Articles - [back to articles directory]
Daily Journal - Sep 9, 2005
Employers Shouldn't Have to Pay for Class Certification Investigations

Employment Column

By Dana Cephas

        Ten years ago, litigating a class action usually required an experienced group of attorneys to conduct the investigation needed to move for certification of a class. But in the current frenzy to file wage-and-hour class actions, and because California courts have been permitting plaintiffs to delay filing motions for class certification for a year or more, attorneys who have never conducted a trial are filing routine overtime claims as class actions with little or no pre-filing investigation. These attorneys ask for defendant-subsidized discovery to make up for the pre-filing shortfalls.
        An appellate opinion issued earlier this year, Pioneer Electronics (USA) Inc. v. Superior Court, may lead more plaintiffs' attorneys to try to shift additional pre-certification investigation costs to defendants and thereby shift more of the financial costs of litigating wage-and-hour class actions to employers.
        Pioneer Electronics concerned a class action alleging that the defendant, "Pioneer," sold defective DVD players. The plaintiffs' counsel tried to determine the extent to which other consumers encountered the same difficulties as the plaintiff and convinced a Superior Court judge to order Pioneer to send a pre-certification notice to 800 consumers who had sent complaints to the company about the DVD players at issue.
        Under that order, Pioneer would have had to disclose the home addresses and telephone numbers for any consumers who did not respond to Pioneer's letter.
        Pioneer argued that, because of the privacy concerns of consumers, contact information of potential class members should not be disclosed unless those class members affirmatively consented to the release of that information.
        The appellate court agreed with Pioneer and held that potential class members' addresses or telephone numbers could not be disclosed to plaintiffs' counsel without signed, written consent. Failing to respond to Pioneer's letter would not be deemed a waiver of those employees' privacy rights.
        The Pioneer Electronics opinion should not be seen as authorizing the use of pre-certification notices, because the appellate court was asked only to decide how to fashion such a notice, not whether the circumstances warranted a court-ordered notice.
        Despite the narrow scope of the Pioneer Electronics holding, plaintiffs are beginning to cite to that case as authorizing courts to require defendants to send pre-certification notices (that is, Pioneer letters) to potential class members in routine wage-and-hour class actions.
        Courts should reject that notion for a number of reasons.
        As an initial matter, the circumstances supporting pre-certification notices to potential class members in a consumer class action (where plaintiffs' attorneys may have limited ability to determine who purchased a defective product) are far different in a wage-and-hour case (where the employees can be found easily where they work).
        For example, the named plaintiff and his attorneys in the Pioneer Electronics case likely would have had significant difficulty locating other consumers who purchased DVD players without discovery from the company.
        In contrast, attorneys litigating an overtime class action on behalf of department store employees simply could walk into that department store and ask potential class members whether the company violated overtime regulations.
        More important, the named plaintiffs - if they truly are "adequate" representatives of the class - should be able to identify and contact many of their co-workers who allegedly were subjected to similar wrongful conduct. These investigatory steps should have been taken before any purported class complaint was filed.
        The recent 9th U.S. Circuit Court of Appeals' decision in Barton v. United States District Court, a case concerning the use of a Web site in a class action brought by plaintiffs who purchased drugs from a drug manufacturer, demonstrates another reason that defendant-subsidized Pioneer letters should be a last resort.
        In Barton, the plaintiffs' attorneys used a Web site to advertise for potential plaintiffs, and the court held that certain communications obtained through that Web site were subject to attorney-client privilege. Significantly, the Barton opinion noted that the class-action Web site did "receive many thousands of responses" from potential class members.
        The Barton court recognized that, because of advances in technology, there are many "attorneys trolling for clients on the internet and obtaining there the kind of detailed information from large numbers of people that used to be provided only when a potential client physically came into a lawyer's office." Thus, the 9th Circuit recognizes Web sites as a viable investigatory device to assist plaintiffs' attorneys.
        State courts also approve of a Web site's use. A 2003 appellate-court decision, Parris v. Superior Court, affirmed the right to pre-certification communications in a wage-and-hour class action and explained that a "web site prepared by plaintiffs' counsel" to communicate with potential class members did not violate the Rules of Professional Conduct.
        Significantly, however, the Parris opinion invoked a California Supreme Court observation that "the right to free speech is put at risk ... by compelling [a party] to fund speech that he otherwise would not fund."
        Such funding, which would include mailing costs, could be very substantial for large employers who might have to engage in manual reviews of hundreds of thousands of personnel files in order to locate contact information for current and former employers.
        Courts deciding whether to authorize a Pioneer letter in a wage-and-hour class action also should recognize that attorneys representing the defendant/employers probably would never go to the homes of potential class members for pre-certification interviews or declarations, because employees - many of whom probably are on the national do-not-call list - do not want to be bothered at home.
        Thus, before courts order defendants to send out Pioneer letters, plaintiffs' attorneys should be required to demonstrate that all other viable investigatory options were attempted and failed.
        For example, plaintiffs should have to first certify that (1) their so-called adequate representatives were unable to find any co-workers willing to talk to them, (2) a class action Web site generated no responses and/or (3) the potential class members are employed in a manner that makes it extremely difficult to locate them - that is, they all work from home.
        With the possible exception of employees who work from their homes, it will be a rare case when plaintiffs demonstrate they could not locate potential class members without judicial assistance. And if, for example, the defendant/employer had a "practice" of misclassifying a category of employees as exempt from overtime pay, the plaintiffs rarely should need to communicate with many potential class members in order to prepare a motion for class certification.
        Significantly, the Parris court upheld the plaintiffs' free-speech rights but explained that the trial court should not order the defendant to produce the home addresses of employees to assist that speech without first considering "the integrity of the litigation process" and whether such discovery would lead to "abuses of the class action procedure."
        Allowing plaintiffs to file wage-and-hour class complaints without first engaging in enough investigation to support the "class" claims (then asking courts to order the discovery of contact information for potential class members) should be considered abusive and an attack on the integrity of the litigation process.
        The Pioneer Electronics court emphasized that the "right to be left alone is a fundamental and compelling interest" enjoyed by all Californians. Courts should not assist in the violation of that privacy right without a compelling need on the part of plaintiffs.
        Thus, courts should assess critically any request for judicial assistance in pre-certification communications in an employment-related class action.
        Free speech is only free if the defendant doesn't have to pay for it.