Wage Law

In the coming months, we'll be paying close attention to how the courts regulate communications with putative class members, after the recent ruling in Pioneer Electronics (USA), Inc. v. Superior Court (2005) 128 Cal.App.4th 246.

Pioneer Electronics dealt with the requisite notice and opportunity to assert a consumer's privacy right accompanying a precertification communication to members of a putative class in a consumer case. The court of appeal held that a trial court must take reasonable steps to assure that the consumer receives actual notice of his or her right to grant or withhold consent of the release of personal information, and that consent for such release be by the consumer's positive act, rather than by mere failure to respond.

Plaintiff Olmstead bought a defective DVD player from Pioneer Electronics (USA), Inc., claiming that some DVDs would not play on the machine. (Pioneer responds by claiming that all but about 60 of the 60,000 available titles play fine.) He filed suit on behalf of all other consumers who bought similarly defective players. In discovery, he demanded documents relating to Pioneer's complaints from consumers, including identifying information about those consumers. Pioneer objected, claiming that its customers had a right of privacy that allowed them to be left alone by the plaintiff and his attorneys, pursuant to the 1974 amendment to the California Constitution.

The issue was whether consumers who disclosed such information have the right to decide whether personal information, such as names, addresses, telephone numbers and e-mail addresses, should be released to attorneys in such lawsuits, and, if so, how their consent would be confirmed. The trial court made the privacy notice an "opt out" procedure. In other words, consumers who got the notice and wanted to be left alone would be required, by sending in an enclosed postcard, to notify the administrator that they wanted their names and information kept confidential. At the March 2004, hearing, the court stated that "the names are probably protected unless there's a Colonial Life [Colonial Life & Accident Ins. Co. v. Superior Court (1982) 31 Cal.3d 785] letter that goes out." The court then authorized the following letter to be sent:

Dear Consumer:  In August, 2001, litigation was filed in California in which the plaintiff alleges that Pioneer DVD Players are not compatible with the DVD Video Standard and as such, are incapable of playing all DVD discs. As part of the litigation, Pioneer was required to provide the plaintiff's counsel with a copy of the record that it made of information or complaints you provided some time ago when you contacted Pioneer's customer service department about your Pioneer DVD Player. Before doing so, however, Pioneer removed all identifying information regarding your name, address and telephone number. The court has now directed that Pioneer send you this notice so that you can decide whether to authorize Pioneer to disclose your personal information to the plaintiff's counsel so they may contact you. " 'If you agree to the disclosure of this information to the plaintiff's counsel, please check the box on the enclosed form and return it to the address shown on the form. Not responding to this letter will be treated as declining contact from Plaintiff's counsel.

Through a strange set of procedural events, the court ended up changing the text of the letter so that it stated that identifying information for the purpose of contact would be released unless the addressed consumer objected to the release.

Pioneer argued that the default should be to keep the information private unless the consumer actively responded with consent for such a disclosure. After aksing for and obtaining a stay of the order pending appeal, Pioneer sought appellate review. The court of appeal agreed with Pioneer, holding that consumers potentially affected by California consumer class actions must provide explicit consent before companies can disclose their names, addresses, telephone numbers or other personal information to class-action attorneys.

The court of appeal adopted the reasoning that consumers had provided their personal information to Pioneer for the specific and limited purpose of complaining about a defective product, which could not be construed as a waiver of the constitutional right of privacy. The trial court, therefore, was required to fashion a notification plan that provides for "a specific, signed, positive response" for any consent to release personal information.

The court noted that, under the Privacy Amendment to the California Constitution, "the definition of the right of privacy is simply the 'right to be left alone.'" The court went on to mention that "a person's right of privacy as to his or her home includes the right to allow or prevent disclosure of the address of that home for the purpose of contact by mail." Strangely, although the court didn't consider the notice asking for permission to release their names to be an imposition, the court apparently considered a letter from the attorneys representing their interests in the lawsuit to be an impermissible imposition.

Of great interest to wage and hour class action attorneys will be the courts' collective application of this standard to employment class actions. Pioneer Electronics was a putative class action under the Consumers Legal Remedies Act (Civil Code § 1750 et seq.) Under the Code of Civil Procedures "Notice to Consumer" statutes, employees are considered "consumers."

However, if the court's holding is broadly applied, it could end the long standing rule that a party is entitled to learn the identities of witnesses with relevant information about a case. At a minimum, the names and identities of people who could have knowledge about the class representatives' claims should be outside this ruling, but the dicta was so strong, it could arguably justify a witness refusing to obey a subpoena, claiming that it violates his constitutional right to be left alone. I doubt that anywhere near so broad a view was intended.

It will be interesting to see how broadly trial courts apply Pioneer to wage and hour cases.