Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Marino v. CACafe, Inc.

United States District Court, N.D. California

April 28, 2017

Leona Marino, Plaintiff,
v.
CACafe, Inc., ET AL., Defendants.

          ORDER GRANTING IN PART MOTION OF PLAINTIFF LEONA MARINO FOR CORRECTIVE ACTION Re: Dkt. No. 39

          Yvonne Gonzalez Rogers United States District Court Judge

         Plaintiff Leona Marino brings this Motion for Corrective Action (Dkt. No. 39) seeking remedies for the conduct of defendants CACafe, Inc., Jane Zheng, and Ted Chao (collectively, “CACafe Defendants”) in their communications with putative class and collective action members in connection with this wage and hour litigation. The other defendants are not implicated. Having carefully considered the papers and evidence submitted, and for the reasons set forth below, the motion is Granted In Part as follows: (1) the request for a corrective notice to the putative class members is Granted; (2) the request to invalidate the releases obtained by CACafe is Granted and the releases are hereby invalidated; and (3) the request to enjoin communications by CACafe is Granted In Part, under the limitations as stated herein.

         The Court finds it appropriate to send a corrective notice and to invalidate the releases obtained in a misleading manner by Zheng, in order to protect putative class members and safeguard the integrity of the process. The Court also finds it appropriate to order CACafe Defendants to cease communications with putative class members to obtain releases of the claims at issue in this litigation until this Court has ruled on the motion for conditional certification of the collective action. However, plaintiff's request to toll the statute of limitations during the period of the pendency of the case until a ruling on conditional certification is Denied Without Prejudice to raising the merits of the issue in connection with class certification or other later proceedings in this action.

         I. Summary of Relevant Facts

         On October 31, 2016, plaintiff Marino filed the initial class action complaint alleging causes of action pursuant to the Fair Labor Standards Act and California state wage and hour laws. Defendants CACafe, Zheng, and Chao were served by certified mail with the required notice of penalty claims by certified mail on November 1, 2016, and with the complaint on November 8, 2016. On November 10, 2016, defendant Zheng contacted plaintiff's counsel to ask for a copy of the penalty notice to be emailed to her, which plaintiff's counsel emailed along with a copy of the complaint that same day.

         On November 25, 2016, defendant Zheng emailed members of the putative class. In her email she stated that the “company is restructuring its processes” and that “to ensure there is no outstanding issue based on your contractual relationships with [the] Company, we are offering an incentive of $500.00 for your cooperation” which she would immediately wire to the recipient's bank account upon signing and returning the attached release of claims. (Nisewander Decl. Exh. A, Dkt No. 39-2; Tracy Decl. Exh. A, Dkt. No. 39-3.) The attachment included a general release of all claims and a waiver of rights under California Civil Code section 1542. The email did not state that a lawsuit had been filed concerning the putative class members' contractual relationship with the company, nor did it identify the counsel who had brought the suit or the nature of the claims at issue.

         II. Discussion

         Before a class is certified in a class action, counsel for both plaintiffs and defendants may communicate with the putative class, ex parte, about the lawsuit. Gulf Oil Co. v. Bernard, 452 U.S. 89, 100 (1981). “Because of the potential for abuse, a district court has both the duty and the broad authority to exercise control over a class action and to enter appropriate orders governing the conduct of counsel and parties.” Id. at 100. “The prophylactic power accorded to the court presiding over a putative class action under Rule 23(d) is broad; the purpose of Rule 23(d)'s conferral of authority is not only to protect class members in particular but to safeguard generally the administering of justice and the integrity of the class certification process.” Retiree Support Grp. of Contra Costa Cty. v. Contra Costa Cty., No. 12-CV-00944-JST, 2016 WL 4080294, at *5 (N.D. Cal. July 29, 2016) (citing O'Connor v. Uber Technologies, Inc., No. C-13-3826 EMC, 2014 WL 1760314, at *3 (N.D. Cal. May 2, 2014)). “Courts applying the Gulf Oil standard have found that ex parte communications soliciting opt-outs, or even simply discouraging participation in a case, undermine the purposes of Rule 23 and require curative action by the court.” Guifu Li v. A Perfect Day Franchise, Inc., 270 F.R.D. 509, 517 (N.D. Cal. 2010).

         In the context of class action litigation, whether pre- or post-certification, unsupervised communications between an employer and its workers present an acute risk of coercion and abuse. See Guifu Li, 270 FRD at 517; Wang v. Chinese Daily News, Inc., 236 F.R.D. 485, 490 (C.D.Cal.2006). Courts applying the Gulf Oil standard have found that an employer's communications soliciting opt-outs, or even simply discouraging participation in a case, undermine the purposes of Rule 23 and require curative action by the court.” Guifu Li, 270 F.R.D. at 517 (citing cases).

         Here, the Court finds that a curative notice to the putative class members is required. Defendant Zheng's communications with the putative class members concealed material information and were misleading. While the evidence does not indicate the high degree of coercion present in other cases, the fact remains that defendant Zheng communicated with putative class members after the lawsuit was filed, but before they had received any formal notice and before plaintiff's counsel had been given an opportunity to communicate with them. The speed with which the emailed release requests were distributed after Zheng was served with the lawsuit; coupled with defendants' continued resistance to providing putative class member contact information, [1] suggest that defendants sought to ensure that putative class members were not given full information before they signed the releases. The communications did not inform putative class members that there was a lawsuit pending that concerned their legal rights, the nature of the claims, plaintiff's counsel's contact information, the status of the case, or any other information that might have permitted them to allow them to make an informed decision about the waiver of their rights. (Zheng Decl. ¶ 26, Dkt. No. 54-2.)

         Evidence that putative class members may have learned about the lawsuit in other ways does not mitigate the misleading nature of this communication. Zheng's representation that nearly every member of the putative class signed the release likewise suggests a degree of coercion. Cf. Guifu Li, 270 F.R.D. at 518 (substantial number of current workers submitting opt-outs solicited by defendants prior to certification indicated coercion). The contention that Zheng's communication with putative class members did not “misstate any facts about the case” is disingenuous, since that communication omitted any information about the pending lawsuit.

         Because the Court finds the releases here were obtained by deceptive omissions of material information, the Court also finds that the releases are invalid. See Camp v. Alexander, 300 F.R.D. 617, 626 (N.D. Cal. 2014) (invalidating opt-outs and requiring corrective notice where former employer sent a letter describing the lawsuit and its potential negative effect on business if employees participated); Cty. of Santa Clara v. Astra USA, Inc., No. C 05-03740 WHA, 2010 WL 2724512, at *6 (N.D. Cal. July 8, 2010) (invalidating settlement agreements and releases obtained prior to class certification where letters did not provide sufficient detail about case and claims at issue); Wang v. Chinese Daily News, 236 F.R.D. 485 (C.D.Cal.2006) (rev'd on other grounds by Wang v. Chinese Daily News, 709 F.3d 829 (9th Cir.2012) (invaliding opt-out forms obtained from 75-80% of employees during workplace meetings the court deemed coercive); Guifu Li., 270 F.R.D. at 518 (opt-outs secured at mandatory meetings with employees were coercive and invalid).

         The Court therefore finds that CACafe's ex parte communications with putative class members were misleading communications under the standards set forth in Gulf Oil and its progeny. To safeguard the putative class members, and the integrity of the class certification process, the Court Orders as follows:

(1) All releases CACafe Defendants obtained from putative class members in this action from October 31, 2016 to the present are hereby invalidated. However, the Court prohibits CACafe from requesting any reimbursement of payments made. The Court will determine at a later date whether CACafe would be entitled to any offset.
(2) By no later than May 7, 2017, plaintiffs counsel shall effect the mailing of the curative notice set forth in Exhibit A hereto; and shall file a certification that the mailing was completed. The Court understands that plaintiffs counsel have been provided with the names and contact information for all putative class members. Mailing shall be at the expense of CACafe, which ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.