Agreements

The U.S. Court of Appeals for the Seventh Circuit, in a case of first impression, has developed a required framework for a district court to evaluate a plaintiff’s request that the court authorize notice to putative class members who have entered into arbitration agreements with their employer.

The Seventh Circuit held on January 24, 2020, that notice of a collective action may be sent to putative class members who entered into arbitration agreements with class action waivers, unless (1) no plaintiff contests the existence or validity of the alleged arbitration agreements, or, (2) if contested by the plaintiffs, the defendant establishes, by a preponderance of the evidence, after the court allows discovery on the alleged agreements’ existence and validity, that a valid arbitration agreement exists for each employee it seeks to exclude from receiving notice.

The plaintiff, Susie Bigger, brought action against Facebook on behalf of herself and others “similarly situated” for violation of the FLSA overtime-pay requirements. Bigger asked the district court to authorize notice to the class of people she alleged were similarly situated. Facebook objected to the notice, arguing in part that many of the proposed notice recipients had entered arbitration agreements precluding them from joining the action and, therefore, those individuals were not “similarly situated” and that the notice would be misleading as they would not be eligible to join the action. The district court authorized notice of the collective action to the entire group of employees the plaintiff proposed, and Facebook appealed to the Seventh Circuit.

The Seventh Circuit reviewed the district court’s facilitation of notice for abuse of discretion. The question faced by the Court of Appeals was whether a court may authorize notice to individuals who, according to the defendant, entered valid arbitration agreements waiving their right to join the action. While this issue was considered in February 2019 by the U.S. Court of Appeals for the Fifth Circuit, in In re JPMorgan Chase & Co., 916 F.3d 494 (5th Cir. 2019), this is an issue of first impression for the Seventh Circuit.

The Seventh Circuit noted that while the twin goals of collective actions are enforcement and efficiency, they also recognized that collective actions present real dangers. Citing to the seminal Hoffmann-La Roche Inc. v. Sperling, 493 U.S. 165, 174 (1989), decision, the Seventh Circuit recognized the potential for abuse of the collective-action device and emphasized that courts “must be scrupulous to respect judicial neutrality” when monitoring the preparation and distribution of notice.

The Seventh Circuit then differentiated the case at bar from the Fifth Circuit’s case, In re JPMorgan Chase & Co., on the grounds that the plaintiff here did not yield to Facebook’s assertions about the existence and validity of the alleged arbitration agreements as the plaintiff had in the Fifth Circuit.

The Seventh Circuit created a new test for district courts to utilize in these circumstances and concluded that a court: (1) may not authorize notice to individuals whom the court has been shown entered mutual arbitration agreements waiving their right to join the action; and (2) must give the defendant an opportunity to make that showing.

When a defendant opposes the issuance of notice by asserting that some or all of the proposed notice recipients entered mutual arbitration agreements containing class action waivers, the trial court must first determine “whether a plaintiff contests the defendant’s assertions about the existence of valid arbitration agreements entered by proposed notice recipients.” If no plaintiff contests those assertions, then the court may not authorize notice to the employees whom the defendant alleges entered valid arbitration agreements. However, if a plaintiff contests the defendant’s assertions, then — before authorizing notice — the trial court must permit the parties to submit additional evidence of the agreements’ existence and validity. This may require that the parties engage in discovery on the issue of the existence and enforcement of the agreements. Ultimately, the employer carries the burden to show, by a preponderance of the evidence, the existence of a valid arbitration agreement with each employee it seeks to exclude from receiving notice. This framework could ultimately prove to be burdensome and costly for employers who implemented arbitration programs.

The Seventh Circuit vacated the district court’s order issuing notice and remanded for the lower court to apply the new standard. We will be watching closely to evaluate how the District Court in this case and other cases applies the Seventh Circuit’s new framework. Please contact a Jackson Lewis attorney with any questions about this case.

Ninth Circuit Affirms Denial of Class Certification in Gender Bias Case

Reinforcing the burden on any putative class to satisfy all of the requirements of Federal Rule of Civil Procedure 23, the U.S. Court of Appeals for the Ninth Circuit has affirmed the district court’s order denying the plaintiffs’ motion for class certification in an employment discrimination action. Moussouris v. Microsoft Corp., No. 18-35791 (9th Cir. Dec. 24, 2019).

The three-judge panel, consisting of Circuit Judges Richard Paez and Johnnie Rawlinson and District Judge Leslie Kobayashi (sitting by designation) separately affirmed the district court’s denial of class certification of the plaintiffs’ disparate impact and disparate treatment claims.

First, on the disparate impact claims, the panel held the district court did not abuse its discretion when it found that the proposed class did not satisfy the “commonality” requirement of Rule 23. To satisfy this requirement, the proposed class must pose “a common question that will connect many individual promotional decisions to their claim for class relief” and “produce a common answer to the crucial question why was I disfavored?” The panel found that in this case, there were no common questions because the proposed class consisted of more than 8,600 women holding more than 8,000 different positions in various facilities throughout the country. Moreover, the panel held that the plaintiffs failed to identify any “common mode” of discretion throughout the company because individual managers exercised broad discretion in assessing employees.

Next, as to the disparate treatment claims, the panel held the district court similarly did not abuse its discretion when it found the plaintiffs’ proposed class did not satisfy the “adequacy or representation” requirement of Rule 23. This requirement addresses whether the named plaintiffs and their counsel have any conflicts of interest with other proposed class members. The panel noted the putative class included thousands of members who acted as a manager once, were a lead or a manager, or were “managers of managers.” Even Katherine Moussouris, a named plaintiff of the proposed class, was a manager who had three of the putative class members report to her. Accordingly, the panel held that Moussouris has a conflict of interest with other putative class members. Additionally, the panel held that the plaintiffs’ proposal that the district court certify subclasses to address this conflict was not an issue that was properly preserved for appeal.

Please contact a Jackson Lewis attorney with any questions about this case or the class actions.

Class Action Trends Report – Fall 2019

Our quarterly report discusses new developments in class action litigation and offers strategic guidance and tactical tips on how to defend such claims. This issue covers the following topics:

  • Proliferation of independent contractor claims
  • Wage and hour
  • The persistant and seismic impact of #MeToo
  • Disparate impact
  • The onslaught of privacy class actions

Click here to download the full report.

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