Jose Gonzalez v. Preferred Freezer Services, LBF, LLC et al, No. 2:2012cv03467 - Document 58 (C.D. Cal. 2012)
Court Description: ORDER GRANTING PLAINTIFFS MOTION FOR AN ORDER FOR CORRECTIVE ACTION 49 by Judge Otis D Wright, II: Preferred Freezer is therefore ORDERED to provide Gonzalez with the contact information of all of those prospective plaintiffs in this case with whom Preferred Freezer has had contact regarding settlement. Furthermore, any communication that either party has with putative plaintiffs must include the following information: (1) the name of this case; (2) the case number; (3) a summary of the basis of Gonzalezs claims; (4) the name of Gonzalezs attorneys and their contact information; and (5) a statement concerning the effect of executing Preferred Freezers released documents will have on its employees ability to participate in this lawsuit. (lc). Modified on 9/27/2012 (lc).
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Jose Gonzalez v. Preferred Freezer Services, LBF, LLC et al Doc. 58 O 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 JOSE GONZALEZ, individually and on behalf of all others similarly situated, 12 v. 13 14 Plaintiffs, Case No. CV 12-03467-ODW (FMOx) ORDER GRANTING PLAINTIFF’S MOTION FOR AN ORDER FOR CORRECTIVE ACTION [49] PREFERRED FREEZER SERVICES LBF, LLC, and DOES 1–100, inclusive, 15 Defendants. 16 17 Plaintiff Jose Gonzalez moves for corrective action under Federal Rules of Civil 18 Procedure 23, on grounds that Defendant Preferred Freezer Services has improperly 19 contacted potential plaintiffs to this putative class action in efforts “to obtain releases 20 from its employees concerning the claims pled by [Gonzalez] in this action.” (Mot. 21 6.) As a result, Gonzalez asks the Court to order Preferred Freezer to release the 22 names and contact information of individuals from whom Preferred Freezer has 23 attempted to extract releases. 24 GRANTS Gonzalez’s motion.1 (Mot. 13.) For the following reasons, the Court 25 Gonzalez brought a collective action on behalf of himself and other of Preferred 26 Freezer’s employees for unpaid overtime pay under California law and the Fair Labor 27 1 28 Having carefully considered the papers filed in support of and in opposition to the instant Motion, the Court deems the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; L. R. 7-15. Dockets.Justia.com 1 Standards Act, 29 U.S.C. § 216(b). (Mot. 2.) In August 2012, Preferred Freezer 2 unilaterally drafted a “Release Agreement” that it provided to its employees, who are 3 potential plaintiffs to this putative class action. (Mot. 6–7.) The Agreement explained 4 that in exchange for a settlement payment “in full satisfaction of all claims that 5 Employee has, had or could have had arising out of the lawsuit or in any way related 6 thereto,” the employee waived any and all claims arising out of a “former 7 employee[’s]” wage-and-hour lawsuit or in any way related to the lawsuit. (Mot. 7.) 8 But the Release Agreement did not state when this unnamed lawsuit was filed, the 9 name of the former employee, the names of the employee’s attorneys, the attorneys’ 10 contact information, or the period of time covered by the release. (Id.) 11 Settlements are usually encouraged; however, public policy demands that 12 potential plaintiffs receive appropriate notice before entering into any release 13 agreement. County of Santa Clara v. Astra U.S.A., Inc., No. C 05-03740 WHA, 2010 14 WL 2724512, at *3 (N.D. Cal. July 8, 2010). While pre-certification communication 15 with prospective § 216(b) plaintiffs is generally allowed, courts may issue a corrective 16 order when “defendant’s communication was misleading or improper.” Parks v. 17 Eastwood Ins. Services, Inc., 235 F. Supp. 2d 1082, 1084 (C.D. Cal. 2002). The 18 concern, of course, is that a defendant could mislead putative class members through 19 “omissions and failure to provide enough information, which can include the failure to 20 append the plaintiffs’ complaint to a settlement offer.” County of Santa Clara, 2010 21 WL 2724512, at *3. As a result, if the Court finds that Preferred Freezer’s actions 22 could mislead potential plaintiffs, then the Court can order a corrective action to 23 rectify Preferred Freezer’s action. 24 The waiver Preferred Freezer tendered its employees was misleading in many 25 ways. It did not include any information regarding this class action, except that a 26 former employee had brought a lawsuit against Preferred Freezer. 27 Exs. A, B.) The waiver did not attach the Complaint, any information on when the 28 case was filed, nor any information regarding the essence of the case. (Mot. 7.) 2 (Sinay Decl. 1 Preferred Freezer also did not include Gonzalez’s counsel’s contact information. (See 2 Gamez Decl. Ex. 1.) Even when Preferred Freezer’s agents spoke to the potential 3 plaintiffs, the agents never provided them with the name of the case. (Gamez Decl. 4 ¶ 6.) Furthermore, Preferred Freezer’s counsel never contacted Gonzalez’s counsel to 5 confer over possible communication to Preferred Freezer’s employees regarding the 6 potential settlement. (Mot. 6.) Thus, the waiver misleadingly failed to provide the 7 potential plaintiffs with adequate notice of this case in order to make an informed 8 decision regarding waiver of their rights. 9 Gonzalez seeks only a list of all employees (and their contact information) to 10 whom Preferred Freezer offered the Release Agreement so that Gonzalez may 11 personally “correct the damage wrought by [Preferred Freezer]’s misleading, 12 unilateral communications.” 13 decisions from other courts. Compare County of Santa Clara, 2010 WL 2724512, at 14 *1 (granting motion for corrective action where defendant failed to provide a 15 summary of plaintiff’s complaint, plaintiffs’ counsel contact information, and the 16 current status of the case) with Eshelman v. OrthoClear Holdings, Inc., No. C 07- 17 01429 JSW, 2007 WL 2572349, at *1 (N.D. Cal. 2007) (denying motion for 18 corrective action where defendants informed plaintiffs’ counsel of the offer for 19 settlement, and the offer included the second amended complaint and apprised the 20 putative class about the pending lawsuit). (Mot. 25.) This is reasonable in light of similar 21 Preferred Freezer is correct when it argues that the Supreme Court’s policy 22 regarding restrictive order is to “limit[] speech as little as possible, consistent with the 23 rights of the parties under the circumstances.” Gulf Oil Co. v. Bernard, 452 U.S. 89, 24 102 (1981); (Opp’n 3.) 25 communications between parties and potential class members should be based on a 26 clear record and specific findings that reflect a weighing of the need for a limitation 27 and the potential interference with the rights of the parties.” Gulf Oil, 452 U.S. at 101. 28 But Gonzalez does not seek to limit communications between parties and potential The Supreme Court has held that “[a]n order limiting 3 1 class members; instead, Gonzalez seeks the “names and contact information of those 2 individuals from whom Preferred Freezer has attempted to extract releases” so that he 3 may increase the level of communication with potential class members to allow a full 4 exchange of information. Gonzalez even acknowledges that “both sides may contact 5 [potential plaintiffs] at this precertification stage in order to evaluate this case.” (Mot. 6 13.) 7 limitations on speech. Gonzalez’s request therefore does not implicate any policy concerns regarding 8 Preferred Freezer also asserts that Gonzalez cannot obtain a corrective order to 9 a § 216(b) collective action under the FLSA because Rule 23 does not apply to 10 § 216(b) collective actions. (Opp’n 2.) This argument is flawed. While § 216(b) 11 collective actions differ from a Rule 23 class action, courts still have authority to 12 govern the conduct of counsel and parties in a § 216(b) collective action. Hoffman-La 13 Roche Inc. v. Sperling, 493 U.S. 165, 171 (1989). Courts have “both the duty and the 14 broad authority to exercise control over a class action and enter appropriate orders” 15 governing the parties’ conduct. Id. 16 Preferred Freezer then argues that even if Gonzalez could seek a corrective 17 order, Preferred Freezer’s actions were proper because the Department of Labor 18 (“DOL”) was supervising the payment of the unpaid overtime to its employees, and as 19 a result, the waiver was valid. (Opp’n 4–6.) Preferred Freezer contends that it 20 voluntarily audited its payroll with DOL’s supervision and tried to remedy any 21 miscomputation. (Opp’n 4.) But the Court here is concerned not with the validity of 22 the waivers but with Preferred Freezer’s failure to provide sufficient information 23 relating to Gonzalez’s claims so that the employees could make an informed decision 24 in accepting the waivers. Omission of important information relating to a plaintiff’s 25 case or claims is misleading. County of Santa Clara, 2010 WL 2724512, at *4. 26 Although Preferred Freezer disclosed that a previous employee brought a suit against 27 it for unpaid overtime, it omitted other relevant information that would give its 28 employees sufficient notice of Gonzalez’s suit. (Mot. 6–7.) 4 1 Nevertheless, Preferred Freezer argues that it provided enough information to 2 its employees based on Alex Gamez’s actions after receiving Preferred Freezer’s offer 3 for settlement. 4 settlement to Alex Gamez while he was still a Preferred Freezer employee, but Gamez 5 rejected the settlement. (Id.) Gonzalez’s counsel learned that Preferred Freezer was 6 offering the Release Agreement to potential plaintiffs after Gamez contacted 7 Gonzalez’s counsel regarding the Agreement. (Mot. 1.) Preferred Freezer asserts that 8 because Gamez was able to contact Gonzalez’s counsel subsequently then it shows 9 that the waiver provided sufficient information without misleading the recipients. 10 (Opp’n 19.) In early August 2012, Preferred Freezer offered a (Id.) 11 Even though Gamez was offered the settlement, rejected it, and contacted 12 Gonzalez’s counsel, this does not mean that every employee who received the 13 settlement was sufficiently informed. (Opp’n 19.) Gamez’s actions do not necessarily 14 represent other potential plaintiffs’ actions or knowledge. For example, Gamez could 15 have known Gonzalez through their employment at Preferred Freezer and spoken with 16 Gonzalez about the lawsuit, either through happenstance or from personal knowledge 17 that Gonzalez had filed suit. 18 opportunity to contact other potential plaintiffs to ensure that these employees are 19 fully informed of the Gonzalez’s lawsuit in order to make a fully informed decision 20 whether to accept or reject the settlement. Whatever the case, Gonzalez should have the 21 In response to Preferred Freezer’s misleading contact with putative class 22 members in this action, Gonzalez asks that the Court orders Preferred Freezer to 23 provide names, addresses, and telephone numbers for each and every person contacted 24 by Preferred Freezer regarding the waiver. (Mot. 25.) Gonzalez also requests that any 25 communication to potential plaintiffs should include all the important information 26 relating to Gonzalez’s case. (Mot. 24.) For the reasons discussed above, the Court 27 finds this request reasonable and therefore GRANTS Gonzalez’s motion. 28 /// 5 1 Preferred Freezer is therefore ORDERED to provide Gonzalez with the contact 2 information of all of those prospective plaintiffs in this case with whom Preferred 3 Freezer has had contact regarding settlement. Furthermore, any communication that 4 either party has with putative plaintiffs must include the following information: (1) the 5 name of this case; (2) the case number; (3) a summary of the basis of Gonzalez’s 6 claims; (4) the name of Gonzalez’s attorneys and their contact information; and (5) a 7 statement concerning the effect of executing Preferred Freezer’s released documents 8 will have on its employees’ ability to participate in this lawsuit. 9 10 IT IS SO ORDERED. 11 12 September 27, 2012 13 14 15 ____________________________________ HON. OTIS D. WRIGHT, II UNITED STATES DISTRICT JUDGE 16 17 18 19 20 21 22 23 24 25 26 27 28 6
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