Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_06-cv-03892/USCOURTS-cand-4_06-cv-03892-2/pdf.json

Nature of Suit Code: 710
Nature of Suit: Fair Labor Standards Act
Cause of Action: 29:201 Fair Labor Standards Act

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United States District Court

For the Northern District of California

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

JEREMY STANFIELD, et al.,

Plaintiffs,

 v.

FIRST NLC FINANCIAL SERVICES, LLC, et

al.,

Defendants.

 /

No. C 06-3892 SBA

ORDER

This matter comes before the Court on the parties' memoranda regarding the content of the

Notice of Collective Action. [Docket Nos. 121, 124, 126]

BACKGROUND

On November 1, 2006, the Court granted Plaintiffs' Motion for Conditional Collective

Action Certification. The Court made several rulings regarding the content of the Notice of

Collective Action, which will be sent to all potential opt-in Plaintiffs, and ordered the parties to meet

and confer within 10 days to draft a mutually-acceptable notice. The parties have now informed the

Court that although they have agreed on most of the content of the notice, there are four sentences

which Defendant argues should be included in the notice, to which Plaintiffs object. 

DISCUSSION

The Court will address each of the four disputed sentences in turn:

1. "Should the lawsuit not succeed, however, any person who joined the lawsuit may be

collectively and/or proportionately liable to reimburse First NLC for its costs of suit – such

as filing fees or deposition transcripts – and/or First NLC's attorneys' fees." (Page 3, lines 9-

12)

Defendants argue that this information should be included in the notice because courts may

award costs to prevailing defendants in FLSA suits, citing Federal Rule of Civil Procedure 54(d) and

Rodriguez v. Whiting Farms, Inc., 360 F.2d 1180, 1190-91 (10th Cir. 2004). Further, Defendants

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contend, although the FLSA does not expressly provide for an award of attorneys' fees to prevailing

defendants, courts may make such an award, citing EEOC v. Complete Dewatering, 16 F. Supp. 2d

1362, 1368-69 (S.D. Fla. 1998) (noting that courts have allowed prevailing defendants in FLSA

cases to recover only if the plaintiff acted in bad faith) (emphasis added). 

Plaintiffs correctly point out that the FLSA only provides for an award of attorneys' fees and

costs to prevailing plaintiffs. See 29 U.S.C. § 216(b) ("The court in such action shall, in addition to

any judgment awarded to the plaintiff or plaintiffs, allow a reasonable attorneys's fee to be paid by

the defendant, and costs of the action.") (emphasis added). Thus, even if Defendants are correct that

they may ultimately be able to recover attorneys' fees if they show that Plaintiffs acted in bad faith,

the proposed sentence is misleading because it suggests that if Plaintiffs lose the suit, they will

automatically be liable for attorneys' fees. Further, according to Plaintiffs, the fee agreement

between Plaintiffs and Plaintiffs' counsel specifies that costs will be borne by counsel, not by class

members. 

The Court's previous Order stated that the Notice should make potential Plaintiffs aware of

any fees and costs for which they may be liable before opting in to the lawsuit. The language about

attorneys' fees is stricken. See Bell v. Mynt Entertainment, LLC, 223 F.R.D. 680, 683 (S.D. Fla.

2004) ("Attorney's fees are awarded to prevailing plaintiffs, but no similar provision is made for

prevailing defendants . . . The plaintiffs' potential liability for attorneys' fees is not as broad as the

defendants imply, and I do not believe it is necessary for the court-ordered notice to contain

language regarding this potential liability."). However, the Court approves the language about

potential costs, pursuant to its previous Order. Although Plaintiffs' counsel has agreed to absorb all

costs "unless and until Plaintiffs achieve successful resolution through judgment or settlement,"

potential Plaintiffs should be made aware that they may be liable for costs if they prevail. 

Thus, the Court orders that the Notice include the sentence as follows: "Should the lawsuit

not succeed, however, any person who joined the lawsuit may be collectively and/or proportionately

liable to reimburse First NLC for its costs of suit, such as filing fees or deposition transcripts."

2. "If you file a "Plaintiff Consent Form" your continued right to participate in this action will

depend upon a later decision by the Court that you and the named Plaintiffs are "similarly

situated" in accordance with applicable laws, and that it is appropriate for this case to

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proceed as a collective action." (Page 3, lines 16-19)

Defendants contend that this sentence should be included because it is "a plain statement of

the collective action process" and because class members have right to understand that the class may

be decertified by the court. Plaintiffs respond that the sentence is a more confusing repetition of a

sentence already included on page 2 of the notice: "Your right to participate in this lawsuit may

depend on a later decision by the United States District Court that you and the representative

Plaintiffs are actually 'similarly situated.'" Defendant concedes that the substance of the proposed

sentence is contained elsewhere in the notice, but argues that it should be included under the heading

"Effect of Joining or Not Joining This Lawsuit" to ensure that class members clearly understand this

point. 

The Court agrees with Plaintiffs that the sentence is redundant, and may confuse potential

Plaintiffs. Thus, the Court rejects this proposed sentence. 

3. "The representative plaintiffs and class counsel will make key decisions concerning the

litigation, the method and manner of conducting this litigation, and all other matters

pertaining to this lawsuit. These decisions will be binding upon you, unless you object." 

(Page 4, lines 19-21)

Defendants argue that this sentence is a true sentence about the relationship between class

counsel and class members, citing various out-of-circuit cases in support. They argue that putative

class members have the right to know the role of class counsel before consenting to join the

collective action. Plaintiffs contend that the sentence is unnecessary because the Notice already

states that class members will be bound by any settlement reached, and the fee agreement between

Plaintiffs and class counsel also sets forth the nature and details of the relationship. Further,

Plaintiffs argue, the proposed sentence "seeks only to frighten putative class members by inferring

that, if they join this lawsuit, all decisions will be effectively out of their hands. This is untrue. All

class members in a collective action have the right to opt-out at any time prior to accepting a

settlement agreement or final resolution, and may consult with Plaintiffs' counsel at any point during

the litigation." 

Again, the Court agrees with Plaintiffs. The proposed sentence is misleading in that it

implies that class members will have no input into the litigation, and it renders the Notice biased in

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favor of Defendants. Thus, the Court rejects this proposed sentence.

4. "If there is a recovery, Plaintiffs' attorneys will receive a part of any settlement obtained or

money judgment entered in favor of all members of the class, which would proportionately

reduce the award that each class member would receive." (Page 4, lines 23-26)

Defendants assert that this information is accurate, and that putative Plaintiffs have a right to

understand that any recovery would be proportionately reduced by Plaintiffs' attorneys' fee award. 

Plaintiffs object to the sentence because it is "merely a more confusing way of stating what is

already clear elsewhere in the notice, that the attorneys will seek compensation, up to 40% of the

recovery (on page 3 of the notice)." 

The Court is inclined to agree with Defendants. Although the Notice already states that

Plaintiffs' counsel will be compensated up to 40% of the recovery, it does not explicitly state that

this will reduce each class members' award. However, rather than adding the sentence proposed by

Defendants, the Court orders that the sentence on page 3 be amended as follows: "In addition,

Nichols Kaster & Anderson and Rukin Hyland & Doria will seek to be compensated for their efforts

in litigating this case, up to a combined 40% of all recovery, which will proportionately reduce the

award that each class member would receive." 

CONCLUSION

The parties shall issue the Notice of Collective Action in accordance with this Order

forthwith.

IT IS SO ORDERED.

Dated: 12/4/06 SAUNDRA BROWN ARMSTRONG

United States District Judge

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