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Leidel v. Coinbase, Inc.

United States District Court, S.D. Florida

June 24, 2019

BRANDON LEIDEL, individually and on behalf of All Others Similarly Situated, Plaintiff,
COINBASE, INC., a Delaware corporation d/b/a Global Digital Asset Exchange GDAX, Defendant.



         THIS CAUSE is before the Court upon Plaintiff, Brandon Leidel's ("Plaintiff) Motion for Protective Order to Prohibit Defendant from Communicating with or Seeking Discovery from Absent Class Members ("Motion") [DE 79]. This matter was referred to the undersigned by United States District Judge Kenneth A. Marra. See DE 26. Defendant, Coinbase, Inc. ("Defendant"), filed a response [DE 80], Plaintiff filed a reply [DE 82], and the parties filed a Joint Notice [DE 85] as required by the Court. The Court held a hearing on the Motion on June 14, 2019. The Court also provided the parties with an opportunity to provide supplemental authority after the hearing. Defendant made no submission. Plaintiff filed a Notice of Filing Supplemental Authority [DE 94], which contained quotations from or summaries of five different cases. The Court has carefully reviewed the entire docket in this case, and the matter is now ripe for review.

         I. BACKGROUND

         In his Motion, Plaintiff argues that Federal Rule of Civil Procedure 23 provides the Court with broad authority to regulate communications between defendants and class members prior to class certification. [DE 79, p. 3');">p. 3]. Plaintiff specifically seeks a protective order prohibiting Defendant from communicating with absent class members without first conferring with Plaintiff about the content of such communications, and, if the parties cannot agree on such communications, seeking leave of the Court to initiate such communications upon approval of the proposed communications. Id. at p. 6.

         In response, Defendant cites Gulf Oil v. Bernard, 452 U.S. 89 (1981), and asserts that the law on pre-certification contact with members of the putative class is that "when there is evidence in the record that would support a finding of actual or threatened abusive or misleading communication by any party...the Court may prohibit or impose conditions on future contact." [DE 80, p. 3');">p. 3]. According to Defendant, Plaintiff has not made the requisite evidentiary showing. Id. Defendant asserts that there is no basis to grant Plaintiffs requests that Defendant be required to produce copies of all communications to and from absent class members or that Defendant be prohibited from using any information it has or will obtain from absent class members. Id. at p. 6.

         Plaintiff points out that Defendant waited until the end of the discovery period to request discovery from Plaintiff about the identity of absent class members, "which effectively precludes Plaintiff from then seeking any communications sent by Defendant to class members and remedying any potential harm that might occur." [DE 82, p. 2');">p. 2]. According to Plaintiff, he could not have requested through written discovery information about Defendant's prior or intended future communications with the absent class since the deadline for propounding written discovery elapsed on April 19, 2019. Id. at p. 3');">p. 3. Plaintiff contends that, because it cannot seek additional discovery, and because Defendant will not agree to share its communications with absent class members, Plaintiff cannot determine if Defendant has or will engage in a misleading or otherwise inappropriate communication with absent class members. Id. Plaintiff maintains that discovery upon an absent class is only authorized in exceptional circumstances. Id. at p. 4. Finally, Plaintiff contends that the Court should "reject Defendant's suggestion that an order from this Court prohibiting or limiting Defendant's communication with absent class members should apply equally to Plaintiff." Id. at p. 5.

         In the parties' Joint Notice, Defendant disclosed that it has had contact with four putative class members. [DE 85, p. 2');">p. 2]. According to Defendant, those four individuals consist of three former Cryptsy employees and one former employee of Defendant, and Defendant only communicated with them regarding their depositions. Id. Additionally, in the Joint Notice, Defendant agreed not to use information produced by Plaintiff to communicate with or seek discovery from putative class members. Id. at p. 1.


         The Supreme Court has considered protective orders in the context of class actions and has ruled as follows:

An 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 rights of the parties under the circumstances.

Gulf Oil Co. v. Bernard, 452 U.S. 89, 101-02 (1981). The Supreme Court further explained

But the mere possibility of abuses does not justify routine adoption of a communications ban that interferes with the formation of a class or the prosecution of a class action in accordance with the Rules. There certainly is no justification for adopting verbatim the form of order recommended by the Manual for Complex Litigation, in the absence of a clear record and specific findings of need. Other, less burdensome remedies may be appropriate. Indeed, in many cases there will be no problem requiring remedies at all.

Gulf Oil Co., 452 at 104.

Jones v. Jeld-Wen, Inc., 250 F.R.D. 554 (S.D. Fla. 2008), a case from the Southern District of Florida, is particularly instructive in applying the above law. In Jones, the plaintiff sought court supervision of communications between the defendant and the putative class members. Id. at 558. The court explained that "a two-pronged test must be met before a court may restrict communication. First, a communication must have occurred or be threatened to occur. Next, the form of communication at issue must be abusive in that 'it threatens the proper functioning of the litigation.'" Id. at 561 ...

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