WADE SHUMWAY vs. INTUIT, INC

SUPERIOR COURT OF CALIFORNIA

COUNTY OF SANTA CLARA

WADE SHUMWAY, an individual, on behalf of himself, and on behalf of others similarly situated,

Plaintiff,

vs.

INTUIT, INC., a Delaware corporation, and DOES 1-100, inclusive,

Defendants.

Case No. 2018-1-CV-330368

TENTATIVE RULING RE: MOTION TO ISSUE CORRECTIVE NOTICE RE: DEFENDANT’S GROUP SETTLEMENT PROGRAM

The above-entitled action comes on for hearing before the Honorable Thomas E. Kuhnle on April 26, 2019, at 9:00 a.m. in Department 5. The Court now issues its tentative ruling as follows:

I. INTRODUCTION
II.
This is a putative class action arising out of various alleged Labor Code violations. According to the allegations of the Second Amended Class Action Complaint (“SAC”), filed on April 2, 2019, defendant Intuit, Inc. (“Defendant”) has a program of unlawfully rounding employee time to the nearest five minutes, resulting in underpayment of all wages owed. (SAC, ¶ 16.) Intuit also has a program in which it sets aside a percentage of its base payroll totaling millions of dollars to fund its “Spotlight Program.” (Id. at ¶ 18.) The Spotlight Program is an employee recognition program pursuant to which certain employees receive bonuses. (Id. at ¶¶ 17-18.) Defendant does not include these bonuses in the regular rate of pay. (Id. at ¶ 22.)

The SAC sets forth the following causes of action: (1) Failure to Pay All Minimum and Overtime Wages; (2) Failure to Pay All Overtime Wages Due to Miscalculation of the Regular Rate of Pay; (3) Failure to Provide Accurate Itemized Wage Statements; (4) Failure to Pay All Wages When Due; (5) Violation of California’s UCL; and (6) PAGA.

Plaintiff Wade Shumway (“Plaintiff”) states Defendant recently sent to potential class members letters that seek to undercut their rights by offering small amounts of money in exchange for a general release of claims. Plaintiff requests that the Court prohibit further ex parte settlement offers to putative class members and order a corrective notice be issued to all recipients of Defendant’s settlement communications.

III. MOTION FOR CORRECTIVE NOTICE
IV.
Defendant sent emails regarding this lawsuit to current employees on February 13, 2019, and letters to former employees on February 15, 2019. Plaintiff asserts that at the time, the parties had been negotiating regarding the production of names and mailing addresses to Plaintiff, and that information was not produced to Plaintiff until February 25, 2019. Plaintiff argues the emails and letters were improper pre-certification communications with putative class members.

In connection with the communications, Defendant included payments based on the incorporation of Spotlight Program awards into the regular rate calculation for each pay period that an employee received the award. (Declaration of Laura Wuertz-Barac in Support of Intuit Inc.’s Opposition to Plaintiff Wade Shumway’s Motion to Issue Corrective Notice Re: Defendant’s Group Settlement Program (“Wuertz-Barac Decl.”), ¶ 6.) The calculations were made by calculating a baseline amount under the regular rate and then increasing that amount by 10%. (¶¶ 6-7.) The baseline plus 10% amount was rounded up to the nearest $25 increment for totals under $100, and up to the nearest $50 for totals over $100. (Ibid.) This resulted in payments ranging from $25 to $9000, with approximately 94% of the payments in the $25 to $500 range. (Id. at ¶¶ 7-8.)

Defendant did not ask for the signing of any release for these payments. (Id. at ¶ 9.) For former employees (but not current employees), Defendant offered an additional $150 if the employee signed a release. (Id. at ¶ 10.)

Plaintiff contends the communications suffered from defects in that they failed to include material information regarding the lawsuit and how the payments were calculated. Plaintiff also asserts Plaintiff’s counsel’s contact information should have been included. Plaintiff seeks to have the Court order the parties to meet and confer to produce a corrective notice to send to all recipients of Defendant’s communications.

Defendant argues it had the right to communicate with its own employees, make a payment for their benefit, and give former employees the option to sign a release agreement. Defendant asserts neither its communications nor the release agreement were misleading and/or coercive.

“Courts routinely hold that releases are misleading where they do not permit a putative class member to fully evaluate his likelihood of recovering through the class action.” (Cheverez v. Plains All American Pipeline, LP (C.D. Cal. 2016) 2016 WL 861107 at *4.) “Examples of communications that may warrant restraint include efforts by a defendant to encourage potential class members not to participate in the class action, thereby reducing potential liability. [Citation.] Courts also have limited communications to putative class members when those communications are shown to contain misleading information.” (County of Santa Clara v. Astra USA, Inc. (N.D. Cal. 2010) 2010 WL 2724512 at *3.) “[P]utative class members can be misled though omissions and failure to provide enough information, which can include the failure to append the plaintiffs’ complaint to a settlement offer.” (Ibid.)

For example, it has been found that a letter that failed to provide a summary of the plaintiffs’ complaint, an explanation of the claims of the plaintiffs, the plaintiffs’ counsel’s contact information, or the current status of the case did not give putative class members enough information to decide whether to accept settlement checks and that the letter essentially concealed material information. (County of Santa Clara v. Astra USA, Inc., supra, 2010 WL 2724512 at *4.) Likewise, a letter in a different case that omitted “key information, such as plaintiffs’ counsel’s contact information and a full description of the claims or the complaint” “discourage[d] participation in the collective action” and merited a corrective notice. (Camp v. Alexander (N.D. Cal. 2014) 300 F.R.D. 617, 625.)

In this case, the communications included a description of the lawsuit, and a statement regarding the payments being made. (Wuertz-Barac Decl., Exs. 1 and 2.) The communications also included the website address or a link to the website for the lawsuit. (Ibid.) Defendant asserts individuals could go to the website to see the complaint, which included contact information for Plaintiff’s counsel.

The Court has some concerns regarding one-sided pre-certification contacts with putative class members. Nevertheless, “absent specific evidence of abuse, an order prohibiting or limiting precertification communication with potential class members by the parties to a putative class action is an invalid prior restraint.” (Parris v. Superior Court (2003) 109 Cal.App.4th 285, 298.) There is no evidence of abuse here and therefore the Court finds there was nothing per se improper about the communications.

As stated previously, the communications included a description of the lawsuit. However, some omitted information may have been helpful for the putative class members to have a better understanding of the case and their options. Plaintiff asserts he filed an amended complaint with additional claims and Defendant could have provided that information to the putative class members prior to the release deadline. Further, the communications did not set forth the potential recovery in the case or explain how payments were calculated. Additionally, while the communications provided a website address where Plaintiff’s counsel’s contact information could be located on the current complaint, it is not clear that putative class members would realize they could obtain that information from the website or that they had a right to contact Plaintiff’s counsel. It would have been helpful to provide Plaintiff’s counsel’s contact information directly in the communications.

Despite these omissions, it is not apparent there is any need for a corrective notice. Aside from the additional $150 offered to former employees, no payments required the signing of a release and it is therefore not evident what impact those payments have on the case, if any. The effect of those payments is a question to be addressed in the future; it does not impact potential class size or membership at this point.

Former employees were offered $150 in exchange for signing a release. Plaintiff does not ask the Court to void the releases or order that the $150 be returned. (Plaintiff Wade Shumway’s Reply in Support of his Motion to Issue Corrective Notice Re: Defendant’s Group Settlement Program, p. 5, fn. 3.) The legal effect of the release is another question to be addressed in the future; it is not the proper subject of a corrective notice. Consequently, it is unclear what purpose would be served by sending corrective notices to the putative class members who are former employees. Sending letters that have no actual effect, and leave the releases and payments in place, could cause more confusion. The Court notes Plaintiff has not provided a proposed notice showing exactly what would be stated and demonstrating how any confusion from Defendant’s communications could be alleviated.

The Court finds a corrective notice is not warranted. Plaintiff’s motion is DENIED.

The Court will prepare the final order if this tentative ruling is not contested.

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