Case Information
UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA DAVID CHAVEZ, et al., Case No. 19-cv-01353-JCS Plaintiffs, v. ORDER DENYING MOTION TO DISMISS STELLAR MANAGMENT GROUP VII, Re: Dkt. No. 84 LLC, et al., Defendants.
I. INTRODUCTION
This is a motion to dismiss a putative collective action under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201 et seq. Defendants Stellar Management Group, Inc. (“Stellar Inc.”) and The Vincit Company, LLC (“Vincit LLC”) challenge this Court’s jurisdiction over the claims of opt-in Plaintiffs who do not reside in or allege injury in California. The Court has previously denied Defendants’ two prior motions to dismiss and found that, while this Court does not have general jurisdiction over Defendants Stellar Inc. and Vincit LLC, it does have specific personal jurisdiction over them as to the claims of Plaintiffs who allegedly worked for Defendants in California. See Order Denying Motion to Dismiss (dkt. 28) [1] ; Order Denying Renewed Motion to Dismiss (dkt. 63). [2] Since then, several other employees have opted into the putative collective action, including one who worked for Defendants in Lufkin, Texas. Notice of Filing by Bridges (dkt. 61) at 5. Stellar Inc. and Vincit LLC argue that this Court does not have personal jurisdiction over the claims of out-of-state opt-in Plaintiffs. The Court held a hearing on July 17, 2020. For the reasons discussed below, the motion is DENIED. [3]
II. BACKGROUND
A. Procedural History
Plaintiff David Chavez originally brought this action against his former employers, Steller Management Group VII (“Group VII”), Stellar Inc., and Vincit LLC. Compl. (dkt. 1) ¶ 1. He brought FLSA and California state law claims on behalf of a putative collective and putative class of similarly situated employees. . Each of the Defendants was served with the summons and a copy of the complaint in Chattanooga, Tennessee on March 25, 2019. Proof of Service (dkts. 8, 9, 10).
Group VII filed its Answer on May 6, 2019. Answer (dkt. 17). That same day, Defendants Stellar Inc. and Vincit LLC filed a motion to dismiss for lack of jurisdiction. Mot. to Dismiss (dkt. 18). The Court denied that motion without prejudice. Order Denying Mot. to Dismiss (dkt. 28). Defendants Stellar Inc. and Vincit LLC filed a second motion to dismiss for lack of jurisdiction on November 11, 2019. Renewed Motion to Dismiss (dkt. 45). The Court again denied Stellar Inc. and Vincit LLC’s motion. Order Denying Renewed Motion to Dismiss (dkt. 63). In denying the renewed motion, the Court found that, while the Court does not have general jurisdiction over the Tennessee-based Defendants, it does have specific personal jurisdiction over Defendants because Plaintiff Chavez made a prima facie showing that Defendants purposefully directed their activities towards California. . at 10–12.
In light of a state court decision between Plaintiff Chavez and Defendants, Stellar Inc. and Vincit LLC filed a motion for reconsideration of the Court’s dismissal of the renewed motion to dismiss. Motion for Reconsideration (dkt. 64). The Court denied that motion and noted that “even if Chavez were precluded from bringing a claim against these defendants, other potential members of this purported class and collective action—including the three individuals who have thus far filed their consent to join the collective action under the Fair Labor Standards Act—would not be affected by the state court’s decision because they were not parties to that case.” Order Denying Mot. for Reconsideration (dkt. 73) at 2–3. After the Court denied that motion for reconsideration, Stellar Inc. and Vincit LLC answered the original complaint, preserving their argument that the Court lacked personal jurisdiction as an affirmative defense. See Stellar Inc. Answer (dkt. 66) at 26 (Fourth Affirmative Defense); Vincit LLC Answer (dkt. 67) at 26 (same).
Plaintiffs then filed the First Amended Complaint (“FAC”) (dkt. 83) adding a second named plaintiff: Vincent Slaughter. FAC at 1. Like Plaintiff Chavez, Plaintiff Slaughter is a resident of California and worked for Defendants in California. FAC ¶¶ 11–14. Defendants filed this motion challenging the Court’s jurisdiction over the out-of-state putative members of the FLSA collective. Meanwhile, twenty-five putative collective members have filed notices of consent to join the FLSA collective action. See Notice of Filing by Valenxia & Johnson (dkt. 95) (listing the putative opt-in plaintiffs as the twenty-fourth and twenty-fifth employees to file consents to join the action). Plaintiffs have not yet moved to certify the FLSA collective or the state law class. B. Allegations of the Complaint In their FAC, named Plaintiffs Chavez and Slaughter bring a putative collective and class action alleging that “Plaintiffs and putative Class members do not receive accurate, itemized wage statements reflecting the hours they actually work and the amount of wages and overtime to which they are entitled and for which they should be compensated.” FAC ¶ 5. Further, the FAC alleges that Defendants “fail[ed] to compensate Plaintiff Slaughter and the Collective for all hours worked and, with respect to such hours, fail[ed] to pay the legally mandated overtime premium for such work and/or minimum wage for those Collective members who earned at or near the federal minimum wage.” Id . ¶ 65. Plaintiffs allege this conduct violated the FLSA. Id . Plaintiffs claim Defendants’ “operation structure is uniform and standardized throughout [Defendants’] operations. The employment conditions for the non-exempt, hourly employees are substantially similar, if not identical, at QSI work locations throughout the United States, including in California.” . ¶ 31. The named plaintiffs, who are citizens of California, allege that they worked for Defendants in California. . ¶¶ 3, 11–12. Defendants are all corporate citizens of and headquartered in Tennessee. . ¶¶ 15–17. According to the FAC, Defendants performed various services in the State of California. Id . at ¶¶ 18–21.
Plaintiffs seek to certify a collective action including:
[a]ll current and former hourly, non-exempt employees of Stellar Management Group VII, LLC; Stellar Management Group, Inc. d/b/a QSI Quality Service Integrity; The Vincit Company, LLC d/b/a The Vincit Group and Vincit Enterprises in the United States during the time period three years prior to March 13, 2019, until the resolution of this action. . ¶ 52. Plaintiffs bring this FLSA action “on Behalf of the Collective.” . at 13. Since the
filing of the FAC, several putative collective members have filed notice of opting into the collective action; one such member worked for the Defendants in Texas. Notice of Filing (dkt. 61) at 5.
The FAC also alleges that Defendants violated various California state laws. FAC ¶¶ 6–7.
The Plaintiffs bring those claims as a class action on behalf of a putative class consisting only of
employees who worked for Defendants in California and assert subject matter jurisdiction under
the Class Action Fairness Act (“CAFA”). . ¶¶ 27, 59. Defendants do not challenge the Court’s
personal jurisdiction over them with regard to the state law claims in the class action in the present
motion to dismiss.
C. The Parties’ Arguments
Defendants challenge this Court’s jurisdiction over Defendants with respect to FLSA
claims by opt-in plaintiffs who are not citizens of California and who allege FLSA violations at
Defendants’ animal processing plants outside of California. The parties’ arguments present a
single issue: whether the Court has specific personal jurisdiction with respect to claims by non-
California plaintiffs who opt into the FLSA action. Defendants contend that this Court does not
have personal jurisdiction over the claims of non-California opt-in plaintiffs because of the
Supreme Court’s ruling in
Bristol-Myers Squibb Co. v. Superior Court
,
III. ANALYSIS
A. Legal Standard
1. Standard for Specific Personal Jurisdiction
A party may move for dismissal under Rule 12(b)(2) of the Federal Rules of Civil
Procedure for lack of personal jurisdiction. The plaintiff bears the burden of establishing personal
jurisdiction over the defendant.
See Pebble Beach Co. v. Caddy
,
“For a court to exercise personal jurisdiction over a non-resident defendant, that defendant
must have at least ‘minimum contacts’ with the relevant forum such that the exercise of
jurisdiction ‘does not offend traditional notions of fair play and substantial justice.’”
Id.
at
1110−11 (quoting
Int’l Shoe Co. v. Washington
,
Personal jurisdiction may be either general or specific.
See Bancroft & Masters, Inc. v.
Augusta Nat’l Inc
.,
(1) the non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privileges of conducting activities in the forum, thereby invoking the benefits and protections of its laws; (2) the claim must be one which arises out of or relates to the defendant’s forum-related activities; and
(3) the exercise of jurisdiction must comport with fair play and
substantial justice, i.e. it must be reasonable.
Dole Food
,
The Ninth Circuit has also recognized that “a court may assert pendent personal
jurisdiction over a defendant with respect to a claim for which there is no independent basis of
personal jurisdiction so long as it arises out of a common nucleus of operative facts with a claim in
the same suit over which the court does have personal jurisdiction.”
Action Embroidery Corp. v.
Atl. Embroidery, Inc.
,
prescribed in the preceding sentences may be maintained against any employer (including a public
agency) in any Federal or State court of competent jurisdiction by any one or more employees for
and in behalf of himself or themselves and other employees similarly situated. No employee shall
be a party plaintiff to any such action unless he gives his consent in writing to become such a party
and such consent is filed in the court in which such action is brought.” 29 U.S.C. § 216(b).
Employees who are similarly situated to the named plaintiffs file opt-in forms to join the
collective, thereby becoming opt-in plaintiffs.
Campbell
,
court.”) (citing
Genesis Healthcare Corp. v. Symczyk
,
The Ninth Circuit summarized in Campbell how district courts proceed with collective FLSA actions:
[I]t is now the near-universal practice to evaluate the propriety of the
collective mechanism—in particular, plaintiffs’ satisfaction of the
“similarly situated”
requirement—by way of a
two-step
“certification” process. As this process most often functions,
plaintiffs will, at some point around the pleading stage, move for
“preliminary certification” of the collective action, contending that
they have at least facially satisfied the “similarly situated”
requirement. Later, after the necessary discovery is complete,
defendants will move for “decertification” of the collective action on
the theory that the plaintiffs’ status as “similarly situated” was not
borne out by the fully developed record.
. at 1100 (internal citations and footnotes omitted). “Preliminary certification in the FLSA
context does not produce a class with an independent legal status[ ] or join additional parties to the
action. The sole consequence of a successful motion for preliminary certification is the sending of
court-approved written notice to workers who may wish to join the litigation as individuals.”
Id.
at 1101 (quoting
Symczyk
,
3. Applying to FLSA Collective Actions
In
Bristol-Myers Squibb v. Superior Court
, the Supreme Court considered the issue of
whether a California state court could exercise jurisdiction in a mass tort action based on the drug
Plavix over defendants as to the claims of plaintiffs who were not injured in California or whose
claims otherwise had no connection to California.
Congress created a mechanism for employees to bring their claims on
behalf of other employees who are “similarly situated,” and in no way
limited those claims to in-state plaintiffs. 29 U.S.C. 216(b). Thus, our
circumstances are far different from those contemplated by the
Supreme Court in
Bristol-Myers
. The result of the rule Title Source
urges would be that each putative collective member not residing in
either the state where the suit is brought, or a state where the
defendant is domiciled, could not be part of the collective action. This
would splinter most nationwide collective actions, trespass on the
efficacy of FLSA collective actions as a means to vindicate
employees’ rights. This result is not mandated by
Bristol-Myers
and
this order declines to extend in the manner Title Source
urges.
.
A second group of cases follows the reasoning of the district court in
Maclin v. Reliable
Reports of Texas, Inc
., which declined to exercise jurisdiction over actions that were not related to
the forum state.
As of the date of this order, thirteen district courts have held that
Bristol-Myers
does not
apply to FLSA collective actions.
See Thomas v. Kellogg Co.
, No. 13-5136RBL, 2017 WL
5256634, at *1 (W.D. Wash. Oct. 17, 2017);
Swamy
,
Eleven courts have found the opposite.
See Maclin
,
B. Defendants May Raise This Issue in a Motion to Dismiss Before the Collective Action Has Been Officially Certified Even though Plaintiffs have not yet filed a motion asking the Court to certify the FLSA
collective, Defendants may raise their challenge the Court’s personal jurisdiction over the claims
of putative members of the collective action. Plaintiffs’ argument that ruling on the personal
jurisdiction at this stage is “speculative,” Opp’n at 4 n.1, is not persuasive because at least one
putative collective member has opted in based on a claim that occurred outside of California.
Notice of Filing by Steven Bridges at 5 (certifying that he worked for Defendants in Lufkin,
Texas);
Campbell
,
C.
Bristol-Myers
Does Not Apply to Federal Courts Applying Federal Law
This Court has already considered whether applies to federal courts applying
federal law and found that it does not. In
Pascal v. Concentra, Inc.
, this Court considered whether
to dismiss class members who did not live in California or have claims connected to California
from a Rule 23 class action; the undersigned “conclude[ed] that
Bristol-Myers
does not apply in
this case because Plaintiff asserts his claim in a federal court and under federal law.” No. 19-CV-
02559-JCS,
Because this Court holds that
Bristol-Myers
does not apply to federal courts and federal
laws, it joins the list of courts following
Swamy
and holds that
Bristol-Myers
does not apply to
FLSA claims brought in federal court. The Court also follows district courts that have applied
Sloan
and finds that the federalism concerns that drove the Supreme Court in are
absent in this case.
See In re Packaged Seafood Prod. Antitrust Litig.
,
In finding that
Bristol-Myers
did not apply to federal courts in
Pascal
, the Court looked to
the reasoning of another court in this district in
Sloan
,
In contrast to , the due process right does not obtain here
in the same manner because all federal courts, regardless of where they sit, represent the same federal sovereign, not the sovereignty of
a foreign state government. There is no risk of a state court exceeding the bounds of its state’s sovereignty and subjecting residents of another state to the coercing power of its courts. Therefore, where a federal court presides over litigation involving a federal question, the due process analysis does not incorporate the interstate sovereignty concerns that animated Bristol-Myers and which may be “decisive” in a state court’s analysis. Id . Without those interstate federalism concerns, the due process analysis falls back on whether “the maintenance of the suit . . . offend[s] ‘traditional notions of fair play and substantial justice,’ ” Int’l Shoe Co. v. Washington , 326 U.S. 310, 316 (1945) (citation omitted), which itself focuses on the burden on the defendant (other than a concern about subjecting it to the power of a foreign sovereign).
Id . at 958–59 (internal citations and footnotes omitted) (emphasis added).
Second, the court in
Sloan
found pendant jurisdiction over the claims by the out of state
plaintiffs. To address the second and third prongs of
International Shoe
, the
Sloan
court turned to
the Ninth Circuit’s decision in
Action Embroidery
,
2. Pendent Jurisdiction Over FLSA Opt-In Plaintiffs As described above, the Court agrees with the decision in Sloan that does not apply to FLSA claims. Moreover, adopting the district court’s reasoning in Sloan , this Court finds that it may exercise pendent jurisdiction over the claims of opt-in Plaintiffs that arose in states other than California. The district court in Sloan considered the claims of multiple named plaintiffs, each of whom had party status like that which the Ninth Circuit recognized as attaching to FLSA opt-in plaintiffs in Campbell . Here, as in Sloan , the opt-in Plaintiffs’ claims arise from the same common nucleus of operative fact as the named in-state Plaintiffs. The Court’s exercise of pendent jurisdiction over the opt-in Plaintiffs’ claims against the Defendants is therefore appropriate.
The FAC indicates that the named Plaintiffs bring claims “on behalf of themselves and other similarly situated individuals who have worked for” Defendants. FAC ¶ 1. According to the FAC, the Defendants’ employment practices are “uniform and standardized throughout [Defendants’] operations.” Id . ¶ 31. Plaintiffs allege that “at all relevant times QSI’s employment policies and practices have been substantially the same for Plaintiffs and the putative Class and Collective members, regardless of location throughout the United States, including in California.” . ¶ 38. The FAC alleges that all Plaintiffs were not paid for all the hours they worked, including overtime wages. . ¶ 52. The FAC alleges that Defendants violated the FLSA in the same way against all Plaintiffs and that they had a uniform policy of doing so. . Based on these pleadings, the Court concludes that the claims of the California Plaintiffs and the out-of-state Plaintiff share a common nucleus of operative fact. Because the Court may properly exercise specific personal jurisdiction over the claims of the California Plaintiffs against Defendants, the Court may exercise pendent jurisdiction over the claims by the out-of-state opt-in Plaintiffs.
The Court will exercise pendant jurisdiction here, because that course of action will best
serve the interests of “judicial economy, avoidance of piecemeal litigation, and overall
convenience of the parties.”
While Defendants are correct that a nationwide action would still be possible in Defendants’ home state of Tennessee even if this Court lacked personal jurisdiction over out-of- state opt-ins, the fact remains that California employees filed this action in California, and would be entitled to pursue their claims here regardless of the outcome of the present motion. Since any given employee seeking to file an FLSA claim against their multi-state employer would generally have little incentive (and, likely, inadequate resources) to litigate in the employer’s home state rather than their own, declining to exercise pendent personal jurisdiction in a case like this one would, as a practical matter, still tend to result in scattered and redundant single-state actions.
In addition, it does not unreasonably inconvenience Defendants to subject them to a
nationwide action for allegedly violating a nationwide statute.
See Swamy
,
The considerations of economy, efficiency, and convenience identified by the Ninth Circuit in Action Embroidery therefore support exercising pendent personal jurisdiction over the opt-in Plaintiffs’ claims against Defendants, and as discussed in Sloan , the federalism concerns underlying do not prevent this federal court from exercising such jurisdiction over claims under federal law.
//
//
//
IV. CONCLUSION
For the reasons stated above, Stellar Inc. and Vincit LLC’s motion to dismiss for lack of personal jurisdiction is DENIED.
IT IS SO ORDERED.
Dated: August 5, 2020
______________________________________ JOSEPH C. SPERO Chief Magistrate Judge
Notes
[1]
Chavez v. Stellar Mgmt. Grp. VII, LLC
, No. 19-cv-01353-JCS,
[2]
Chavez v. Stellar Mgmt. Grp. VII, LLC
, No. 19-cv-01353-JCS,
[3] The parties have consented to the undersigned magistrate judge presiding over the case for all 28 purposes pursuant to 28 U.S.C. § 636(c).
[4] Plaintiffs have not argued that the FLSA, by its terms, confers personal jurisdiction on a district
26
court more expansive than the personal jurisdiction of a forum state’s courts.
Cf.
,
e.g.
,
Sec. Inv’r
Prot. Corp. v. Vigman
,
[5] Rule 82 states that the Federal Rules of Civil Procedure “do not extend or limit the jurisdiction of
26
the district courts.” Fed. R. Civ. P. 82. While some courts have found “tension” between Rule 82
and limitations on personal jurisdiction arising from Rule 4(k),
e.g
.,
Mussat v. IQVIA, Inc.
, 953
27
F.3d 441, 448 (7th Cir. 2020), the Supreme Court held in a 1946 decision that the “jurisdiction”
addressed by Rule 82 is
subject matter
jurisdiction, and that the Federal Rules of Civil Procedure
28
may therefore cabin a court’s
personal
jurisdiction.
Miss. Pub. Corp. v. Murphree
,
[6] Several district courts that cite
Maclin
do not apply its Fifth Amendment analysis, but
26
nevertheless cite its reasoning applying
Bristol-Myers
to FLSA collective actions.
See, e.g.
,
Roy v.
FedEx Ground Package Sys., Inc.
,
[7]
In re Packaged Seafood
and
In re Takata Airbag
suggest that pendent jurisdiction is proper when
a statute authorizes nationwide service of process.
See Packaged Seafood
, 338 F. Supp. 3d at
1173 (“This Court joins in the reasoning of
Muir
[
v. Nature’s Bounty (DE), Inc.
, No. 15 C 9835,
[8] Under Campbell , opt-in members of an FLSA collective action are more similar to named 23 plaintiffs bringing their own claims than to absent class members in a Rule 23 class action. Because Sloan addressed jurisdiction over claims by out-of-state named plaintiffs rather than 24 absent class members, however, the fact that the plaintiffs there also sought to certify a class under Rule 23 does not distinguish Sloan ’s analysis from the case at hand. 25
[9] On reconsideration at a later stage of the case where the plaintiffs asserted only diversity
jurisdiction under 28 U.S.C. § 1332 with no basis for federal question jurisdiction, the
Sloan
court
ultimately held that it lacked personal jurisdiction as to claims by out-of-state plaintiffs because
26
“nearly every court considering the issue has concluded pendent party jurisdiction cannot be
27
exercised by a federal court sitting in diversity.”