MEMORANDUM OF DECISION
This lаwsuit arises out of the October 2008 bankruptcies of three related cookie companies — Defendant Archway & Mother’s Cookies, Inc., a.k.a. “Dough Co.”;
Pending before the Court is the Catterton Defendants’ Motion for an Order Per
I.
The Court discussed the facts of this case at some length in its decision denying Defendants’ motions to dismiss for failure to state a claim. See Austen v. Catterton Partners V, LP,
Mr. Austen and Mr. Icardi moved for class certification in this case on October 6, 2009. See Mot. for Class Certification [doc. # 31]. The Court held oral argument on their motion for class certification on May 24, 2010. On June 7, 2010, the Court issued a decision denying the motion for class certification without prejudice to renewal. See Austen v. Catterton Partners V, LP,
In early February 2011, the Court began to receive communications from Plaintiffs’ counsel and from Defendants’ counsel regarding Defendants’ attempts to communicate with putative class members. Specifically, Plaintiffs’ counsel alleged improprieties by Defendants’ counsel in their communications during discovery with Jennifer Marquette, who was the Vice President of Human Resources at Dough Co. at the time of the bankruptcies. See Marquette Dep. [doc. # 170-2] at 11. Plaintiffs’ counsel was particularly concerned that one of Defendants’ lawyers, Linda M. Inscoe of Latham & Watkins LLP (“Latham & Watkins”), had a prior working relationship with Ms. Marquette, and believed that Attorney Inscoe was trying to take advantage of the prior relationship to coerce Ms. Marquette to sign an affidavit against her own interests and against the interests of other putative class members. At that time, a deposition of
On March 2, 2011, the Court held an on-the-record telephonic status conference with the parties to discuss the allegedly improper communications between Defendants’ counsel and putative class members. Following the conference, the Court ordered the parties to submit briefs on two issues: (1) whether Defendants’ counsel could contact putative class mеmbers without notice to Plaintiffs’ counsel and without Plaintiffs’ counsel being present; and (2) whether Plaintiffs’ counsel represented the putative class members even though no class had yet been certified. See Order [doc. # 165]. In connection with that order, Defendants’ counsel submitted a copy of Ms. Marquette’s deposition transcript to the Court, which the Court has read. See Marquette Dep. [doc. # 170-2],
Ms. Marquette primarily testified at her deposition about facts relevant to the merits of this case. She testified that during her time at Dough Co., she was responsible for overseeing plant closings, and had specific responsibility for WARN Act notifications. See id. at 15. Ms. Marquette also testified about the relationship between Dough Co. and the Catterton Defendants, see id. at 17; about the number of employees who worked at various Dough Co.-related facilities, see id. at 19-20; and about the fact that some of the same people performed worked at multiple different Dough Co.-related facilities. See id. at 21-22. Ms. Marquette is currently the Director of Human Resources for Snyder’s Lance, Inc., which now operates the Ash-land Bakery that used to be run by Dough Co. See id. at 10-11. When the bankruptcies occurred, Ms. Marquette also stayed on for a time at the Ashland Bakery working for a bank as it attempted tо sell the bankrupt companies’ assets. See id. at 11.
In addition to testifying about facts relevant to the merits of this case, Ms. Marquette also testified about her prior communications with Defendants’ counsel. Ms. Marquette testified that she knew Attorney Inscoe because Attorney Inscoe was the Dough Co. Human Resources Department’s main contact at its outside counsel, Latham & Watkins. See id. at 185. Ms. Marquette regularly sought legal advice from Attorney Inscoe when Ms. Marquette was working for Dough Co. See id. In September 2010, Attorney Inscoe reached out to Ms. Marquette via telephone and email to ask her for information about Dough Co.’s operations before the bankruptcies. See id. at 187. Attorney Inscoe did not tell Ms. Marquette why she was asking for the information, but Ms. Marquette assumed it was for the purpose of defending a lawsuit. See id. at 188. Ms. Marquette even assumed that Attorney Inscoe was representing one or more Defendants in this very case, although she was not sure whether Attorney Inscoe was representing the Catterton Defendants or Insight Holdings. See id. at 210-11. Ms. Marquette asked Attorney Inscoe if she needed to have a lawyer present for their communications; Attorney Inscoe indicated that she did not think Ms. Marquette needed a lawyer, but that it was ultimately up to Ms. Marquette to decide. See id. at 190. Ms. Marquette discussed with Attorney Inscoe the possibility of signing a declaration or affidavit about Dough Co.’s operations, and eventu
Ms. Marquette also testified at the deposition that she has long believed that one of Plaintiffs’ lawyers, Jack A. Raisner of Outten & Golden LLP (“Outten & Golden”), has been acting as her attorney. See id. at 154. Ms. Marquette never signеd an engagement letter with Attorney Raisner, and never came to any verbal agreement with Attorney Raisner or with his law firm. See id. at 154-56. Instead, Ms. Marquette simply received a letter informing her about the pendency of this action. See id. at 156. She assumes that because this action is a class action, and because she has not yet opted out, Attorney Raisner must be acting as her attorney. See id. Attorney Raisner and Attorney Rene S. Roupinian, also of Outten & Golden, held two telephone meetings with Ms. Marquette to help her prepare for her deposition. See id. at 156-57.
II.
A.
Thirty years ago, in Gulf Oil Co. v. Bernard,
Class actions serve an important function in our system of civil justice. They present, howеver, opportunities for abuse as well as problems for courts and counsel in the management of cases. Because of the potential for abuse 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. But this discretion is not unlimited, and indeed is bound by the relevant provisions of the federal rules.
Gulf Oil,
[A]n order limiting communications bеtween parties and potential class members should be based on a clear record and specific findings that reflect a weighing of the need for limitation and the potential interference with the rights of the parties. Only such a determination can ensure that the court is furthering, rather than hindering, the policies embodied in the Federal Rules of Civil Procedure, especially Rule 23. In addition, such a weighing — identifying the potential abuses being addressed— should result in a carefully drawn order that limits speech as little as possible, consistent with the rights of the parties under the circumstances.
Because the parties dispute the extent to which Gulf Oil controls this Court’s decision regarding whether to limit communications between Defendants’ counsel and putative class members, the Court sets forth the facts of the case in detail. Gulf Oil was an employment discrimination case pitting current and former black employees against the owners of an oil refinery in Port Arthur, Texas. See id. at 91,
The district court thereafter issued two orders prohibiting the parties and their counsel from contacting actual or potential class members other than the named parties. The district court’s initial, temporary order prohibited “all communications concerning the case from parties or their counsel to potential or actual class members.” Id. at 93,
Under the second order, the district court denied a request by plaintiffs’ counsel to send actual and potential class members a leaflet encouraging them to talk to a lawyer before signing any release form from the refinery. The Supreme Court eventually held that the district court abused its discretion by issuing the orders without basing them on “a clear record and specific findings that reflect[ed] a weighing of the need for a limitation and the potential interference with the rights of the parties.” Id. at 101,
The Second Circuit has applied Gulf Oil only once, in Rossini v. Ogilvy & Mather, Inc.,
On appeal by the plaintiffs, the Second Circuit held that the district court did not abuse its discretion by issuing the two orders limiting communications between the parties and potential members of the class. See id. The Second Circuit reasoned that “[ujnlike the order at issue in Gulf Oil, the order[s] ... were based on specific findings of fact.” Id. at 602. The Second Circuit noted that the оrders “may have been broader than necessary to curb the abuses found by the court,” but that the fact that the order might have gone farther than necessary was of no moment because neither party asked the district court to issue a more narrowly drawn order. Id. at 602.
Two other Second Circuit cases are relevant to the issue before the Court in this case. First, in Weight Watchers of Philadelphia, Inc. v. Weight Watchers International, Inc.,
The Supreme Court’s holding in Gulf Oil; the Second Circuit’s holdings in Rossini and Christensen; and the Second Circuit’s dicta from Weight Watchers seemingly indicate that this Court must carefully follow certain principles when deciding whether to limit communications by parties and counsel with putative class members before class certification. First, any “order limiting communications between parties and potential class members [must] be based on a clear record and specific findings that reflect a weighing of the need for limitation and the potential interference with the rights of the parties.” Gulf Oil,
In opposition to the pending motion, however, Plaintiffs suggest that this Court need not apply the principles set forth in Gulf Oil and the other cases discussed above. Instead, according to Plaintiffs, this Court has virtually unlimited authority to restrict defendants’ and defendants’ counsels’ communications with putative class members — as opposed to plaintiffs’ and plaintiffs’ counsels’ communiсations with putative class members — even absent any specific findings regarding the need for such restrictions and absent any showing that “serious abuses” are likely. Gulf Oil
Because Plaintiffs rely so heavily on In re Currency Conversion, the Court sets forth the facts of the case in detail. In re Currency Conversion was an antitrust action in which the plaintiffs alleged that the defendant credit card companies conspired to fix foreign currency conversion fees. See
This Court is not persuaded by the In re Currency Conversion court’s conclusion for four reasons. First, while the In re
In this Court’s view, the principles set forth in Gulf Oil and other cases regarding a district court’s authority to impose restrictions on communications with putative class members apply to restrictions on plaintiffs’ communications and defendants’ communications alike. See Federal Judicial Center, Manual for Complex Litigation § 21.12, at 248 (4th ed. 2004) (“Direct communications with class members ... whether by plaintiffs or defendants, can lead to abuse.”). Admittedly, there is a certain surfaсe appeal to the notion that it is always in putative class members’ best interests to receive communications from a named plaintiff and his or her counsel, and that there is something inherently coercive about ex parte communications between defendants and putative class members or between defense counsel and putative class members. But that appeal disappears when one delves below the surface. Both parties need to be able to communicate with putative class members — if only to engage in discovery regarding issues relevant to class certification — from the earliest stages of class litigation. Furthermore, named plaintiffs and their counsel do not always act in the best interests of absent class members, and not all defendants and defense counsel engage in abusive tactics. District courts thus must not interfere with any party’s ability to communicate freely with putative class members, unless there is a specific reason to believe that such interference is necessary. The rule proposed by Plaintiffs — which would in essence grant named plaintiffs and their counsel a monopoly on ex parte communications with putative class members from the outset — would be manifestly unjust аnd unfair. See Fed.R.Civ.P. 1; Fed.R.Civ.P. 23(d).
B.
Applying those principles to the facts of this case, the Court finds there is a basis for imposing limited restrictions on the parties’ abilities to communicate with putative class members at the present time. Any restrictions the Court imposes on such communications must be based on “a clear record and specific findings that reflect a weighing of the need for limitation and the potential interference with the rights of the parties.” Gulf Oil, 452 U.S.
At the same time, however, the Court does not believe there is any “likelihood of serious abuses” by any of the parties in this case. See Gulf Oil,
The Court is not persuaded that the only conduct that either party has оbjected to here — Attorney Inscoe’s ex parte communications with Ms. Marquette — was in any way abusive. The Court recognizes that when a defendant is in an ongoing, current business relationship with members of a putative class, for example an employment relationship, it may be prudent to preempt the defendant’s ability to use the relationship and pressure class members to make factual concessions or settle claims. See Manual for Complex Litigation § 21.12, at 248; see, e.g., Rossini,
The Court in no way means to suggest that both parties’ counsels’ conduct has been consistent with the best of all possible professional practices throughout this litigation so far. It would have been better for another Latham & Watkins attorney to contact Ms. Marquette instead of Attorney Inscoe. It would also have been more prudent for Attorney Inscoe to explicitly inform Ms. Marquette about why she was contacting her and about who she was representing, even though Ms. Marquette already knew about the lawsuit and assumed — correctly—that Attorney Inscoe was representing one or more of the Defendants. See id. at 188. But the Court cannot say that Attorney Inscoe’s missteps constituted misconduct, nor that there is any realistiс, foreseeable possibility of any misconduct by Attorney Inscoe or anyone else on Defendants’ side of this case. At the same time, it would have been wiser
The Court notes that, while this Court’s authority to restrict pre-certification communications with class members is limited and discretionary, communications with putative class members prior to certification may also implicate ethical rules. See ABA Comm. on Ethics & Profl Responsibility, Formal Op. 07-445 (2007). Ethical obligations also restrict an attorney’s ability to communicate with individuals who are represented by counsel. See Manual for Complex Litigation § 21.12, at 249. Thus, it would probably have been unethical for Attorney Inscoe to contact Ms. Marquette if she had been represented by counsel at the time of their communications. Crucially, however, Plaintiffs’ lawyers do not argue in opposition to the pending motions that they have ever represented Ms. Marquette. Thus, the Court need not сonsider at this time whether Ms. Marquette or any other putative plaintiff is currently represented by Plaintiffs’ lawyers.
Even if Plaintiffs’ counsel had argued that they represented Ms. Marquette at the time when Attorney Inscoe contacted her, the record currently before the Court does not support such a conclusion. In general, “[a] relationship of client and lawyer arises when: (1) a person manifests to a lawyer the person’s intent that the lawyer provide legal services to the person; and either (a) the lawyer manifests to the person consent to do so; or (b) the fails to manifest lack of consent to do so, and the lawyer knows or reasonably should know that the person reasonably relies on the lawyer to provide the services .... ” Restatement (Third) of the Law Governing Lawyers § 14 (2000). There is no evidence in the record that Ms. Marquette manifested an intent to receive legal services from any Outten & Golden lawyer before Attorney Inscoe contacted her, and there is also no evidence that any Outten & Golden lawyer manifested consent to represent her or should have known that she was relying on Outten & Golden to provide her with legal services. To the contrary, Ms. Marquette seems tо have simply assumed from receiving a notification about this case from Outten & Golden that she was represented by Attorney Raisner. See Marquette Dep. [doc. # 170-2] at 156.
C.
In light of the Court’s conclusion that there is a basis for imposing limited restrictions on the parties’ ability to communicate with putative class members, but that there is no record to support more extensive restrictions on such communications, the Court imposes the following restrictions on future communications between counsel for both parties and putative class members:
• First, whenever counsel for a party contacts a putative class member, counsel must explicitly inform the putative class member that he or she is an attorney, and identify the party or parties that he or she is representing in this case, and that the putative class member may be a plaintiff in the case. If the putative class member does not wish to engage in discussion with counsel, counsel should stop all efforts to engage the putative class member.
• Second, counsel must at the outset of the communication ask the putativeclass member if he or she is already represented by counsel, and if not, whether he or she would like to consult with an attorney before engaging in further communications. If the putative class member indicates a desire to consult with counsel, сounsel must cease all communications with the putative class member.
• Third, because the parties seemingly agree that it is appropriate to limit communications with putative class members at this time to discussions regarding the facts of the case and the class aspects for discovery purposes only, counsel shall not communicate with putative class members either directly or indirectly about opting out of a potential class, or about settling any claims related to the claims asserted by Plaintiffs in this case.
• Fourth, counsel for both parties shall keep detailed lists of all the putative class members that they contact prior to certification, and shall submit those lists to the Court when a class certification motion is eventually filed in this case.
III.
In sum, the Court concludes that while neither party has engaged in misconduct to date, there are good reasons to impose limited restrictions on both parties’ abilities to communicate with putative class members. See Gulf Oil, 452 U.S. at 101,
IT IS SO ORDERED.
Notes
. Pursuant to a stipulation that the Court approved on January 12, 2010, litigation of the claims against Dough Co. is currently on hold. See Order [doc. # 84].
. The Court agrees with Plaintiffs that "the rules governing ... communications with putative class members have little if anything to do with the attorney-client relationship.” Mem. in Opp. [doc. # 172] at 5. Gulf Oil clearly permits a district court to regulate communications with putative class members even when they are not yet technically represented by class counsel. See
. The same is true of another case on which Plaintiffs rely, Gortat v. Capala Brothers, Inc., No. 07cv3629 (ILG)(SMG),