2:10-cv-00899
D. Ariz.Feb 24, 2017Background
- This putative class action concerns Swift’s issuance (Jan. 9, 2017) of a new Independent Contractor Operating Agreement (ICOA) that current lease-operator drivers were required to sign by March 1, 2017 or be terminated.
- The new ICOA expressly labels drivers "independent contractors" and is largely similar to the prior agreement, but adds Paragraph 16 (reclassification remedies/recapture) and Paragraph 17(E) (indemnification for unsuccessful employee-status suits).
- Plaintiffs moved for emergency relief (TRO / preliminary injunction) arguing the two new provisions are misleading/coercive and chill participation by putative class members in the pending litigation; Plaintiffs sought (inter alia) an injunction against applying those paragraphs and a corrective notice to drivers.
- Defendants argued the provisions do not affect ongoing litigation and are not intended to chill participation; they proposed a clarifying notice but Plaintiffs found it inadequate.
- The court treated the dispute under Rule 23(d) (authority to regulate communications and take steps to protect and fairly conduct class actions) and concluded the requested relief was not a typical preliminary injunction because the issue is not preliminary to the merits.
- Court held Paragraphs 16 and 17(E) are misleading/coercive on their face as to damages and fee allocation, risk chilling class participation, and ordered a court-approved corrective notice to be sent via Qualcomm and first-class mail; request to broadly enjoin future communications was denied as overbroad.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether court can regulate communications/agreements affecting putative class members pre-certification | Getman: Court may act under Rule 23(d) to protect putative class and regulate communications that interfere with litigation | Swift: No class to manage pre-certification; no standing by named plaintiffs who no longer work for Swift; ICOA not a class communication | Court: Plaintiffs have standing; Rule 23(d) authorizes court to act to prevent potential interference with putative class members’ rights |
| Whether Paragraph 16 (reclassification remedy/recapture) is misleading or improperly alters FLSA remedies | Getman: Paragraph 16 suggests Swift can recapture payments and substitute an averaged hourly remedy contrary to FLSA; misleads drivers about damages | Swift: Paragraph 16 does not apply to prior agreements or to class claims; not intended to affect rights in litigation | Court: Paragraph 16 is misleading and coercive on its face because it suggests improper damage calculation and substitution not permitted under FLSA |
| Whether Paragraph 17(E) (indemnification for unsuccessful suits) chills participation by threatening fee liability | Getman: 17(E) could be read to make Lease Operators liable for Swift’s attorneys’ fees if claims fail, chilling participation | Swift: Indemnification language not meant to apply to drivers’ personal wage claims; not intended to deter litigation | Court: 17(E) is misleading/coercive because FLSA fee-shifting favors prevailing plaintiffs, and drivers could reasonably fear fee liability |
| Appropriate remedy to address misleading/coercive communications | Getman: Enjoin application of paras.16 & 17(E), require written corrective notice to all drivers, bar further contacts without court/lead counsel approval | Swift: Proposed limited clarifying notice sufficient; broad contact restriction unnecessary | Court: Granted in part — ordered court-approved corrective notice clarifying paras.16 & 17(E) do not affect remedies/fees in this case and apply regardless of signing; denied broad restriction on future communications as overbroad |
Key Cases Cited
- Gulf Oil Co. v. Bernard, 452 U.S. 89 (1981) (district courts have broad authority to control class actions and communications to protect fairness)
- Wang v. Chinese Daily News, Inc., 623 F.3d 743 (9th Cir. 2010) (district courts may regulate communications with class members to prevent coercive behavior)
- Kleiner v. First Nat’l Bank of Atlanta, 751 F.2d 1193 (11th Cir. 1985) (trial court power to prohibit unilateral communications with class)
- Brooklyn Sav. Bank v. O’Neill, 324 U.S. 697 (1945) (private agreements cannot waive FLSA remedial mechanisms)
- Deposit Guar. Nat’l Bank v. Roper, 445 U.S. 326 (1980) (plaintiff may have standing to protect putative class)
- Christiansburg Garment Co. v. EEOC, 434 U.S. 412 (1978) (prevailing defendant’s fee award requires showing claim was frivolous; fee-shifting principles relevant to analysis)