Federal Court Orders Sanctions in Class Action for Defendants’ Communications with Potential Class Members

In the recent decision in Mullen v. GLV, Inc.,[1] a federal court in Illinois certified a class action against a youth volleyball training business and its owners.  The certified class consisted of parents whose children attended volleyball programs offered by the business, and the claims asserted on behalf of the class were that one of the two owners sexually abused children and both owners concealed the abuse.

Upon certifying the class, the court approved a class notice and set a deadline for class members to opt out of the class action.  After the notice was sent and before the opt-out deadline, the owners and their attorney communicated with class members encouraging them to opt-out.  Specifically, the owners sent emails and text messages to class members including a “mass email” to class members encouraging them to opt-out, communications instructing them on how to opt-out, and communications answering questions about the class action.  The defendants’ attorney knew of these communications and participated in some of the communications.  Upon learning of the communications, the class action plaintiffs moved for sanctions against the defendants and their attorney for improperly interfering with the class action notice process.

In granting the motion and imposing sanctions, the Court held that “[w]hen a party communicates with class members during the notice period in a way that is potentially misleading or may discourage class participation, it disrupts a court’s authority over the class notice process.”  The Court reasoned that misrepresentations about the details of a suit and pressure to opt-out of a suit undermine the policy behind the class action procedures of ensuring that the choice of whether to opt-out of a class action is an informed choice made freely and based on unbiased information.  The Court held that “a communication that is even potentially coercive undermines the purposes of Rule 23.”

Notably, the Court indicated that even if the information in the defendants’ communications was factually correct and not overtly coercive, the communications were still coercive due to their “context and source,” i.e., there being unilateral communications and there being made in the context of an ongoing business relationship between the defendants and the class members.  The Court also found evidence that “the defendant’s communications were potentially coercive by endorsing and enabling decisions to opt out of the class.”

The court ordered the defendants to pay the plaintiffs’ attorneys fees incurred in engaging in discovery on the communications and pursuing the sanctions and pay a $5,000 fine to the court.  The court also reprimanded the defendant’s attorney and ordered her to complete certain professional responsibility education.

While a useful example of the prohibition on defendants pressuring class members to not participate in a class action, the decision is not groundbreaking and follows a long line of earlier cases strictly limiting defendants’ communications with class members.[2]  The decision is notable for its clear ruling that unilateral communication between a defendant and a class member is prohibited even if the content of the communication is factually correct and the communication is not overtly coercive.

[1] Mullen v. GLV, Inc., No. 18-C-1465, 2020 WL 1233826, — F.R.D. — (N.D. Ill. March 13, 2020).

[2] See Gulf Oil Co. v. Bernard, 452 U.S. 89 (1981); Kleiner v. First Nat’l Bank of Atl., 751 F.2d 1193 (11th Cir. 1985); Reid v. Unilever U.S., Inc., 964 F. Supp. 2d 893 (N.D. Ill. 2013); Ralph Oldsmobile, Inc. v. General Motors Corp., 2001 WL 1035132 (S.D.N.Y. Sept. 7, 2001).