Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_07-cv-01842/USCOURTS-casd-3_07-cv-01842-10/pdf.json

Nature of Suit Code: 442
Nature of Suit: Civil Rights Employment
Cause of Action: 28:1332 Diversity-Petition for Removal

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

JOEL M. CRAM, MINH D. NGUYEN, and

ROES 1 through 10, individually, and on

behalf of all others similarly situated,

Plaintiffs,

CASE NO. 07cv1842-LAB (NLS)

ORDER DENYING PLAINTIFFS'

MOTION FOR ORDER

DIRECTING CURATIVE

COMMUNICATION

[Dkt No. 38]

vs.

ELECTRONIC DATA SYSTEMS

CORPORATION, a Delaware

corporation, and DOES 1 through 100,

inclusive,

Defendants.

Defendant Electronic Data Systems Corporation ("EDS") removed to federal court this

putative class action alleging solely state labor law and unfair competition claims associated

with allegations of failure to pay its employees owed overtime compensation. The matter

is before the court on the named plaintiffs' motion for a court Order directing EDS to circulate

a "curative communication" to prospective class members to ensure: (1) they are aware of

the pendency of this lawsuit; (2) they are aware they may have claims under California labor

law which differ from and may survive any waiver of claims arising under the federal Fair

Labor Standards Act ("FLSA"), the subject matter of the EDS communications plaintiffs find

objectionable; and (3) they remain eligible to participate in this lawsuit, in the event the court

certifies it as a class action, even if they accept back overtime compensation owed under

federal law and have signed or will sign EDS' proferred receipt. EDS filed an Opposition,

Case 3:07-cv-01842-LAB-NLS Document 76 Filed 01/17/08 Page 1 of 6
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and plaintiffs filed a Reply. Pursuant to Civil Local Rule 7.1(d)(1), the court finds the issues

presented appropriate for decision on the papers and without oral argument. For the

reasons discussed below, plaintiffs' Motion For Order Directing A Curative Communication

("Motion") is DENIED.

EDS communicated with certain of its employees or former employees using a U.S.

Department of Labor ("DOL") form associated with the tender of back overtime

compensation as calculated under the federal Fair Labor Standards Act ("FLSA"). A cover

letter from EDS to those employees explained EDS conducted a voluntary job code review

under the supervision of the DOL to identify job functions appropriately re-classified as

overtime eligible, EDS records indicated the recipient may have performed one of those reclassified functions within the past three years, and EDS "has decided to compensate you

for back overtime you may have worked during this period." Hittle Decl. Exh. A-5. The

communications were accompanied by a DOL receipt to be executed and returned by the

recipient and expressly alerted the recipients state labor law may differ from federal law,

including with respect to the period of recoverable back overtime pay. Id.

Despite the purely federal law auspices under which the communications and

tendered compensation were distributed, plaintiffs perceive a "danger that Prospective Class

Members may be left with the inaccurate understanding" that by accepting EDS' payments

proferred under federal labor law, they "are somehow barred from recovering back overtime

recoverable under" California law. Mot. P&A 5:2-7. Plaintiffs worry "Prospective Class

Members may also be left with an inaccurate belief that any overtime compensation earned

between three (3) and four (4) years ago cannot be recovered" because of a reference in the

communication to two-year and three-year recovery periods. Id. 5:8-9. They predicate their

Motion on their opinion "it would seem appropriate" to inform prospective class members of

the pendency of this lawsuit "prior to being asked to execute any document which may be

construed as a release of any kind or character." Id. 5:9-12. Without a "curative

communication" providing prospective class members with such information "in the near

future, they may conclude . . . they need not read any notices which this Court may order"

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in this action "because they may believe they have 'settled' their claims." Id. 5:12-15. They

also express "concern" that EDS might try to use the Receipts to assert an affirmative

defense of release of claims for all back overtime payments. Id. 5:15-17. 

Plaintiffs rely on the court's "duty to supervise pre-certification communications with

Prospective Class members" to protect "the integrity of the class and the administration of

justice," citing FED. R. CIV. P. ("Rule") 23(d) and Gulf Oil v. Bernard, 452 U.S. 89, 100-102

(1981) (holding that while a district court has "broad authority to exercise control over a class

action and to enter appropriate orders governing the conduct of counsel and parties," orders

limiting 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 the limitation and

the potential interference with the rights of the parties" upon a specific "showing by the

moving party of the particular abuses by which it is threatened," and any such Order should

be "consistent with the narrowest possible relief which would protect the respective parties").

The Gulf Oil court found a district court's "sweeping restraint order," restricting

communications from named plaintiffs and their counsel to prospective class members

during the pendency of a class action, failed to weigh competing factors and failed to

disclose the grounds on which the court could have determined the Order was necessary

or appropriate. 

This Motion seeks not to restrain EDS' communications but rather to compel follow-up

communications in a manner helpful to the advancement of plaintiffs' position in this

litigation. However, plaintiffs fail to persuade the court their fears and speculation regarding

possible misunderstandings by potential class members need to be addressed at this prenotice, pre-certification phase in the litigation. Moreover, from the face of the FLSA-based

communications, no recipient accepting the proffered back overtime pay calculated under

federal law is asked to waive state law rights nor does the communication propose an

election of remedies. Plaintiffs fail to make the case for any compelling need to explain all

such distinctions and eligibilities in advance of an eventual notice to class members, nor do

they provide any principled basis upon which the court can weigh the competing rights and

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1

 In reliance on the Evans Declaration provided in support of their Opposition, EDS

represents checks were mailed to employees included in EDS' voluntary audit "in several phases

beginning in April 2007." Op. P&A 4:16-17. "Of the 58 checks sent to putative class members who

are still employed by EDS, only one was sent after August 21, 2007 (the date the Complaint in this

matter was filed) . . . [and the] final phase of the self-audit was completed on September 27, 2007

when checks were mailed to employees who had been separated from EDS prior to or during the

audit." Id. 4:17-21. EDS removed the action to federal court on September 20, 2007 pursuant to the

Class Action Fairness Act of 2005, 28 U.S.C. s 1332(d), and the federal case recently survived

plaintiffs' Motion To Remand.

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obligations of the parties on any record permitting the specific findings a district court must

make before issuing orders affecting the rights of the parties to communicate with potential

class members. It is insufficient to assert simply, as do plaintiffs here, "it would seem

appropriate" for the court to intervene at this time. 

EDS characterizes the Motion as "frivolous" because "it is undisputed [EDS] has

voluntarily paid back overtime to certain current and prior employees in exchange for a

waiver of their right to pursue an action under the federal Fair Labor Standards Act, 29

U.S.C. ss 201 et seq (the 'FLSA') . . . [and] plaintiffs in this matter have not sought to pursue

a claim under the FLSA on behalf of themselves or the putative class members." Opp. 2:2-

7. "Furthermore, these payments were largely mailed out prior to the filing of this case."

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Id. 2:7. Plaintiffs do not dispute the waiver form EDS tendered along with the payments is

"a standard form prepared by the [DOL] . . . [which] specifically notifies the recipient that the

waiver applies only to FLSA claims," and the cover letter "expressly advises that state laws

may differ from the FLSA." Id. 2:8-13. EDS further objects the requested "curative

communication" to each employee who received a waiver would have to be distributed

"whether or not the employee would be part of the purported putative class in this case." Id.

2:14-16. They argue the forms EDS sent "were noncoercive and completely accurate," and

plaintiffs' "request is an improper attempt to leapfrog the certification phase of this matter

and proceed directly to class notification." Id. 2:14-22. 

Plaintiffs identify no actual "abuse" or "threat[] to create confusion and influence the

threshold decision whether to remain in the class" in the procedural posture of this case.

Mot. P&A 5:25-6:2 (emphasis added), quoting In re School Asbestos Litig., 842 F.2d 671,

683 (3rd Cir. 1988) (addressing post-class-certification communications regarding the very

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subject matter of the litigation which urged particular conduct by actual class members,

where the reviewing court held the district court lacked a proper Rule 23(d) basis to restrict

communications with the class as expansively as had been ordered) and In re Currency

Conversion Fee Antitrust Litigation, 361 F.Supp.2d 237, 252 (S.D.N.Y. 2005) (substantiating

"one policy of Rule 23 is the protection of class members from 'misleading communications

from the parties or their counsel'") (citation omitted). A mere possibility of confusion is

insufficient to justify the district court's exercise of supervisory authority over parties'

communications with potential class members. Plaintiffs' purely speculative concerns

regarding what the individuals receiving the communications from EDS "may believe," in light

of the absence of any actual misinformation likely to affect the rights of potential class

members, convince the court judicial intervention to compel EDS to issue "corrective"

communications at this time is unnecessary and would be inappropriate. See, e.g., Parks

v. Eastwood Ins. Servs., 235 F.Supp.2d 1082, 1084 (C.D. Cal. 2002) (denying application

to prevent defense communications with potential "opt-in" class members in a FLSA class

action, noting "pre-certification communication from the defense to prospective plaintiffs is

generally permitted" and holding "a defendant employer may communicate with prospective

plaintiff employees who have not yet 'opted in,' unless the communication undermines or

contradicts the Court's own notice to prospective plaintiffs"). Plaintiffs' Motion complains

EDS made no mention of this action, quite the opposite of circumstances where defendants

misrepresent the nature of a class-action lawsuit or attempt to counsel potential class

members to opt out of particular litigation. See Great Rivers Cooperative of Southeastern

Iowa v. Farmland Industries, Inc., 59 F.3d 764 (8th Cir. 1995) (holding the district court's

Order granting plaintiffs' motion to regulate defendant's communications under Rule 23(d)

both restraining and enforcing speech did not arise from improper communications with

plaintiffs and lacked a clear record, lacked specific findings regarding what was misleading

and why, and failed to weigh the need for the limitation in consideration of potential

interference with the rights of the parties under the Gulf Oil standard, so that a curative

notice from the court was not justified). The challenged communication here does not omit

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any critical information and actually alerts recipients their rights under state law may differ

from their rights under federal law. 

The court finds the objectives of plaintiffs' proposed "curative communication" can be

effectively achieved in the normal course at the class notice phase of this litigation. Plaintiffs

do not make the case for urgency to explain to potential class members the distinctions

between federal labor law rights and issues outside the scope of this litigation and the

independent state law claims advanced in this lawsuit. Plaintiffs' conjecture offers no basis

for specific findings the court must make before it may properly compel or restrict EDS'

communications, particularly when they were not inherently abusive nor coercive and do not

appear to have compromised the state law rights of any potential class member. The court

finds on balance EDS' challenged communication with potential putative class members was

neither misleading nor improper so as to justify the court's intervention at this time. 

For all the foregoing reasons, IT IS HEREBY ORDERED plaintiffs' Motion For Order

Directing Curative Communication is DENIED. Each side shall bear its own costs associated

with the Motion.

IT IS SO ORDERED.

DATED: January 16, 2008

HONORABLE LARRY ALAN BURNS

United States District Judge

Case 3:07-cv-01842-LAB-NLS Document 76 Filed 01/17/08 Page 6 of 6