Anish v. National Securities Corporation et al
Filing
88
OPINION AND ORDER granting in part and denying in part 82 Motion for approval of Form of Notice. Signed by Judge Kenneth A. Marra on 9/2/2012. (ir)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 10-80330-CIV-MARRA
EVAN ANISH, individually, and
on behalf of all others similarly situated,
Plaintiff,
vs.
NATIONAL SECURITIES CORPORATION, a
Foreign Corporation, and DOES 1 through 10,
inclusive,
DefendantS.
____________________________________/
OPINION AND ORDER
THIS CASE is before the Court upon Plaintiff’s Motion for Approval of Form of Notice
(DE 82), filed on June 26, 2012. Defendant National Securities Corporation (“NSC”) filed
objections to Plaintiff’s form of notice (DE 85). The Court has carefully considered the motion,
Defendant’s response, and is otherwise fully advised in the premises.
I. Background
Defendant National Securities Corporation (“Defendant”), a wholly-owned subsidiary of
National Holdings Corporation, is a financial services organization that offers full retail
brokerage services to thousands of high net worth and institutional clients nationwide. DE 66-2,
September 30, 2010, 10-K Filing of National Holdings Corporation (“10-K Filing”) at p. 4).
Defendant describes its relationship with its brokers as follows:
Our brokers operate primarily as independent contractors. An independent
contractor registered representative who becomes an affiliate of a Broker Dealer
Subsidiary establishes his own office and is responsible for the payment of
expenses associated with the operation of such office, including rent, utilities,
furniture, equipment, stock quotation machines and general office supplies. The
independent contractor registered representative is entitled to retain a higher
percentage of the commissions generated by his sales than an employee registered
representative at a traditional employee-based brokerage firm.
Id.
Plaintiff Evan Anish, a former employee of Defendant, worked for Defendant as a
registered representative from approximately June 2009 through January 15, 2010. Amended
Complaint (“Am. Compl.”) ¶ 29. Plaintiff brings a collective action under the Fair Labor
Standards Act (“FLSA”), 29 U.S.C. § 216(b), on “behalf of himself and all other similarly
situated individuals employed by Defendant.” Am. Compl. p. 1. The Complaint specifically
alleges that Plaintiff, a non-exempt employee under the FLSA who regularly worked over forty
hours per week for Defendant, Am. Compl. ¶¶ 7, 15, 46, was not compensated at the statutory
rate of time and one-half for the hours in excess of forty, in violation of the FLSA. Am. Compl.
¶ 48. The Complaint also alleges that Defendant’s commission-based compensation policy,
which did not account for actual hours worked, resulted in Plaintiff receiving compensation
below the federal minimum wage, also in violation of the FLSA. Am. Compl. ¶¶ 51-54. Finally,
the Complaint alleges that Defendant is an employer engaged in interstate commerce. Am.
Compl. ¶45.
Defendant initially moved to dismiss Plaintiff’s Complaint pursuant to Federal Rule of
Civil Procedure 12(b)(6) and strike certain allegations in the Complaint pursuant to Federal Rule
of Civil Procedure 12(f). DE 13. The Court ultimately denied Defendant’s motion to dismiss,
but did give Plaintiff leave to amend his complaint to specify the location and dates associated
with his employment. DE 43. Plaintiff subsequently filed an Amended Complaint on October
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25, 2010. DE 45. Also, Plaintiff and another registered representative, Richard Darquea, have
filed Notices of Consent to Join as Party Plaintiffs. DEs 16, 41.
Plaintiff subsequently moved the Court for: (1) a conditional certification of a nationwide
collection action compromised of a class of “Registered Representatives”; (2) the issuance of
Court-authorized notice to members of the class; and (3) the production of the names and
addresses of the class members for the effective dissemination of notice. DE 66. On May 25,
2012, the Court granted Plaintiff’s Motion for Conditional Certification (DE 66). DE 75. The
Court allowed notice to and the opportunity to opt-in to the following collective class:
All registered representatives who were employed by Defendant, National
Securities Corporation, within the three (3) year period from consenting to
be included in this collective action.
Id. The Court ordered the parties to confer and attempt to agree to a proposed notice to the
collective class members, but noted that if the parties are unable to agree, Plaintiffs shall file a
motion for approval of their proposed notice within five (5) days of the deadline for the joint
proposed notice, and Defendants shall file a response to Plaintiffs’ proposed notice within five
(5) days of service. Id. The parties were unable to agree on a proposed notice, so Plaintiff filed
the motion presently before the Court.
II. Discussion
The only matter presently before the Court is the adequacy of Plaintiff’s proposed form of
notice. The parties disagree over six specific issues with regard to the form of notice, each of
which will be addressed separately.
1. Reminder Notice
Plaintiff asserts that because he agreed to a 60 day notice period (as opposed to 120 days)
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he should be allowed to send a reminder notice to potential class members ten days prior to the
expiration of the opt-in period. The only precedent for sending out a reminder notice provided
by Plaintiff is a case from the Northern District of Illinois, Demarco v. Northwestern Memorial
Healthcare, Case No. 10-CIV-397 (N.D. Ill.), DE 86, in which that court approved a reminder
notice in a wage and hour action. Motion at 82. Demarco, however, involved a situation where
the defendants consented to the reminder notice. See id., DE 85 at ¶ 3. In a separate matter
where Defendant opposed Plaintiff’s proposal to send a reminder letter to putative class
members, the Northern District of Illinois held that “a reminder is unnecessary and potentially
could be interpreted as encouragement by the Court to join the lawsuit.” Smallwood v. Illinois
Bell Telephone Co., 710 F.Supp.2d 746, 753-54 (N.D. Ill. 2010) (citing Witteman v. Wisconsin
Bell, Inc., 2010 WL 446033, *3 (W.D. Wisc. 2010)). Although not binding authority, the Court
finds the rationale articulated by the Smallwood and Witteman courts to be persuasive here.
Accordingly, Plaintiff may not send out a reminder notice 10 days prior to the expiration of the
opt-in period.
2. Inclusion of Defense Counsel’s Contact Information
Defendant argues that the contact information for defense counsel should be included in
the form of notice because “without such information, the notice is, in effect, steering potential
opt-in members to seek information about the notice only from counsel for plaintiff.” Response
at 5. Further, Defendant’s argue that including only the contact information for plaintiff’s
counsel “affords counsel for plaintiff a considerable opportunity to solicit the opt-in members to
join the collective action in violation of the Florida Rules of Professional Conduct.” Id. In
support of Defendant’s request to include the contact information for defense counsel, Defendant
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cites to two federal cases from Florida to support the proposition that trial courts may allow for
the inclusion of defense counsel’s contact information. Id. at 5 (citing Gutescu v. Carey Int’l,
Inc., 2003 WL 25586749 (S.D. Fla. 2003); Garrison v. Chuck, Carol & Co., Inc., 2007 WL
1106128 (M.D. Fla. 2007)).
The court has carefully reviewed the briefs and concludes that inclusion of defense
counsel’s contact information is not appropriate here. Although the Court acknowledges that
other federal courts in Florida have allowed the inclusion of defense counsel’s contact
information, neither of the two cases relied on by Defendant provide that the inclusion of defense
counsel’s contact information was contested. The Court is not persuaded by Defendant’s
argument that the failure to include defense counsel’s contact information will lead to
inappropriate communications between Plaintiff’s counsel and the putative class. Even if the
Court were to agrees with Defendant that the inclusion of Plaintiff counsel’s contact information
may lead to ethical violations, which it does not, the Court fails to see how the inclusion of
defense counsel’s contact information would cure that potential problem. Regardless, the Court
presumes that attorneys, acting as officers of the Court, will proceed in accordance with the
Florida Rules of Professional Conduct and therefore refuses to implement prophylactic measures
aimed at curing speculative ethical violations. To the contrary, for reasons further developed in
the next section, the Court believes that potential class members should contact Plaintiff’s
counsel with any questions regarding the matter. Accordingly, the Court concludes that the form
of notice should not include defense counsel’s contact information.
3. Plaintiff’s Right to Give Legal Advice
Next, Defendant asserts that Plaintiff’s counsel should not be permitted to provide legal
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advice. Defendant argues that “Counsel’s function should be merely to answer questions about
the notice and the process without soliciting, coercing, or misleading the potential opt-in
plaintiffs to join or not join the collective action.” Response at 5. The Court agrees.
Nonetheless, as stated above, the Court will not act under the assumption that one party will
likely engage in unethical conduct. Plaintiff’s counsel is authorized to render any legal advice
allowed by any applicable rules and regulations. The Court will not impose any further
restrictions on Plaintiff’s ability to advise future clients.
4. Disclosure of Potential Liability for Attorney’s Fees
Plaintiff proposes the following language be included in the form of notice:
The attorneys for Plaintiff are being paid on a contingency-fee basis, which means
that if there is no recovery, the attorneys will not be entitled to any attorneys’ fees.
You will not be responsible for paying any fees or costs to Plaintiff’s attorneys. If
Plaintiff prevails, the Court may order that attorneys’ fees be paid from the money
judgment entered in favor of the Plaintiff, that they be paid separately by NSC, or
some combination of the two.
(Emphasis supplied). Defendant objects to the inclusion of the underlined portion of the excerpt
because, according to Defendant, the language is misleading. Specifically, Defendant argues that
potential opt-in plaintiffs should be aware of the possibility of being held liable for taxable costs
associated with Defendant’s defense of the claim. The Court agrees. Accordingly, the Court
requires the above-referenced paragraph to be amended to include the following language:
The attorneys for Plaintiff are being paid on a contingency-fee basis, which means
that if there is no recovery, the attorneys will not be entitled to any attorneys’ fees.
You will not be responsible for paying any fees or costs to Plaintiff’s attorneys.
However, if the claims of class members are found to be without merit, the
court costs and other expenses of NSC may be assessed against the class, with
such assessment distributed equitably among class members. If Plaintiff
prevails, the Court may order that attorneys’ fees be paid from the money
judgment entered in favor of the Plaintiff, that they be paid separately by NSC, or
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some combination of the two.
Although emphasized in this Order, the added text need not be emphasized in the actual form of
notice.
5. Language on Envelope
Plaintiff proposes the following statement to be on the mailing envelope containing the
form of notice: “COURT AUTHORIZED NOTICE OF UNPAID OVERTIME LAWSUIT
AGAINST NATIONAL SECURITIES CORPORATION.” Defendant claims that such
language provides the appearance of judicial endorsement, and thus proposes the following
statement as a replacement: “NOTICE OF PENDENCY OF COLLECTION ACTION
LAWSUIT AGAINST NATIONAL SECURITIES CORPORATION.” The Court agrees
with Defendant that Plaintiff’s proposed language improperly suggests judicial endorsement.
Accordingly, the Court holds that Defendant’s proposed language shall be included on the
envelope.
6. Plaintiff Counsel’s Obligations
Finally, Defendant identifies the following deficiencies in Plaintiff’s proposed order:
•
•
•
•
•
Fails to treat the list of the names and addresses of registered
representatives as confidential
Fails to require Plaintiff’s counsel to maintain the original envelopes and
consent forms when they are received
Fails to require Plaintiff’s counsel to date stamp and number each properly
completed consent to join form when received
Fails to require Plaintiff’s counsel to send a copy of the consent to join
forms received to defense counsel once a week
Fails to require Plaintiff’s counsel to file a list of opt-in plaintiffs, as well
as the timely consent to join forms, within seven days of the end of the
notice period
The Court finds these requests to be reasonable and holds that Plaintiff shall be required to
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adhere to them. The Court notes that Defendant also urges the Court to require the proposed
form of notice to explicitly address the prohibition of Plaintiff’s counsel against violating ethical
rules. Such a requirement need not be articulated in the proposed form of notice.
III. Conclusion
For all the reasons stated above, it is ORDERED AND ADJUDGED as follows:
1. Plaintiff’s Motion for Approval of Form of Notice (DE 82) is GRANTED IN PART
AND DENIED IN PART.
2. The parties shall confer and file a joint proposed form of notice consistent with this
Order within ten (10) days of the entry of this Order.
3. Within ten (10) days of the entry of this Order, Defendant shall provide to Plaintiff’s
counsel the names, addresses, dates of employment, and telephone numbers of all current and
former “registered representatives” who held the position at any of Defendant’s locations within
the last three years.
DONE AND ORDERED in Chambers at West Palm Beach, Palm Beach County,
Florida, this 2nd day of September, 2012.
______________________________________
KENNETH A. MARRA
United States District Judge
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