Wang v. Chinese Daily News, Inc.

236 F.R.D. 485, 65 Fed. R. Serv. 3d 632, 2006 U.S. Dist. LEXIS 66725, 2006 WL 1624548
District Court, C.D. California·Decided June 7, 2006·No. No. CV 04-1498CBM(JWJX)·Published·Cited by 8 cases

Opinion

ORDER GRANTING PLAINTIFFS’ MOTION TO INVALIDATE OPT-OUTS, FOR POST-JUDGMENT CURATIVE NOTICE, AND TO RESTRICT DEFENDANTS’ COMMUNICATION WITH THE CLASS

MARSHALL, District Judge.

The matter before the Court, the Honorable Consuelo B. Marshall, Judge, presiding, is Plaintiffs’ Motion to Invalidate Opt-outs, for Post-Judgment Curative Notice, and to Restrict Defendants’ Communication with the Class and the parties’ evidentiary objections to evidence submitted by both sides.

JURISDICTION

This Court has jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1367.

BACKGROUND & PROCEDURAL HISTORY

Plaintiffs allege multiple labor violations by Defendants, pursuant to the Fair Labor Standards Act (“FLSA”), the California Business and Professions Code § 17200 et seq. and the California Labor Code. On January 20, 2005, the Court issued an amended order granting Plaintiffs’ motion for class certification pursuant to Fed.R.Civ.P. 23(b)(2) while directing that notice and an opportunity to opt out be given to class members consistent with Rule 23(c)(2)(B).

On June 27, 2005, the Court issued an order approving class notice. Consistent with the Court’s order, Plaintiffs mailed notice to putative class members and Defendants provided notice and opt-out forms in its workplace. A substantial number of opt outs were submitted by employees. Because of circumstances surrounding the opt out period, Plaintiffs have filed the instant motion to invalidate the returned opt outs, to restrict Defendants’ communications with the class, and for Post-judgment curative notice. An opposition and reply brief were timely filed.

STANDARD OF LAW

Fed.R.Civ.P. 23(d) gives courts the authority to oversee class actions. It provides that “the court may make appropriate orders ... for the protection of the members of the class or otherwise for the fair conduct of the action [and] ... imposing conditions on the representative parties .... ” Fed.R.Civ.P. 23(d); Gulf Oil Co. v. Bernard, 452 U.S. 89, 103, 101 S.Ct. 2193, 68 L.Ed.2d 693 (1981). Courts may invalidate opt-outs, restrict parties’ contact with the class, and issue curative notice. See, e.g., Kleiner v. First National Bank of Atlanta, 751 F.2d 1193, 1202 (11th Cir.1985).

DISCUSSION

The class in this action is comprised of former and current non-exempt employees of Defendant Chinese Daily News (“CDN”). The opt out period overlapped with a contentious union election. Decl. of Jeffrey Sun 119; Decl of Lynne Wang 114. In their efforts to oppose unionization, CDN management held mandatory meetings where CDN warned that unions would be divisive, cost the employees money, and that the unions wanted to kill the newspaper. Sun Decl. 119; Wang Decl. 118. It was in that environment that CDN placed the opt out forms on a table in the workplace. Sun Decl. 1110. During at least some portion of the opt out period, someone placed a large sign over the table which stated in Chinese, “Don’t Tear the Company Apart! Don’t Act Against Each Other!” Id. Additionally, Lynne Wang, one of the strong supporters of the unionizing effort and the lawsuit was terminated in the middle of the opt out period, six days after her second day of deposition in this suit. Wang Decl. 11115, 8.1

[488]*488In addition, Jeffrey Sun, a CDN delivery truck driver was approached by CDN management about his involvement in this lawsuit as well as charges Sun had filed with the NLRB. Sun Deck K17. Sun’s supervisor told Sun that if he would drop out of the suit the supervisor would arrange for Sun to meet with CDN President Guo. Id. The supervisor also made a veiled threat if Sun continued with the suit, saying that it would be a big loss to Sun if he were to lose his job in light of his fifteen years with the company and his youth. Id. The supervisor also rhetorically asked Sun if he believed that his boss would not seek revenge, which Sun interpreted to mean that retaliation would be sought for participation in the lawsuit. Id.

The parties agree that at least 155 opt outs were filed with the Court. Deck of Maria Stroud 114; Deck of Scott Dauscher H 7. Accordingly, depending on the total size of the putative class (Plaintiffs calculate 205 members, Stroud Deck H 4, Defendants calculate 196, Dauscher Deck H 7), the percentage of the class that opted out was between 75 and 80 percent. This percentage of opt outs is in stark contrast with the opt out rate observed in the typical class action.

Joseph Fisher, president of the Notice Company, has worked for over a decade assisting attorneys with class action notice and claims administration. Deck of Joseph Fisher 111. In his experience, opt out rates have never exceeded one percent in cases on which The Notice Company have assisted. Id. 117. Fisher’s observations are consistent with the findings of other commentators writing on the subject. See, e.g., Theodore Eisenberg & Geoffrey P. Miller, The Role of Opt-Outs and Objectors in Class Action Litigation: Theoretical and Empirical Issues, 57 Vand. L.Rev. 1529, 1532-33 (2004)(mean rate approximately 2 percent for employment cases); Barbara J. Rothstein & Thomas E. Willging, Managing Class Action Litigation: A Pocket Guide for Judges (2005)(approxi-mately .1 percent for opt outs); Thomas E. Willging, Laura L. Hooper & Robert J. Niemec, Class Actions and the Rulemaking Process: An Empirical Analysis of Rule 23 to Address the Rulemaking Challenges, 71 N.Y.U. L.Rev. 74, 134-36 (1996)(median percentage of .1 or .2 percent). It is with this in mind that the Court considers the relief requested by Plaintiffs.

I. Invalidating the Opt Outs

A court’s authority under Rule 23(d) includes the invalidation of opt outs where the court finds that the opt outs were procured through fraud, duress, or other improper conduct. See, e.g., Kleiner v. First National Bank of Atlanta, 751 F.2d 1193, 1202 (11th Cir.1985); Impervious Paint Indus. v. Ashland Oil, 508 F.Supp. 720 (D.Ky.1981); Georgine v. Amchem, 160 F.R.D. 478 (E.D.Pa.1995). Courts need to ensure that individual decisions to opt out are independent and free from coercion. Manual for Complex Litigation, Fourth § 21.33 (2004). It is obviously in defendants’ interest to diminish the size of the class and thus the range of liability by soliciting opt out requests. Kleiner, 751 F.2d at 1202. The danger of improper tampering is only enhanced when, as here, the class and the class opponent are involved in an ongoing business relationship. Id. Indeed, the relationship at issue in Kleiner

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Wang v. Chinese Daily News, Inc., 236 F.R.D. 485, 65 Fed. R. Serv. 3d 632, 2006 U.S. Dist. LEXIS 66725, 2006 WL 1624548 (C.D. Cal. 2006).

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