“an order limiting 27 communications between parties and potential class members should be based on a clear record and 28 specific findings that reflect a weighing of the need for a limitation and the potential interference 1 with the rights of the parties”
How later courts described this case
- “an order limiting 27 communications between parties and potential class members should be based on a clear record and 28 specific findings that reflect a weighing of the need for a limitation and the potential interference 1 with the rights of the parties”
- “We cannot accept the 16 suggestion that a potential (but as yet unapproached) class member should be deemed a party 17 represented by counsel even before the class is certified”
Written by the judges who cited it.
The opinion
1 O
2
3
4
5
6
7
8 UNITED STATES DISTRICT COURT
9 CENTRAL DISTRICT OF CALIFORNIA
10
BENNIE HAMILTON, ANTHONY KILLION, Case No.: 5:21-cv-01859-MEMF-SP
11
KRISTOPHER KACZANOWSKI, LEROY
12 COKER, DARRELL BROWN, on behalf of ORDER GRANTING IN PART EX PARTE
himself and all similarly situated persons, and APPLICATION FOR TEMPORARY
13 the general public, RESTRAINING ORDER [ECF No. 96]
14 Plaintiffs,
15 v.
16
KNIGHT TRANSPORTATION, INC. dba
17
Arizona Knight Transportation Inc.; KNIGHT
18 PORT SERVICES, LLC; and DOES 1 through
25, inclusive,
19
Defendants.
20
21
22 Before the Court is an Ex Parte Application for a Temporary Restraining Order filed by
23 Plaintiffs Bennie Hamilton, Anthony Killion, Kristopher Kaczanowski, Leroy Coker, and Darrell
24 Brown. ECF No. 96. The Court deems this matter appropriate for resolution without oral argument.
25 See C.D. Cal. L.R. 7-15. For the reasons stated herein, the Court GRANTS IN PART the Ex Parte
26 Application for a Temporary Restraining Order.
27
28 / / /
1 I. Background
2 The Court addressed the background of this litigation at length in a previous Order. See ECF
3 No. 91. The Court will only address aspects here that are relevant to this Order.
4 A. Background as to this Litigation.
5 Plaintiff Bennie Hamilton (“Hamilton”) filed a class action complaint in this Court on
6 November 2, 2021. ECF No. 1. He has since filed a First Amended Complaint, a Second Amended
7 Complaint, and a Third Amended Complaint. See ECF Nos. 10, 42, 66. In the Third Amended
8 Complaint (“TAC”), Hamilton is joined by Plaintiffs Anthony Killion (“Killion”), Kristopher
9 Kaczanowski (“Kaczanowski”), Leroy Coker (“Coker”), and Darrell Brown (“Brown,” or
10 collectively with Hamilton, Killion, Kaczanowski, and Coker, “Plaintiffs”). See ECF No. 66.
11 Plaintiffs bring suit in the TAC against Defendants Knight Transportation Inc. (“Knight
12 Transportation”) and Knight Port Services, LLC (“Knight Port,” or collectively with Knight
13 Transportation, “Defendants”).1 See id.
14 Plaintiffs allege various wage and hour violations against Knight Transportation and Knight
15 Port on behalf of themselves and a purported class. No class has yet been certified, and Plaintiffs’
16 Motion for Class Certification is currently pending and set for a hearing in February of 2025. See
17 ECF No. 93, 110.
18 B. The Martinez Action and Stay of this Action.
19 In an action distinct from this one, and filed prior to the filing of this action, Plaintiffs Raul
20 Martinez (“Martinez”) and Philippe Vieux (“Vieux”) filed a class action (the “Martinez Action”) in
21 San Bernardino County Superior Court on July 7, 2020, which was removed to this Court on April 1,
22 2021. See Raul Martinez et al v. Knight Transportation, Inc. et al, Case No. 5:21-cv-00572, ECF No.
23 1 (C.D. Cal. Apr. 1, 2021). Martinez and Vieux brought the Martinez Action against Knight
24 Transportation, and alleged various wage and hour violations on behalf of themselves and a
25 purported class. See id.
26
27
1 Defendant Kold Trans, LLC—referenced in the caption of this action on the Court’s CM/ECF system,
Bennie Hamilton v. Kold Trans, LLC et al—was dismissed as a Defendant in the TAC. See ECF No. 66; see
28
1 The parties to the Martinez Action reached a settlement on behalf of themselves and the
2 purported class, and Martinez filed a Motion for Preliminary Approval of Class and Representative
3 Action Settlement on July 20, 2023. See Raul Martinez et al v. Knight Transportation, Inc. et al,
4 Case No. 5:21-cv-00572, ECF No. 37 (C.D. Cal. July 20, 2023). The Court preliminarily approved
5 the class settlement on December 5, 2023. See Raul Martinez et al v. Knight Transportation, Inc. et
6 al, Case No. 5:21-cv-00572, ECF No. 53 (C.D. Cal. Dec. 5, 2023). Pursuant to that preliminary
7 approval, Class Notice was sent to the putative class members. See Raul Martinez et al v. Knight
8 Transportation, Inc. et al, Case No. 5:21-cv-00572, ECF No. 62-4 at 8–23 (C.D. Cal. Apr. 10, 2024).
9 The Class Notice stated the following (along with other information):
10
You are receiving this Notice because a proposed settlement has been reached in the
following case pending in the United States District Court for the Central District of
11
California: Raul Martinez and Philippe Vieux v. Knight Transportation, Inc., Case No.
5:21-cv-00572-MEMF-SP (the “Lawsuit”). You may be entitled to benefits as a member
12
of the Settlement Class if the Court approves the settlement described in this Notice.
13
. . .
14
YOUR LEGAL RIGHTS AND OPTIONS IN THIS LAWSUIT ARE:
15
Do Nothing[:] If you want to participate and receive your share of the money from
the settlement, you do not need to do anything. If you do nothing, you will be mailed
16
a settlement payment and you will be releasing certain claims.
17
Object[:] If you want to object to the settlement, you must submit in writing the
reason(s) why you think the settlement should not be approved by the deadline stated
18
below.
19
Exclude Yourself[:] If you exclude yourself (or “opt-out”) from the settlement, you
will not receive any share of the money from the settlement. You will still receive
20
your share of the PAGA settlement (described below).
21
. . .
22
On December 5, 2023, the Court preliminarily approved the proposed Settlement and
certified the Settlement Class for purposes of Settlement only. You have received this
23
Notice because Knight’s records indicate that you are a member of the Settlement Class.
This Notice is designed to inform you of how you can participate in the Settlement, request
24
to be excluded from the Settlement Class, or object to the Settlement. Unless you submit a
request to be excluded from the Settlement Class, the Settlement, if finally approved by the
25
Court, will be binding on you.
26
. . .
27
If the Court approves the proposed Settlement, it will enter judgment as to all Settlement
Class Members who do not timely request exclusion from the Settlement.
28
1
If the Court does not approve the proposed Settlement, the Lawsuit will proceed as if no
2 settlement has been attempted and there can be no assurance that the Settlement Class
Members will recover more than is provided for in this Settlement or anything at all.
3
4 See id. (capitalization and emphasis in original).
5 While final approval of the settlement in the Martinez Action was pending, Plaintiffs in this
6 action became aware of the Martinez settlement and objected to it. See Raul Martinez et al v. Knight
7 Transportation, Inc. et al, Case No. 5:21-cv-00572, ECF No. 61 (C.D. Cal. Apr. 8, 2023). Pursuant
8 to Plaintiffs’ Motion, the Court stayed this action pending the determination of whether to approve
9 the final settlement in Martinez. See ECF No. 91.
10 On June 11, 2024, the Court issued an Order denying final approval of the Martinez
11 settlement. See Raul Martinez et al v. Knight Transportation, Inc. et al, Case No. 5:21-cv-00572,
12 ECF No. 74 (C.D. Cal. Apr. 8, 2023). The Court lifted the stay in this action as a result. See ECF No.
13 99. The Martinez Action is now stayed. See Raul Martinez et al v. Knight Transportation, Inc. et al,
14 Case No. 5:21-cv-00572, ECF No. 74 (C.D. Cal. Apr. 8, 2023).
15 C. The Instant Application and Related Filings.
16 Plaintiffs filed their Motion for Class Certification on July 11, 2024. See ECF No. 93. On
17 September 16, 2024, Defendants filed an Ex Parte Application to Continue the deadline for their
18 Opposition to the Motion for Class Certification. See ECF No. 94. Plaintiffs opposed Defendants’ Ex
19 Parte Application. See ECF No. 95.
20 Plaintiffs filed the instant Ex Parte Application for a Temporary Restraining Order on
21 September 18, 2024, along with various supporting documents. See ECF No. 96 (“Application”);
22 ECF Nos. 96-1–96-8. Defendants filed an Opposition to the Application on September 20, 2024. See
23 ECF No. 97. Plaintiffs filed a Supplemental Declaration in support of the Application on September
24 20, 2024. See ECF No. 98. Defendants filed a Supplemental Declaration in opposition to the
25 Application on September 26, 2024. See ECF No. 96.
26 On September 20, 2024, the Court issued an Order granting in part Defendants’ Ex Parte
27 Application to Continue the deadline for their Opposition to the Motion for Class Certification. See
28 ECF No. 99. The Court noted that the instant Ex Parte Application for a Temporary Restraining
1 Order was also pending at that time, but explained that the Court would address the Application in a
2 separate order. See id. Since then, the Motion for Class Certification has been fully briefed. See ECF
3 Nos. 100–107, 112–129. The Court will address the Motion for Class Certification in a separate
4 Order.
5 II. Applicable Law
6 As a general matter, the legal standard for a temporary restraining order (“TRO”) is
7 substantially similar to the standard for a preliminary injunction. See Stuhlbarg Intern. Sales Co.,
8 Inc. v. John D. Brush and Co., Inc., 240 F.3d 832, 839 n.7 (9th Cir. 2001).
9 “A preliminary injunction is an extraordinary remedy never awarded as of right.” Winter v.
10 Nat. Res. Def. Council, Inc., 555 U.S. 7, 24 (2008). “A plaintiff seeking a preliminary injunction
11 must establish that [it] is likely to succeed on the merits, that [it] is likely to suffer irreparable harm
12 in the absence of preliminary relief, that the balance of equities tips in [its] favor, and that an
13 injunction is in the public interest.” Id. at 20 (“Winter Test”). Under the “serious question” approach
14 adopted by the Ninth Circuit, “[a] preliminary injunction is appropriate when a plaintiff
15 demonstrates . . . that serious questions going to the merits were raised and the balance of hardships
16 tips sharply in the plaintiff’s favor.” Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1134–
17 35 (9th Cir. 2011).
18 At this stage, the Court need only determine whether Plaintiffs have met their burden for
19 their requested TRO. See Los Angeles Mem’l Coliseum Comm’n v. Nat’l Football League, 634 F.2d
20 1197, 1200 (9th Cir. 1980). Accordingly, the Court is not making a final decision on the merits of
21 any claim, nor is it a decision on the merits of the factual assertions either party made in support of
22 any claim. See id.
23 III. Discussion
24 Plaintiffs base the Application on allegations that Defendants are inappropriately
25 communicating with potential class members and seeking to settle individual claims. See ECF No.
26 96. Plaintiffs request (1) that the Court order Defendants to cease such communications and only
27 allow further communications after approval by the Court, and (2) that the Court invalidate any
28 settlements that came from such communications. See id. The Court finds that the record does not
1 provide sufficient grounds for the Court to order defendants to cease communications with potential
2 class members or to require all future communications be pre-approved by the Court. The Court
3 finds that the record does, however, provide sufficient grounds for the Court, in its undisputed
4 powers over the Martinez Action and this action, to order defendants to cease all misleading written
5 communications with potential class members as well as to correct prior misleading written
6 communications. The Court need not reach the question of whether any settlements should be
7 invalidated and will consider this issue as needed at a later stage. Thus, the Application is
8 GRANTED IN PART.
9 A. Alleged Conduct Discussed in Application.
10 In their Application, Plaintiffs assert that beginning around September 5, 2024, after the
11 Court denied final approval of the Martinez settlement and stayed the Martinez Action, Defendants
12 began communicating with potential class members and seeking to settle individual claims. See ECF
13 No. 96-1 at 5–7.
14 First, Defendants mailed letters (the “September Letters”) to potential class members offering
15 to settle the individual recipients’ claims. See ECF No. 96-5 at 5–6 (example of a September Letter).
16 The September Letters referenced, in their subject lines, both this action and the Martinez Action.
17 See id. Defendants offered potential class members between $75 and $250 to settle their claims. See
18 ECF No. 96-1 at 7 n.7.
19 Plaintiffs assert that the September Letters were misleading in multiple respects. Most
20 critically, the September Letters did not state that the Court had denied final approval of the
21 Martinez settlement. See id. at 6. Potential class members previously received the Class Notices
22 described above via mail regarding the settlement negotiated in the Martinez Action (which the
23 Court later declined to approve), and Plaintiffs submitted a declaration from one potential class
24 member stating that she was confused as a result, assuming that the September Letter was a follow-
25 up to the Class Notice regarding the previous settlement, as opposed to a separate offer made after
26 that settlement was not approved. See ECF No. 96-5 ¶¶ 2–7. Furthermore, the individual offers in the
27 September Letters were significantly less than the not-approved Martinez settlement would have
28 been—the previous settlement would have delivered class members approximately $434 each, while
1 the individual offers in the September Letters were for $75 to $250. See ECF No. 53 at 9.
2 Additionally, the September Letters were purportedly misleading in that they did not include any
3 other information that a recipient would need to evaluate the value of their individual claims. See
4 ECF No. 96-1 at 6.
5 Second, Plaintiffs assert that Defendants have had inappropriate in-person conversations
6 encouraging individual potential class members to settle. Plaintiffs assert that on September 18,
7 2024, a manager at Defendants’ Tulare facility addressed drivers and made a series of statements on
8 the litigation against Defendants, including that the lawsuits were “ridiculous,” that employees
9 would never receive more than the offers in the September Letters, and that the attorneys were
10 driving the litigation to make themselves money. See id. at 18–19; see also ECF No. 96-4 ¶¶ 4–13.
11 The manager purportedly then handed out copies of settlement offers and release forms. See ECF
12 No. 96-1 at 19, ECF No. 96-4 ¶ 11. Defendants concede that a manager at the Tulare facility spoke
13 to employees about the litigation on September 18, 2024, but dispute the substance of the
14 conversation. See ECF No. 97 at 13.
15 Plaintiffs assert that the September Letters and the in-person communications were not only
16 misleading but were also improper communications with represented parties. Some of the potential
17 class members that received the September Letters are purportedly represented by Plaintiffs’
18 counsel. See ECF No. 96 at 3. And one of the individuals present for the in-person conversation
19 described above, Kaczanowski, was a named plaintiff in this action and is represented. See ECF No.
20 96-1 at 19. Defendants assert that the manager who spoke to Kaczanowski was not aware that
21 Kaczanowski was a named plaintiff and represented. See ECF No. 97 at 13.
22 Finally, Plaintiffs assert that one more similarly misleading conversation occurred with a
23 potential class member at another of Defendants’ facilities on September 20, 2024. See ECF No. 98.
24 Defendants concede that some conversation occurred but dispute the specifics of what was discussed
25 and argue that it was not misleading, and no pressure was applied for settlement. See ECF No. 108.
26
B. Courts May Limit Communications with Potential Class Members, but Only
Through Narrowly Drawn Orders Based on Specific Findings of Fact.
27
28
1 Federal Rule of Civil Procedure 23(d) allows a court overseeing a class action to exercise
2 various powers to manage the case. See Fed. R. Civ. P. 23(d)(1). These powers explicitly include the
3 authority to “determine the course of proceedings or prescribe measures to prevent undue repetition
4 or complication in presenting evidence or argument,” to require notice be given to class members in
5 order “to protect class members and fairly conduct the action,” to “impose conditions on the
6 representative parties or on intervenors, and to “deal with similar procedural matters.” See id.
7 In Gulf Oil Co. v. Bernard, 452 U.S. 89, 99–104 (1981), the Supreme Court held that a court
8 may limit communications pursuant to the court’s Rule 23(d) powers, but that an order limiting
9 communications with class members must be narrowly drawn in response to specific findings. In
10 Gulf Oil, the Supreme Court addressed a lower court’s order that had “imposed a complete ban on all
11 communications concerning the class action between parties or their counsel and any actual or
12 potential class member who was not a formal party, without the prior approval of the court.” See id.
13 at 95. The lower court that issued this order made “no findings of fact and did not write an
14 explanatory opinion.” See id. at 96. The Supreme Court held that the lower court’s order was invalid.
15 See id. at 99–104. The Supreme Court recognized that “a district court has both the duty and the
16 broad authority to exercise control over a class action and to enter appropriate orders governing the
17 conduct of counsel and parties.” See id. at 100. However, as the Supreme Court explained, such
18 orders can cause problems and inappropriately limit parties’ rights to communicate about the
19 litigation, so “an order limiting communications between parties and potential class members should
20 be based on a clear record and specific findings that reflect a weighing of the need for a limitation
21 and the potential interference with the rights of the parties.” See id. at 101. This weighing must
22 identify “potential abuses being addressed,” and the resulting order must be “carefully drawn” in
23 order to “limit[] speech as little as possible, consistent with the rights of the parties under the
24 circumstances.” See id. The Supreme Court also noted that such orders may raise constitutional
25 issues as to parties’ First Amendment rights, but did not reach the issue, discussing only the
26 authority conferred by Rule 23. See id. at 101 n.14 (“We do not reach the question of what
27 requirements the First Amendment may impose in this context. Full consideration of the
28
1 constitutional issue should await a case with a fully developed record concerning possible abuses of
2 the class-action device.”).
3 There is a broad consensus among district courts interpreting Gulf Oil and Rule 23(d) that a
4 court may “take action to cure inaccurate, confusing or misleading communications” from parties to
5 potential or actual class members, as such communications “pose a threat to the fairness of the
6 litigation process, the adequacy of representation and the administration of justice.” In re Apple Inc.
7 Device Performance Litig., Case No. 5:18-md-02827, 2018 WL 4998142, *4 (N.D. Cal. Oct. 15,
8 2018); see also Cheverez v. Plains all Am. Pipeline, LP, Case No. 2:15-cv-04113, 2016 WL 861107,
9 *3 (C.D. Cal. Mar. 3, 2016) (“a court may ‘take action to cure the mis-communication and to prevent
10 similar problems in the future’ where ‘potential class members have received inaccurate, confusing
11 or misleading communications.’ [citation to another district court]”); Johnson v. Ameriprise Fin.,
12 Case No. 4:07-cv-03168, 2008 WL 11417643, *1 (N.D. Cal. Apr. 4, 2008) (“The court’s Rule 23(d)
13 powers include the authority to enjoin communications with class members to protect them from
14 undue interference.”). But, as Gulf Oil made clear, such orders must be carefully drawn based on
15 findings of fact. See Gulf Oil, 452 U.S. at 101. District courts typically hold that an order limiting
16 communications need not be based on “a finding of actual misconduct” or “a finding of actual
17 harm,” but that at minimum, there must be facts showing “potential interference with the rights of
18 the parties in a class action.” See In re Apple, 2018 WL 4998142 at *4 (collecting cases).
19 C. Plaintiffs Have Shown that Defendants’ Written Communications Were Confusing.
20 The Court finds that the September Letters are, at the very least, confusing, if not inaccurate
21 or misleading. As one court wrote in a nonbinding opinion, examples of misleading or abusive
22 communications that would warrant court intervention are “communications that misrepresent the
23 status or effect of the pending action or have the potential for confusion.” See In re Apple, 2018 WL
24 4998142 at *4. This Court finds it reasonable to take a similar approach and holds that
25 communications can only justify an injunctive if they meet this or some similar definition, based on
26 the guidance by the Supreme Court in Gulf Oil. See Gulf Oil, 452 U.S. at 101 (“an order limiting
27 communications between parties and potential class members should be based on a clear record and
28 specific findings that reflect a weighing of the need for a limitation and the potential interference
1 with the rights of the parties”). The September Letters certainly meet this threshold as they have the
2 potential for confusion in light of the prior Class Notice already distributed.
3 Plaintiffs assert that the September Letters were misleading in that (1) they did not explicitly
4 state that the Court had denied approval of the Martinez settlement, (2) they were sent as a follow up
5 to the Martinez preliminary settlement notifications, and thus might be construed as the next step as
6 to that settlement, and (3) they lacked information to evaluate claims. See ECF No. 96-1.
7 The Court finds the following facts in support of this Order. First, the Court finds that the
8 original Class Notice informed potential class members that there had been a settlement in the
9 Martinez action and that class members would be part of the settlement if approved unless they
10 affirmatively opted out. See Raul Martinez et al v. Knight Transportation, Inc. et al, Case No. 5:21-
11 cv-00572, ECF No. 62-4 at 8–23 (C.D. Cal. Apr. 10, 2024). The Court also finds that the Defendants
12 sent the September Letters as asserted by Plaintiffs.2 See ECF No. 96-5 at 6–9. In light of the prior
13 Class Notice, the Court finds that the September Letters are confusing.
14 First, they both began with a similar title or heading. The Class Notice (sent March 2024)
15 began with the following:
16
To: All current and former over-the-road drivers employed by Knight Transportation, Inc.
who were California residents or assigned to work out of a location in California from April
17
6, 2016 through December 5, 2023.
18
You are receiving this Notice because a proposed settlement has been reached in the
following case pending in the United States District Court for the Central District of
19
California: Raul Martinez and Philippe Vieux v. Knight Transportation, Inc., Case No.
5:21-cv-00572-MEMF-SP (the “Lawsuit”). You may be entitled to benefits as a member
20
of the Settlement Class if the Court approves the settlement described in this Notice. Your
options with respect to the Settlement and as a member of the Settlement Class are
21
explained in further detail below.
22
See Raul Martinez et al v. Knight Transportation, Inc. et al, Case No. 5:21-cv-00572, ECF No. 62-4
23
at 8 (C.D. Cal. Apr. 10, 2024). And the September Letters began with the following:
24
25
26 2 Defendants appear to acknowledge that they sent the September Letters, or at least do not make any serious
attempt to dispute that they did so. See ECF No. 96 at 13 (Defendants argue that “there is nothing in the
27
release agreements, letters accompanying them, or any communication from Defendants that could have
reasonably led putative class members to have the alleged misunderstanding,” but do not dispute that they
28
1 Inc. and Knight Port Services LLC; U.S. District Court for the Central District of California
Case no. 5:21-cv-01859 and Martinez v. Knight Transportation Inc. et al., U.S. District
2 Court for the Central District of California Case no. 5:21-cv-00572 (the “Lawsuits”)
3 Dear [Name]:
4 This is an offer to resolve any claim you may have in the above lawsuits, as described
further below. If you sign and return the enclosed agreement or cash the enclosed check,
5 you will release your claims in the Lawsuits.
6
See ECF No. 96-5 at 5.3
7
This gives the impression that the “settlement” discussed in the letter is the same
8
“settlement” that was preliminarily approved by the Court in the Class Notice. Nowhere do the
9
September Letters make reference to the original proposed settlement or distinguish what is being
10
offered from the original proposed settlement.
11
Second, the September Letters state “The court has not determined that these cases can
12
proceed as a class action or that Defendants will face any liability.” See ECF No. 96-5 at 5. This is
13
confusing in light of the fact that the original Class Notice stated that the Court had certified the
14
Settlement Class, albeit for purposes of Settlement only. See Raul Martinez et al v. Knight
15
Transportation, Inc. et al, Case No. 5:21-cv-00572, ECF No. 62-4 at 5 (C.D. Cal. Apr. 10, 2024).
16
Third, because the letter does not make any reference to the proposed settlement in the Class Notice,
17
it does not explain how the letter and this new settlement falls within the two paths identified in the
18
Class Notice (“WHAT HAPPENS IF THE COURT APPROVES THE SETTLEMENT?” and
19
“WHAT HAPPENS IF THE COURT DOES NOT APPROVE THE SETTLEMENT?”). See Raul
20
Martinez et al v. Knight Transportation, Inc. et al, Case No. 5:21-cv-00572, ECF No. 62-4 at 11
21
(C.D. Cal. Apr. 10, 2024). Fourth, because the letter does not make any reference to the proposed
22
settlement in the Class Notice, it does not explain that the letter and any attached check is not the
23
payment previously referred to in the Class Notice. This is particularly confusing because the Class
24
Notice suggests that checks will be sent and releases effectuated once the settlement in the Class
25
26
27 3 Although it is true that the letters mentioned both the Martinez Action and this action (Hamilton) in
their subject lines, see ECF No. 96-5 at 3, this does not alleviate the confusion caused by failing to
28
1 Notice is approved by the Court. See id. at 10 (“An individual in the Settlement Class is not required
2 to submit a claim form in order to be eligible for and to receive a Class Member Payment.”). Finally,
3 the Class Notice repeatedly makes reference to a settlement that has been reached, which makes the
4 letter’s discussion of an offer to resolve a claim even more confusing. See, e.g., id. at 9 (“The parties
5 participated in prolonged settlement discussions and reached a Settlement. The Settlement resolves
6 all claims in the Lawsuit.” (emphasis added)).
7 Defendants’ argument that they are “entitled to negotiate releases regardless of the Court’s
8 views of the fairness of the proposed class settlement in Martinez” misses the point. See ECF No. 97
9 at 11. To be clear, the Court does not find that governing law requires that all settlement offers must
10 provide updates on class settlement. Where, however, as here, a Court-approved notice has already
11 gone out describing a preliminarily approved settlement and next steps in detail, a further
12 communication that makes reference to a “settlement” without distinguishing the prior “settlement”
13 that had been “reached” and “preliminarily approved” is confusing.
14 With respect to the Plaintiffs’ third assertion—that the September Letters were misleading
15 because they lacked the information individuals needed to evaluate their claims—there does not
16 appear to be any authority that requires this and it would appear to this Court that it is not
17 uncommon for a settlement offer not to include all information that the recipient might use to
18 evaluate whether he or she should settle. This Court therefore does not find that the letters were
19 misleading in this respect.
20
D. The Confusing Nature of the Written Communications Justifies a Limited
Injunction.
21
22 Having found that the written communications are confusing, the Court finds that a limited
23 injunction is in order to correct the confusing nature of the past communications and ensure that
24 future communications are not similarly misleading. Such an injunction is justified under Gulf Oil
25
26
27
28
1 and Rule 23 which grant this Court the power to take action to cure confusing communications with
2 class members.4
3 Accordingly, in any further communications, the Defendants must make clear that Court
4 denied final approval of the preliminarily approved settlement discussed in the Class Notice and that
5 the new offer is just that—a new offer not preliminarily approved by the Court or considered by the
6 Court at all. In addition, the Defendants must communicate this same information to any individuals
7 who received the prior confusing letter, whether or not they accepted the new offer or not.
8 E. The Communications with Represented Parties Pointed to by Plaintiffs Do Not
Justify an Injunction.
9
10 Plaintiffs argue that Defendants have inappropriately communicated with represented parties,
11 both through written communications with potential class members and in-person communications
12 with Kaczanowski. The Court finds that this does not warrant an injunction.
13 First, the weight of authority suggests that under the California Rules of Professional
14 Conduct, potential class members are not represented by class counsel prior to class certification.
15 Atari, Inc. v. Superior Ct., 166 Cal. App. 3d 867, 873 (Ct. App. 1985) (“We cannot accept the
16 suggestion that a potential (but as yet unapproached) class member should be deemed a party
17 represented by counsel even before the class is certified”); Koo v. Rubio’s Restaurants, Inc., 109 Cal.
18 App. 4th 719, 736 (Ct. App. 2003) (same, citing Atari). Some authority points the other direction.
19 See Pollar v. Judson Steel Corp., Case No. 3:82-cv-06833, 1984 WL 161273, *1 (N.D. Cal. Feb. 3,
20 1984) (without analysis of the issue, describing potential class members pre-certification as “class
21 members who are represented by counsel”). A holding that class members are by default
22 “represented” by class counsel prior to certification, which would suggest that Defendants’ counsel
23 cannot communicate with potential class members at all except through class counsel, would appear
24 to contravene the Supreme Court’s guidance in Gulf Oil that “an order limiting communications
25
26
4 Because the Court finds that the Court has the power to correct misleading communications under Rule
27
23(d), as explained by the Supreme Court in Gulf Oil, the Court need not reach Defendants’ other arguments,
including that Plaintiffs lack standing to seek this injunction and that Plaintiffs failed to analyze the typical
28
1 between parties and potential class members should be based on a clear record and specific findings
2 that reflect a weighing of the need for a limitation and the potential interference with the rights of the
3 parties”—this record and findings would be unnecessary if such communication was already
4 prohibited by ethical rules. See Gulf Oil, 452 U.S. at 101. Potential class members have not chosen
5 to be represented, and so Defendants may communicate with them until the step of class certification
6 is complete and a legal relationship is accordingly established.
7 The Court finds, based on the record submitted, that to the extent that Defendants
8 communicated through defense counsel with specific named plaintiffs, such communications were
9 likely inadvertent. First, as to Kaczanowski, who Defendants communicated with in person,
10 Kaczanowski conceded in his declaration that “I presume [Defendants’ representative] did not know
11 who I was.” See ECF No. 96-4 ¶ 5.5 Plaintiffs have not pointed to any recipients of the September
12 Letters who were represented, except for Stanley Heath and Michelle Allman, who are not named
13 plaintiffs, and were, per Plaintiffs, represented by Plaintiffs’ counsel in depositions. See ECF No. 96-
14 1 at 5. There is no evidence that these individuals received letters different from any other potential
15 class members, and the Court finds that they received the letters due to a presumably inadvertent
16 failure to remove them from the list of recipients. Defendants should strive to avoid any such
17 communications with represented parties in the future, but the Court will not issue an injunction
18 because of these inadvertent communications.
19 F. The Court Declines to Invalidate Any Individual Settlements That May Have Been
Reached.
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21 Importantly, the Court is not reaching in this Order the issue of whether any settlements that
22 have been reached should be invalidated because of the confusing nature of the written
23 communications. Consideration of whether specific settlements should be invalidated would require
24 more information and a properly noticed motion, including more detail on how many settlements
25 were consummated and the circumstances around individuals’ acceptances thereof. The Court might
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5 The communication with Kaczanowski was also made a non-lawyer, and so it appears to the Court that it
was not prohibited by the rule regarding communications by counsel with represented parties. See ECF No.
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1 later find it appropriate to invalidate settlements, but the only issue here is whether the record
2 justifies an injunction. This Order is without prejudice as to Plaintiffs’ right to seek to have
3 settlements invalidated at some later stage.
4 G. Plaintiffs Have Not Otherwise Shown That the Broad Injunction They Seek Is
Justified.
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6 Plaintiffs also seek to have the Court broadly enjoin the Defendants’ communications with
7 potential class members on the ground that the settlement offers being made are lower than the
8 average in the prior preliminarily approved Settlement. Even assuming that individuals would
9 receive less in the recent settlements sent via the September Letters than they would have in the
10 settlement that the Court did not approve, that fact alone does not make the offers improper or
11 confusing. As discussed above, failing to distinguish the prior settlement does. There does not
12 appear to be any authority suggesting that a court may enjoin a defendant from making individual
13 settlement offers simply because the offers are too low. The Court therefore declines to enjoin the
14 Defendants from making settlement offers in their discretion.
15 In addition, Plaintiffs seek to have the Court broadly enjoin the Defendants’ in-person
16 communications. The Court finds that the record as to the in-person communications does not show
17 abuse sufficient to justify restraining Defendants’ speech as to the litigation.6 Even assuming that no
18 actual harm must be shown, there must be some record justifying the restriction, and the Court does
19 not find this record sufficient.
20 To be clear, the Court will not enjoin the Defendants from making future settlement offers
21 that are clear and not confusing in the ways identified at this time. Plaintiffs have not shown that this
22 falls within the Court’s authority under Gulf Oil and Rule 23(d), nor have they otherwise shown that
23 the TRO factors are met with respect to this issue—primarily because they have not established that
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6 The record is muddled as to what exactly occurred in the in-person communications, and the Court finds that
26 the record is not sufficient to make a factual finding at this time that the in-person communications were
confusing. Furthermore, the injunction sought with respect to the in-person communications is unduly broad
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and burdensome. Defendants assert that the first conversation was unplanned and occurred after a manager
overheard employees discussing the lawsuit and potential settlement. See ECF No. 97-1. The Court is not
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1 || they are likely to succeed on a claim that governing law prohibits individual settlements. The Court’s
2 || prior orders did not address individual settlements, and to the extent that they contemplated the
3 || nature and sequence of future proceedings in the Martinez and Hamilton cases, they did not
4 || contemplate or address the negotiation of individual settlements.
5 IV. Conclusion
6 For the foregoing reasons, the Court hereby ORDERS as follows:
7 1. Plaintiffs’ Application for a Temporary Restraining Order is GRANTED IN PART;
8 2. The Defendants are ENJOINED from continuing to make written settlement offers
9 without the clarifications noted above;
10 3. The Defendants are ORDERED to properly advise all individuals who have received the
11 September Letters in the manner described above and file notice with the Court that they
12 have done so within twenty-one (21) days of the date of this Order.
13 4. The parties are ORDERED to meet and confer, and within seven (7) days of this Order,
14 file a joint status report with proposed dates for a hearing to show cause why a
15 preliminary injunction should not issue with restrictions regarding misleading
16 communications similar to those in this Order.
17
18 IT IS SO ORDERED.
19 af
20 Dated: January 2, 2025
21 MAAME EWUSI-MENSAH FRIMPONG
22 United States District Judge
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