Summary
requiring a corrective notice where the defendant breached a stipulation between the parties concerning contact with potential class members
Summary of this case from Davine v. Golub Corp.Opinion
Case No. SA CV 01-731-GLT (ANx) Calendar
January 28, 2002
ORDER GRANTING PLAINTIFFS' MOTION FOR CORRECTIVE NOTICE AND DENYING DEFENDANT'S MOTION TO STAY THE ACTION
Plaintiffs' Motion for Corrective Notice is GRANTED. Defendant's Motion to Stay the Action is DENIED.
I. BACKGROUND
Plaintiffs, current and former Auto Club Sales Agents responsible for selling and servicing insurance products and memberships, allege Defendants denied them overtime pay because Defendant incorrectly classified Sales Agents as "exempt." Plaintiffs bring claims under the Fair Labor Standards Act (ELSA) and California state law. 2001, this Court granted Plaintiffs' Motion to send a collective notice to Potential Plaintiffs. The parties entered a stipulation concerning the notice information and communications with Potential Plaintiffs, which this Court approved.
Five individual plaintiffs, who are not parties to this action, have asserted similar state law claims in California state court,Cummings, et al. v. Auto. Club of S. Cal. In June 2001, the state court denied Plaintiffs' request to certify the putative class, which included some of the Plaintiffs in this action. Now, the state court action is stayed pending resolution of plaintiffs' certification appeal, which is expected in 2002.
Defendant brings a Motion to Stay this action pending decision in theCummings case. Defendant contends the parties and claims in this action and the Cummings case are the same, except for the FLSA claims in this action. Defendant claims this case duplicates efforts for the parties and the Courts because both cases rely upon similar facts and discovery. Defendant asserts the Cummings case's progress, state law predomination, and adequate protection of Plaintiffs' FLSA rights under the state court's concurrent jurisdiction warrant the stay. Plaintiff contends the parties are not the same or potentially the same. Plaintiff indicates even if the Cummings class is certified, all Plaintiffs are not necessarily parties and may opt-out of that action. Also, Plaintiff distinguishes between the claims and stresses the actions will not be duplicative because the Cummings plaintiffs have agreed to share discovery information.
Plaintiffs bring a Motion for Corrective Notice, contending Defendant breached their stipulated agreement to not solicit or encourage Potential Plaintiffs about joining Plaintiffs' suit. Plaintiffs contend Defendant's Memo to current Sales Agents discouraged potential Plaintiffs from joining the suit. Plaintiffs claim the Memo included misrepresentations and suggested the Sales Agents would lose prestige and compensation if Plaintiffs succeed in this suit. Defendant asserts the Memo was not a solicitation or encouragement, but was intended to respond to a number of individual inquiries and boost company morale. Defendant also contends the First Amendment protects the Memo and any other communications between it and its employees.
II. DISCUSSION
A. Defendant's Motion to Stay the Action
The Court weighs several non-exclusive factors to determine whether a federal court should decline to exercise its jurisdiction,. See Colorado River Water Conservation Dist. v. U.S. , 424 U.S. 800, 818-19 (1976); Am. Intern. Underwriters v. Cont'l Ins., 843 F.2d 1243, 1257 (9th Cir. 1998). Some of these factors include similarity between state and federal parties and actions, the desirability of avoiding piecemeal litigation, the actions' progress, whether federal or state law controls the main issues, and whether the state court can adequately protect the rights of the federal plaintiff. See id., 424 U.S. at 818-19; Intel Corp. v. Advanced Micro Devices, 12 F.3d 908, 913 (9th Cir. 1993). The Court has discretion to defer to state court or maintain the federal action. See id. at 817 (noting a pending state court action does not bar federal proceedings concerning the same matter); Will v. Calvert Fire Ins. Co., 437 U.S. 655, 664 (1978) (emphasizing the court's decision to stay an action is discretionary). If the Court doubts a state court litigation will be an "adequate vehicle for the complete and prompt resolution of the issues . . .," the action should not be stayed. See Intel Corp., 12 F.3d at 913.
The parties are not similar. Defendant contends that, if the Cummings appeal succeeds in obtaining class certification, Plaintiffs will be involved in two similar cases simultaneously. The Plaintiffs are not the same or co-extensive even though the two cases' impact on Defendant may be the same. The state court action involves five named plaintiffs who are not parties to this federal action. Plaintiffs and Potential Plaintiffs are not parties to the state court action. Although some Plaintiffs and Potential Plaintiffs may have tried to join the state court action as class members, the state court does not recognize that class. If a Cummings class is recognized, Plaintiffs may opt-out or be ineligible for that defined class. The federal and state court plaintiffs are not the same or co-extensive.
Defendant's reliance upon cases outside this Court's jurisdiction to support a stay are unpersuasive. Those cases included plaintiffs who were definitely members of both actions' classes. Plaintiffs are not bound by the Cummings case, which has not been litigated yet.
Defendant relies upon unpersuasive case law to support its contention similar facts and discovery warrant a stay even if the issues are not identical. See Garcia v. Tamir, 1999 U.S. Dist. LEXIS 11940 (S.D.N.Y. 1999) (involving identical plaintiffs who deliberately divided state and federal claims between the forums); Bradford v. Olympic Courier Systems, Inc., 1997 U.S. Dist. LEXIS 13978 (E.D.N.Y. 1997)(same).
Defendant contends a stay will prevent piecemeal litigation. Although the discovery period in the Cummings case is completed, the certification issue is pending still, and the merits of the case have not been decided. The Cummings plaintiffs' agreement to share discovery with Plaintiffs will avoid duplicative discovery efforts. Also, the Cummings case is not substantially more completed than this action. This Court cannot force the Plaintiffs to join the Cummings case or pursue their claims in state court. The Court doubts the Cummings litigation will be an "adequate vehicle for the complete and prompt resolution of the issues. . . ." Defendant's Motion to Stay the Action is DENIED.
B. Plaintiffs' Motion for Corrective Notice
On December 4, 2001, this Court adopted the parties' stipulation concerning collective notice and opt-in procedures. The stipulation states Defendant "will [not] solicit or encourage, directly or indirectly, potential opt-in plaintiffs, to join or not join this lawsuit." See November 22, 2001 Stip., ¶ 19. Plaintiffs claim Defendant influenced class participation and misrepresented material information in the Memo it issued on December 5, 2001, to current Sales Agents. Defendant contends the Memo's presentation of its one-sided position was not a misrepresentation and it intended to improve company morale and productivity.
1. Defendant's Influence on Class Participation
Plaintiffs assert Defendant misrepresented several factors in the Memo, including the number of Plaintiffs who originally filed suit. Plaintiff contends the Memo undermined the Collective Notice by using the term "professionals," which was a defined term in the Collective Notice, and noting the denial of class certification in Cummings, without indicating the pending appeal. Plaintiff contends Defendant's statement to "vigorously defend" the suit and characterization of Plaintiffs' perspective of the suit as "grossly inaccurate," discouraged participation.
Plaintiffs claim one paragraph of the Memo implied participation in the suit validates Plaintiffs' position, which downgraded the Sales Agents' status and decreased their earning capacity.
Plaintiffs contend that you should be classified as non-exempt employees, who fill out time cards, take their forty-five minute lunch and fifteen minute breaks according to schedule, and work overtime only with prior management approval. We [Defendant], however, continue to believe that you are professional, commissioned sales agents entitled to the flexibility of exempt status and the opportunity to earn as much as your talent and commitment will enable you to earn in commissions and incentives. Memo, ¶ 3.
Plaintiffs also assert a non-retaliation statement in the Memo was necessary. See Abdallah v. Coca-Cola Co., 186 F.R.D. 672, 679 (N.D. Ga. 1999) (requiring all employer communications concerning the case include a non-retaliation clause).
Defendant contends the Memo did not violate the stipulation, but addressed questions raised by individuals, comforted morale concerns, and focused employees' energies. Defendant also asserts these one-sided statements are protected under the First Amendment. Although Defendant can provide one-sided information concerning its position, the Memo discourages employee participation. Defendant agreed not to encourage, directly or indirectly, Potential Plaintiffs concerning opt-in decisions. The First Amendment is not implicated because Defendant agreed to limit its speech. The Court finds the third paragraph of the Memo violates the stipulation provision to not solicit or encourage Potential Plaintiffs regarding opt-in decisions. The Court orders Defendant to include a non-retaliation clause in any writing addressed to Plaintiffs and Potential Plaintiffs concerning this suit.
Defendant incorrectly notes, as employer, it may issue a statement even if the statements discourage some employees from participating in the litigation. See Opp. 11:7; cf. Stip. ¶ 19.
2. Contents and Distribution of the Corrective Notice
The Court is authorized to order corrective notices and a tolling of the statute of limitations to enforce its orders. See Relig. Tech. Ctr. v. Henson, 200 U.S. App. LEXIS 15396 (9th Cir. 2000); see also Manual for Complex Litigation § 30.24, p. 273 (noting extension of option deadlines and curative notice issued at the expense of the party at-fault may be appropriate where the party at-fault provided class members with inappropriate communications); Haffer v. Temple Univ., 115 F.R.D. 506, 514 (E.D. Pa. 1987) (ordering defendants to pay for corrective notice where they violated court order with a statement implying it preferred potential plaintiffs not to participate in suit).
Defendant contends Corrective Notice is not warranted before to class certification. Although, the collective class is certified for the FLSA claims, the Court finds certification is not required to order Corrective Notice.
Defendant claims if the Court orders Corrective Notice it should be limited to those Potential Plaintiffs who received the Memo from Defendant. Plaintiff contends the Corrective Notice should be sent to all Potential Plaintiffs because some Potential Plaintiffs may have been influenced after receiving copies of the Memo from someone other than Defendant.
The Court finds the Memo may have discouraged all Potential Plaintiffs. The Court orders Defendant to pay for the issuance of the Corrective Notice, as submitted with Plaintiffs' Reply Brief, to all Potential Plaintiffs because its Memo was improper and violated the parties' stipulation.
This Notice is modified according to the suggestions in Defendant's Opposition.