Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_05-cv-01175/USCOURTS-cand-3_05-cv-01175-2/pdf.json

Nature of Suit Code: 710
Nature of Suit: Fair Labor Standards Act
Cause of Action: 28:1441 Petition for Removal- Labor/Mgmnt. Relations

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

JASON MEVORAH, 

Petitioner,

v.

WELLS FARGO HOME MORTGAGE, INC.,

a division of WELLS FARGO BANK,

NATIONAL ASSOCIATION, and DOES 1

through 50, inclusive, 

 Defendants.

_____________________________________/

No. C 05-1175 MHP

MEMORANDUM & ORDER

Re: Motion to Correct

Plaintiff Jason Mevorah has brought the present action on behalf of all persons employed by

defendant Wells Fargo Home Mortgage, Inc. as home mortgage consultants (“HMCs”), HMC

trainees, and any similar positions responsible for originating home mortgage or personal loans to

consumers within California from February 10, 2001 to the date of judgment after trial (the “class

period”). Plaintiff alleges that defendant’s characterization of HMCs as exempt from overtime is

incorrect, and that he and other potential class members are entitled to overtime pay under the Fair

Labor Standards Act (“FLSA”) and California law. Now before the court is plaintiff’s motion to

correct alleged misrepresentations made by defendant. Having considered the parties’ submissions

and arguments, the court enters the following memorandum and order. 

BACKGROUND

This action was filed in the San Francisco Superior Court on February 10, 2005, and removed

to this court by defendant on March 22, 2005. Plaintiff seeks to certify a class pursuant to Federal

Rule of Civil Procedure 23; however, no motions regarding certification have been filed and a class

has not been certified.1 Plaintiff worked as a HMC for defendant, where he was paid on a

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commission basis and classified as exempt from overtime. Joint CMS at 2. Plaintiff argues that he

and other potential class members—other HMCs, HMC trainees, and any similar positions

responsible for originating home mortgage or personal loans to consumers within California during

the class period—are not exempt from the overtime requirements under the FLSA and California

law. Id. Plaintiff seeks restitution for unpaid overtime wages, damages, and penalties, for himself

and for the potential class members. Id.

Plaintiff moves this court to issue a notice to all potential class members correcting certain

alleged misrepresentations that defendant has made to prospective class members. Plaintiff alleges

that defendant, through counsel, has contacted members of the potential class and has made false and

misleading statements regarding this action and its potential impact. Pl.’s Motion at 10. Plaintiff

further alleges that defendant has asked members of the potential class to sign declarations regarding

the nature of their duties as HMCs and their compensation preferences, and that these declarations as

drafted by defendant are inaccurate and omit critical facts. Id. In support of these allegations,

plaintiff submitted the declaration of Caroline Urso, a former HMC. See Urso Decl. Ms. Urso states

that in July 2005, while she was still employed by defendant, she was contacted by its counsel

regarding this action. Id. ¶ 3. She states that she was led to believe that if the action were successful

HMCs would no longer be paid by commission, but instead would be paid on an hourly basis. Based

on this representation, she states that she agreed to an interview to support the maintenance of her

position on a commission basis. Id. She was informed that the interview would serve as the basis

for a declaration. See Id. Ms. Urso further states that she was not informed by defendant’s counsel

that if the action were successful she might be eligible to recover overtime pay, that her declaration

could be used against the interests of the potential class (including herself), that declining to be

interviewed would not impact her job, or that she should seek the advice of counsel. Id. ¶ 4. A few

days after her conversation with counsel, Ms. Urso received a draft declaration which she declined to

sign because she “felt that [counsel] had manipulated my words by leaving out significant statements

and using only the words that benefitted his argument” and that it was not “the complete truth.” Id. ¶

6.

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Defendant filed its opposition to plaintiff’s motion on October 17, 2005. Defendant admits 

that it contacted HMCs including Ms. Urso, but asserts that it did so as part of its own internal

discovery to collect information about how the HMCs perform their jobs. Def.’s Opp. at 1, 6. 

Defendant asserts that it engaged in no misconduct in interviewing the HMCs. Id. at 11. Defendant

maintains that it made no untrue statements about the potential impact of this action; its counsel did

not tell Ms. Urso that the action sought to change the position from commissioned to hourly pay, but

rather that it sought to change the position “to become eligible for overtime rather than the present

exempt commission-based structure.” Id. at 8. Defendant also states that the draft declaration

prepared for Ms. Urso represented a fair and accurate representation of what she told counsel during

their telephone interview. Id. In support of these assertions, defendant filed the declaration of

Michael P. Wallock, an attorney who interviewed Ms. Urso and other HMCs. See Wallock Decl. 

Mr. Wallock attests to the above, and additionally states that he informed Ms. Urso that she was

under no obligation to be interviewed by defendant’s attorneys, and that there would be no reprisals

should she decline. Id. ¶ 3. Mr. Wallock also states that he emphasized, both in his conversation

with Ms. Urso and in the cover memo accompanying the draft declaration he sent to Ms. Urso, that

she should review the declaration for accuracy before signing it, and contact him to make any

corrections. Id. ¶ 4. He further states that “when an interviewee has asked to make changes or

corrections to his or her declaration, we have always made them.” Id. ¶ 4. 

On October 24, 2005 plaintiff replied to defendant’s opposition, arguing that by obtaining

declarations, which may be used as evidence in court, defendant has done far more than engage in

internal discovery. Pl.’s Reply at 1. Plaintiff also raises two new arguments in its reply. First,

plaintiff claims that defendant has violated Federal Rule of Civil Procedure 26 by failing to reveal

the existence of any declarations in its disclosures.2 Id. Second, plaintiff claims that defendant has

violated California Rule of Professional Conduct 3-600 by failing to reveal to the HMCs it contacts,

who are all potential class members, that “the organization’s interests are or may become adverse to

those of the constituent(s) with whom the member is dealing” and that any information

communicated to defendant may be “used in the organization’s interest” if defendant “becomes

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adverse to the constituent.” Cal. R. Prof. Conduct 3-600; see Pl.’s Reply at 1. On October 28, 2005,

defendant filed a motion for leave to file a sur-reply. The court requested that defendant address

Rule 26 and Rule of Professional Conduct 3-600 at oral argument, which took place on November 9,

2005.

Plaintiff argues that the court should issue a notice to all potential class members advising

them of several things: (1) that a class action has been filed seeking overtime compensation for

HMCs; (2) that the dispute between plaintiff and defendant centers on whether HMCs are “inside”

sales employees entitled to overtime payment or “outside” sales employees exempt from overtime

requirements; (3) that if plaintiff prevails, defendant can continue to pay its HMCs on a commission

basis, but will be additionally required to make overtime payments; (4) that if plaintiff prevails,

members of the class will be awarded back overtime pay; (5) that all potential class members have to

right to speak, or to refuse to speak, to anyone, including defendant or its counsel, without fear of

reprisal; (6) that if potential class members should choose to speak with defendant or its counsel,

they have the right to refuse to sign any written statement, but if they do sign they should be sure it is

complete and accurate; (7) that potential class members have the right to seek their own counsel; and

(8) that potential class members may, but are not required to, contact plaintiff’s counsel. Pl.’s

Motion at 16–17, 19. Defendant, in opposition, argues that plaintiff’s motion for a corrective notice

should be denied because defendant’s actions were proper under law. Def.’s Opp. at 9. The

appropriate action, according to defendant, would be for plaintiff to depose the declarants of any

declarations defendant should later submit to the court. Id.

LEGAL STANDARD

The United States Supreme Court has observed that

[c]lass actions serve an important function in our system of civil justice. They present,

however, opportunities for abuse as well as problems for courts and counsel in the

management of cases. 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. But this discretion is not unlimited, and indeed

is bounded by the relevant provisions of the Federal Rules. 

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Gulf Oil Co. v. Bernard, 452 U.S. 89, 99–100 (1981). The foundation for the court’s duty and broad

authority is found in Rule 23(d) of the Federal Rules of Civil Procedure, which provides, as relevant

to the instant action, that the court may make appropriate orders “requiring, for the protection of the

members of the class or otherwise for the fair conduct of the action, that notice be given . . . to some

or all of the members of any step in the action,” and “imposing conditions on the representative

parties.” Fed. R. Civ. Pro. 23(d).

DISCUSSION

The motions currently before the court concern pre-certification communications by

defendant to potential class members. Pre-certification communications to potential class members

by both parties are generally permitted, and also considered to constitute constitutionally protected

speech. See e.g. Gulf Oil Co., 452 U.S. at 101; Parks v. Eastwood Ins. Services, Inc., 235 F. Supp.

2d 1082, 1084 (C.D. Cal. 2002); Atari, Inc. v. Superior Court of Santa Clara County, 166 Cal. App.

3d 867, 871 (1985). As such, any limitations on pre-certification communications between parties

and potential class members should be “based on a clear record and specific findings that reflect a

weighing of the need for a limitation and the potential interference with the rights of the parties.”

Gulf Oil Co., 452 U.S. at 101. 

Courts have limited pre-certification communications with potential class members after

misleading, coercive, or improper communications were made. See Parks, 235 F. Supp. 2d at 1084;

Belt v. Emcare Inc., 299 F. Supp. 2d 664, 667 (E.D. Tex. 2003). For example, this court has

restricted a defendant’s ability to communicate with potential class members following the

defendant’s publication of a notice that, in relevant part, failed to disclose the pendency or scope of

the class action and may have caused confusion among potential class members regarding their

rights. See Pollar v. Judson Steel Corp., Civil No. 82-6833 MHP, 1984 WL 161273 (N.D. Cal. Feb.

3, 1984) (Patel, J.). Likewise, a district court in Texas has restricted a defendant’s ability to

communicate with potential class members where defendant sent a letter to potential class members

that the court determined had “mischaracterized the suit [seeking overtime wages for nurse

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practitioners and physician’s assistants] as an attack on the absent class members’ status as

‘professionals’ in the workplace,” mischaracterized the damages, and was coercive because “the

absent class member and the defendant are involved in an ongoing business relationship . . . as

employer-employee.” See Belt, 299 F. Supp. 2d at 668. 

In the instant case, defendant, through its counsel, has contacted by telephone an unknown

number of its employee HMCs who are potential class members. Defendant told these HMCs that

the telephone calls were in connection with this action, which defendant described as seeking to have

“HMC positions changed to become eligible for overtime rather than the present exempt

commission-based structure,” with the possible effects including “a system of time-monitoring,

payment of overtime, as well as some lunch period regulation.” Wallock Decl. ¶ 5. For the HMCs

who agreed to be interviewed, defendant has conducted telephone interviews and prepared

declarations for the HMCs to sign. See id. ¶¶ 3–4.

These circumstances are not unlike those in the Belt case, where the court found the

defendant’s statements to improperly characterize the lawsuit “as an attack on the absent class

members’ status as ‘professionals’ in the workplace.” See Belt, 299 F. Supp. 2d at 667 n.4, 668. 

Here, defendant’s verbal explanation of this action as seeking to have “HMC positions changed to

become eligible for overtime rather than the present exempt commission-based structure” with the

possible effects including “a system of time-monitoring, payment of overtime, as well as some lunch

period regulation” (see Wallock Decl. at ¶ 5) could easily give a potential class member the mistaken

impression that “if the lawsuit were successful, [HMC positions] would be paid on an hourly basis

instead of by commission.” Urso Decl. at ¶ 3. Indeed, that is precisely the impression Ms. Urso

states she was given. See id. The court therefore finds that defendant’s statements to potential class

members were misleading.

Defendant’s statements also have a “heightened potential for coercion because where the

absent class member and the defendant are involved in an ongoing business relationship, such as

employer-employee, any communications are more likely to be coercive.” Belt, 299 F. Supp. 2d at

668. Ms. Urso states that if she had not already been looking for another job she “would have felt

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forced to sign the declaration in order to continue her employment” with defendant. Defendant

states that it told Ms. Urso and other HMCs it interviewed that they would “neither receive any

benefit from participating in the interview nor receive any detriment by not participating.” Def.’s

Opp. at 7. Accepting defendant’s version of the facts, it is still reasonable to assume that an

employee would feel a strong obligation to cooperate with his or her employer in defending against a

lawsuit.

Closely related to this problem is the conflict that a corporation’s attorney must address when

speaking to an unrepresented employee. California Rule of Professional Conduct 3-600 provides

that an attorney representing an organization shall, in dealing with that organization’s employees,

“explain the identity of the client for whom the member acts, whenever it is or becomes apparent that

the organization’s interests are or may become adverse to those of the constituent(s) with whom the

member is dealing.” Cal. R. Prof. Conduct 3-600(D). The rule further provides that the attorney

shall not “mislead such a constituent into believing that the constituent may communicate

confidential information to the member in a way that will not be used in the organization’s interest if

[the organization] is or becomes adverse to the constituent.” Id. 

When engaging in precertification communications, as is equally true with any

communication, a member of the State Bar of California must comply with the requirements of the

Rules of Professional Conduct. See Parris v. Superior Court of Los Angeles County, 109 Cal. App.

4th 285, 298 n.6 (2003) (observing that counsel for plaintiff must abide by rule 1-400’s prohibitions

on false, misleading and deceptive messages in pre-certification communications with prospective

clients). It does not appear from the record currently before this court that defendant properly

explained to the HMCs it contacted that “the organization’s interests are or may become adverse to

those of the constituent(s) with whom the member is dealing” and that any information

communicated to defendant may be “used in the organization’s interest” if defendant “becomes

adverse to the constituent.” Cal. R. Prof. Conduct 3-600. Thus the court finds that defendant’s precertification communications were misleading in at least one instance and, if this one employee was

misled, it is reasonable to assume that other employees, who attorney Wallock acknowledges were

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similarly questioned, may have been misled. Moreover, this is a case that goes further than the

employer disseminating information to its employees; it also involves the solicitation of signed

declarations, thus committing employees who are potential class members to a set of facts that may

be adverse to their interest and without their having been fully informed of all aspects of the case.3

The opportunity for mischief is compounded by the relationship between the employer and the

employee and the coerciveness an employee may feel. Employers and their attorneys need to be

cautious about placing themselves in an untenable position.

Having determined that defendant’s pre-certification communications with potential class

members were misleading and improper, the court turns to the question of formulating an

appropriate response. Plaintiff has asked the court to issue a corrective notice to all potential class

members, but has explicitly declined to request that the court restrain defendant from further precertification contact with potential class members. See Pl.’s Motion at 16. Defendant believes that

the appropriate response would be for plaintiff to depose the authors of any declarations defendant

should later submit to the court. See Def.’s Opp. at 9.

In the interests of correcting any inaccurate impression left by defendant’s misleading and

improper pre-certification communications with potential class members, and of forestalling any

future problems, the court finds and orders the following:

1. Neither party, including the parties’ counsel, may engage in any further precertification communications regarding this action with any potential class member

unless pre-approved by this court. Communication undertaken in the regular course

of business is excepted from this restriction. However, any communications touching

upon matters involved in this litigation are impermissible absent a court order.

2. Defendant shall provide to plaintiff a complete list of all potential class members

already contacted for interviews, regardless of whether the individual consented to an

interview or provided a signed declaration. Plaintiff may depose each of these

individuals for the limited purpose of determining the content of each individual’s

conversation with counsel for defendant and resulting declaration, if any.

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3. The parties shall meet and confer and draft a notice to be distributed to potential class

members which shall contain a brief summary of plaintiff’s claims, defendant’s

defenses, and the potential outcome of the suit should plaintiff prevail. Within twenty

(20) days of the date of this order the parties shall submit the proposed notice to the

court for approval. Defendant shall bear the costs of distribution of the notice.

4. The parties also shall meet and confer about the preparation and distribution of a

questionnaire designed to elicit facts about each individual’s employment with

defendant, including but not limited to dates of employment, job functions, hours

worked, time spent on particular tasks, and manner of compensation. The parties

shall reach agreement on the questionnaire if at all reasonably possible and submit it

to the court for approval within forty-five (45) days of the date of this order. 

Defendant shall bear the costs of distribution of the questionnaire.

CONCLUSION

For the reasons stated above, the court DENIES plaintiff’s motion to correct, but ORDERS

the parties to comply with the foregoing on or before the dates ordered. 

IT IS SO ORDERED

Date: November 17, 2005

_______________________________

MARILYN HALL PATEL

District Judge

United States District Court

Northern District of California

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1. The class certification hearing is currently set for April 24, 2006. Defendant has asserted that if

class certification is appropriate, it should be under section 216(b) of the Fair Labor Standards Act

(“FLSA”) rather than under Federal Rule of Civil Procedure 23. The court does not find it necessary

to distinguish between certification of an “opt-out” class under Rule 23 and an “opt-in” class under

section 216(b) to decide the instant motion.

2. The court will not address plaintiff’s argument that defendant’s failure to disclose the declarations

under Federal Rule of Civil Procedure 26 precludes their use “at trial, at a hearing, or on a motion”

under Federal Rule of Civil Procedure 37. It is prematurely raised.

3. It is questionable whether the soliciting and preparation of declarations is within the ambit of

constitutionally protected speech, since this goes beyond the dissemination of information or mere

communication.

ENDNOTES

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