Wu v. Pearson Education Inc.
MEMORANDUM AND ORDER denying 108 Motion for Preliminary Injunction and Other Relief, filed by Norbert Wu: For the reasons set forth on this Memorandum and Order, the plaintiff's motion is denied in all respects. (Signed by Magistrate Judge James C. Francis on 6/7/2011) Copies Mailed By Chambers. (ab)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
- - - - - - - - - - - - - - - - - -:
NORBERT WU, Individually and on
Behalf Of All Similarly Situated
- against :
PEARSON EDUCATION INC.,
- - - - - - - - - - - - - - - - - -:
JAMES C. FRANCIS IV
UNITED STATES MAGISTRATE JUDGE
09 Civ. 6557 (RJH) (JCF)
10 Civ. 6537 (RJH) (JCF)
These related cases are putative class actions in which a
photographer, Norbert Wu, alleges that Pearson Education Inc.
publications without obtaining the proper licenses.
Mr. Wu now
moves for an order enjoining Pearson from communicating with class
members, compelling Pearson to produce all communications it has
had with class members, and imposing sanctions on Pearson for
allegedly misrepresenting the nature of its communications with
class members. For the reasons that follow, the plaintiff’s motion
Mr. Wu contends that Pearson has “engaged in direct settlement
negotiations with members of the proposed class, including both
compromise precisely the claims that are at issue in this action.”
Preliminary Injunction and Other Relief (“Pl. Memo.”) at 2).
Further, the plaintiff asserts that Pearson has attempted to
mislead the Court by initially denying that any such communications
took place and then, when the communications were revealed, arguing
that they were not improper.
(Pl. Memo. at 1-2).
The plaintiff has proffered evidence of two instances in which
Pearson had contact with members of the putative class.
first, Carla Nolan, a Photo Permissions Editor for Pearson, sent an
e-mail to Mark Gibson requesting “an extension to a license granted
in 2006 for [Mr. Gibson’s] image of the California state flag in
the Elementary Social Studies Leveled Readers.” (E-mail from Carla
Nolan to Mark Gibson dated Dec. 3, 2010 (“Nolan 12/3/10 E-mail”),
attached as Exh. A to Exh. 9 to Declaration of Danial A. Nelson
dated March 18, 2011 (“Nelson Decl.”)). Attached to the e-mail was
a draft letter agreement stating that it “expresses our entire
understanding and replaces any and all former understandings oral
or written, relating to the subject matter hereof.”
Agreement dated Dec. 3, 2010, attached to Nolan 12/3/10 E-mail).
Also attached was a license request that identified the image at
issue and characterized the anticipated usage as “Reuse (New
(License Request, attached to Nolan 12/3/10 E-mail).
According to that document, the proposed license would authorize an
unlimited print quantity.
Audrey Gibson is the wife of Mark Gibson and the co-owner with
him of Gibson Stock Photography, the entity that licenses his work.
(Declaration of Audrey Gibson dated Feb. 10, 2011 (“Gibson Decl.”),
attached as Exh. B to Exh. 9 to Nelson Decl., ¶¶ 2-4).
receiving the e-mail from Ms. Nolan, Ms. Gibson became concerned
about the reference to an unlimited print quantity and asked for
information about Pearson’s prior use of the image. (Gibson Decl.,
Ms. Nolan responded with an e-mail indicating that she
would provide the requested information only after the Gibsons
entered into a confidentiality stipulation.
The relevant portion
of the e-mail states:
proprietary and confidential. Please confirm that any
discussions that take place between you and Pearson (or
your representatives) shall remain strictly confidential,
including information regarding manufacturing practices.
Please confirm that you agree not to publish, publicize
or allow disclosure of the discussions or information to
others in whole or in part for any other purpose. In the
event you and Pearson fail to settle any claims that
result from these discussions, please know that any
settlement-related discussions (whether written or oral)
shall be inadmissible for any legal proceedings.
(E-mail from Carla Nolan to Audrey Gibson dated Dec. 8, 2010,
attached as Exh. C to Exh. 9 to Nelson Decl.).
When neither Ms.
Gibson nor her husband responded, Julie Orr, Manager of Image
Permissions for the Curriculum Group at Pearson, called and left a
telephone message indicating that Pearson was operating under a
deadline and would replace Mr. Gibson’s photo with a different
image if it did not receive an executed license agreement promptly.
(Gibson Decl., ¶ 10; Declaration of Julie Orr dated Feb. 18, 2011
(“Orr Decl.”), attached as Exh. A to Exh. 10 to Nelson Decl., ¶¶ 1,
13). According to Ms. Gibson, Ms. Orr further stated that “Pearson
‘certainly wants to settle and make good on what’s been done in the
past as far as this image is concerned.’”
(Gibson Decl., ¶ 10).
When the Gibsons did not execute a license, Mr. Gibson’s photo was
removed from the publication.
(Orr Decl., ¶ 14).
Previously, on August 27, 2010, the Gibsons had received an email from a different permissions editor at Pearson requesting a
license to use one of Mr. Gibson’s images in a new edition of
Pearson’s “Sidewalk Reader.”
(Gibson Decl., ¶¶ 11-12; Orr Decl.,
At that time as well, Ms. Gibson requested information
stipulation of confidentiality.
Decl., ¶ 7).
(Gibson Decl., ¶¶ 12-14; Orr
When the Gibsons did not agree to confidentiality,
Pearson did not provide the requested information, and when the
Gibsons did not respond to the request for a new license, Pearson
omitted Mr. Gibson’s photo from the publication. (Orr Decl., ¶ 8).
The second instance of communications with a putative class
member involved the photographer Carl Schneider.
apparently initiated contact with Pearson, demanding that it cease
and desist from using his photographs without permission and
seeking payment for a retroactive license that would cover the
allegedly unauthorized use.
(E-mail from Kieran Doyle to Carl
Schneider dated Dec. 30, 2010 (“Doyle 12/30/10 E-mail”), attached
as Exh. E to Exh. 9 to Nelson Decl.; E-mail from Carl Schneider to
Kieran Doyle dated Dec. 30, 2010 at 8:21 p.m. (“Schneider 1st
12/30/10 E-mail”), attached as part of Exh. B to Exh. 10 to Nelson
Decl.; E-mail from Carl Schneider to Kieran Doyle dated Dec. 30,
2010 at 9:52 p.m. (“Schneider 2nd 12/30/10 E-mail”), attached as
part of Exh. B to Exh. 10 to Nelson Decl.).
Initially, counsel for
Pearson resisted Mr. Schneider, indicating that because of the
pendency of this case, Pearson could not negotiate with him until
a class certification determination had been made unless he was
represented by counsel.
(Doyle 12/30/10 E-mail).
Mr. Schneider, however, would not be put off.
Pearson’s suggestion that he retain counsel (Schneider 1st 12/30/10
E-mail) and stated:
Since Pearson is refusing to comply with my cease and
desist demands, I will make another demand. I demand
that Pearson immediately hold all revenues and profits
from the sale of all textbooks and other publications
that contain my photographs (without my permission) in a
trust bank account for my benefit, until this is
(Schneider 2nd 12/30/10 E-mail).
After Pearson’s attorney again
advised Mr. Schneider that it would be necessary for him to retain
counsel before an agreement could be negotiated, Mr. Schneider
responded that “you need to make sure that your client is aware
that Pearson will be paying for all of my legal fees and expenses.”
(E-mail from Carl Schneider to Kieran Doyle dated Jan. 5, 2011
(“Schneider 1/5/11 E-mail”), attached as part of Exh. B to Exh. 10
to Nelson Decl. (emphasis omitted)).
Mr. Schneider went on to
threaten legal action, arguing that “fighting my claims in federal
court will cost Pearson many times what it would cost for a simple
Pearson’s counsel finally agreed to negotiate in light of Mr.
requiring him to retain a lawyer and in light of the fact that any
retroactive license would be granted to Mr. Schneider’s agency,
Ultimate Group, LLC, rather than to him individually. (E-mail from
Kieran Doyle to Carl Schneider dated Jan. 11, 2011 (“Doyle 1/11/11
E-mail”), attached as part of Exh. B to Exh. 10 to Nelson Decl.).
However, Pearson conditioned negotiations with Mr. Schneider on his
agreeing that Pearson was making no admission of wrongdoing and
that the discussions would remain confidential.
(Doyle 1/11/11 Eof
indicated he would “not agree to confidentiality prior to reaching
(E-mail from Carl Schneider to Kieran Doyle dated
Jan. 11, 2011, attached as part of Exh. B to Exh. 10 to Nelson
Pearson’s attorney then reiterated a willingness to
negotiate but repeated that discussions would have to be predicated
on a confidentiality agreement and no admission of wrongdoing. (Email from Kieran Doyle to Carl Schneider dated Jan. 13, 2011,
attached as part of Exh. B to Exh. 10 to Nelson Decl.).
Schneider replied again that he would not agree to confidentiality
and gave Pearson a deadline for resolving the matter, failing which
he promised to “retain legal council [sic] and  instruct them
to immediately move forward with our legal action.”
Carl Schneider to Kieran Doyle dated Jan. 13, 2011, attached as
part of Exh. B to Exh. 10 to Nelson Decl.).
The following day, Mr.
Schneider again communicated with Pearson’s counsel, accusing him
of violating his fiduciary duty to his client and suggesting that
Pearson’s conduct was grounds for criminal prosecution.
from Carl Schneider to Kieran Doyle dated Jan. 14, 2011, attached
as part of Exh. B to Exh. 10 to Nelson Decl.).
apparently no further communications between Mr. Schneider and
In addition to asserting that Pearson has engaged in improper
communications with class members, Mr. Wu accuses Pearson’s counsel
On October 11, 2010, Mr. Wu’s attorney wrote to
counsel for Pearson expressing concern that Pearson “has been
engaged in extensive negotiations with several putative class
members in both Wu I and Wu II in an effort to compromise claims
which are a part of those actions.”
(Letter of Dan Nelson dated
Oct. 11, 2010, attached as Exh. 1 to Nelson Decl.).
Pearson’s counsel stated that “[i]t is our understanding that
Pearson has gone out of its way in discussions with photographers
about ongoing business not to take steps that would have the effect
information about the communications to which Mr. Wu’s attorney
(Letter of David W. Marston Jr. dated Oct. 11, 2010,
attached as Exh. 2 to Nelson Decl.).
Mr. Wu’s counsel declined to
“discuss the matter with [his] client again to set the record
(Letter of Dan Nelson dated Oct. 11, 2010, attached as
Exh. 3 to Nelson Decl.).
Apparently having received no further
response, Mr. Wu’s counsel wrote again two days later, indicating
that if he did not receive further information about Pearson’s
communications with class members, he would seek relief from the
Court. (Letter of Dan Nelson dated Oct. 13, 2010, attached as Exh.
4 to Nelson Decl.).
Thereafter, counsel for Pearson stated:
We have spoken with our client and are not aware of any
post-complaint communications with photographers not
otherwise represented by counsel in which Pearson has
attempted to secure any kind of release for the claims
asserted in the litigation.
Your unwillingness to
provide any specifics concerning your allegation makes it
difficult to assess the issue you are raising, to probe
more deeply, or to see if there is any kind of
(Letter of David W. Marston Jr. dated Oct. 18, 2010, attached as
Exh. 5 to Nelson Decl.).
Mr. Wu’s attorney was not mollified.
responded with a letter asserting that Pearson’s claim not to have
engaged in “‘any post-complaint communications with photographers
not otherwise represented by counsel’” conflicted with its prior
representations to the Court that it had had no such communications
(Letter of Dan Nelson dated Oct. 19, 2010 (“Nelson
10/19/10 Letter”), attached as Exh. 6 to Nelson Decl., at 1).
distinguishing between photographers and photographic agencies,
which also own rights to some of the images utilized by Pearson.
(Nelson 10/19/10 Letter at 2).
Pearson’s attorney responded by
denying that there was any inconsistency between its ongoing
business discussions with photographers and its representation that
(Letter of David W. Marston Jr. dated Oct. 25, 2010
(“Marston 10/25/10 Letter”), attached as Exh. 7 to Nelson Decl., at
represented by separate counsel and that the classes as defined by
(Marston 10/25/10 Letter at 1-2).
Finally, in a letter
to the Court relating to a discovery dispute, defendant’s counsel
reiterated that “[s]ince the outset of this litigation, Pearson has
photographers to avoid either discussion of, or inclusion of,
anything that could operate as a release of claims alleged in the
(Letter of David W. Marston Jr. dated Nov. 17, 2010,
attached as Exh. 8 to Nelson Decl., at 3 n.1).
plaintiff’s counsel raised his concerns with the Court by letter
(Letter of Dan Nelson dated Feb. 11, 2011, attached as Exh. 9 to
Nelson Decl.), and then filed the instant motion.
A. Nature of the Motion
Although the plaintiff initially couched his application as a
motion for a preliminary injunction (Pl. Memo. at 1), it is more
accurately characterized as a request for an order under Rule 23 of
the Federal Rules of Civil Procedure, which governs litigation of
Pursuant to that Rule, “the court may issue orders
that: . . . (C) impose conditions on the representative parties or
Fed. R. Civ. P. 23(d)(1); see Gulf Oil Co. v. Bernard,
452 U.S. 89, 99 (1981).
Accordingly, I may properly address the
plaintiff’s motion by way of memorandum and order pursuant to 28
U.S.C. § 636(b)(1)(A).
See Castaneda v. Burger King Corp., No. C
(magistrate judge deciding dispute regarding defendants’ contacts
with putative class action plaintiffs under referral for pretrial
matters); Rankin v. Board of Education, 174 F.R.D. 695, 696 (D.
Kan. 1997) (same).
B. The Legal Standard
“[A] district court has both the duty and the broad authority
to exercise control over a class action and to enter appropriate
orders governing the conduct of counsel and parties.”
The plaintiff makes this distinction in his reply papers
(Reply Memorandum of Law in Support of Plaintiff’s Motion for a
Preliminary Injunction and Other Relief (“Pl. Reply Memo.”) at 1-2
& n. 1) and, indeed, argues that Rule 23 provides the proper
framework for the analysis. (Pl. Reply Memo. at 2-3).
452 U.S. at 100. In Gulf Oil, the Supreme Court directly addressed
[A]n order limiting communications between parties and
potential class members should be based on a clear record
and specific findings that reflect a weighing of the need
for a limitation and the potential interference with the
rights of the parties. Only such a determination can
ensure that the court is furthering, rather than
hindering, the policies embodied in the Federal Rules of
Civil Procedure, especially Rule 23. In addition, such
a weighing -- identifying the potential abuses being
addressed -- should result in a carefully drawn order
that limits speech as little as possible, consistent with
the right of the parties under the circumstances.
Id. at 101-02 (footnotes omitted); accord In re School Asbestos
Litigation, 842 F.2d 671, 679-80 (3d Cir. 1988); Rossini v. Ogilvy
& Mather, Inc., 798 F.2d 590, 601-02 (2d Cir. 1986); Austen v.
Catterton Partners V, LP,
F. Supp. 2d
, No. 3:09cv1257,
2011 WL 1374035, at *6 (D. Conn. April 6, 2011); Ralph Oldsmobile
Inc. v. General Motors Corp., No. 99 Civ. 4567, 2001 WL 1035132, at
*2 (S.D.N.Y. Sept. 7, 2001).
As is implicit in the Supreme Court’s
reference to the “conduct of counsel and parties,” Gulf Oil, 452
U.S. at 100, an order may limit communications by plaintiffs,
defendants, or both.
See Austen, 2011 WL 1374035, at *7 (“[T]he
principles set forth in Gulf Oil and other cases regarding a
district court’s authority to impose restrictions on communications
with putative class members apply to restrictions on plaintiffs’
Oldsmobile, 2001 WL 1035132, at *2 (“Although Gulf Oil concerned
potential class members, its rationale has been found to apply to
communications between defendants and potential class members as
well.”). And an order may be issued before a class is certified as
intervention will differ.
See Castaneda, 2009 WL 2382688, at *5;
Ralph Oldsmobile, 2001 WL 1035132, at *2 (“[A] court’s power to
members, apply [sic] even before a class is certified.”).
In general, communications that are litigation-neutral -- that
do not alter the legal relationship between the defendants and
members of a putative class -- are not subject to restriction.
Indeed, defendants can even negotiate settlement of the claims of
Watchers [of Philadelphia, Inc. v. Weight Watchers International,
Inc., 455 F.2d 770 (2d Cir. 1972),] establishes that, at least
prior to class certification, defendants do not violate Rule 23
by negotiating settlements with potential members of a class.”);
accord Austen, 2011 WL 1374035, at *5.
However, courts have a
responsibility to restrict communications, including offers of
settlement, that are potentially coercive or misleading.
Oil, 42 U.S. at 104 (“We recognize the possibility of abuses in
class-action litigation, and agree . . . that such abuses may
implicate communications with potential class members.”); In re
communications to class members concerning the litigation pose a
serious threat to the fairness of the litigation process, the
In some circumstances where there is an ongoing and
unequal business or employment relationship between the parties,
communications may be deemed inherently coercive.
See In re
Currency Conversion Fee Antitrust Litigation, 361 F. Supp. 2d 237,
253 (S.D.N.Y. 2005)
(holding arbitration clauses proffered by
defendant credit card companies during litigation coercive and
unenforceable where “the potential class consisted of cardholders
Oldsmobile, 2001 WL 1035132, at *4 (finding defendant’s request for
releases from putative class members potentially coercive where
“potential class members depend upon the defendant for information,
supplies, and credit” and where “[t]heir continued success and,
indeed, existence may depend upon [defendant’s] good will”).
Furthermore, a communication may be coercive where the defendant
interferes with participation by potential class members in the
lawsuit or misleads them by failing to reveal how some proposed
transaction might affect their rights in the litigation. See Goody
v. Jefferson County, No. CV-09-437, 2010 WL 3834025, at *3 (D.
defendant’s communications with potential class members caused
confusion about right to join suit); In re Currency Conversion Fee
Antitrust Litigation, 361 F. Supp. 2d at 254 (“[D]efendants’
unsupervised communications were improper because they sought to
eliminate putative class members’ rights in this litigation.”).
C. Application to the Record
The plaintiff’s motion in this case is premised on the belief
contacts with putative class members.”
(Tr. at 3-4).2
counsel’s unsworn allegations of misconduct cannot support an order
restricting communications with potential class members.
Oil, 452 U.S. at 104 n.18.
And the record here falls well short
of substantiating the plaintiff’s charges.
First, the plaintiff presented direct evidence relating to
With respect to Mr. Schneider, Pearson’s
counsel made every effort to avoid any impropriety, stating that it
“Tr.” refers to the transcript of the hearing held on May 9,
could not negotiate with him about his claims to compensation under
existing licenses prior to a class certification determination
unless he was represented by counsel.
As Mr. Schneider became
increasingly aggressive in his demands for a settlement, however,
Pearson ultimately agreed to negotiate and attributed its aboutface to the realization that the photos at issue were actually
owned by Mr. Schneider’s agency and not Mr. Schneider personally.
This distinction was cosmetic: the plaintiff had long purported to
represent not only photographers, but also other entities with
copyrights in the images at issue.
(Complaint in 10 Civ. 6537, ¶
60; Amended Complaint in 09 Civ. 6557, ¶ 194).
Pearson’s willingness to negotiate what the plaintiff calls a
“retroactive license” with Mr. Schneider that would compromise his
claims in this action was a response to Mr. Schneider’s unceasing
demands; it was not initiated by Pearson.
And it was unique:
will be discussed further below, there is no credible evidence of
other attempts by Pearson to engage in such negotiations.
The plaintiff also presented the affidavit of Audrey Gibson,
the wife of the photographer Mark Gibson. She contended that Julie
Orr, on behalf of Pearson, expressed a desire to settle with
respect to the past use of Mr. Gibson’s images.
making any such statement.
Ms. Orr denies
Given this dispute of fact, it is
remarkable that the plaintiff, who has the burden of proof, failed
to proffer Ms. Gibson as a witness at the hearing.
In any event,
Ms. Orr’s affidavit is the more credible, as it is more consistent
with the resistance Pearson exhibited when confronted with Mr.
Schneider’s demands to negotiate.
initiating negotiations with many copyright holders. This is true,
but only to the extent that Pearson sought to negotiate licenses on
a going-forward basis.
(Tr. at 23).
Were there any ambiguity on
this point, Pearson represented to the Court that the licenses for
additional uses of photographs would “not deprive the putative
class member of potential relief for overruns that occurred while
the prior license agreement was in effect.”
Tr. at 48-49).
(Tr. at 23; see also
A new license entered into between Pearson and any
putative class members does not threaten the class members’ rights
in the litigation and therefore does not provide a basis for
plaintiff has not demonstrated the potential for abuse that would
potential class. Since there is no evidence of improper conduct by
Pearson, the defendant’s prior communications with putative class
members need not be disclosed.
counsel did not equivocate in their representations to the Court.
They did argue in the alternat
, first contending that Pearson
had not negotiated with potential class members and later maintaing
that any such negotiations would not be improper.
precluded from presenting alternative
Parties are not
and though it
might have been better had Pearson made it clear from the outset
that it was negotiating prospective but not retroactive licenses
with certain photographers, it never misled the Court.
For the reasons set forth above,
the plaintiff's motion is
denied in all respects.
JAMES C. FRANCIS IV
UNITED STATES MAGISTRATE JUDGE
Dated: New York, New York
June 7, 2011
Copies mailed this date:
Danial A. Nelson, Esq.
Kevin P. McCulloch, Esq.
Nelson & McCulloch
100 Park Avenue
New York, New York 10017
David W. Marston, Jr., Esq.
Ezra D. Church, Esq.
Robert A. Particelli, III, Esq.
J. Gordon Cooney, Jr., Esq.
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103
Shana R. Cappell, Esq.
Namita E. Mani, Esq.
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
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