Borup v. The CJS Solutions Group, LLC

Background

Timothy C. Borup sued The CJS Solutions Group, LLC, doing business as The HCI Group, in a wage-and-hour case. Borup alleged that HCI failed to properly pay overtime compensation. He brought a federal Fair Labor Standards Act claim as a nationwide collective action and a Minnesota wage-law claim as a Rule 23 class action limited to people who performed the relevant work in Minnesota. The parties disputed whether Borup was an employee or an independent contractor.

HCI's original answer asserted that certifying a collective or class action would violate its substantive and procedural due-process rights, but it did not expressly use the words "personal jurisdiction." HCI later moved to amend its answer to state that the court lacked personal jurisdiction over claims by individuals who neither worked for HCI in Minnesota nor lived in Minnesota when they worked for HCI.

Personal-Jurisdiction Defense

The court explained that a personal-jurisdiction defense must generally be raised in a preliminary motion, in the answer, or in an amended answer filed within the time allowed by Federal Rule of Civil Procedure 15(a)(1). Otherwise, the defense is waived. The court also explained that an answer must raise the defense clearly enough to give the opposing party notice and avoid unfair surprise.

The court concluded that HCI's due-process defense had sufficiently raised personal jurisdiction, although it did so in an inartful way. The court relied in part on its treatment of a similar defense in a connected case involving HCI and described the two cases as presenting the same claims against the same defendant based on nearly identical facts. The court therefore determined that HCI had not waived its personal-jurisdiction defense.

Motion to Amend

Under Rule 15(a)(2), courts should generally allow amendments when justice requires, absent reasons such as undue delay, bad faith, repeated failure to correct deficiencies, undue prejudice, or futility. Borup argued that the amendment would prejudice the proposed collective. The court found that this argument concerned whether personal-jurisdiction limits recognized in Bristol-Myers Squibb Co. v. Superior Court apply to nationwide collective actions, rather than whether permitting the amendment itself would cause prejudice. The court stated that question was not before it.

Disposition

The court granted HCI's motion to amend its answer to clarify its personal-jurisdiction defense. The opinion's final paragraph refers to a motion to amend the complaint, but the introduction, analysis, and ruling consistently address HCI's motion to amend its answer. The court did not decide whether HCI's personal-jurisdiction defense would ultimately succeed or whether the defense applies to nationwide collective actions.