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Ferry v. SGS Control Services Inc.

July 10, 2007


The opinion of the court was delivered by: Ronald L. Ellis, United States Magistrate Judge



On June 8, 2006, plaintiffs (collectively, "Ferry"), individually and on behalf of others similarly situated, filed a complaint in United States District Court for the Southern District of Texas. On September 8, 2006, the case was transferred sua sponte to this District.*fn1 In the complaint, Ferry alleges that defendants, SGS Control Services Inc. and SGS North America (collectively, "SGS"), failed to pay their Oil, Gas and Chemical (OGC) Inspectors proper overtime, and thereby violated the Fair Labor Standards Act (FLSA).

On September 2, 2006, prior to transfer to this District, Ferry moved for an order 1) declaring settlement agreements obtained by SGS to be null and void insofar as they purport to settle the FLSA claims of putative class members; 2) prohibiting SGS from soliciting additional settlement agreements or otherwise communicating with potential class members regarding any of the issues raised by the case; 3) authorizing Ferry to notify potential class members that the settlements are null and void and do not affect their right to participate in the action; and 4) awarding Ferry his costs and reasonable attorney's fees for the filing of the motion. Plaintiff's Emergency Motion for Protective Order, Sanctions and Corrective Notice ("Pl. Mot."), at 1. On October 20, SGS wrote the Court requesting a pre-motion conference with respect to its motion for an injunction 1) precluding opposing counsel from contacting prospective plaintiffs about the litigation; 2) requiring opposing counsel to remove all information from counsel's website pertaining to the instant action, including the "Overtime Calculator"; 3) precluding opposing counsel from accepting any future employment by SGS employees; and 4) precluding opposing counsel from continuing to represent SGS employees who had engaged his services since the date that any misleading information appeared on opposing counsel's website. Letter from Neil

A. Capobianco, October 20, 2006 ("10/20/06 Letter"), at 1

On October 16, District Judge Richard M. Berman ordered that all issues of protective orders be taken up with the designated Magistrate Judge. The undersigned was so designated and, on October 19, Judge Berman referred the case for general pretrial. Pending before the Court are Ferry's motion for a protective order, sanctions and corrective notice, and SGS's motion for an injunction. For the following reasons, Ferry's motion is DENIED, without prejudice, and SGS's motion is DENIED.


A. Ferry's Motion for a Protective Order

In his initial motion, Ferry moved for an order finding the settlement agreements null and void, prohibiting SGS from soliciting additional like agreements or otherwise communicating with potential class members, including information on the settlements in the class notice, and awarding costs and fees. Pl. Mot. at 1. Subsequently, the Court granted Ferry's motion to conditionally certify the class and issue notice, and approved a class notice that included language addressing the effect of the settlement agreements. The Court asked Ferry to address whether the motion for a protective order was moot. Ferry acknowledged that the issue of what language would be included in the notice had been resolved, but the "effect of any settlements on defendants' ultimate liability . . . must be determined at or before trial." Letter from Dan Getman, May 11, 2007 (5/11/07 Letter), at 4. In addition, Ferry is still requesting sanctions for SGS's "interference with the Court's jurisdiction to determine the form of Notice advising the class of their rights under the FLSA." Id. Ferry also informs the Court of SGS's argument that, should there be an award of damages, those damages should be set-off by the amount paid to individuals through these settlements. Id. However, Ferry asks that the pending motion for a protective order should be held in abeyance until after the transcripts of the meetings at which the settlements were negotiated become available. Id.

Based on Ferry's report, the Court understands Ferry to no longer be seeking an order prohibiting SGS from soliciting additional like agreements or otherwise communicating with potential class members. Therefore, the remaining relief sought by Ferry does not appear within the jurisdiction of the current referrals for general pretrial and protective orders. Whether the settlement agreements affect SGS's liability is a dispositive issue, and the effect of such payments on any potential award is a damages issue. Both issues should be brought to Judge Berman at the appropriate stage of the case. Therefore, Ferry's motion for a protective order is DENIED, without prejudice.

B. SGS's Motion for an Injunction*fn2

In its request for a pre-motion conference, SGS asserts that Ferry's counsel, Dan Charles Getman and Edward John Tuddenham, have been communicating with SGS employees in a manner that violates the Bar Rules of the State of Texas. 10/20/06 Letter at 1. SGS claims that opposing counsel, either personally or through their staff, has contacted SGS employees via telephone, letters, and invitations to visit counsel's website in an attempt to convince parties to join the action. Id. at 2. According to SGS, this is a violation of Texas State Bar Rules 78.02(a)(1, 3) and 7.03(a), which prohibit misleading communications and solicitation of clients for pecuniary gain. Id. at 1-2. In addition, SGS asserts that Getman's website contains both misleading statements about the case and an "Overtime Calculator" function that overstates the potential damages of individual plaintiffs. Id. at 2-3. In his opposition, Ferry argues that SGS's claims that his counsel solicited potential parties through telephone and letters are baseless. Letter from Dan Getman, October 27, 2006 ("10/27/06 Letter"), at 2. Ferry's counsel states that "office policy is not to call any potential class member in a case unless the individual specifically requests" it, and that this policy was not violated in the instant action. Id. As to SGS's claims regarding opposing counsel's website, Ferry's counsel argues that the statements included on the website are accurate and the "Overtime Calculator," which is not a feature specific to either this case or the consolidated one, is accurate under the law and states explicitly that any calculation is approximate. Id. at 2-3.

1. Solicitation of Clients

SGS has not offered any evidence in support of its accusation that Ferry's counsel violated Texas State Bar Rules. While SGS states that it "received a report that at least one SGS employee was contacted via telephone by an employee of the Getman law firm in an effort to convince him to join the lawsuit" and that the employee reports that he had not reached out to opposing counsel's firm, this is not a sufficient basis. SGS's representation that it has been difficult to obtain an affidavit from the employee to substantiate the report is understandable, see Letter from Neil A. Capobianco, November 28, 2006 ("11/28/06 Letter"), at1 n. ...

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