Many class actions are won or lost at the class certification stage. Because FRCP 23(c) requires a district court to determine whether a class action is to be maintained (i.e., certified) “[a]t an early practicable time after a person sues,” both sides often engage in a flurry of activity to gather evidence either to support or oppose class certification. Frequently, this involves communication with potential class members.
Class action defense counsel readily recognize the pitfalls in communicating directly with putative class members once class counsel has been appointed. Rule 4.2 of the ABA Model Rules of Professional Conduct and corresponding state ethics rules prohibit a lawyer from communicating about the subject of representation with a person the lawyer knows to be represented by another lawyer. Less settled is whether that prohibition applies upon class certification or instead upon the later expiration of any opt-out period. (Compare, e.g., Walney v. Swepi LP, Civ. A. 13-102, 2017 WL 319801, at *12 (W.D. Pa. Jan. 23, 2017) (collecting cases for the proposition that the attorney-client relationship between class counsel and class member arises at the time of class certification) with ABA Committee on Ethics & Prof’l Responsibility, Formal Op. 07-445, at 3 (2007) (finding that the attorney-client relationship arises only after expiration of the opt-out period)). But there is much more uncertainty about how class or defense counsel may communicate with potential class members prior to class certification and about the ability and role of the district courts to regulate these communications.
Below, we answer some of the most commonly asked questions regarding communicating with potential class members prior to class certification.
Can counsel communicate with potential class members before a class is certified?
Yes. It is now well-established that both plaintiffs’ counsel and defense counsel can communicate with potential class members prior to class certification, just as they would with any other witness or unrepresented party. From an ethical standpoint, “[t]he key to evaluating the propriety of contacting putative class members is whether they are deemed to be represented by the lawyer or lawyers seeking to certify a class,” ABA Formal Op. 07-445 at 2, and, as discussed above, that happens at the earliest upon the certification of a class.
Under FRCP 23, and as confirmed by the U.S. Supreme Court, counsel generally are not required to obtain leave of court before communicating with potential class members before certification. See Gulf Oil Co. v. Bernard, 452 U.S. 89, 99-102 (1981); Agerbrink v. Model Serv. LLC, No. 14 Civ. 7841, 2015 WL 6473005, at *3 (S.D.N.Y. Oct. 27, 2015) (“[T]here is nothing inherently improper about a party’s communication with potential class members prior to certification.”), vacated sub nom. Agerbrink v. MSA Models, No. 14 CIV 7841, 2017 WL 4876221 (S.D.N.Y. May 23, 2017) (vacating restriction on communications with putative class members following withdrawal of class allegations). As the Manual for Complex Litigation explains, citing Gulf Oil, “Defendants and their counsel generally may communicate with potential class members in the ordinary course of business, including discussing settlement before certification.” Manual for Complex Litigation (Fourth) § 21.12 at p. 249 (2004).
Are certain types of communications with unrepresented potential class members ethically prohibited?
Yes. Even though counsel may be permitted to communicate with potential class members before class certification, state ethical rules still restrict certain types of communication. ABA Model Rule 4.3, for example, prohibits providing legal advice to unrepresented parties other than advice to retain counsel, if appropriate, if there is a reasonable possibility of a conflict of interest between the unrepresented party and the lawyer’s client. Model Rules of Prof’l Conduct r. 4.3.
ABA Model Rule 7.3’s restrictions on solicitation of clients presents another potential ethical pitfall. It prohibits a lawyer from soliciting professional employment by in-person, live telephone, or real-time electronic contact unless the person contacted is a lawyer or has a close personal or prior professional relationship with the lawyer. Model Rules of Prof’l Conduct r. 7.3. And written, recorded, and electronic communications soliciting clients must include the words “Advertising Material” as required by the rule. Id. Counsel for plaintiffs or defendants should check the applicable ethics rules, comments, and opinions before reaching out to putative class members, to avoid the potentially severe sanctions for prohibited solicitation of clients. See, e.g., Hamm v. TBC Corp., 345 Fed. Appx. 406, 409-12 (11th Cir. 2009) (affirming imposition of severe sanctions for solicitation of class members to join collective action).
Do federal courts have authority to regulate communications with potential class members?
Yes. FRCP 23(d)(1) provides as to putative class actions that “the court may issue orders that: . . . (C) impose conditions on the representative parties or on intervenors . . . [and] (E) deal with similar procedural matters.” The Court in Gulf Oil, acknowledging these provisions, recognized that “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.” Gulf Oil, 452 U.S. at 100. It has that authority over communications because “it is critical that the class receive accurate and impartial information regarding the status, purposes and effects of the class action.” Kleiner v. First Nat’l Bank, 751 F.2d 1193, 1202 (11th Cir. 1985).
When may a district court regulate these communications?
Judicial intervention is warranted when communications pose a serious threat to the fairness of the litigation process, the adequacy of representation, and the administration of justice generally. Brown v. Mustang Sally’s Spirits & Grill, Inc., No. 12-CV-529S, 2012 WL 4764585, at *3 (W.D.N.Y. Oct. 5, 2012). Therefore, court intervention is typically justified only by “actual or threatened misconduct of a serious nature.” Great Rivers Coop. of Se. Iowa v. Farmland Indus., Inc., 59 F.3d 764, 766 (8th Cir. 1995). The party challenging the communications bears the heavy burden of adducing “evidence that a potential for serious abuse exists.” Burrell v. Crown Cent. Petroleum, Inc., 176 F.R.D. 239, 244 (E.D. Tex. 1997); Williams v. U.S. Dist. Ct., 658 F.2d 430, 436 (6th Cir. 1981) (finding trial court lacked grounds to restrict a party’s pre-certification communications absent evidence of abuse). Generally, a party seeking to regulate these communications must (1) “show that a particular form of communication has occurred or is threatened to occur” and (2) “show that the particular form of communication at issue is abuse in that it threatens the proper function of the litigation.” Cox Nuclear Med. v. Gold Cup Coffee Servs., Inc., 214 F.R.D. 696, 697-98 (S.D. Ala. 2003). “[T]he Court will not impose limitations based on speculation and conjecture.” In re M.L. Stern Overtime Litig., 250 F.R.D. 492, 500 (S.D. Cal. 2008). However, actual harm need not be proven. Ojeda-Sanchez v. Bland Farms, 600 F. Supp. 2d 1373, 1378 (S.D. Ga. 2009).
What constitutes misconduct and abuse?
Courts are willing to correct communications that are inaccurate, unbalanced, misleading, or coercive, or which improperly attempt to encourage class members not to join the suit. Agerbrink, 2015 WL 6473005, at *3. These include communications that undermine cooperation with or confidence in class counsel. Cox Nuclear Med., 214 F.R.D. at 698. “Whether a communication is misleading or coercive—and therefore warrants judicial intervention—often depends not on one particular assertion, but rather the overall message or impression left by the communication.” Talavera v. Leprino Foods Co., Case No. 1:15-cv-105, 2016 WL 880550, at *5 (E.D. Cal. Mar. 8, 2016).
One court, for example, found the actions of a defendant in a Title VII discrimination case to be intimidating to putative class members where the employer for the first time compelled its employees to complete federal immigration employment forms. EEOC v. City of Joliet, 239 F.R.D. 490, 492-93 (N.D. Ill. 2006). Another court found that comments by the defendant about how “Plaintiffs’ lives will be subject to public scrutiny” as a result of participation in the putative class action would have a “chilling effect” on participating in the class action. Wright v. Adventures Rolling Cross Country, Inc., No. C-12-0982, 2012 WL 2239797, at *5 (N.D. Cal. June 15, 2012). Yet another court found letters from the defendant to potential class members to be misleading where the letters mischaracterized the damages available to the potential class and misrepresented how the plaintiffs’ attorneys would be compensated if successful in the class action. Belt v. Emcare, Inc., 299 F. Supp. 2d 664, 668 (E.D. Tex. 2003).
May the district court enter a blanket prohibition on communications?
No. Orders regulating communications between litigants pose grave threats to First Amendment freedom of speech. In re Sch. Asbestos Litig., 842 F.2d 671, 680 (3d Cir. 1988). As a result, orders that operate prospectively are unconstitutional prior restraints. Bernard v. Gulf Oil Co., 619 F.2d 459, 466-71 (5th Cir. 1980), aff’d on other grounds, 452 U.S. 89 (1981). As the Supreme Court explained, “[a]n order limiting communications between parties and potential class members 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. . . . [S]uch a weighing—identifying the potential abuses being addressed—should result in a carefully drawn order that limits speech as little as possible . . . .” 452 U.S. at 101-102.
What remedies are available to address misleading or abusive communications?
Because of First Amendment concerns, courts generally address improper communications with putative class members after the fact, through remedial or curative notices. The parties or their counsel who engaged in the behavior requiring remediation may be required to bear the costs of the curative notices. Great Rivers Coop., 59 F.3d at 766. The court may also impose a wide variety of sanctions, such as setting aside executed opt-ins or opt-outs or extending the deadlines for returning them. Belt, 299 F. Supp. 2d at 669-70. A district court may also impose monetary sanctions, as well as attorneys’ fees and costs. Kleiner, 751 F.2d at 1209-1210.
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Counsel for both plaintiffs and defendants, subject to applicable ethical restrictions, are free to communicate with putative class members prior to class certification in the normal course of business. Thus, for example, putative class counsel may communicate with potential class members to discuss representation, encourage support, or investigate the merits of the action. For their part, defense counsel may contact potential class members to marshal evidence on Rule 23’s class requirements or to discuss settlement. And defendants may have ongoing business relationships with potential class members (e.g., employees in a wage act suit) that require the involvement of counsel (e.g., releases arising out of a reduction in force).
But these communications remain subject to limitations. District courts are willing to police communications before certification to protect the administration of justice. That means the communications must be accurate, fair, and non- coercive. Otherwise, the offending party risks corrective action and the possibility of sanctions.