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Gortat v. Capala Brothers

May 10, 2010


The opinion of the court was delivered by: Gold, S., United States Magistrate Judge



On October 16, 2009, I issued a Report recommending that a Rule 23 class be certified and a Memorandum and Order that a collective action pursuant to 29 U.S.C. § 216(b) be authorized. ("Order & Report"), Docket Entry 184. Senior United States District Judge I. Leo Glasser affirmed my order and adopted my recommendation by Memorandum and Order on April 9, 2010. See generally Gortat v. Capala Bros., Inc., 2010 WL 1423018 (E.D.N.Y. Apr. 9, 2010).

On May 5, 2010, after Judge Glasser's ruling was issued, I held a conference. The purpose of the conference was to review plaintiffs' proposed notice directed to class members and those eligible to join in the collective action pursuant to the Fair Labor Standards Act. The conference also addressed the propriety of defendants' and defense counsel's contacts with the now certified class.

The court was first alerted to defendants' contacts with class members when defendants, in support of their opposition to class certification, submitted a number of affidavits from putative class members expressing a lack of interest in participating in this action. I was so concerned about these contacts that I directed defendants to show cause, in writing, by October 30, 2009, why an Order should not be entered limiting defendants' and defense counsel's contacts with putative class members. Docket Entry 184, at 23. Defendants filed a Memorandum in response on October 29, 2009. Docket Entry 186. I reserved decision pending Judge Glasser's ruling on defendants' appeal and objections to my Order & Report.

The issue of defendants' and defense counsel's contacts with class members was again raised during the conference on May 5, 2010. One of the topics discussed at the conference was the date by which class members seeking to opt out of the class would be required to submit a written request to be excluded. When a date of August 2, 2010 was proposed, counsel for defendants objected on the ground that this left him with insufficient time to "work on . . . possible exclusions." Tr. of 5/5/10, Docket Entry 199, at 18-19. I understood counsel's statement to mean that he intended to contact class members and attempt to persuade them to opt out of the class action. I reacted by expressing concern about whether such efforts by defendants' counsel would be proper. Defense counsel responded by asserting his belief that he is "allowed" to communicate with class members about opting out of the class action absent an Order to the contrary. Tr. of 5/5/10 at 19.

I stated during the conference that I would issue an Order limiting such contacts and indicated the terms the Order would include. I now have the benefit of written submissions by the parties following the conference, see Def. 5/5/10 Ltr., Docket Entry 198; Pl. 5/6/10 Ltr., Docket Entry 200, as well as my own research. For the reasons stated below, I now issue an Order with somewhat different terms than indicated during the conference.


As discussed in my Order & Report, a court, even before certification, may regulate communications by parties and their counsel with putative class members. See Docket Entry 184, at 9-10, 21-23. See also In re Initial Pub. Offering Sec. Litig., 499 F. Supp. 2d 415, 418 n.13 (S.D.N.Y. 2007)(citing In re Currency Conversion Fee Antitrust Litig., 361 F. Supp. 2d 237, 252-53 (S.D.N.Y. 2005)). Indeed, in Gulf Oil Company v. Bernard, the Supreme Court recognized that, "[b]ecause of the potential for abuse, a district court has both the duty and the broad authority to exercise control over a class action and to enter appropriate orders governing the conduct of counsel and parties." 452 U.S. 89, 100 (1981). See also Erhardt v. Prudential Group Inc., 629 F.2d 843, 846 (2d Cir. 1980) ("It is the responsibility of the court . . . to safeguard [class members] from unauthorized, misleading communications from the parties or their counsel."). The Gulf Oil Court also specified that any order limiting communications "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." 452 U.S. at 101.

Upon class certification, the rules governing communications with class members are heightened because they "apply as though each class member is a client of the class counsel." MANUAL FOR COMPLEX LITIGATION, FOURTH § 21.33 (2004) (citing In re Sch. Asbestos Litig., 842 F.2d 671, 679-83 (3d Cir. 1988)and Erhardt, 629 F.2d at 845). In other words, class certification gives rise to an attorney-client relationship between potential class members and class counsel. Tedesco v. Mishkin, 629 F. Supp. 1474, 1483 (S.D.N.Y. 1986). A number of courts have held that this relationship arises once the class has been certified and not only at the end of the opt-out phase. See, e.g., Kleiner v. First Nat. Bank of Atlanta, 751 F.2d 1193, 1207 n.28 (11th Cir. 1985) (finding that "[a]t a minimum, class counsel represents all class members as soon as a class is certified . . . if not sooner") (citing Van Gemert v. Boeing Co., 590 F.2d 433, 440 n.15 (2d Cir. 1978) (internal citations omitted)); Fulco v. Continental Cablevision, Inc., 789 F. Supp. 45, 47 (D. Mass. 1992) (citing cases and finding that the relationship arises upon an order certifying a class); Tedesco, 629 F. Supp. at 1483 (noting that the relationship arises "at least for the limited purpose of aiding prospective class members in deciding whether or not to join in the class action" (internal quotation marks omitted)). Therefore, upon certification, defense counsel is bound by New York Rule of Professional Conduct 4.2(a), which provides that "a lawyer shall not communicate or cause another to communicate about the subject of the representation with a party the lawyer knows to be represented by another lawyer in the matter, unless the lawyer has the prior consent of the other lawyer or is authorized to do so by law." See Kleiner, 751 F.2d at 1206-07(holding that "defense counsel had an ethical duty to refrain from discussing the litigation with members of the class as of the date of class certification, if not sooner"); Fulco, 789 F. Supp at 47(finding that, after certification, "defendants' counsel must treat the unnamed class members as 'represented by' the class counsel for purposes of DR 7-104"); Tedesco, 629 F. Supp. at 1483 (finding that defense counsel violated DR 7-104(A) by communicating with class members after certification); Resnick v. Am. Dental Ass'n, 95 F.R.D. 372, 376-77 (N.D. Ill. 1982) (finding that DR 7-104 applies once the class has been certified).*fn1

Where defense counsel has violated this ethical rule and solicited or advised clients to solicit class members to opt out, courts have imposed a variety of remedies, ranging from requiring a new opt-out phase to assessing attorney's fees or imposing punitive fines. See, e.g., Kleiner, 751 F.2d at 1207-10 (affirming district court's disqualification of lead defense counsel and issuance of a $50,000 fine where defense counsel violated ethical rule and court order limiting communications with class members by advising defendants to solicit members to opt out of the class action); Tedesco, 629 F. Supp. at 1487 (ordering attorney who circulated misleading communications to class members to mail a letter and a copy of the court's order to class members to clarify any misimpressions, to reimburse plaintiffs' counsel for the cost of mailing the notice, to pay plaintiffs' attorney's fees incurred in uncovering the misleading communications, and to pay a punitive sanction in the amount of $10,000).

As noted in my Order & Report, defendants submitted forty-one affidavits from putative class members purportedly disclaiming any interest in joining this action. In my decision, I cited several of the cases discussed above, expressed my concern about the propriety of defense counsel's unsupervised communications with putative class members, and recommended to Judge Glasser that the affidavits be disregarded on the ground that, among other things, they were procured in violation of the policies underlying Rule 23. Docket Entry 184, at 8-10. Judge Glasser agreed, noting that "[i]t is for this Court, not the defendants, to designate the appropriate means by which class members may opt out of a certified class action." Gortat, 2010 WL 1423018, at *3. He further held that it is within the court's "broad supervisory responsibility over class actions" to disregard such affidavits, particularly when giving effect to them would undermine the policies behind the rules governing joinder of parties and class actions. Id.

Despite the concerns raised by Judge Glasser and the undersigned, defense counsel contends that, even after certification, he is "allowed" to contact class members and attempt to dissuade them from participating in this action absent an Order preventing it. In fact, defense counsel indicated that he plans an effort to "work" on "exclusions" so substantial that ninety days is an insufficient amount of time in which to accomplish it. For the reasons discussed above and in my Order & Report, such contacts are prohibited by Rule 23 and by Rule of Professional Conduct 4.2(a). Accordingly, defense counsel is directed not to communicate or cause his clients to communicate with class members on any matter related to this litigation unless prior consent is obtained by the Court or by class counsel.*fn2 Although it should be clear and obvious, I stress that this Order prohibits defense counsel from attempting to persuade class members directly or through his clients to opt out of the class action. Nothing in this Order prohibits defendants from communicating with class members on matters unrelated to this litigation.

I now turn to the written and oral objections raised by defendants. In objecting to my original proposed Order, defendants raised the following grounds: 1) a Magistrate Judge does not have the authority under 28 U.S.C. ยง 636 to issue such anOrder; 2) the Order is overbroad and violates defendants' First Amendment rights; and 3) the Order violates defendants' due process rights ...

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