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In a Wage & Hour Class Action and FLSA Collective Action, Northern District Invalidates Opt-Out Forms and Orders Defendants to Show Cause Why They Should Not Be Sanctioned Pursuant to Rule 11

In Class Actions, Class Notice, Collective Action, FLSA, Opt-in, Opt-out, Sanctions on October 7, 2010 at 7:21 am
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Issuing a robust opinion in a putative wage and hour class and FLSA collective action, Judge Lucy H. Koh invalidated opt-out forms solicited by defendants, granted plaintiff’s request for a curative notice at defendants’ expense, and ordered defendants to show cause why they should not be sanctioned pursuant to Rule 11.  Li v. A Perfect Day Franchise, Inc., No. 10-CV-01189-LHK, 2010 WL 3835596 (N.D. Cal. Sept. 29, 2010).  The court concluded that based on the record, it appeared likely that “the opt-out forms submitted by Defendants on September 7, 2010 were fraudulently created after the September 2, 2010 hearing on the underlying motions.”  Id. *11.  The court admonished that “Defendants will not be permitted to defraud this Court by submitting false testimony.” Id. *12.

Background

Named plaintiffs are former workers for A Perfect Day Franchise, Inc., which owns and operates spas. Id. *1. Named plaintiffs describe themselves and the majority of the putative class as being native Chinese speakers, with limited English proficiency and little or no formal education. Id. Plaintiffs claim that they paid for a massage training course offered by an entity related to Perfect Day, the Minjian Hand Healing Institute.  Id. Plaintiffs allege they paid for the course based on promises, contained in advertisements for the training program, that they would be employed by Perfect Day and would earn a minimum income once it was completed, but that these promises were not honored by Perfect Day, and that Perfect Day has miscategorized them as independent contractors rather than employees. Id. Read the rest of this entry »