Geoffrey Desrosiers,, Respondents,v.Perry Ellis Menswear, LLC, et al., Appellants.

Brief

N.Y.November 14, 2017

APL-2016-00188 New York County Clerk’s Index No. 151414/15 Court of Appeals STATE OF NEW YORK GEOFFREY DESROSIERS, individually and on behalf of other persons similarly situated who were employed by PERRY ELLIS MENSWEAR, LLC, PEI LICENSING, INC., or any other related entities, Plaintiffs-Respondents, against PERRY ELLIS MENSWEAR, LLC, PEI LICENSING, INC., and/or any other related entities, Defendants-Appellants. >> >> BRIEF FOR PLAINTIFFS-RESPONDENTS LADONNA M. LUSHER JACK L. NEWHOUSE VIRGINIA & AMBINDER, LLP 40 Broad Street, 7th Floor New York, New York 10004 212-943-9080 and JEFFREY K. BROWN LEEDS BROWN LAW, P.C. One Old Country Road, Suite 347 Carle Place, New York 11514 516-873-9550 Attorneys for Plaintiffs-RespondentsDate Completed: January 11, 2017 To Be Argued By: LaDonna M. Lusher Time Requested: 30 Minutes TABLE OF CONTENTS PAGE TABLE OF AUTHORITIES .................................................................................... ii QUESTIONS PRESENTED ...................................................................................... 1 COUNTERSTATEMENT OF THE CASE ............................................................... 2 STANDARD OF REVIEW ....................................................................................... 6 ARGUMENT ............................................................................................................. 7 I. Notice under CPLR § 908 Is Mandatory .................................................... 8 II. CPLR § 908 Notice is Not Conditioned On Plaintiffs-Respondents Timely Moving for Class Certification ....................................................13 III. CPLR § 908’s Notice Requirement Protects Absent Class Members and The Integrity of Clss Actions ............................................17 A. Protection of Absent Class Members ..................................................18 B. Protection of the Class Action Mechanism .........................................20 IV. Defendants’ Calculated Tactics Demonstrate Why § 908 Notice is Mandatory ..............................................................21 CONCLUSION ........................................................................................................25 ii TABLE OF AUTHORITIES PAGE State Cases American Pipe & Constr. Co. v. Utah, 414 U.S. 538 (1974) ..........................................................................................5, 21 Astill v. Kumquat Prop., LLC, 2013 NY Slip Op 32964[U] (N.Y. Sup. Ct. 2013) ....................................... passim Astill v. Kumquat Prop., LLC, 125 A.D.3d 522 (1st Dept. 2015) ................................................................... 12, 14 Avena v. Ford Motor Co., 85 A.D.2d 149 (1st Dept. 1982) .................................................................... passim Beekman Hill Ass'n v. Chin, 274 A.D.2d 161 (1st Dept. 2000) ..........................................................................11 Borden v. 400 E. 55th St. Assoc. L.P., 2012 NY Slip Op 33712[U] (N.Y. Sup. Ct. 2012) ...........................................9, 12 Brady v. Ottaway Newspapers, Inc., 63 N.Y.2d 1031 (1984) ........................................................................................... 6 Brinckerhoff v. Bostwick, 99 N.Y. 185 (1885) .................................................................................. 18, 21, 23 Chavarria v. Crest Hollow Country Club at Woodbury, Inc., 109 A.D.3d 634 (2d Dept. 2013) ..........................................................................16 Diakonikolas v. New Horizons Worldwide Inc., 2011 NY Slip Op 33098[U] (N.Y. Sup. Ct. 2011) .................................... 4, 10, 12 Galdamez v. Biordi Constr. Corp., 50 A.D.3d 357 (1st Dept. 2008) ............................................................................16 Huebner v. Caldwell & Cook, 139 Misc.2d 288 (N.Y. Sup. Ct. 1988) .................................................................14 iii In re Colt Indus. S'holder Litig., 155 A.D.2d 154 (1st Dept. 1990) .............................................................................24 Ind. Invs. Protective League v. Options Clearing Corp., 107 Misc.2d 43 (N.Y. Sup. Ct., 1980) ..................................................................18 Jackson v. Natl. Grange Mut. Liab. Co., 299 N.Y. 333 (1949) .............................................................................................25 O’Hara v. Del Bello, 47 N.Y.2d 363 (1979) ..................................................................................... 14-16 Paru v. Mutual of Am. Life Ins. Co., 52 A.D.3d 346 (1st Dept. 2008) ............................................................................18 Pludeman v N. Leasing Sys., Inc., 2005 NY Slip Op 30270[U] (N.Y. Sup. Ct., 2005) ..............................................17 Pruitt v. Rockefeller Center Properties, Inc., 167 A.D.2d 14 (1st Dept. 1991) ............................................................................23 Putnam v. Otsego Mut. Fire Ins. Co., 45 A.D.2d 556 (3d Dept. 1974) ............................................................................12 Rochester v. Chiarella, 65 N.Y.2d 92 (1985) .............................................................................................20 Rodriguez v. Metropolitan Cable Communications, 79 A.D.3d 841 (2d Dept. 2010) ............................................................................16 Shah v. Wilco Systems, Inc., 27 A.D.3d 169 (1st Dept. 2005) ............................................................................15 Small v. Lorillard Tobacco Co., 94 N.Y.2d 43, 52 (1999) ........................................ 6 Sonnenschein v. Evans, 21 N.Y.2d 563 (1968) .............................................................................. 19, 21, 23 Vasquez v. Nat’l. Sec. Corp., 48 Misc.3d 597 (N.Y. Sup. Ct. 2015) .................................................... 3, 9, 12, 24 iv Vasquez v. Nat’l. Sec. Corp., 139 A.D.3d 503 (1st Dept. 2016) ......................................................................9, 12 Weinstein v. Jenny Craig Operations, Inc., 41 Misc. 3d 1220(A) (N.Y. Sup. Ct. 2013) .............................................................23 Wendt v. Fischer, 243 N.Y. 439 (1926) ................................................................................................20 Yollin v. Holland America Cruises, Inc., 97 A.D.2d 720 (1st Dept. 1983) ............................................................................18 Federal Cases American Pipe & Constr. Co. v. Utah, 414 U.S. 538 (1974) ..........................................................................................5, 18 Statutes N.Y. C.P.L.R. 901 ............................................................................................. 15, 23 N.Y. C.P.L.R. 902 ............................................................................................ passim N.Y. C.P.L.R. 908 ............................................................................................ passim N.Y. C.P.L.R. 1005 .................................................................................................... 9 N.Y. C.P.L.R. 3211 ..................................................................................................15 N.Y. C.P.L.R. 3221 ..............................................................................................2, 23 N.Y. C.P.L.R. 5501 .................................................................................................... 6 N.Y. C.P.L.R. 5602 .................................................................................................... 5 N.Y. C.P.L.R. 5713 .................................................................................................... 5 Other Authorities Twelfth Annual Report of the Judicial Conference to the Legislature on the Civil Practice Law and Rules (1973), appearing in Report of the Administrative Board of the Judicial Conference of the State of New York, 1973-1974, Legislative Doc. No. 90 (1975) .................................................................................................. 9 1 QUESTION PRESENTED Question Presented: Whether the Appellate Division, First Department correctly held that the mandatory class notice requirement under CPLR § 908 is not rendered inoperable simply because the time for an individual plaintiff to move for class certification pursuant to Article 9 has expired. This question should be answered in the affirmative. 2 COUNTERSTATEMENT OF FACTS Named Plaintiff, Geoffrey Desrosiers, commenced this action on February 10, 2015 seeking to recover unpaid minimum wages allegedly owed to himself and a class of unpaid interns (collectively “Plaintiffs-Respondents”) who performed work for Defendants Perry Ellis Menswear, LLC and PEI Licensing, Inc. (collectively “Defendants-Appellants”). [R. 24-35.]1 The action was brought as a class action, pursuant to Article 9 of the New York Civil Practice Law and Rules (“CPLR”). [Id.] Defendants-Appellants were put on notice of the class claims on February 11, 2015 when service was effectuated through an authorized person in New York State Department of State’s Corporation Division. [R. 23, 41-42.] Instead of responding to the class action complaint, on March 18, 2015, Defendants-Appellants sent Named Plaintiff Desrosiers an offer to compromise his individual claim pursuant to CPLR § 3221. [R. 36-38.] Nine days later, and prior to Plaintiffs-Respondents’ obligation under CPLR Article 9 to move for class certification2, Named Plaintiff Desrosiers accepted Defendants-Appellants’ offer. [R. 40.] Despite Named Plaintiff Desrosiers’ timely acceptance, Defendants- Appellants waited almost two months to notify the trial court that Plaintiff Desrosiers’ claim had been settled. [R. 15-42.] In fact, Defendants-Appellants 1 All references to “R.” are to the Record on Appeal. 2 Section 902 of the CPLR states that motions for class certification are to be filed within “sixty days after the time to serve a responsive pleading has expired….” CPLR § 902. 3 calculated just six days after the time to move for class certification had expired, at which time they filed an application requesting that: (1) the clerk of the court enter judgment in the amount of $ 4,500.00 plus costs against Defendants-Appellants and in favor of Named Plaintiff Desrosiers; and (2) the complaint be dismissed with prejudice as Plaintiffs-Respondents had not moved for class certification within the time period allotted by CPLR § 902. [Id.] In their motion, Defendants-Appellants acknowledged that class actions cannot be dismissed, discontinued or compromised without approval of the court, citing to CPLR § 908. [R. 19.] Nevertheless, they claimed that Plaintiffs-Respondents were time-barred from seeking class certification and requested dismissal of the entire class action with prejudice. [Id.] In response, Plaintiffs-Respondents filed a cross-motion pursuant to CPLR § 908 requesting that the trial court issue notice to putative class members informing them of the impending dismissal of their class claims and of their right to object. [R. 43-58.] Plaintiffs-Respondents cited to several Appellate Division decisions that held notice to class members was mandatory under § 908 even where class actions had not yet been certified. [R. 52-55 (citing Avena v. Ford Motor Co., 85 A.D.2d 149 (1st Dept. 1982); Vasquez v. Nat’l. Sec. Corp., 48 Misc.3d 597 (N.Y. Sup. Ct. 2015), aff’d, 139 A.D.3d 503 (1st Dept. 2016), cert. granted, M-5047 (1st Dept. Dec. 13, 2016) (No. APL-2016-00239); Astill v. Kumquat Prop., LLC, 2013 NY Slip Op 32964[U] (N.Y. Sup. Ct. 2013), aff’d, 125 A.D.3d 522 (1st Dept. 2015); 4 Diakonikolas v. New Horizons Worldwide Inc., 2011 NY Slip Op 33098[U] (N.Y. Sup. Ct. 2011)).] The parties’ motions were fully submitted to the trial court, which, following a brief oral argument, granted Defendants-Appellants’ motion to dismiss the class action without prejudice, and denied Plaintiffs-Respondents’ cross-motion to notify class members that their claims would no longer be tolled. [R. 8-14]. While the trial court briefly commented during oral argument that Plaintiffs-Respondents were “beyond [their] time to move for class certification,” its decision was memorialized in a short form order without any explanation or analysis. [R. 7, 13.] A little less than one month later, Plaintiffs-Respondents filed a notice to appeal the trial court’s decision to the Appellate Division, First Department. [R. 5.] Plaintiffs-Respondents asserted that the trial court’s decision should be reversed because the court incorrectly dismissed a class action prior to sending notice to the putative class as is required by (i) CPLR § 908 and (ii) long-standing First Department precedent set forth in Avena v. Ford Motor Co., 85 A.D.2d 149 (1st Dept. 1982). [R. 3.] Plaintiffs-Respondents further argued that their failure to apply for class certification within the time period prescribed in CPLR § 902 does not obviate the requirement to send notice to the class, particularly when the offer to compromise was accepted while Plaintiffs-Respondents still had the opportunity to move for class certification. [Id.] 5 The First Department agreed with Plaintiffs-Respondents and reversed the trial court’s order. [R. 65.] In a unanimous decision, the appellate court specifically held that, “[a]lthough the time in which to seek class certification had expired pursuant to CPLR 902 by the time defendants sought discontinuance of this case based on the settlement, the court improperly denied plaintiff’s application to send CPLR 908 notice to the putative class members.” [Id.] The court cited to American Pipe & Constr. Co. v. Utah, 414 U.S. 538, 551-554 (1974) and its progeny, and further explained: [T]he putative class retains an interest in the action, and CPLR 908 is not rendered inoperable simply because the time for the individual plaintiff to move for class certification has expired. Notice to the putative class members of the compromise in the instant case is particularly important under the present circumstances, where the [statute of] limitations period could run on the putative class members’ cases following discontinuance of the individual plaintiff’s actions. [R. 66.] The appellate court remanded the action to the trial court “to fashion an appropriate notification” under CPLR § 908. [R. 65.] Shortly thereafter, Defendants-Appellants sought leave to appeal the First Department’s unanimous decision to this Court pursuant to CPLR § 5602(b)(1). [R. 64.] The Appellate Division granted that request, and certified the following question of law for this Court’s review pursuant to CPLR § 5713: “Was the order of this Court, which reversed the order of the Supreme Court, properly made?” [Id.] 6 The Appellate Division further certified that its determination was made as a matter of law and not in the exercise of discretion. [Id.] STANDARD OF REVIEW As a threshold matter, the CPLR mandates that the “[t]he court of appeals shall review questions of law only. . . .” CPLR § 5501(b). By contrast, the Appellate Division is permitted to review questions of law and questions of fact. CPLR § 5501(c); Small v. Lorillard Tobacco Co., 94 N.Y.2d 43, 52 (1999) (“The Appellate Division, as a branch of Supreme Court, is vested with the same discretionary power and may exercise that power, even when there has been no abuse of discretion as a matter of law by the nisi prius court.”) (citations omitted). Where the Appellate Division exercises discretion in issuing an order, the standard of review on appeal to this Court is whether the Appellate Division abused its discretion as a matter of law. Brady v. Ottaway Newspapers, Inc., 63 N.Y.2d 1031, 1033 (1984) (“. . . the Appellate Division may also substitute its own discretion even in the absence of abuse, which is then reviewable by [the Court of Appeals] only for abuse of discretion as a matter of law.”). The abuse of discretion standard has been applied even where the Appellate Division’s order granting leave to appeal states that the ruling was made on the law. See e.g., Small, 94 N.Y.2d at 52 (finding that the proper standard of review was “abuse of discretion as a matter of law,” the Court of Appeals opined: “The Appellate Division stated in its order granting leave 7 to appeal and in its order of reversal that its ruling was made on the law; in deciding the appeal, however, it also undertook an exercise of its discretion.”). In the instant matter, the Appellate Division reversed the order of the trial court, and undertook an exercise of its discretion in holding that the expiration of the time to move for class certification is not by itself sufficient to render CPLR § 908’s notice requirement inoperable. [R. 66.] The appellate court substituted its own discretion for that of the trial court, finding that the putative class members interest in receiving notice in this case “is particularly important under the present circumstances, where the limitations period could run on the putative class members’ cases following discontinuance of the individual plaintiff’s action.” [R. 66-67.] The Appellate Division’s order to issue notice under CPLR § 908 was based on its review of the of the facts and circumstances surrounding this matter. Accordingly, it is respectfully submitted that the only issue before this Court is whether the Appellate Division abused its discretion as a matter of law in reversing the order of the trial court. For the reasons set forth below, Plaintiffs-Respondents contend that there was no abuse of discretion made by the Appellate Division. ARGUMENT Following its own precedent, the First Department rightly held that class members should have been notified of the dismissal of this action pursuant to the mandatory requirements of CPLR § 908. As noted by the appellate court, § 908’s 8 notice requirement is not contingent upon the filing of a motion for class certification, and became warranted upon Named Plaintiff Desrosiers’ acceptance of Defendants-Appellants’ offer to compromise his individual claim. Although Desrosiers’ acceptance occurred before the time to move for class certification had expired, Defendants-Appellants waited for the deadline to elapse, and then moved to dismiss the entire class action with prejudice. It is within this narrow factual circumstance that the Appellate Division correctly held that “CPLR 908 is not rendered inoperable simply because the time for the individual plaintiff to move for class certification has expired.” [R. 66.] To hold otherwise would conflict with the plain language of the statute and greatly prejudice absent class members. It would also provide parties with a mechanism to circumvent CPLR § 908’s notice requirement by waiting until the class certification deadline expires before requesting dismissal of class claims. Accordingly, this Court should affirm the Appellate Division’s decision in its entirety. I. Notice Under CPLR § 908 Is Mandatory Section 908 was enacted in 1975 and unconditionally provides: A class action shall not be dismissed, discontinued, or compromised without the approval of the court. Notice of the proposed dismissal, discontinuance, or compromise shall be given to all members of the class in such manner as the court directs. CPLR § 908. 9 Unlike its predecessor (CPLR § 1005), CPLR § 908 contains a mandatory notice requirement. In sponsoring the statute, the Judicial Conference explicitly noted that “[CPLR § 908] is stricter than the present law because, in addition to court approval, it requires in all cases notice to the members of the class in such manner as the court directs.” See Twelfth Annual Report of the Judicial Conference to the Legislature on the Civil Practice Law and Rules (1973), appearing in Report of the Administrative Board of the Judicial Conference of the State of New York, 1973- 1974, Legislative Doc. No. 90, at 210-211 (1975) (emphasis added). For more than thirty years, New York courts have uniformly enforced the statute’s clearly drafted language and required notice be sent to class members where there is a voluntary pre-certification dismissal, discontinuance, or compromise of a named plaintiff’s individual claims. See e.g., Avena v. Ford Motor Co., 85 A.D.2d 149 (1st Dept. 1982) (affirming decision to require notice of settlement where parties contended that notice should not be disseminated); Vasquez v. Nat’l. Sec. Corp., 48 Misc. 3d 597 (N.Y. Sup. Ct. 2015), aff’d, 139 A.D.3d 503 (1st Dept. 2016) (ordering that notice to the class be sent where named plaintiff was presented with an offer of tender to satisfy his individual claims prior to class certification); Astill v. Kumquat Prop., LLC, 2013 NY Slip Op 32964[U], *3 (N.Y. Sup. Ct. 2013), aff’d, 125 A.D.3d 522 (1st Dept. 2015) (ordering notice be sent upon granting individual plaintiff’s application for discontinuance prior to class certification); Borden v. 400 E. 55th St. 10 Assoc. L.P., 2012 NY Slip Op 33712[U], at *7 n.2 (N.Y. Sup. Ct. 2012) (relying on Avena in noting that notice of settlement of individual claims requires notice to class members even before the class is certified); Diakonikolas v. New Horizons Worldwide Inc., 2011 NY Slip Op 33098[U], at *7 (N.Y. Sup. Ct. 2011) (requiring notice to putative class where pleadings amended to withdraw class related allegations). Once triggered, the obligation to publish notice is mandatory and not dependent on any party affirmatively seeking such relief. CPLR § 908 (“[n]otice…shall be given to all members of the class….”) (emphasis added); Avena, 85 A.D.2d at 153 (“The natural reading of the statute on its face is that some notice must be given….”) (emphasis in original). Indeed, courts have held notice to class members was required under § 908 even though it was never requested by any of the parties to the action. Id. at 151. The seminal case on CPLR § 908 notice is Avena v. Ford Motor Co., 447 N.Y.S.2d 278 (1st Dept. 1982). There the named plaintiffs commenced a class action seeking damages and injunctive relief related to defective car engines. Id. at 150-151. Prior to class certification, the named plaintiffs entered into a settlement agreement that resulted in the discontinuance of their individual claims, and the claims alleged on behalf of putative class members. Id. A condition to the parties’ settlement agreement was that notice of the settlement would not be sent to the 11 putative class. Id. The trial court refused to approve the settlement on the grounds that notice to class members was mandatory pursuant to CPLR § 908. Id. The First Department affirmed the trial court’s decision holding that notice under § 908 is mandatory even where “no application has been made for an order to determine whether the action is to be maintained as a class action and for certification as such under CPLR 902.” Id. at 150. This is because “[t]he natural reading of the statute on its face is that some notice must be given….” Id. at 153. See also Beekman Hill Ass'n v. Chin, 274 A.D.2d 161, 166-167 (1st Dept. 2000) (“It is fundamental that a court, in interpreting a statute, should attempt to effectuate the intent of the legislature and where the statutory language is clear and unambiguous, the court should construe it so as to give effect to the plain meaning of the words used.”). While the appellate court acknowledged that requiring notice to the class may “make settlement more difficult, perhaps even impossible in some cases,” it noted that “CPLR § 908 intends to make settlement of class actions somewhat more difficult as part of the price of preventing abuse.” Avena, at 153. The court went on to recognize that, because class action settlements must be approved by the court, which would otherwise not be necessary, “such settlements are subject to greater control and thus more difficult than the settlement of a purely individual lawsuit.” Id. 12 Since Avena was decided, the First Department has reaffirmed its holding that CPLR § 908 notice should issue in actions pleaded as class actions but not certified in at least two other decisions. See Vasquez v. Nat’l. Sec. Corp., 139 A.D.3d 503 (1st Dept. 2016); Astill, 125 A.D.3d 522 (1st Dept. 2015). Likewise, at least three trial courts have followed this precedent and ordered notice be issued pursuant CPLR § 908 without requiring the parties engage in pre-class certification discovery or that the named plaintiff move for class certification. See Vasquez, 48 Misc. at 601; Diakonikolas, at *7; Astill, 013 NY Slip Op 32964[U] at *4; see also Borden, 2012 NY Slip Op 33712[U], at *7 n.2. Relying on this body of case law, the First Department correctly held that the trial court in the instant action should have directed notice be sent to class members that Named Plaintiff Desrosiers had accepted Defendants-Appellants’ offer to compromise his individual claims. Section 908’s mandatory notice requirements were triggered as soon as Named Plaintiff Desrosiers accepted the offer and decided not to proceed with the action. [R. 40.] Putnam v. Otsego Mut. Fire Ins. Co., 45 A.D.2d 556, 558 (3d Dept. 1974) (“When plaintiffs accepted the offer [to compromise], the compromise agreement was made and binding on defendant to pay….”). The statute’s notice obligations were further implicated when Defendants- Appellants moved to dismiss the claims of absent class members with prejudice. [R. 17-18.] 13 Despite the statute’s plain language, the trial court ignored § 908’s mandates, and erroneously concluded that, because Plaintiffs-Respondents never moved for class certification, there was no harm in dismissing the action without notice. [R. 11-12.] The First Department unanimously held this was clear error and remanded the case so that an appropriate notification could be fashioned under the statute. [R. 65 (“the court improperly denied plaintiff’s application to send CPLR 908 notice to the putative class members”).] II. CPLR § 908 Notice is Not Conditioned On Plaintiffs-Respondents Timely Moving for Class Certification Defendants-Appellants acknowledge the holding in Avena that “notice of a compromise or settlement under CPLR § 908 is required if the settlement or compromise occurred prior to class certification.” [Def. Brief, p. 13.]3 They further readily admit that “[h]ad Desrosiers timely moved for certification, the Appellate Division’s holding in [Avena] would have applied” to this action. [Id.] Nevertheless, Defendants-Appellants incorrectly claim, with no legal authority, that notice should not be issued to class members because Named Plaintiff Desrosiers failed to move for class certification within the sixty-day time period prescribed by CPLR § 902. They argue this “lawsuit was for all purposes an individual claim when the deadline for moving for class certification had passed.” [Def. Brief, p.5.] 3 All citations to Defendants-Appellants’ Brief are hereinafter referred to as “Def. Brief.” 14 The First Department rejected Defendants-Appellants’ argument and correctly held that CPLR § 908’s notice requirement “is not rendered inoperable simply because the time for the individual plaintiff to move for class certification has expired.” [R. 66.] As noted by the appellate court in Astill, supra: “even if [the trial court] had granted defendants’ motion on the ground that plaintiff failed to seek class certification within the time required by CPLR 902, the determination would apply only to the named plaintiff and would not bar other potential class members from bringing an action and seeking class certification.” 125 A.D.3d 522 (citing Huebner v. Caldwell & Cook, 139 Misc.2d 288, 292 (N.Y. Sup. Ct. 1988)). Accordingly, “the putative class retains an interest in the action . . . .” [R. 66.] Defendants-Appellants predominantly rely on this Court’s decision in O’Hara v. Del Bello, 47 N.Y.2d 363 (1979) to support their argument that § 908 notice should not issue because Plaintiffs-Respondents did not move for class certification within the time prescribed by § 902. Defendants-Appellants’ argument is entirely misguided because O’Hara does not even mention CPLR § 908, let alone analyze its obligatory requirements. O’Hara was an Article 78 proceeding brought by a petitioner on behalf of a putative class seeking recovery of alleged unpaid travel vouchers. After rejecting the respondent’s motion to dismiss the action under CPLR § 3211, the trial court 15 awarded summary judgment in favor of petitioner. The trial court then sua sponte granted certification of the class. Id. at 366-67. Upon review, this Court found that, while the trial court properly granted petitioner summary judgment, it had improperly granted relief to the class, as petitioner failed to “comply with the procedural and substantive provisions of CPLR article 9….” Id. at 368. Rather than remanding the issue of class certification to the trial court for future determination, this Court denied class certification with prejudice on the grounds that: (1) petitioner could no longer serve as an adequate class representative because his claims had been effectively resolved on the merits; and (2) over two years had passed since the action was commenced, rendering any future class certification motion untimely. See id. at 368-69. Defendants-Appellants’ reliance on O’Hara is fatally flawed because nowhere in this Court’s decision is there an analysis, opinion, or even mention of CPLR § 908. While there is discussion regarding class certification under Article 9, this Court’s focus was on whether to allow the plaintiff to move for what would have been a very untimely motion under CPLR § 901 and § 902. See id. at 366-70. See also Shah v. Wilco Systems, Inc., 27 A.D.3d 169, 173 (1st Dept. 2005) (same). This distinction is crucial given that CPLR § 902 states that motions for class certification are to be filed within “sixty days after the time to serve a responsive pleading has expired. . . .” CPLR § 902. Conversely, CPLR § 908 contains no 16 temporal restrictions. Accordingly, there is no merit to Defendants-Appellants contention that CPLR § 902’s deadline to move for class certification is a procedural prerequisite to publishing notice under CPLR § 908. Such a finding would be particularly inappropriate considering that the purpose of each statute is fundamentally different. Section 902’s deadlines were enacted to ensure the early determination, well before any decision on the merits, of whether an action should continue as a class action.4 See O’Hara, 47 N.Y.2d at 369-70. Meanwhile, § 908’s notice serves as part of a statutory mechanism that ensures the adequate protection of absent class members when actions shielding their rights are terminated. See Avena, 83 A.D.2d at 155. In light of these distinct purposes, the First Department was entirely correct in holding that CPLR § 908’s notice requirement is not subject to CPLR § 902’s filing deadlines. [R. 66 (“CPLR 908 is not rendered inoperable simply because the time for the individual plaintiff to move for class certification has expired.”).] It is also important to note that Named Plaintiff Desrosiers accepted Defendants-Appellants’ offer to compromise on March 27, 2015, approximately six weeks before Plaintiffs-Respondents’ May 12, 2015 deadline to move for class certification would have expired. [R. 36-40.] As such, CPLR § 908’s notice 4 Court’s routinely extend the deadline to move for class certification to allow the parties to conduct pre-class certification discovery. Galdamez v. Biordi Constr. Corp., 50 A.D.3d 357, 358 (1st Dept. 2008); Rodriguez v. Metropolitan Cable Communications, 79 A.D.3d 841, 842 (2d Dept. 2010); Chavarria v. Crest Hollow Country Club at Woodbury, Inc., 109 A.D.3d 634, 634 (2d Dept. 2013). 17 requirement was actually triggered when Plaintiffs-Respondents still had the ability to move for class certification. Defendants-Appellants chose to wait until that deadline had expired prior to moving for dismissal of the class claims, and then cunningly claimed that notice should not issue under § 908 because § 902’s sixty- day window had passed. [R. 65 (“Although the time in which to seek class certification had expired pursuant to CPLR 902 by the time defendants sought discontinuance of this case based on the settlement….”) (emphasis added).] Defendants-Appellants tactics should not be condoned as notice pursuant to CPLR § 908 is mandatory even if Plaintiffs-Respondents never moved for class certification regardless of the temporal requirements of § 902. Avena, at 150, 152- 153, 156. III. CPLR § 908’s Notice Requirement Protects Absent Class Members and The Integrity of Class Actions As has been noted by the First Department, § 908’s notice requirement was instituted for the benefit and protection of absent class members, as well as to prevent abuse of the class action mechanism for individual gain. Indeed, “[t]he abuses which have developed incident to the beneficent widened availability of class actions and the potential for abuse in a private settlement even before certification are widely recognized.” Avena, at 153. See also Pludeman v N. Leasing Sys., Inc., 2005 NY Slip Op 30270[U], *6 (N.Y. Sup. Ct. 2005) (“The purpose of CPLR 908 is to protect the putative class and to discourage collusive settlements of class actions”). 18 A. Protection of Absent Class Members One of the important justifications for disseminating § 908 notice is to protect absent class members against the unknowing lapse of their statute of limitation periods. This was recognized by the First Department in the instant matter when it explained that, upon the filing of a class action complaint, the statute of limitations is immediately tolled for all putative class members and gives them an opportunity to intervene after the court has found the suit inappropriate for class action status. [R. 66 (citing American Pipe & Constr. Co., v. Utah, 414 U.S. 538, 553 (1974)).] See also Brinckerhoff v. Bostwick, 99 N.Y. 185, 194-195 (1885) (where a plaintiff commences an action for the benefit of others, “for the purposes of the statute of limitations, the action must be treated as if all the [others] were plaintiffs…. The suit having been commenced for their benefit in which full and adequate relief could have been given to them, their rights would not have been barred by any lapse of time if they had not come in as plaintiffs.”); Paru v. Mutual of Am. Life Ins. Co., 52 A.D.3d 346, 348 (1st Dept. 2008); Yollin v. Holland America Cruises, Inc., 97 A.D.2d 720, 720 (1st Dept. 1983). Since the commencement of a class action tolls their claims, prospective class members are encouraged to rely on an already-filed class action, instead of filing their own individual lawsuit, secure in the knowledge that their statute of limitations will not run while the class action is pending. See Ind. Invs. Protective League v. 19 Options Clearing Corp., 107 Misc.2d 43, 45 (N.Y. Sup. Ct. 1980) (“. . . the court must consider the interest of the as yet unrepresented members of the putative plaintiff class who may have been lulled into inaction by the plaintiffs’ commencement of an action nominally for their benefit.”). Once the class action is dismissed, discontinued or compromised, CPLR § 908’s notice requirement serves the self-evident benefit of notifying absent class members that they are no longer protected and that they must act to preserve their claims. Sonnenschein v. Evans, 21 N.Y.2d 563, 570 (1968) (after absent putative class members receive notice, they can “apply to the court for permission to prosecute the action against the original defendant or defendants on behalf of the class . . . .”). Here, the distribution of § 908 notice was rightly recognized by the First Department as “particularly important under the present circumstances, where the limitations period could run on the putative class members’ cases following discontinuance” of Named Plaintiff Desrosiers’ action. [R. 67.] Plaintiff Desrosiers commenced this lawsuit seeking minimum wages for himself and a class of unpaid interns who typically hold internships for a period of only three to four months (i.e., Plaintiff Desrosiers worked for Defendants-Appellants from September 2012 through December 2012). [R. 30, at ¶ 25.] If this class action is dismissed without notice to the class, many of these class members whose internships may teeter on the edge of the statute of limitations period could lose not only a portion of their 20 claim, but their entire claim. [R. 26-28, at ¶¶ 3, 11-13.] Accordingly, the prejudicial impact of not sending § 908 notice of this action’s dismissal to class members is significant. B. Protection of the Class Action Mechanism Section 908 notice also protects the integrity of class actions by giving class members transparency and providing them with the opportunity to object, cast doubt, or intervene on the actions of the named plaintiff who has a fiduciary duty to the class. Avena, 83 A.D.2d at 152 (“The fiduciary obligations of the named plaintiffs in instituting [a class action] . . . are generally recognized and not disputed.”); Rochester v. Chiarella, 65 N.Y.2d 92, 100 (1985). In Avena, the First Department recognized the risks associated with private settlements of class actions and emphasized CPLR § 908’s role in preventing an individual plaintiff from abusing the class action mechanism for unfair personal aggrandizement. Avena, at 152-155. Noting that the named plaintiff’s “[f]iduciary obligations should not be lightly assumed and cannot be lightly discarded,” the court observed that a class representative’s obligation to those s/he sought to represent is one of “undivided loyalty” that is to be upheld with an “uncompromising rigidity.” Avena, at 155 (citing Wendt v. Fischer, 243 N.Y. 439, 444 (1926)). The court further opined that § 908 notice assists the named plaintiff with his basic fiduciary duty “to disclose all relevant facts to his beneficiaries.” Avena, at 153; Wendt, at 442 (“[i]f 21 dual interests are to be served [by a fiduciary], the disclosure to be effective must lay bare the truth, without ambiguity or reservation, in all its stark significance.”). This is especially important where named plaintiffs-fiduciaries have settled their claims and are assured some reward, “while their beneficiaries, the other members of the class, are left to struggle for themselves.” Avena, at 154. In the current matter, class members should be notified that Named Plaintiff Desrosiers accepted Defendants-Appellants offer to compromise his claim for $4,500.00. Defendants-Appellants’ offer was specifically intended to compensate Named Plaintiff Desrosiers for all his alleged damages without regard for the damages allegedly owed to the putative class. By accepting the offer, Named Plaintiff Desrosiers received a benefit to the detriment of the putative class. This deviation from the Named Plaintiff’s duty as fiduciary to the putative class members requires that § 908 notice be disseminated so that class members are provided with all relevant facts and the opportunity to object, cast doubt, or intervene in the action. Sonnenschein, 21 N.Y.2d at 570; Brinckerhoff, 99 N.Y. at 195 (recognizing the interest of absent class members in being “present to protect and secure their rights, and to prevent a discontinuance of the action by the original plaintiff.”). IV. Defendants’ Calculated Tactics Demonstrate Why § 908 Notice is Mandatory The fact that Defendants-Appellants intentionally waited until after the expiration of the deadline to move for class certification prior to moving for 22 dismissal of the class claims did not go unnoticed by the First Department and should not be condoned by this Court. [R. 65 (“Although the time in which to seek class certification had expired pursuant to CPLR 902 by the time defendants sought discontinuance of this case based on the settlement….”) (emphasis added).] Indeed, Defendants-Appellants waited almost two months after Plaintiff Desrosiers accepted their offer to notify the trial court and request that all class claims be dismissed with prejudice, disingenuously contending that “this case ceased being a ‘class action’ after the deadline passed.” [Def. Brief, p. 9.] Under Defendants-Appellants’ curious interpretation of Avena, CPLR § 908 notice would have been proper had Plaintiff Desrosiers, after accepting the offer to compromise, moved for class certification. Playing this scenario to its logical conclusion highlights the impractical folly of Defendants-Appellants’ position as they would undoubtedly argue that Plaintiff Desrosiers had no standing to act as a class representative since he compromised his individual claims. Defendants- Appellants would most certainly have contended that class certification was inappropriate for failure to meet, at minimum, the typicality and adequacy requirements of CPLR § 901(a). Additionally, a substantial amount of time and resources would have been expended by the parties and the court in assessing whether the class should be certified, which is not a requirement under the plain language of § 908. 23 Alternatively, had Plaintiff Desrosiers rejected Defendants-Appellants offer to compromise in order to preserve his ability to serve as class representative, he would face the possibility of having to pay all costs incurred by Defendants- Appellants in the litigation. See CPLR § 3221. Defendants-Appellants’ costs could amount to substantially more than the $4,500.00 in damages Plaintiff Desrosiers was offered in exchange for his limited minimum wage claim. Accordingly, under the pressure of incurring substantial liability, Plaintiff Desrosiers was forced to accept the offer to compromise, and withdraw his efforts to recover unpaid wages on behalf of the class. To allow Defendants-Appellants to moot all class claims under these circumstances is antithetical to the public benefit yielded through class actions. See Weinstein v. Jenny Craig Operations, Inc., 41 Misc. 3d 1220(A), 1220A (N.Y. Sup. Ct. 2013) (“A class action also yields a public benefit which makes it superior…and induc[es] socially and ethically responsible behavior on the part of large and wealthy institutions. . .which will be deterred from carrying out policies or engaging in activities harmful to large numbers of individuals.”) (citing Pruitt v. Rockefeller Center Properties, Inc., 167 A.D.2d 14, 23 (1st Dept. 1991)). Notice to the putative class under CPLR § 908 assists in effectuating this public benefit by putting class members on notice of the named plaintiff’s actions, and affording them the opportunity to intervene in the action. Sonnenschein, 21 N.Y.2d at 570; Brinckerhoff, 99 N.Y. at 195. 24 There is also no credence to Defendants-Appellants’ unsupported argument that, had the trial court ordered CPLR § 908 notice be issued to class members, “the parties would undoubtedly have been called upon to litigate the identity of an appropriate class, and, after a hearing, the court would have entered an order certifying the class for purposes of sending notices that this lawsuit was being dismissed.” [Def. Brief, p. 9.] Not a single court that has directed notice be sent under CPLR § 908 has ordered that a hearing on class certification must be held and a certification order entered prior to sending notice. There is also no merit to Defendants-Appellants contention that the parties would have to litigate the identity of class members for purposes of issuing § 908 notice. Courts that have required distribution of § 908 notice have simply ordered defendants to produce the names and last known addresses of all potential members of the class. See Diakonikolas, 2011 NY Slip Op 33098[U] at *7 (requiring defendant to provide a list of names and addresses of all students enrolled in the program); Astill, 2013 NY Slip Op 32964[U] at *4 (requiring defendant to produce names and current addresses of all individuals who resided in the building); Vasquez, 48 Misc.3d at 601 (ordering parties to meet and confer over publishing notice via electronic means). To the extent that contact information is lacking, notice to class members has been effectuated through publication. In re Colt Indus. S'holder Litig., 155 A.D.2d 154, 160 (1st Dept. 1990). 25 Finally, with respect to whether CPLR 908’s notice and approval provisions apply to the other various hypothetical scenarios posed by Defendants-Appellants - i.e., actions where (1) a class certification motion was denied, (2) the named plaintiff’s claims were time barred, (3) a motion to dismiss was granted for failure to state a claim, or (4) the named plaintiff decided to withdraw his class allegations - they are beyond the scope of this appeal. Jackson v. Natl. Grange Mut. Liab. Co., 299 N.Y. 333, 335 (1949) (“. . . an appeal to us upon a question certified brings up for review that question and no others (N.Y. Const., art. VI, §7). Moreover, we will not entertain such an appeal unless the question is decisive of some part of the determination of the Appellate Division.”). The Appellate Division rendered one holding in this case - that CPLR § 908 is not rendered inoperable simply because the time for the individual plaintiff to move for class certification has expired when the trial court was asked to approve a settlement of the named plaintiff’s claim. Whether that holding was proper is the only issue this Court is faced with on review, and Plaintiffs-Respondents respectfully submit that it should be affirmed in its entirety. CONCLUSION For the foregoing reasons, Plaintiffs-Respondents respectfully request that the Court issue an order (1) affirming the decision of the First Department; and (2) remanding this case to the trial court to fashion an appropriate notification to putative class members pursuant to CPLR § 908. Dated: New York, New York January 11, 2017 VIRGINIA & AMBINDER LLP c~~~J~-- TO: Steven C. DePalma, Esq. NICOLL DAVIS & SPINELLA LLP Attorneys for Defendants 450 Seventh Avenue, Suite 2205 NewYork,N.Y.10123 Frank Henry, Esq. Of Counsel Blue Rock Legal, P.A. 11645 Biscayne Boulevard, Suite 400 North Miami, Fl. 3 3181 26 By: LaDonna M. Lusher, Esq. Jack L. Newhouse, Esq. 40 Broad Street, 7th Floor NewYork,N.Y.10004 Tel: (212) 943-9080 Fax:· (212) 943-9082 and Jeffrey K. Brown, Esq. Daniel Markowitz, Esq. LEEDS BROWN LAW, P.C. 1 Old Country Road, Suite 347 Carle Place, N.Y. 11514 Tel: (516) 873-9550 Fax: (516) 747-5024 Attorneys for Plaintiffs-Respondents CERTIFICATE OF COMPLIANCE I hereby certify pursuant to 22 NYCRR § 500.13(c) that the foregoing brief was prepared on a computer. A proportionally spaced typeface was used, as follows: Name of typeface: Times New Roman Point size: 14 Line spacing: Double The total number of words in the brief: inclusive of point headings and footnotes and exclusive of the table of contents, the table of cases and authorities and the statement of questions presented required by subsection (a) of this section; and any addendum containing material required by§ SOO.l(h) is 6,044. Dated: YANU.V\J..)={ \ l , 20 17 Respectfully submitted, :i? -~P. c~t~~-- By= LaDonna M. Lusher, Esq. Jack L. Newhouse, Esq. VIRGINIA & AMBlNDER, LLP 40 Broad Street, 71h Floor New York, N.Y. 10004 Tel: (212) 943-9080 Fax: (212) 943-9082 Attorneys for Plaintiffs-Respondents ADDENDUM 210 Comment Following the lead of the Federal Rule the proposed section expressly authorizes class treatment with respect to particular issues and the formation of subclasses. Rule 907. Orders in conduct of class actions. In the conduct of class actions the court may make appropriate orders: 1. determining the course of proceedings or prescribing measures to prevent undue repetition or complication in the presentation of evidence or argument; 2. requiring, for the protection of the members of the class, or otherwise for the fair conduct of the action, that notice be given in such manner as the court may direct to some or all of the members of any step in the action, or of the proposed extent of the judgment, or of the opportunity of members to signify whether they consider the representation fair and adequate, or to appear and present claims or defenses, or otherwise to come into the action; 3. imposing conditions on the representative parties or on intervenors; 4. requiring that the pleadings be amended to eliminate therefrom allegations as to representation of absent persons, and that the action proceed accordingly; 5. directing that a money judgment favorable to the class be paid either in one sum, whether forthwith or within such period as the court may fix, or in such installments as the court may specify; 6. dealing with similar procedural matters. The orders may be altered or amended as may be desirable from time to time. Comment The proposed rule like the Federal Rule would provide important guidelines that assist the court in the management of the action. Deviating from the Federal Rule, proposed Rule 907 authorizes the court in the exercise of its discretion to determine whether represented parties may enter an appearance without first seeking permission to intervene, and to tailor the effect of an appearance to the exigencies of the particular case. In contrast to the bill submitted to the 1972 Legislature, this bill would also allow the court to set terms for payment of a judgment to a victorious class in accordance with the financial capacity of the defendant so as to avoid harsh economic and social consequences such as loss of employment. The desirability of this change is self-evident. Rule 908. Dismissal, discontinuance or compromise. A class action shall not be dismissed, discontinued, or compromised without the approval of the court. Notice of the 211 proposed dismissal, discontinuance, or compromise shall be given to all members of the class in such manner as the court directs. Comment The proposed provision is stricter than the present law. In addition to court approval, it requires in all cases notice to the members of the class in such manner as the court directs. B. NEW RECOMMENDED LEGISLATION AND PROPOSALS The Committee recommends that the following new legislation and proposals be submitted by the Judicial Conference to the 197 4 Legislature. 1. Proposals Relating to the Right of Contribution The decision of the Court of Appeals in Dole v. Dow Chemical Co., 30 N.Y. 2d 143 (1972) has significantly changed the law governing contribution between tortfeasors in New Y ark both in its substantive and procedural aspects. The immediate impact of Dole has been to increase sharply the likelihood that each wrongdoer who contributed to the harm suffered by the injured party will also contribute an equitable share to his compensation. While it is generally agreed that the drastic changes in the law of contribution brought by Dole are beneficial, it cannot be denied that Dole has created problems of its own. Some of them have since been resolved by judicial decision; others require legislative resolution. The proposals submitted herewith are directed towards two principal goals: First, they would codify and clarify the fundamental rule embodied in Dole and its progeny (1) that there is no longer the requirement of a joint money judgment against tortfeasors if contribution is to be allowed among them; and (2) that the courts are no longer restricted to either apportioning liability for contribution on a pro rata basis, if the statutory prerequisites for contribution have been met, or shifting responsibility entirely from one tortfeasor to another under the primary-secondary tortfeasor doctrine of indemnification. Instead, under proposed new article 14, which the Committee recommends, the courts may apportion the shares of the contributing tortfeasors on the basis of their comparative degrees of culpability. Second, a proposed amendment of section 15-108 of the General Obligations Law would remove the disincentive to settle which presently exists under Dole for a tortfeasor because he remains subject to contribution to other tortfeasors against whom a judgment in favor of the injured party may be rendered. Under the proposed statutory scheme, the settling tortfeasor would no longer be subject to a claim for contribution by other persons who are liable to the injured party; neither could he assert a claim for contribution against them. Rather, under the proposed amendment, the claim of the