Leidel et al v. Coinbase, inc., No. 9:2016cv81992 - Document 96 (S.D. Fla. 2019)

Court Description: ORDER denying without prejudice 79 Plaintiff's Motion for Protective Order. Signed by Magistrate Judge William Matthewman on 6/24/2019. See attached document for full details. (kza)

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Leidel et al v. Coinbase, inc. Doc. 96 UN ITED STA TES D ISTRICT CO U RT SOU TH ERN D ISTRICT O F FLORID A CivilN o.16-81992-ClV -M arra/M at4hew m an BRAN D ON LEID EL,individually and on behalfofA l1Others Sim ilarly Situated, Plaintiff, FILED BY D.C . JdN 2i 2219 COINBA SE,lN C.,a D elaware corporation UANGELA E.NOBLE d/b/aGlobalDigitalAssetExchange(GDAX), s.o.ogF' L:.-w.p,B. LERK U S DIST.CI D efendant. O RD ER DEN YIN G W ITH O UT PR EJU DIC E PLA IN TIFF'S M O TIO N FO R PROTECTIVE ORDER IDE 791 THIS CAUSE isbeforetheCourtupon Plaintiff,Brandon Leidel's(tûplaintiff')M otion forProtective O rderto ProhibitD efendantfrom Com m unicating w ith or Seeking D iscovery from AbsentClassM embers(tsM otion'')(DE 791.ThismatterwasreferredtotheundersignedbyUnited States D istrict Judge Kelm eth A .M arra.See D E 26.D efendant,Coinbase, lnc.(ir efendant'), tiledaresponsegDE 801,PlaintifftiledareplygDE 821,andthepartiesfiledaJointNoticegDE 85) 'asrequiredbytheCourt.TheCourtheld ahearingontheM otion on June 14,2019.TheCourtalso provided the parties w ith an opportunity to provide supplem ental authority after the hearing. Defendantmadenosubmission.PlaintifftiledaNoticeofFilingSupplementalAuthoritygDE 941, w hich contained quotations from or sum m aries of five different cases. The Courthas carefully review ed the entire docketin thiscase,and the m atter isnow ripe forreview . 1. BA CK G R O U ND In hisM otion,Plaintiffargues thatFederalRule ofCivilProcedure 23 providesthe Court Dockets.Justia.com with broad authority to regulate comm unicationsbetween defendantsand classmem berspriorto class certification.gDE 79,p.31.Plaintiff specifically seeks a protective order prohibiting D efendantfrom com m unicating w ith absentclassm em bersw ithoutfirstconfening w ith Plaintiff about the content of such com m unications, and, if the parties cannot agree on such com m unications,seeking leave ofthe Courtto initiate such com m unicationsupon approvalofthe proposed com m unieations.1d.atp.6. Inresponse,DefendantcitesGulfoilv.Bernard,452U.S.89(1981),andassertsthatthe law on pre-certitication contactw ith m em bersofthe putative class isthatSlw hen there isevidence in the record that w ould support a tinding of actual or threatened abusive or m isleading com m unication by any party...the Courtm ay prohibit or im pose conditions on future contact.'' kDE 80,p.31.Accordingto Defendant,Plaintiffhasnotmadetherequisiteevidentiary showing. 1d.D efendantassertsthatthere is no basis to grantPlaintiff's requests thatD efendantbe required to produce copies of allcom m unicationsto and from absentclass m em bers orthatD efendantbe prohibited from using any inform ation ithasorw illobtain from absentclassm em bers. 1d.atp.6. Plaintiff points outthatD efendantw aited untilthe end ofthe discovery period to request discovery from Plaintiffaboutthe identity of absentclass m em bers,ûûw hich effectively precludes Plaintiff from then seeking any communications sent by Defendant to class mem bers and remedyinganypotentialharm thatmightoccur.''(DE 82,p.2).AccordingtoPlaintiff,hecouldnot have requested through written discovery information aboutDefendant'spriororintended futtzre vom m unications w ith the absent class since the deadline for propounding m itten discovery elapsed on A pril l9,2019.1d.atp.3.Plaintiff contends that,because it cannot seek additional discovery,and because D efendantw illnot agree to share its com m unications w ith absentclass m em bers,Plaintiffcannotdeterm ine ifD efendanthas or willengage in a m isleading orotherwise inappropriate communication with absentclass mem bers. 1d.Plaintiffm aintainsthatdiscovery upon an absentclass is only authorized in exceptionalcircum stances. 1d.atp.4.Finally,Plaintiff contends thatthe Courtshould ûtrejectDefendant's suggestion thatan order from this Court prohibiting or limiting Defendant's communication with absent class members should apply equally to Plaintiff.''1d.atp.5. In the parties'JointN otice,D efendantdiselosed thatithashad contactw ith fourputative classmembers.gDE 85,p.2).According to Defendant,those fourindividualsconsistofthree form er Cryptsy em ployees and one form er em ployee of D efendant, and Defendant only com m unicated w ith them regarding their depositions. 1d Additionally, in the Joint N otice, . Defendant agreed notto use inform ation produced by Plaintiff to com municate with or seek discovery from putative classm em bers.1d. atp.1. II. APPLICA BLE LA W The Suprem e Courthas considered protective ordersin the contextofclassactionsand has ruled asfollow s: An order lim iting com m unications betw een parties and potential class m em bers should bebased on a clearrecord and specitic findingsthatreflectaw eighing ofthe need for a lim itation and the potential interference with the rights of the parties.O nly such a determ ination can ensure that the courtis furthering, rather than hindering, the policies em bodied in the Federal Rulesof Civil Procedure, especially Rule 23.ln addition,such a w eighing identifying the potentialabuses being addressed should result in a carefully drawn order that lim its speech as little as possible,consistentw ith the rightsofthe partiesunderthe circum stances. GulfoilCo.v.Bernard,452U.S.89,101-02(1981).TheSupremeCourtf' urtherexplained But the mere possibility of abuses does not justify routine adoption of a com m unicationsban thatinterferesw ith the form ation ofa class orthe prosecution ofaclassactioninaccordancewiththeRules.Therecertainlyisnojustiticationfor adopting verbatim the form oforder recomm ended by the M anualfor Com plex Litigation,in the absence ofa clearrecord and specific findings ofneed. Other,less burdensom e rem edies m ay be appropriate.Indeed,in m any casesthere w illbe no problem requiring rem edies atall. GulfoilCo.,452at104. Jonesv.Jeld-lkkn,Inc.,250F.R.D.554(S.D.Fla.2008),aeasefrom theSouthernDistrict ofFlorida,isparticularly instructive in applying the above law . In Jones,the plaintiffsoughtcourt supervision ofcomm unicationsbetween the defendantand theputativeclassmem bers. Id.at558. The court explained that t$a two-pronged test m ust be m et before a court may restrict com m unication.First,a com m unication m usthave occurred or be threatened to occur. N ext,the form ofcom m unication atissue m ustbe abusive in thatiitthreatensthe properfunctioning ofthe litigation.'''1d.at561(citingCoxNuclearM edicinev.GoldCup C(?f&cServices,Inc.,214F.R.D. - 696(S.D.Ala.2003)).TheJonescourtexplainedthat Com m unicationsthathave been found to be violative ofthe prindples of Rule 23 include m isleading com m unications to class m em bers regarding the litigation, com m unications that m isrepresent the status or effect of the pending action, com m unications thatcoerce prospective class m em bersinto excluding them selves from the litigation, and com m unications that underm ine cooperation with or confidence in class counsel. 1d.The Jones courtfound that,underthe specific facts ofthatcase,the only realissuew aswhether the tw o prior com m unications between the defendant and the putative class m em bers w ere abusive.1d.at562.The courtfound that,w hile an em aildid notoffend the ttprinciplesofthe class action law suit or Federal Rule 23,'' a letter sent by defendant did, in fact, interfere with the integrity ofthe class action.1d.The courtexplained thatthe lastparagraph ofthatletterlinked the class action law suitw ith (:a negative consequence the w ithholding ofnecessary repairs.''1d.at 563.The courtdeterm ined thatthere need notbe a Cûnefarious m otive''on the defendant'spart. 1d. The cotu' tultim ately issued a protective orderand created a procedure which the defendanthad to follow in orderto com m unicate with putative classm em bers. 1d.at564. 111. A NA LY SIS TheCourthascarefullyreviewedthecase 1aw reliedon by Plaintiffand Defendantandhas conducted its own independentresearch.Itshould be noted thatseveralofthe cases relied on by Plaintiffin hisM otion and reply are cases from outside ofthis Circuit,and m any ofthem involve com m unications betw een a plaintiff and putative class m em bers,rather than com m unications betw een a defendantand putative dassm em bers.M oreover,upon review ofPlaintiff sN otice of FilingSupplementalAuthority (DE 941,itisclearthatneitherpartywasabletoidentifyanycases directly on pointw ith the factualscenario in the case athand.This is,therefore,a m atter offirst im pression. The parties conceded in open courtthatD efendanthas,thus far,only com m unicated w ith fourputative classm em bersand thatnone ofthose com m unicationsw ere problem atic.The issue, therefore,is thatD efendantplans on possibly com m unicating w ith putative class m em bers in the future in order to investigate the facts ofthe case and bolsterits ow n defense.Defendantasserts thatsuch inform alinvestigation isperm issible by both parties,even afterthe discovery cut-offhas passed.Defendantalso represented that,if it engages in any such com m unications,itw illdo so w ithin al1ethicaland professionalrules or requirem ents. Plaintiff argues thatthis case is factually distinguishable from all of the other case law regarding class actions and protective orders lim iting or barring com m unication w ith putative classm em bers because,in this case,the discovery period has closed.Plaintiff's concern is thathe cannotpossibly m onitorD efendant'scom m unicationsw ith putative classm em berssince Plaintiff can no longer propound w ritten discovery to inquire about such com m tm ications.Plaintiff also points out this problem atic procedural posttlre was created by D efendant because D efendant w aited until the end of the discovery period to serve discovery regarding the putative class 5 m em bers.Finally,Plaintiffcontendsthathiscounselshould be able to com m unicate with putative class m embers that contact Plaintiff's counsel, but that Defendant's counsel should not be pennitted to communicate with ayy putative class members under any circumstances unless Plaintiff s counselfirstapproves the proposed com m unication. Despite Plaintiff s argum entto the contrary,the Courttinds itnecessary to apply the case law -created testregarding whetherto issue a proted ive order lim iting a party's com m unications w ith putative classm em bers.SeeJones,250 F.R.D .at561.First,here,arguably,a com m unication is threatened to occur.D efense counselexplained at the discovery hearing that counsel m ight contactputativeclassm em bersw ho w ere also partiesto a related classaction law suitregarding the sufficiency of Plaintiff s counsel's representation during thatrelated law suit.D efense counselis also stillin the processofreview ing doctzm entsrecently produced by Plaintiffand w antsto reserve the right to contact putative class m em bers in light of the inform ation contained in those docum ents.D efendant'sposition isthatsuch com m unication constitutesroutine trialpreparation. The second prong of the requisite testisw hetherthe form ofthe com m unication atissue threatensthe proper functioning ofthe litigation.There issim ply no way forthe Courtto find that thisprong hasbeenmetatthisjuncture.Plaintiffhasproduced no evidencewhatsoevertomeet this prong or to establish thatthis prong w illbe m etin the futlzre.Plaintiffhasnotm etits burden forobtaining aprotective order,and itw ould be prem ature forthe C ourtto granta protective order atthisjuncture.Plaintiffadvancesmerespeculation andnohardevidence. TheCourtrejectsPlaintiffsargumentthattheproceduralpostureofthiscasemandatesthe im plem entation ofaprotective order.The factthatdiscovery isnow closed isnota suftk ientbasis tojustify entryoftheprotectiveorderPlaintiffseeks.The Coul'talsorejectsPlaintiff'sassertion that Defendant is trying to conduct tdinform al discovery'' after the discovery cut-off and that 6 Defendanthas a burden to establish the necessity of such discovery.Based on Defendant's counsel's representations and argum ents at the discovery hearing, it is clear that Defendant's counselis trying to investigate the case,as he is entitled to do,and is notattem pting to conduct discovery outside of the discovery period. Of course, if D efendant's counsel does contact a putative class m em ber, and that individual chooses not to engage w ith counsel,D efendant's counselwillhave no recourse.The sam e appliesto Plaintiff'scounsel. The Courtnotesthatdefense counselconceded atthe hearing thatthe need fora protective order m ay arise in the fm ure. The Court agrees. The Court w ill provide Plaintiff w ith the opportunity to renew his m otion if he later obtains evidence or infonuation show ing that D efendant'scom m unication w ith a putative class m em berthreatensthe proper functioning ofthe litigation. Both parties are perm itted to investigate the case- not through fonnal discovery, but through inform alcom m unicationswith putative classm em bers.H ow ever,the parties'counselare w arned thatany such com m unicationsm ustabide by allprofessionaland ethicalrules.There shall be no a) misleading communications to putative class members regarding the litigation,b) communicationsthatmisrepresentthestatusoreffectofthepending action,c)communications that coerce prospective class members into excluding themselves from the litigation, d) communicationsthatundenuine cooperation with or confidence in class counsel,ore) other im proper orunethicalcom m unications.lf such barred com m unications do take place,they shall prom ptly be broughtbefore the Court,and the Courtw illdealw ith the m attersw iftly. IV . C O N C LU SIO N Upon careful review of the M otion,response,reply,Joint N otice,Plaintiff's N otice of Filing Supplem ental A uthority, the relevant case law , counsel's argum ents at the discovery hearing,and the entire docketin this case,itishereby O R DER ED as follow s: Plaintiff s M otion for Protective O rder to Prohibit D efendant from Commtmicatingwith orSeekingDiscovery from AbsentClassMembers(DE 79)isDENIED.ThisdenialisW ITHOUT PREJUDICE to renew atalater date if Plaintiff has a good-faith belief that he is able to m eet his burden for obtaining a protective order. Plaintiff and Defendant are permitted to com municate with putative class membersatthisjuncture,butonlywithintheparameterssetforthabove. D NE and O RD ER ED in Cham bers atW estPalm Beach,Palm B each Cotm ty,Florida, lt' d this 4fd . a -y-o-rlune2019. , w Q W ILLIA M M THEW M AN U nited States agistrate Judge 8

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