Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_05-cv-00585/USCOURTS-cand-4_05-cv-00585-8/pdf.json

Nature of Suit Code: 710
Nature of Suit: Fair Labor Standards Act
Cause of Action: 28:1331 Fed. Question: Fair Labor Standards

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

JASMIN GERLACH and REGGIE PLACE, on

behalf of themselves and all others

similarly situated,

Plaintiffs,

v.

WELLS FARGO & CO.; WELLS FARGO BANK,

N.A.; and WELLS FARGO SERVICES

COMPANY,

Defendants.

 /

WELLS FARGO BANK, N.A.,

Counterclaimant,

v.

JASMIN GERLACH,

Counterdefendant.

 /

No. C 05-0585 CW

ORDER GRANTING IN

PART AND DENYING

IN PART

PLAINTIFFS'

MOTION FOR

APPROVAL OF

HOFFMAN-LA ROCHE

NOTICE AND

DENYING

PLAINTIFFS'

MOTION FOR

CORRECTIVE NOTICE

Plaintiffs move the Court to certify conditionally this action

as a representative collective action and to authorize and

facilitate notice of this action to prospective collective action

members. Defendants oppose this motion and object to the notice

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1

In addition, Plaintiffs bring State wage law and ERISA

claims.

2

and opt-in form that Plaintiffs have prepared. In a separate

motion, Plaintiffs move the Court to order Defendants to issue a

corrective written notice to all potential collective action

members concerning Defendants' allegedly misleading and coercive

communications to them and to prohibit Defendants and their counsel

from communicating with them concerning this action. Defendants

also oppose that motion.

The matters were heard on February 10, 2006. Having

considered all of the papers filed by the parties and oral argument

on the motions, the Court grants in part Plaintiffs' motion for

approval of a Hoffman-LaRoche notice and denies it in part, and

denies Plaintiffs' motion for a corrective notice.

BACKGROUND

Plaintiffs contend that they are owed overtime pay under the

Fair Labor Standards Act (FLSA). The FLSA authorizes workers to

sue for unpaid overtime wages on their own behalf and on behalf of

"other employees similarly situated." 29 U.S.C. § 216(b). 

Plaintiffs bring this action on behalf of themselves and other

similarly situated employees.1 Unlike class actions brought under

Federal Rule of Procedure 23, however, collective actions brought

under the FLSA require that each individual member "opt in" by

filing a written consent. See 29 U.S.C.A. § 216(b) ("No employee

shall be a party plaintiff to any such action unless he gives his

consent in writing to become such a party and such consent is filed

in the court in which such action is brought."). 

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2

As Plaintiffs note, although Hoffmann-La Roche involved

claims brought under the Age Discrimination in Employment Act

(ADEA), because ADEA incorporates § 16(b) of the Fair Labor

Standards Act into its enforcement scheme, the same rules govern

judicial management of collective actions under both statutes.

See, e.g., Shaffer v. Farm Fresh, Inc., 966 F.2d 142, 147 (4th Cir.

1992).

3Plaintiffs define BSEs to include Business Systems

Consultants levels 2 through 6; e-Business Systems Consultants

levels 2 through 6 and Business Systems Analysts. According to

Defendants, there has been no job title in the relevant time period

called Business Systems Analysts. Defendants also note that BSE is

a job classification invented by Plaintiffs, which does not exist. 

3

In Hoffmann-La Roche Inc. v. Sperling, 493 U.S. 165 (1989),

the Supreme Court held that, "in appropriate cases," district

courts should exercise their discretion to authorize and facilitate

notice of a collective action to similarly situated potential

plaintiffs.2 Plaintiffs contend that this is an appropriate case.

They request leave to send a Hoffman-La Roche notice to similarly

situated Business Systems Employees (BSEs)3 who are, or have been,

employed throughout the country by Defendants Well Fargo & Co.,

Wells Fargo Bank, N.A., Wells Fargo Services Company, and any other

subsidiaries of Wells Fargo & Co., at any time since February 9,

2002. According to Plaintiffs, this notice will alert potentially

aggrieved individuals that, if they want to pursue a similar claim

in this pending lawsuit, they must opt in, and will further the

broad remedial goals of the FLSA.

DISCUSSION

I. Hoffmann-La Roche Notice 

As noted above, the FLSA provides for a collective action

where the complaining employees are "similarly situated." 29

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U.S.C. § 216(b). But the FLSA does not define "similarly

situated," nor has the Ninth Circuit defined it. As noted by the

Tenth Circuit, there is little circuit law defining "similarly

situated." Thiessen v. General Electric Capital Corp., 267 F.3d

1095, 1102 (10th Cir. 2001).

Although various approaches have been taken to determine 

whether plaintiffs are “similarly situated,” district courts in

this circuit have used the ad hoc, two-tiered approach. See Wynn

v. National Broadcasting Co., Inc., 234 F. Supp. 2d 1067, 1082

(C.D. Cal. 2002) (noting that the majority of courts prefer this

approach); see also Thiessen, 267 F.3d at 1102-03 (discussing three

different approaches district courts have used to determine whether

potential plaintiffs are “similarly situated” and finding that the

ad hoc approach is arguably the best of the three approaches); Hipp

v. Liberty Nat. Life Ins. Co., 252 F.3d 1208, 1219 (11th Cir. 2001)

(finding the two-tiered approach to certification of § 216(b)

opt-in classes to be an effective tool for district courts to use). 

Under this approach, the district court makes two determinations,

on an ad hoc, case-by-case basis. The court first makes an initial

"notice stage" determination of whether plaintiffs are similarly

situated, determining whether a collective action should be

certified for the purpose of sending notice of the action to

potential class members. See, e.g., Thiessen, 267 F.3d at 1102. 

For conditional certification at this notice stage, the court

requires little more than substantial allegations, supported by

declarations or discovery, that "the putative class members were

together the victims of a single decision, policy, or plan." Id.

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at 1102. The standard for certification at this stage is a lenient

one that typically results in certification. Wynn, 234 F. Supp. 2d

at 1082. 

The second determination is made at the conclusion of

discovery, usually on a motion for decertification by the

defendant, utilizing a stricter standard for "similarly situated." 

Thiessen, 267 F.3d at 1102. During this second stage analysis, the

court reviews several factors, including the disparate factual and

employment settings of the individual plaintiffs; the various

defenses available to the defendant which appear to be individual

to each plaintiff; fairness and procedural considerations; and

whether the plaintiffs made any required filings before instituting

suit. Id. at 1103.

Although Defendants acknowledge that some courts have applied

this two-stage analysis, they argue that the Court should consider

Rule 23 requirements for commonality. Plaintiffs' claim, however,

is brought as a collective action under the FLSA, not as a class

action under Rule 23. As noted in Thiessen, Congress chose not to

apply the Rule 23 standards to collective actions under the ADEA

and FLSA, and "instead adopted the 'similarly situated' standard. 

To now interpret this 'similarly situated' standard by simply

incorporating the requirements of Rule 23 . . . would effectively

ignore Congress' directive." 267 F.3d at 1105. See also Wertheim

v. Arizona, 1993 WL 603552, *1 (D. Ariz. Sept. 30, 1993) ("The

requisite showing of similarity of claims under the FLSA is

considerably less stringent than the requisite showing under Rule

23 of the Federal Rules of Civil Procedure. All that need be shown

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4

 Part of the evidence Defendants rely upon is thirty-nine

declarations from its employees, all of whom are potential

collective action members. Plaintiffs move to strike these

declarations, arguing that they were obtained improperly and in

violation of the California Rules of Professional Conduct; in

addition, Plaintiffs argue that the declarations should be excluded

because Defendants failed to disclose them in their discovery

responses. Plaintiffs' motion to strike is denied as moot. 

Plaintiffs meet their burden at the notice stage, and thus the

Court need not consider the declarations at this time.

6

by the plaintiff is that some identifiable factual or legal nexus

binds together the various claims of the class members in a way

that hearing the claims together promotes judicial efficiency and

comports with the broad remedial policies underlying the FLSA.")

(citations omitted). To determine whether potential plaintiffs are

similarly situated and whether notice is appropriate, the Court

will apply the two-tiered approach. 

As noted above, the standard for certification at the notice

stage is a lenient one. Plaintiffs meet their burden of showing

that all BSEs are similarly situated with respect to their FLSA

claim: all BSEs share a job description, were uniformly classified

as exempt from overtime pay by Defendants and perform similar job

duties. Defendants do not dispute that Plaintiffs meet their

burden under this lenient standard. 

Instead, Defendants argue that this motion should be decided

under the stricter second stage analysis. According to Defendants,

extensive discovery has been conducted: Plaintiffs have received

over 40,000 pages of documents in response to 116 requests and have

deposed sixteen witnesses. Defendants contend that the evidence4

shows that BSEs are not similarly situated: they are more than

2,500 white-collar employees who work in widely varying jobs in

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thirty-eight States and in multiple lines of businesses. Business

Systems Consultants levels two and three are overtime-exempt, have

salaries starting at $43,1000, and are not bonus-eligible; Business

Systems Consultants levels four through six have salaries ranging

up to $112,500 and are bonus-eligible; level 6 even includes a

Corporate Vice President. Defendants further argue that the

employees at issue are subject to every permutation of the

executive, administrative, professional and computer professional

exemptions, and therefore a conditional class will not promote

judicial efficiency. 

Defendants cite Pfohl v. Farmers Ins. Group, 2004 WL 554834,

*3 (C.D. Cal. Mar. 1, 2004), to support their argument that the

Court can, and should, proceed to the second stage of the twotiered analysis. In Pfohl, the court proceeded directly to the

second stage and weighed relevant factors to determine whether the

plaintiffs there were similarly situated. But, before proceeding

to the second stage, the court noted that "the parties did not

dispute that discovery has been undertaken relating to the issues

of certification of this action as a collective action." Id. 

Here, although volumes of paper have been produced and over a dozen

witnesses deposed, Plaintiffs state that discovery is nowhere near

complete. After filing their reply, Plaintiffs submitted

additional relevant information, which Defendants had only recently

produced. Even Defendants do not contend that discovery on the

issue of certification is complete; Defendants only contend that

discovery has been extensive and that additional discovery will not

change the facts or analysis that BSEs are not similarly situated. 

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 To apply the second-tier heightened review at this stage would

be contrary to the broad remedial policies underlying the FLSA. In

Thiessen, the district court conditionally certified the class

"during the course of discovery"; it was only at the conclusion of

discovery that the court applied the heightened second-tier review. 

267 F.3d at 1103. This Court, too, will conditionally certify the

collective action for the purpose of sending notice of the action

to potentially similarly situated employees. After discovery is

complete, Defendants can move for decertification, and the Court

will then apply the heightened second-tier review.

A. Proposed Notice and Opt-in Form

Although the Court conditionally certifies the collective

action, it does not approve the notice and opt-in form Plaintiffs

prepared. Nor does the Court approve the notice and opt-in form

Defendants prepared. 

Defendants' proposed "Responsibility For Costs and Fees"

section could be misleading; potential plaintiffs could believe

that, if Defendants prevail, plaintiffs will have to pay

Defendants' attorneys' fees. Any language in the notice regarding

Defendants obtaining "an award of costs to be paid by the

individual Plaintiffs" must define those costs and be clear that

potential plaintiffs will not bear the burden of paying Defendants'

attorneys' fees should Defendants prevail. 

Defendants' description of the lawsuit, consisting of four

sentences, is not adequate. As Plaintiffs note, potential

collective action members are entitled to receive "accurate and

timely notice concerning the pendency of the collective action, so

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that they can make informed decisions about whether to

participate." Hoffman-La Roche, 493 U.S. at 170. It would be

difficult to make an informed decision on the limited information

Defendants provide. Plaintiffs' description of the lawsuit,

however, is one-sided and argumentative. Although Plaintiffs do

use the word "allege," they use it only once in the beginning of

each paragraph. The description fails to note that Defendants deny

they have violated the law.

The Supreme Court has instructed, "In exercising the

discretionary authority to oversee the notice-giving process,

courts must be scrupulous to respect judicial neutrality. To that

end, trial courts must take care to avoid even the appearance of

judicial endorsement of the merits of the action." Id. at 174. 

Defendants' notice and form, though inadequate, are neutral. 

Plaintiffs note that the Court has taken no position on the case,

but they do so in a single sentence seemingly tacked onto the end

of the notice. Plaintiffs' form has a Court caption, which as

Defendants note could be perceived as a judicial endorsement of

this action; the caption should be omitted.

Plaintiffs' proposed 120 day deadline for potential class

members to file their consents is too long; Defendants' proposed

thirty day deadline is too short. In Reab v. Electronic Arts,

Inc., 214 F.R.D. 623, 632 (D. Colo. 2002), the court approved a

sixty day opt-in period. The Court sets a seventy-five day

deadline. The "Further Information" section approved in Reab is

preferable to either party's proposed "Further Information"

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5

The approved section in Reab is as follows:

Further Information

Further information about this Notice, the deadline for

filing a "Consent to Become A Party Plaintiff" or

questions concerning this lawsuit may be obtained by

writing, phoning or e-mailing Plaintiffs' counsel, James

Schmehl, at Schmehl, Yowell & Mackler, P.C., at: [TO BE

PROVIDED BY COUNSEL], or Defendants' counsel, Victor

Schachter and Daniel McCoy, at Fenwick & West LLP,

(650)494-0600, vschachter@fenwick.com, dmccoy@fenwick.com.

Id.

10

section.5 Defendants are aware of their ethical duties, as well as

the California Rules of Professional Conduct, which they must obey

if they are contacted by potential plaintiffs seeking further

information.

The forms should be returned to a third-party claims

administrator, not to the Clerk of the Court. The form should not

contain a space for potential plaintiffs to check whether they want

to be represented by Plaintiffs' counsel, by their own retained

counsel or by themselves.

B. Equitable Tolling for Potential Plaintiffs

The FLSA statute of limitations runs until a valid consent is

filed. 29 U.S.C. § 256(b); Partlow v. Jewish Orphans' Home of

Southern California, Inc., 645 F.2d 757, 760 (9th Cir. 1981),

abrogated on other grounds by Hoffman-La Roche, 493 U.S. 165. 

Plaintiffs request that the Court equitably toll the limitations

period on the claims of the FLSA collective action members from the

date that the Complaint was filed on February 9, 2005, through the

Court-set deadline for receipt of consents. They argue that

equitable tolling is warranted because similarly situated

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plaintiffs, through no fault of their own, have been unable to opt

in to, or even learn of, the lawsuit. Defendants refuse to produce

contact information for potential collective action members, which,

Plaintiffs claim, prevents Plaintiffs and their counsel from

informing similarly situated potential plaintiffs about this case

and their right to opt in.

But, as Defendants note, the two cases Plaintiffs cite to

support equitable tolling are distinguishable. In Partlow, the

Ninth Circuit held that the district court could toll the statute

of limitations under the FLSA for forty-five days to permit the

class members who had earlier filed invalid consents, due to

Plaintiffs' counsel's error, to execute proper consents. Although

this holding was based largely on the court's finding that "it

would simply be improper to deprive the consenting employees of

their right of action," the court also pointed out that the

defendant was notified of the claims of the consenting employees

within the statutory period because they had filed the improper

consents. 645 F.2d at 761. In Owens v. Bethlehem Mines Corp., 630

F. Supp. 309, 313 (W.D. Va. 1986), the court, relying on Partlow,

found that equitable tolling was warranted because it had delayed

ruling on the plaintiffs' certification motion for over a year.

In their reply, Plaintiffs do not address Defendants' argument

that the cases they cited were inapposite. Instead, Plaintiffs

cite a new case where the defendant refused to provide contact

information for former employees and the district court granted

equitable tolling. See Baldozier v. Am. Family Mut. Ins. Co., 375

F. Supp. 2d 1089, 1093 (D. Colo. 2005). Nonetheless, the Court

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finds that, under the law of this circuit, equitable relief is not

proper in this case.

II. Corrective Notice

After this action was filed, Defendants instructed their

employees to retain documents relating to their work. A document

pertaining to this litigation (the Q&A document) was attached to the

document retention instructions sent to managers and employees, some

of whom were potential plaintiffs. Defendants state that

approximately one hundred out of 2,600 BSEs received the Q&A

document. Plaintiffs contend that the document was widely

disseminated and that hundreds or thousands of potential collective

action members were exposed to the information contained in the Q&A

document. According to Plaintiffs, the Q&A document, which answers

such questions as, "Who is being sued," "What does she want," "If I

want to participate in the lawsuit, will that affect my job," "Why

do I have to save documents," and "Can I trust the lawyers who are

suing Wells Fargo," contains misleading, deceptive and coercive

statements. See Belt v. Emcare, Inc., 299 F. Supp. 2d 664, 668

(2003) (recognizing that statements in a letter, encouraging

potential class members not to join a class action, sent from an

employer to its employees have heightened potential for coercion

based on the employer-employee relationship). Plaintiffs request

that the Court allow Plaintiffs to issue a corrective notice

containing Plaintiffs' answers to the questions posed by the Q&A

document. In addition, Plaintiffs request that the Court prevent

Defendants from communicating with potential and actual plaintiffs

concerning this litigation and require Defendants to identify each

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individual who received the Q&A document and describe in detail all

communications with any potential collective action member related

to the Q&A document.

As Plaintiffs acknowledge in their reply, however, precertification communications with potential collective action

members are generally permitted. See Gulf Oil v. Bernard, 452 U.S.

89, 100 (1981). In Gulf Oil, the Supreme Court noted that an order

preventing counsel from communicating with potential class members

"involved serious restraints on expression." 452 U.S. at 104. 

Thus, an order limiting communications between parties and potential

collective action 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." Id. at 101. While finding that a district court cannot

issue an order prohibiting communication between potential

plaintiffs and counsel based on the mere possibility of abuse, the

Court recognized that district courts have "both the duty and broad

authority to exercise control over a class action and to enter

appropriate orders governing the conduct of counsel and parties." 

Id. at 100.

Plaintiffs cite several cases where district courts have

employed their broad authority to remedy improper communications and

ordered that corrective notices be sent and prohibited future

communication. Plaintiffs contend that this case is directly

analogous to Pollar v. Judson Steel Corp., 1984 U.S. Dist. LEXIS

19765 (N.D. Cal. Feb. 3, 1984). After finding that improper precertification communications caused confusion concerning potential

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6As Plaintiffs note, Defendants' argument that Plaintiffs

cannot rely on this case because a notice of appeal was filed on

December 14, 2005, is not supported by the case Defendants cite. 

14

class members' rights, the court in Pollar prohibited the defendants

from further communication with any class member on issues related

to the litigation, ordered the defendants to turn over to class

counsel all written communications from potential class members and

ordered the defendants to pay for corrective notice. But, as

Defendants point out, the defendants in Pollar caused confusion

concerning potential members' rights by running advertisements in

newspapers regarding an affirmative action program for women,

without disclosing the existence of the class action litigation. 

Here, the Q&A document discloses the litigation, albeit in an

allegedly misleading and coercive fashion. 

Mevorah v. Wells Fargo Home Mortgage, Inc., 2005 U.S. Dist.

LEXIS 28615 (N.D. Cal. Nov. 17, 2005), another case Plaintiffs cite

from this district, is also distinguishable.6 In Mevorah, the

defendants' counsel contacted potential class members, interviewed

them and then attempted to obtain depositions from them, without

informing them that these depositions might be adverse to their

interests. In addition, the defendants' counsel mischaracterized

the litigation, giving potential class members the mistaken

impression that if the lawsuit were successful they would no longer

receive commissions and instead would be paid an hourly wage. Here,

although the answer to at least one hypothetical question in

Defendants' Q&A document does not actually answer the question,

Defendants do not mischaracterize the litigation. Furthermore, as

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Defendants note, in Mevorah, a potential class member submitted a

declaration that she agreed to be interviewed by defense counsel

because she was misled into believing that she would lose her

commissions if the lawsuit was successful. Despite being provided

the opportunity to do so, Plaintiffs have not deposed any of the

potential collective action members who received the Q&A document to

determine whether they were misled or coerced.

The Court finds that the Q&A document is not sufficiently

misleading or coercive to justify the relief sought. It informs

potential collective action members that it is their decision

whether to speak to any lawyer that contacts them and that, if they

decide to speak to Plaintiffs' attorneys, they will not be

retaliated against. It reiterates that their jobs will not be

affected by participating in the lawsuit or by speaking to

Plaintiffs' counsel. As Defendants note, there is nothing improper

about telling potential collective action members, at this point in

the litigation, to speak with their manager or an HR representative

if they want to learn more about the lawsuit. See Parks v. Eastwood

Ins. Servs., Inc., 235 F. Supp. 2d 1082, 1085 (C.D. Cal. 2002)

(finding that sending an internal memorandum to employees, before

the employees opted in to the collective action, which discussed the

litigation and suggested that employees direct questions to the

employer's general counsel, was permissible). And, like the

memorandum in Parks, the Q&A document does not give legal advice,

does not suggest retaliation if employees opt in, and does not

undermine any notice given by the Court. Id. 

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7

Plaintiffs' request for the BSEs' social security numbers is

denied.

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The Court finds insufficient justification to prohibit

Defendants from contacting potential collective action members; nor

does the evidence justify a finding that Defendants violated the

California Rules of Professional Conduct or the Business and

Professions Code by sending the Q&A document. Because the Q&A

document was not inherently misleading or coercive, and in light of

the Hoffman-La Roche notice that will be sent to potential

collective action members, the Court finds that sending the

corrective notice prepared by Plaintiffs is not necessary. 

Plaintiffs' motion for a corrective notice is denied. 

CONCLUSION

For the foregoing reasons, the Court GRANTS IN PART Plaintiffs'

Motion for Approval of Hoffmann-La Roche Notice (Docket No. 45) and

DENIES it IN PART. The Court conditionally certifies the class of

BSEs so that notice may be sent and authorizes Plaintiffs to send

notice to prospective collective action members; however, the Court

does not approve the notice and form prepared by Plaintiffs or the

alternative notice and form prepared by Defendants. The Court has

prepared a notice and form for the parties to use, unless they are

able to agree on an alternative notice and form within ten days of

this order. Defendants will produce to Plaintiffs' counsel the

names, addresses, alternative addresses, and all telephone numbers,7

in Microsoft Excel format, of all BSEs, within ten days of this

order. The Court will not equitably toll the limitations period on

the claims of the FLSA collective action members from the date that

Case 4:05-cv-00585-CW Document 238 Filed 03/28/06 Page 16 of 17
United States District Court

For the Northern District of California

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8To the extent that the Court relied upon evidence to which

there is an objection, the parties' objections are overruled. To

the extent that the Court did not rely on such evidence, the

parties' objections are overruled as moot.

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the Complaint was filed on February 9, 2005, through the Court-set

deadline for receipt of consents. The Court DENIES Plaintiffs'

Motion for Corrective Notice (Docket No. 114). Defendants' Motion

to strike portions of the Goldman declaration and to strike portions

of Plaintiffs' motion for notice (Docket No. 72) and Plaintiffs'

Motion to Strike Defendants' Declarations of Potential Class Members

(Docket No. 93) are also DENIED.8

IT IS SO ORDERED.

Dated: 3/28/06

 

CLAUDIA WILKEN

United States District Judge

Case 4:05-cv-00585-CW Document 238 Filed 03/28/06 Page 17 of 17