2015-00176610-CU-OE

Arturo Dominguez vs. Easy-Fuel, Inc.

Nature of Proceeding: Motion for Protective Order

Filed By: Revelas, Alexandra

Plaintiffs’ motion for protective order, for corrective notice to class members, and to strike fourteen opt-outs procured by Defendants’ managers is ruled upon as follows.

Overview

This is a class action involving alleged wage and hour violations. Defendant Easy-Fuel, Inc. (“Easy-Fuel”) was the employer allegedly operating a mobile fueling company. Plaintiffs allege that Defendant Joyce Teskey (“Teskey”), as an individual is a principal, president, and owner of Easy Fuel and Teskey Investements, LLC. (“Teskey Investments”). Plaintiffs allege that Teskey, Easy-Fuel, and Teskey Investments dominated and controlled each other such that they held a complete unity of interest amongst themselves. Plaintiffs allege that Defendant Teskey, as a trustee as of the Gary L. Teskey and Joyce M. Teskey Living Trust (the “Trustee”), is an owner of Easy-Fuel.
Easy-Fuel and the Teskey parties are collectively referred herein as “Easy-Fuel Defendants.”

Plaintiffs Arturo Dominguez and Antonio Godinez (collectively “Plaintiffs”) were Easy-Fuel truck drivers who claim they were denied pay and other benefits. Plaintiffs filed this action on 3/8/2015.

Plaintiffs further allege that on 11/12/2015, Easy Fuel wrongfully transferred certain assets to co-defendants Don Harper (“Harper”) and eFuel Investments, LLC (“eFuel Investments”). They further allege that co-defendant eFuel, LLC (“eFuel”) is the successor to Easy-Fuel and continues Easy Fuel’s business operations. Plaintiffs allege that Harper is the managing member of eFuel Investments and eFuel. Harper, eFuel and EFuel Investments are collectively referred herein as “eFuel Defendants.” Plaintiffs’ complaint asserts successor liability against eFuel for the Labor Code and B&P Code causes of action. The Private Attorney General Act (“PAGA”) cause of action against eFuel was stricken by the Court.

On 3/10/2016, Judge Perkins signed a stipulated order certifying the class. (ROA 75.) The stipulation was between Plaintiffs and Easy Fuel, Teskey Investments, LLC (“Teskey Investments”), and Joyce Teskey, an individual (“Teskey”). The class is defined as “All nonexempt hourly employees employed by Defendants in the State of California at any time during the period beginning at least four years prior to the filing of the original complaint in this action to the present.”

At the time of the class certification order, the complaint had not been amended to add the eFuel Defendants. The eFuel Defendants were added in the third amended complaint, filed on 4/6/2017. On 8/14/2017, Judge Perkins signed a stipulated order regarding class notice and procedures. (ROA 246.) The parties to the stipulation regarding class notice were Plaintiffs and the Easy-Fuel Parties. The proposed class notice, approved by the Court identified the class representatives as “former employees” of Easy Fuel, Inc. (ROA 246.) It further stated that “Easy Fuel, Inc. records show that you were employed as a nonexempt hourly employee by Easy Fuel, Inc. in California sometime between March 18, 2011 and March 10, 2016.” (ROA 246.)

The opt-out period closed on November 27, 2017 (sixty days after the class notice packets were mailed). (Declaration of Kelsey Skey in Support of Motion.) From previous experience handling class certification mailings, the class administrator, CPT Group, Inc. (“CPT”), typically receives a 10% response rate. In this matter, CPT received 15 opt-outs reflecting a 10.71% response rate. (Declaration of Kelsey Skey in Response to Plaintiff’s Motion.)

Plaintiffs are concerned that eFuel and Harper have been communicating with potential class members and urging them opt out of the class. Plaintiffs bring this motion for a protective order prohibiting communications (by all defendants) with the class members. They also seek a Corrective Notice to Class Members advising them of the nature of the case and their rights, and to strike fourteen opt-outs “procured” by Defendants’ managers.

The eFuel Parties and Easy-Fuel filed oppositions to the motion. Teskey Investments, Teskey and the Trustee Trustee filed a joinder to the oppositions, which is GRANTED.

Communications with eFuel employees and Opt-Out Notices

1. Plaintiffs’ Evidence

One hundred forty class notices were mailed. Each notice included a number individualized to the class member, labeled as a CPT ID, along with a bar code and the name of the class member to allow the notice administrator to track response. (Declaration of Kelsey Skey at ¶¶4-6.) On November 21, 2017, their counsel learned that eFuel was holding meetings with its current employees. (Declaration of Enrique Martinez, ¶2.) Plaintiffs proffer the declaration of five e-Fuel employees. Three of the employees, Miguel Rodriguez, Ernesto Delgado and Miguel Del Villar, met with eFuel’s general manager Phil Hernandiz (“Hernandiz”) on November 21, 2017. (Declarations of Miguel Rodriguez, Ernesto Delgado and Miguel Del Villar.) At the meeting, Hernandiz showed the three employees the Opt-Out Form. (Id.) He explained that the Easy Fuel owner had done nothing wrong and that some of their co-workers had already opted out to show gratitude to the former owner. (Id.) None of the three employees signed the Opt-Out Form. (Id.) Two other employees, Jimmy Moreno (“Moreno”) and Jorge Aldama (“Aldama”) met with Jay Spurgeon (“Spurgeon”), eFuel’s manager at the Fresno location. (Declarations of Jimmy Moreno and Jorge Aldama.) Spurgeon stated that eFuel and Harper had done nothing wrong and that if they did not opt-out they would have to testify at trial. (Id.) They felt either “scared” or “nervous.” (Id.) Aldama declined to opt-out; Moreno signed the Opt-Out Form. (Id.) After Moreno signed the Opt-Out Form Spurgeon stated “we’ll know who stays and who opt-outs. We can’t send it out, it has to come from you.” (Declaration of Jimmy Moreno.) Spurgeon then gave Moreno a stamped envelope. (Id.)

The Opt-Out Notices included an individual CPT ID. According to CPT’s Case Manager, Kelsey Skey, CPT received 10 Opt-Out Forms in English. Each had a large blank space between the shaded heading and the text of the document where the CPT ID, barcode, name, and address of the class member should have been located. These Opt-Out Forms were received on November 27, 2017. (Declaration of Kelsey Skey.)

CPT also received 4 Opt-Out Forms in Spanish. The forms did not include an individual CPT ID at the top right hand comer where it should have been. These Opt-Out Forms were received on November 27, 2017. (Id.) CPT also received 3 Opt-Out Forms from individuals who were not on the class list and were not sent class notice packets. (Id.) Plaintiffs move to strike the 14 Opt-Out forms obtained from class members.

2. The eFuel Defendants’ Evidence

The eFuel Defendants proffer Hernandiz’s and Jay Spurgeon’s declarations. Both admit to communications with eFuel employees, but disagree with the employees’ versions of the meetings. Hernandiz and Spurgeon were concerned that not all of the

employees had received the class action packets, or if they had received the packet that they might not have understood the information. (Declarations of Phil Hernandiz and Jay Spurgeon.) To make copies of the packet, each obtained a packet from an eFuel employee. They whited out the name and addresses of the employee that was on the first page of the Opt-Out Form and the CPT ID number. (Id.)

When they met with the employees, they explained that it was entirely up to them to decide whether to opt out of the class. They never told or suggested that any employee should opt out. They did not threaten any employee with disciplinary action, suspension or termination if they did not opt out. They never told the employees that Harper “did nothing wrong” or that the employees would have to testify at trial if they did not sign the opt out. (Id.)

Hernandiz states that he was surprised by Villar’s declaration. He explains that after speaking with Villar and explaining the opt-out packet, Villar elected not to opt-out. Hernandiz did not try to persuade him to change his mind. (Hernandiz Declaration.)

Spurgeon indicates that he was surprised by Moreno’s declaration. He felt he had a very good conversation with Moreno. At one point Moreno asked Spurgeon if the company would find out if he elected to opt out. He told Moreno truthfully that the company would know at some point. Moreno then informed Spurgeon that he had to think about what he wanted to do. Moreno ultimately decided to opt-out. Spurgeon declined to mail the opt-out form so there would be no question that the form came from Moreno. (Spurgeon Declaration.)

The Protective Order

As an initial matter, given that the eFuel Defendants were not the identified defendants in the class certification and class notice, it is unclear to the Court whether the certified class includes the eFuel Defendants. Thus, the class may be uncertified as to the eFuel Defendants. The Court, however, expresses no opinion as to whether or not the class is certified as to the eFuel Defendants because the Court may limit communications between the parties and putative class members before class certification. (See Gulf Oil Co. v. Bernard (1981) 452 U.S. 89, 100.) But the limits are bounded by the First Amendment. (Id.) “An 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. . . . In addition, such a weighting – 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.” (Id. at 101-102 [emphasis added].)

In Kleiner v. First National Bank (1985) 751 F.2d 1193, the court considered whether the first amendment rationale of Gulf Oil Co. v. Bernard, supra, bars sanctions against a defendant and counsel for secretly soliciting requests from potential members of a

Rule 23(b)(3) plaintiff class. The court focused on the commercial speech aspect of the defendant’s communications with potential class members. According to Kleiner, an order limiting communications regarding ongoing litigation between a class and class opponents will satisfy first amendment concerns if it is grounded in good cause and issued with heightened sensitivity for first amendment concerns. Four criteria are used to determine good cause: the severity and the likelihood of the perceived harm; the precision with which the order is drawn; the availability of a less onerous alternative; and the duration of the order. (Id. at 1206.)

Plaintiffs did not provide the Court with a proposed copy of the protective order. Plaintiffs’ proposed order on the motion provides the following language “it is hereby ordered that . . . a limited protective order will be issued that prohibits Defendants from communicating with Class members regarding the claims made, the merits of those claims, or any other aspect of the present class-action lawsuit.” Given this language, it appears to the Court that Plaintiffs desire a protective order “prohibiting Defendants from communicating with Class members regarding the claims made, the merits of those claims, or any other aspect of the present class- action lawsuit.”

Plaintiffs contend that the eFuel Defendants’ communications are commercial speech and that “a narrowly-tailored protective order that prohibits communications about this lawsuit, about the class notice, and about a plaintiff or class member’s decision to participate in the lawsuit is both necessary and appropriate.” (Motion, 10:9-11.)

The Court disagrees with Plaintiffs that the protective order is narrowly tailored, necessary or appropriate. The crux of Plaintiffs’ motion is their concern that the eFuel Defendants are communicating with potential class members in order to obtain opt-outs. As noted above, the opt-out period closed on November 27, 2017 – four months before Plaintiffs filed this motion for protective order. (Declaration of Kelsey Skey in Support of Motion.) Therefore, the harm over the eFuel Defendants improperly obtaining opt-outs is moot (and was moot when Plaintiffs filed the motion.) Moreover, the protective order is indefinite in time, extending after the opt-out period expired and even after the litigation has ended. The protective order is also imprecise and unenforceable.

Accordingly, Plaintiffs’ motion for protective order is DENIED.

Striking of the 14 Opt-Outs

Here, although the Court is troubled by the eFuel Defendants’ communication with putative class members, Plaintiffs have not provided sufficient evidence to show that the 14 opt-outs should be stricken. Of the five e-Fuel employees who submitted declarations in support of the motion, only one, Jimmy Moreno, opted out. Plaintiffs fail to proffer declarations from the other 13 opt-outs showing that the opt-outs were obtained as a result of the eFuel Defendants’ communication, rather than the employee’s willing and voluntary choice. Moreover, as Kelsey Skey explains, CPT

normally receives a 10% opt-out rate. (Declaration of Kelsey Skey in Response to Plaintiff’s Motion.) In this action, CPT received a 10.71% opt-out rate – less than 1% difference from the typical rate.

Given the record before it, Plaintiff’s motion to strike the 14 opt-outs is DENIED.

Corrective Notice

Plaintiffs desire a corrective notice “advising class members of the nature of the case and their rights therein to be issued in a form to be prepared by Plaintiffs to the Class at Defendants’ expense.” (Proposed Order.)

The motion is DENIED. As explained above, because the opt-out period has expired, the harm over the eFuel Defendants improperly obtaining opt-outs is moot. Thus, the need for a corrective notice is moot as well. Coupled with the fact that there is a less than 1% difference from the typical opt-out rate, the Court sees no need for a corrective notice.

The Court declines to rule on the eFuel Defendants’ objections to evidence.