Defendant Communications with Members of a Class Action Suit: Toeing the Line

As the saying goes: “Everything in moderation— especially communications from defendant employers to putative members of a class action suit.”

While this might not be exactly how the saying goes, a trial court in Massachusetts recently found that such a principle does limit how and when defendants can contact members of a putative class action.  In Frost v. Malden/Dockside, Inc.,[1] the plaintiff sought to limit the defendant employer from communicating with putative class members until the court had ruled on the issue of class certification, filing a preliminary injunction to cut off settlement communications.  The court granted the injunction, ruling in favor of protecting the settlement process from any untoward influence.

The Frost dispute involves the defendant restaurant’s alleged failure to pay required overtime compensation and the efforts of its manager, Jack Urbaczewski to contact current and former employees, who were putative class members, after suit was filed to request that they meet with him individually to discuss the litigation and potentially to seek resolution of their claims.  At those meetings, Urbaczewski offered various amounts of money in exchange for the employees’ agreement to release any claims they had against the restaurant.[2]

While such conduct generally is not regarded as per se unlawful, the court in Frost found that Urbaczewski’s statements and actions had been misleading and coercive and therefore an appropriate basis on which to grant the injunction.  The court pointed to deficiencies in both the language found in Urbaczewski’s draft release as well as the manner of his contact with the restaurant’s employees.[3]

With respect to the release, the court found that language stating that defendant did not believe the settling plaintiff was “likely to win at trial” misrepresented the strength of plaintiff’s case.[4]  The defendant had already admitted it had failed to properly pay overtime and the court found that the phrasing of the release was “demonstrably false.”[5]  Further, the release purported to cover any and all claims the employee might have had against the restaurant, even though an accompanying disclosure letter only referenced claims asserted in the lawsuit at issue.[6]  The court found that this could lead to plaintiffs “releas[ing] much more than they intend.”[7]  Generally, the deficiencies in the defendant’s release “call[ed] into question whether… [the employees were] provided with sufficient, accurate information to make an informed choice.”[8]

The manner of Mr. Urbaczewski’s contact with his employees was also problematic.[9] Specifically, the court found that one-on-one, in-person meetings may have put “additional and uncomfortable pressure” on the employees to sign the agreement.[10] Further, the court noted that the parties disputed exactly what was said at these meetings and that oral conversations might have included “unrecorded comments” that improperly influenced the employees.[11]  The court ruled that, together, these deficiencies created an undue element of coercion.[12]

The court, however, did not conclude that all communications between defendants and putative class members are necessarily improper. Instead, the court advised defendants to seek and obtain the court’s approval prior to making overtures to class members to provide the court an opportunity to “evaluate the content of the proposed communication and its expected manner of delivery.”[13]  Asking ahead, the court reasoned, protects the class members’ interests while giving defendants peace of mind that their settlement efforts would not be “misconstrued or undone” after the fact.[14]

While the general message of this decision—that courts have some discretion to limit communications with putative class members—is reflected in broader case law, the Frost court’s conclusion that such communications should be routed through the court was only necessary because of the defendant’s prior conduct.  Requiring court approval for such settlement communications between prospective parties would appear both impractical and beyond the pale given the overall state of the case law.  The U.S. Supreme Court laid out the general rule applicable in federal court in Gulf Oil Co. v. Bernard:[15]

[To] the extent that the district court is empowered… to restrict certain communications in order to prevent frustration of the policies of Rule 23, it may not exercise the power without a specific record showing by the moving party of the particular abuses by which it is threatened. Moreover, the district court must find that the showing provides a satisfactory basis for relief and that the relief sought would be consistent with the policies of Rule 23 giving explicit consideration to the narrowest possible relief which would protect the respective parties.[16]

The federal case law reflects the Supreme Court’s guidance that restrictions on communications between parties under Federal Rule of Civil Procedure 23 should be carefully considered and fact-specific. See McLaughlin v. Liberty Mut. Ins. Co., 224 F.R.D. 295, 297 (D. Mass. 2004) (denying motion to preclude communications where no “abuse took place as a result of defendant’s communications with the alleged putative class members”); see also Sorrentino v. ASN Roosevelt Ctr., LLC, 584 F. Supp. 2d 529, 533 (E.D.N.Y. 2008) (ordering the inclusion of a “position letter” from plaintiffs’ counsel to accompany defendant’s communication instead of precluding communications altogether); Ross v. Wolf Fire Prot., Inc., 799 F. Supp. 2d 518, 527 (D. Md. 2011) (denying plaintiffs’ motion for protective order where communications were not in “bad faith”); Camp v. Alexander, 300 F.R.D. 617, 627 (N.D. Cal. 2014) (invalidating opt-out declarations and ordering defendants to serve corrective notice to putative class members instead of restricting the parties’ communications).

In sum, defendants who wish to communicate with putative class members before class certification should take care to do so in a manner that neither misrepresents the issues nor constitutes coercion, particularly if the suit arises between a company and its employees or individual consumers. If a company is truly concerned that the content or manner of those communications may be improper, obtaining leave from the court may be wise.

[1] Nos. 140674, 1784 CV 02204, 2018 Mass. Super. LEXIS 119 (July 24, 2018) (“Frost”).

[2] Frost, 2018 Mass. Super. LEXIS 119, at *2-3.

[3] Id. at *9-10.

[4] Id. at *8.

[5] Id.

[6] Id. at *9.

[7] Id.

[8] Id.

[9] Id. at *10.

[10] Id.

[11] Id.

[12] Id. at *8.

[13] Id. at *12-13.

[14] Id. at *13.

[15] 452 U.S. 89 (1981).

[16] Id. at 102.