Eduard Meleshinsky, Esq.

A study of Judge Rogers’ order granting in part Plaintiff’s motion for Corrective Action in Marino v. Cacafe, Inc. provides guidance on how to distinguish Chindarah v. Pick Up Stiks, Inc. and invalidate  opt-out releases:

“In the context of class action litigation, whether pre- or post-certification, unsupervised communications between an employer and its workers present an acute risk of coercion and abuse. See Guifu Li [v. A Perfect Day Franchise, Inc.], 270 FRD [509, ] 517; Wang v. Chinese Daily News, Inc., 236 F.R.D. 485, 490 (C.D. Cal. 2006). ‘Courts applying the Gulf Oil standard have found that an employer’s communications soliciting opt-outs, or even simply discouraging participation in a case, undermine the purposes of Rule 23 and require curative action by the court.’ Guifu Li, 270 F.R.D. at 517 (citing cases).

Here, the Court finds that a curative notice to the putative class members is required. Defendant Zheng’s communications with the putative class members concealed material information and were misleading. While the evidence does not indicate the high degree of coercion present in other cases, the fact remains that defendant Zheng communicated with putative class members after the lawsuit was filed, but before they had received any formal notice and before plaintiff’s counsel had been given an opportunity to communicate with them. The speed with which the emailed release requests were distributed after Zheng was served with the lawsuit; coupled with defendants’ continued resistance to providing putative class member contact information, suggest that defendants sought to ensure that putative class members were not given full information before they signed the releases. The communications did not inform putative class members that there was a lawsuit pending that concerned their legal rights, the nature of the claims, plaintiff’s counsel’s contact information, the status of the case, or any other information that might have permitted them to allow them to make an informed decision about the waiver of their rights.”

The Court was not persuaded that Chindarah v. Pick Up Stix, Inc., 171 Cal. App. 4th 796 (2009), a case fully briefed by the parties, applied because the releases were obtained “by deceptive omissions of material information,” and thus, corrective action under Federal Rule of Civil Procedure 23(d) was warranted.

” … Because the Court finds the releases here were obtained by deceptive omissions of material information, the Court also finds that the releases are invalid. See Camp v. Alexander, 300 F.R.D. 617, 626 (N.D. Cal. 2014) (invalidating opt-outs and requiring corrective notice where former employer sent a letter describing the lawsuit and its potential negative effect on business if employees participated); Cty. of Santa Clara v. Astra USA, Inc., No. C 05-03740 WHA, 2010 WL 2724512, at *6 (N.D. Cal. July 8, 2010) (invalidating settlement agreements and releases obtained prior to class certification where letters did not provide sufficient detail about case and claims at issue); Wang v. Chinese Daily News, 236 F.R.D. 485 (C.D. Cal. 2006) (rev’d on other grounds by Wang v. Chinese Daily News, 709 F.3d 829 (9th Cir. 2012) (invaliding opt-out forms obtained from 75-80% of employees during workplace meetings the court deemed coercive); Guifu Li., 270 F.R.D. at 518 (opt-outs secured at mandatory meetings with employees were coercive and invalid).”

Accordingly, the Court invalidated all releases obtained by the Defendants from the filing of the initial complaint to the present, and prohibited the Defendants from requesting reimbursement of payments made to putative class members related to the improperly obtained releases. The Court also ordered the issuance of curative notice to all putative class members with costs of mailing to be paid by Defendants. In addition, the Court prohibited the Defendants themselves from engaging in any further ex parte communications with putative class members except by way of their counsel of record through the date the Court rules on Plaintiff’s forthcoming motion for conditional certification under the Fair Labor Standards Act, 29 U.S.C. §§ 201 et seq.

Eduard R. Meleshinsky (argued), Bryan Jeffrey Schwartz, Bryan Schwartz Law, Oakland, CA, for Plaintiff.
Dan Lee (argued), Sarah Helene Scheinhorn, Metal Law Group LLP, David D. Kadue, Seyfarth Shaw LLP, Los Angeles, CA, Catherine M. Dacre, Justin Taylor Curley, Tatyana Shmygol, Seyfarth Shaw LLP, San Francisco, CA, Mustafa El-Farra, Fermin Humberto Llaguno, Littler Mendelson, P.C., Irvine, CA, for Defendants.
U.S. District Court for the Northern District of California. 4/28/17 decision by Gonzalez Rogers; 2017 WL 1540717.

Eduard Meleshinsky is an associate attorney at Bryan Schwartz Law, where he focuses on employment discrimination, disability accommodation, whistleblower retaliation, and wage and hour claims.