Atari, Inc. v. Superior Court

Decision Date12 April 1985
Citation166 Cal.App.3d 867,212 Cal.Rptr. 773
CourtCalifornia Court of Appeals Court of Appeals
PartiesATARI, INC., a corporation, Petitioner, v. SUPERIOR COURT of Santa Clara County, Respondent, Maria CARSON and Rodolfo Villanueva, et al., Real Parties in Interest. H000200.

Dretzin & Kauff, Littler, Mendelson, Fastiff & Tichy, Maureen E. McClain, San Francisco, for petitioner.

Robertson, Alexander, Luther, Esselstein, Shiells & Wright, Menlo Park, Joan M. Graff, Linda J. Krieger, Employment Law Center, San Francisco, for real parties in interest.

AGLIANO, Associate Justice.

Atari, Inc. is the defendant in a civil action brought by real parties Carson and Villanueva, ostensibly as a plaintiffs' class action. There has been no proceeding to certify the class. Atari seeks review of an order of respondent superior court which permits Carson and Villanueva to send a broadly-worded notice to, and to communicate without limitation with, potential class members, but which at the same time limits Atari's access to the same individuals. We conclude that the evidence of record does not justify denying any party equal access to persons who potentially have an interest in or relevant knowledge of the subject of the action, but who are not yet parties.

In February 1983 Atari laid off 600 employees, including plaintiffs Carson and Villanueva. Carson and Villanueva brought this action, for themselves and assertedly for the rest of the 600 employees, upon theories of fraud, misrepresentation, and breach of implied contracts and covenants, based on allegations to the general effect that Atari managers had told the 600 employees there would be no mass layoffs.

In the course of preliminary discovery Carson and Villanueva sought names, addresses and telephone numbers of the rest of the 600 employees. The parties could not agree to limits to be placed on what the potential class members could be told and by whom; they presented cross-motions to respondent court. Respondent court issued the order under review, which in relevant part authorizes Carson and Villanueva to send a precertification notice, in writing, on counsel's letterhead, to all potential class members, telling each of them about the lawsuit and asking each of them to furnish specified kinds of evidence to counsel for Carson and Villanueva (or to counsel of their own choice); provides that with the exception of the form and handling of the initial letter "no limitation shall be placed at the present time on the right of plaintiffs or their counsel to communicate with potential class members ..."; and orders that Atari and its attorneys and agents "shall not communicate in the absence of [Carson and Villanueva's] counsel and without prior court approval with any member of the proposed class on any issue relevant to this litigation.

Atari complains of the provision for written precertification notice from Carson and Villanueva to potential class members and of the limitation upon its own right to communicate with potential class members. The order also provides that "[s]hould the defendant wish to take discovery from absent class members, it must do so in accordance with the principles set forth in Danzig v. Superior Court (1978) 87 Cal.App.3d 604 , and Southern California Edison Co. v. Superior Court (1972) 7 Cal.3d 832 [103 Cal.Rptr. 709, 500 P.2d 621]." Atari is apparently willing to abide by this specific limitation on discovery.

Preliminarily Atari argues that Carson and Villanueva probably will not be able to obtain certification of the proposed class, because they will not be able to establish the requisite community of interest among the potential class members. (Cf. City of San Jose v. Superior Court (1974) 12 Cal.3d 447, 459, 115 Cal.Rptr. 797, 525 P.2d 701.) The argument begs the question: A determination "whether the common questions are sufficiently pervasive to permit adjudication in a class action rather than in a multiplicity of suits" (Vasquez v. Superior Court (1971) 4 Cal.3d 800, 810, 94 Cal.Rptr. 796, 484 P.2d 964) cannot realistically be made until the parties have had a chance to conduct reasonable investigation.

1. The Precertification Notice

Respondent court's order contains an approved text for the precertification notice, which would inform the addressee that "[t]he suit alleges that Atari defrauded laid-off workers" in specified ways, that the addressee is "one of the people on whose behalf the lawsuit was filed," and that counsel for Carson and Villanueva "need to gather evidence," including documentation, "regarding statements made by Atari supervisors and managers to Atari employees regarding job security, directly or by implication."

Atari argues that the notice is not supported by settled authority, has no legitimate purpose, and is potentially misleading and prejudicial as worded.

Atari does not press its first point. Technically the point is correct: There is no express provision for, or settled practice to support, use of a precertification notice in California. Obviously the procedure is not analogous to the postcertification notice which has been called a "jurisdictional" procedural element of a class action. (Kass v. Young (1977) 67 Cal.App.3d 100, 105-106, 136 Cal.Rptr. 469.) But we perceive no persuasive objection to use of this kind of precertification communication by class-action plaintiffs to potential class members where, as here, the trial court has been given the opportunity in advance to assure itself that there is no specific impropriety. Atari does not, for example, contend that the communication might be an improper form of solicitation of litigation or clientele (cf. Schoor,Class Actions: The Right to Solicit (1976) 16 Santa Clara L.Rev. 215, 232-233); to the contrary, Atari acknowledges that Carson and Villanueva would be "free to contact potential class members to discuss all aspects of this case." The mechanism Carson and Villanueva have selected should not be rejected on the abstract ground that there is no general provision for it in the law.

Atari's second and third points merge. Atari argues that "even if Plaintiffs are allowed to communicate in standardized form with all potential class members, the communication should not describe Plaintiffs' allegations without any reference to [Atari's] defenses nor should it identify the type of evidence Plaintiffs wish to receive." (Emphasis in original.) The notice "is an improper solicitation of evidence that should not be allowed. [p] In the present posture of the Court's Order, Plaintiffs may solicit evidence while [Atari] is precluded from obtaining evidence without prior approval of the Court and utilization of formal discovery." (Emphasis in original.)

As we shall explain, we agree that upon the record before us it would be unfair to give Carson and Villanueva free rein while limiting Atari's access to the same individuals: Absent a showing of actual or threatened abuse, both sides should be permitted to investigate the case fully. If equal access is given, Atari's complaints become less significant: Sooner or later Carson and Villanueva could legitimately approach potential class members and ask them, forthrightly, whether Atari had misled them to their detriment. So long as Atari is free to communicate its own message to the same individuals we perceive no reason why Carson and Villanueva should not be permitted to send the approved notice now.

2. Limitation on Communication

Respondent court recites in its order that communication between Carson and Villanueva and potential class members should not be limited because "[s]uch a limitation would be inconsistent with the policies underlying the class action device, and the defendant has failed to present any facts indicating that such communication would result in any abuse of class action procedure," but that communication between Atari and the same individuals "may constitute a violation of Rule 103 of the California Rules of Professional Conduct, and could present a clear danger of confusion and misrepresentation of the nature and effect of the...

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    ...“a chance to conduct reasonable investigation” in advance of the class certification determination. ( Atari, Inc. v. Superior Court (1985) 166 Cal.App.3d 867, 870, 212 Cal.Rptr. 773, italics added.) We conclude Dailey had sufficient time to conduct such a reasonable investigation. At a mini......
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