Two Texas law firms representing a national Texas-based building contractor obtained a reversal on appeal that curtails the scope of an immigrant overtime wages collective action.
Wright Close & Barger and Munsch Hardt Kopf & Harr represented Signet Builders Inc. on the appeal and at the trialcourt, respectively.
Jose Ageo Luna Vanegas, a immigrant with an H-2A guest worker visa, built structures as a Signet employee for livestock in three states, including Wisconsin. According to a 2-1 split opinion of a three-judge panel in the U.S. Court ofAppeals for the Seventh Circuit, Signet hired immigrants with H-2A visas for agricultural work.
Seven Circuit Judge Ilana Rovner dissented, arguing that the ruling gives employers an advantage that Congress did notintend under the Fair Labor Standards Act.
“I worry for the workers the FLSA was meant to protect—those who, by the very nature of their allegations, will almostcertainly 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 in her dissent.
The FLSA provides an exception to time-and-a-half overtime pay for persons employed in agriculture. Vanegas challenged his status as an agricultural worker ineligible for overtime pay in U.S. District Court for the Western District of Wisconsin.
Vanegas moved for conditional certification, which the district court granted and Signet appealed.
Joseph Mead, special litigation counsel with the Georgetown University Law Center’s Institute for Constitutional Advocacy and Protection, represents Vanegas. Local counsel has been Erica Sweitzer-Beckman of Legal Action of Wisconsin.
The issue on appeal was whether Vanegas could push for nationwide distribution of the class. Signet argued that the trial court only had jurisdiction over claims from laborers who worked in Wisconsin.
The Seventh Circuit grappled with whether an FLSA collective action can be treated as a class action with general jurisdiction or as a mass action where plaintiffs much prove specific jurisdiction. A second issue was whether the lead plaintiff’s work under a federal rule of procedure establishing jurisdiction qualified every plaintiff and define the scope of jurisdiction.
The Signet and the Seventh Circuit majority relied on the U.S. Supreme Court’s decision in Bristol-Myers Squibb v. Superior Court to conclude that federal courts lack personal jurisdiction over defendants with respect to claims brought by out-of-state plaintiffs in FLSA collective actions.
Vanegas, as well as Public Citizen in an amicus curiae brief, argued that the impact of Bristol-Myers was limited to the powers of state courts and did not apply to federal courts.
Rovner acknowledged that the majority’s ruling does not totally abolish the plaintiffs’ rights, “but they have been severely hindered for an outcome not required by statute, the supreme court, or personal jurisdiction jurisprudence.”
Wright Close attorney Brad Snead, in a statement, said, “This decision not only confirms that, in FLSA collective actions, there must be personal jurisdiction over each opt-in plaintiff, but it also resolves key questions about how personal jurisdiction works in federal courts.”
The majority opinion notes that its conclusion on personal jurisdiction over opt-in plaintiffs in FLSA collective actions puts it in line with three sister circuits, the Third, Sixth and Eighth circuits. The only sister circuit to decide the other way was the First Circuit.
Responding to Vanegas and the dissent, the majority said, “No parade of horribles undercuts our holding.”
The plaintiffs could still go for a nationwide collective of Signet workers by refiling in Texas, “which enjoys general jurisdiction over Signet, with no loss of efficiency.”
In the alternative, the plaintiffs would file multiple statewide collective lawsuits in states with Signet workers that have contact with the respective states, the majority said.
“The choice to concentrate the claims into one suit or disperse them across the nation rests always in plaintiffs’ hands. In this way, too, the FLSA is unlike a class action. The FLSA claims will splinter into different suits if (and only if) the plaintiffs so choose,” the majority opinion said.
Counsel for Vanegas was granted its motion to extend time to file a petition for rehearing en banc. The motion is due Sept. 27.
The Wright Close team, with oral arguments led by partner Snead, also included partner Raffi Melkonian and associate Rachel Willroth. The trial counsel at Munsch Hardt was shareholder Dan Pipitone.
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