Ninth Circuit Clarifies FLSA Collective Action Certification and Jurisdiction

Key Takeaways

• The Ninth Circuit reaffirmed the “near-universal” two-step process for managing FLSA collective actions.
• The Ninth Circuit held that district courts are not required to conclusively determine arbitrability for all potential opt-in plaintiffs before notice is sent.
• The court held that the U.S. Supreme Court’s decision in Bristol-Myers Squibb Company v. Superior Court of California applies in FLSA collective actions in federal court.

The U.S. Court of Appeals for the Ninth Circuit recently issued a significant opinion regarding the certification and scope of Fair Labor Standards Act (FLSA) collective actions. With this opinion, the Ninth Circuit aligned itself with the majority of other circuits holding that Bristol-Myers Squibb Company v. Superior Court of California (Bristol-Myers), 582 U.S. 255 (2017), applies in FLSA collective actions in federal court.

In Harrington v. Cracker Barrel Old Country Store, Inc., current and former employees of the defendant alleged violations of the FLSA’s minimum wage and overtime provisions as they relate to tipped workers. The Ninth Circuit addressed three questions on interlocutory appeal.

First, the court considered whether the lower court followed the correct procedure in granting preliminary certification. Finding that it did, the Ninth Circuit reaffirmed the “near-universal” two-step process for managing FLSA collective actions, as outlined in Campbell v. City of Los Angeles, 903 F.3d 1090 (9th Cir. 2018). Under this approach, plaintiffs first move for preliminary certification by showing they are “similarly situated.” If granted, the court authorizes notice to potential opt-in plaintiffs. After discovery, defendants may move for decertification if the “similarly situated” requirement is not met on a fully developed record.

The court rejected arguments to abandon this two-step process in favor of a more rigorous, single-step approach at the outset. The Ninth Circuit concluded that its own precedent in Campbell is binding and that the lower court did not abuse its discretion by following this established procedure.

Second, the Ninth Circuit addressed an issue of first impression for that court—whether a district court may authorize notice to employees who allegedly entered into arbitration agreements with the defendant. The court held that, while it is an abuse of discretion to send notice to employees who are indisputably bound by valid arbitration agreements, district courts are not required to conclusively determine arbitrability for all potential opt-in plaintiffs before notice is sent. Where the existence or validity of arbitration agreements is disputed, courts may defer such determinations until after employees have opted in. This approach recognizes the individualized and fact-intensive nature of arbitration disputes and preserves judicial discretion in case management.

Third, and most importantly, the court considered whether the Supreme Court of the United States’ decision in Bristol-Myers applies in FLSA collective actions in federal court, such that nationwide notice was inappropriate in this case. Bristol-Myers requires that, where specific personal jurisdiction is at issue, each plaintiff’s claim must bear a sufficient connection to the defendant’s activities in the forum state. The Ninth Circuit held that this does apply to FLSA collective actions.

In Harrington, the district court had authorized nationwide notice on the assumption that the presence of a single Arizona-based plaintiff was sufficient to establish personal jurisdiction over Cracker Barrel for all claims in the collective action. The Ninth Circuit disagreed, holding that personal jurisdiction must be assessed on a claim-by-claim basis for each opt-in plaintiff. Because Cracker Barrel is not subject to general personal jurisdiction in Arizona, the district court must determine whether each opt-in plaintiff’s claim arises out of or relates to Cracker Barrel’s contacts with Arizona.

This holding brings the Ninth Circuit in line with the Third, Sixth, Seventh, and Eighth Circuits, which have also applied Bristol-Myers to FLSA collective actions. The court emphasized that the FLSA’s collective mechanism is more akin to a mass action than a class action, and thus personal jurisdiction must be analyzed individually for each plaintiff’s claim.

Ultimately, the Ninth Circuit vacated the district court’s order granting preliminary certification and authorizing nationwide notice, remanding the case for further proceedings consistent with its opinion. District courts in the Ninth Circuit must now carefully assess personal jurisdiction for each opt-in plaintiff in FLSA collective actions where specific personal jurisdiction is at issue and may not send notice to employees whose claims lack a sufficient nexus to the forum state.

This decision underscores the importance of proper procedural safeguards in FLSA collective actions and clarifies the limits of federal courts’ jurisdiction over out-of-state claims in such cases. Employers facing FLSA collective actions should contact experienced employment counsel with questions.