Heldt v. Tata Consultancy Services, LTD

Northern District of California, cand-4:2015-cv-01696

ORDER by Judge Yvonne Gonzalez Rogers denying {{371}} Motion to Invalidate Release Agreements.

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 CHRISTOPHER SLAIGHT, ET AL., CASE NO. 15-cv-01696-YGR 8 Plaintiffs, ORDER DENYING MOTION TO INVALIDATE 9 vs. RELEASE AGREEMENTS 10 TATA CONSULTANCY SERVICES, LTD, Re: Dkt. No. 371 11 Defendant. 12 Northern District of California United States District Court 13 Plaintiffs Christopher Slaight, Seyed Amir Masoudi, and Nobel Mandili1 bring this class 14 action against defendant Tata Consultancy Services, Ltd. ("TCS") for discrimination in 15 employment practices. (Dkt. No. 246, Fourth Amended Complaint.) Plaintiffs bring causes of 16 action for disparate treatment under Title VII of the Civil Rights Act of 1964, 42 U.S.C. 2000e, et 17 seq., and the Civil Rights Act of 1866, 42 U.S.C. 1981. (Id. ¶ 5.) Plaintiffs allege that TCS 18 discriminated against them in their employment and/or termination practices based on race and 19 national origin. (Id. ¶¶ 1-5.) Specifically, plaintiffs claim that TCS maintains a pattern and 20 practice of intentional discrimination in its United States workforce whereby TCS treats persons 21 who are South Asian2 or of Indian national origin3 more favorably than those who are not South 22 Asian or of Indian national origin. (Id.) 23 1 24 On July 23, 2018, this Court granted the TCS's motion to bifurcate from the class claims of plaintiff Brian Buchanan. (Dkt. No. 412.) Accordingly, the Court notes that the caption of this 25 order has been revised to reflect the class action only. 2 26 Plaintiffs define "South Asian race" as referring to individuals who trace their ancestry to the Indian sub-continent. (4AC ¶ 1, n. 3.) 27 3 Plaintiffs define "Indian national origin" as referring to individuals born in India, or 28 whose ancestors came from India. (Id.) 1 Now before the Court is plaintiffs' motion to invalidate release agreements between TCS 2 and class members. (Dkt. Nos. 371, 442 ("Motion").)4 Having carefully reviewed the papers and 3 supplemental information submitted, as well as oral argument at the July 17, 2018 hearing, and for 4 the reasons set forth more fully below, the Court DENIES plaintiffs' motion to invalidate the 5 release agreements. 6 I. BACKGROUND 7 The background giving rise to this action is well-known and the Court will not repeat it 8 here. 9 Relevant to the instant motion, Steven Heldt, a terminated TCS employee, filed an initial 10 EEOC charge on October 30, 2014 seeking to advance discrimination claims against TCS "on his 11 own behalf, and on behalf of a class of individuals similarly affected by Tata's discriminatory 12 practices." (See Dkt. No. 25-1.) Plaintiffs filed their initial class action complaint on April 14, Northern District of California United States District Court 13 2015. (Dkt. No. 1.) On December 27, 2017, the Court certified the following class: All individuals who are not of South Asian race or Indian national origin who 14 were employed by [TCS] in the United States, were subject to a policy or practice 15 of benching and allocation, were place in an unallocated status and were terminated between April 14, 2011 and December 27, 2017 and who are not 16 bound by an arbitration agreement with TCS. 17 (Dkt. No. 244 ("Cert. Order")); see also Dkt. No. 412 at 16.) 18 For the first time, in its answer to the fourth amended complaint filed on January 22, 2018, 19 TCS asserted "release/arbitration" as an affirmative defense, averring that "[p]laintiffs' claims are 20 barred to the extent any plaintiff has released any claim or has agreed to arbitration of such 21 claims." (Dkt. No. 252 at 12.) On May 15, 2018, the deadline for completion of expert and non- 22 expert discovery, TCS produced 346 separation and release agreements between TCS and former 23 TCS employees, 246 of which plaintiffs estimate involve class members. (See Dkt. No. 258; 24 Motion at 1.) TCS later clarified that for the total group of involuntarily terminated local 25 employees, it had located 344 release agreements and for the group of those employees who were 26 4 27 Plaintiffs' initially filed a redacted version of their motion at Docket Number 371. Following and in compliance with the Court's order on parties sealing motions at Docket Number 28 414, plaintiffs re-filed the instant motion at Docket Number 442. All references to the Motion herein will refer to the unredacted version of the document filed at Docket Number 442. 2 1 terminated due to being unallocated, TCS had located 283 release agreements. (Dkt. No. 424 ¶ 6.) 2 On July 31, 2018, the Court determined that although it "was not inclined to order as 3 expansive a corrective notice as plaintiffs have requested. . . . [A] corrective notice is still 4 required" as was additional discovery regarding the circumstances giving rise to the releases. 5 (Dkt. No. 430.) On August 9, 2018, the Court approved the parties' proposed corrective notice 6 and ordered the parties to distribute the notice no later than August 17, 2018. (Dkt. No. 469.) 7 Therein, the Court advised potential members of the class who had signed release agreements with 8 TCS of their status as a potential class member in the instant action and their ability to participate 9 in the lawsuit despite the fact that they had signed a release agreement. (Id., Ex. A at 4.) The 10 corrective notice also noted that the Court was "in the process of deciding how to address the 11 payment you have already received." (Id.) 12 On August 10, 2018, and in response to the Court's July 31, 2018 order, TCS made Northern District of California United States District Court 13 available for deposition Jeevak Sharma, who served as TCS's human resources manager for 14 employee retention and employee welfare, which included employee separations and employee 15 records. (Dkt. No. 488-2, Deposition Transcript for Jeevak Sharma, ("Sharma Depo.") at 8.) 16 During his deposition, Sharma testified that the determination as to which terminated employees 17 would receive an offer for a release agreement and severance payment is based on a case-by-case 18 evaluation. (Id. at 16.) Sharma provided examples of specific circumstances leading to a 19 severance offer, including an employee's return from a long leave, medical issues, tenure at the 20 company, or independent grievances. (Id. at 16-17.) Sharma also stated that all severance 21 payments are calculated based on the employee's wages for a particular time period and noted that 22 he was not aware of any instances in which TCS calculated a severance payment based on the 23 value of a legal claim that the employee may have against the company. (Id. at 36-37.) 24 On August 24, 2018, and in response to the Court's August 17, 2018 order, TCS filed a 25 chart detailing "each separation agreement signed by a class member." (Dkt. No. 488 at ECF 12.)5 26 That list contains the names of approximately 370 former employees. (See Dkt. No. 488, Ex. A 27 5 28 The Court uses ECF pagination because the last two pages of the document at Docket Number 488 does not have any page numbers of its own. 3 1 ("List of Class Releases").) The earliest "date of agreement" for the release agreements 2 referenced there in is January 29, 2009. (See id. at ECF 2.) Of the 370 agreements listed, 30 pre- 3 date the filing of the initial complaint in this lawsuit of which only 19 pre-date the filing of Heldt's 4 EEOC charge. (See id.) Only 6 of the agreements post-date the Court's December 27, 2017 5 certification order. (Id. at ECF 11.) 6 II. DISCUSSION 7 Before a class is certified in a class action, counsel for both plaintiffs and defendants may 8 communicate with the putative class, ex parte, about the lawsuit. Gulf Oil Co. v. Bernard, 452 9 U.S. 89, 100 (1981). "Because of the potential for abuse, a district court has both the duty and the 10 broad authority to exercise control over a class action and to enter appropriate orders governing 11 the conduct of counsel and parties." Id. at 100. "The prophylactic power accorded to the court 12 presiding over a putative class action under Rule 23(d) is broad; the purpose of Rule 23(d)'s Northern District of California United States District Court 13 conferral of authority is not only to protect class members in particular but to safeguard generally 14 the administering of justice and the integrity of the class certification process." Retiree Support 15 Grp. of Contra Costa Cty. v. Contra Costa Cty., No. 12-CV-00944-JST, 2016 WL 4080294, at *5 16 (N.D. Cal. July 29, 2016) (citing O'Connor v. Uber Technologies, Inc., No. C-13-3826 EMC, 2014 17 WL 1760314, at *3 (N.D. Cal. May 2, 2014)). 18 In the context of class action litigation, whether pre- or post-certification, unsupervised 19 communications between an employer and its workers present an acute risk of coercion and abuse. 20 See Guifu Li, 270 FRD at 517; Wang v. Chinese Daily News, Inc., 236 F.R.D. 485, 490 (C.D. Cal. 21 2006). "Courts applying the Gulf Oil standard have found that ex parte communications soliciting 22 opt-outs, or even simply discouraging participation in a case, undermine the purposes of Rule 23 23 and require curative action by the court." Guifu Li v. A Perfect Day Franchise, Inc., 270 F.R.D. 24 509, 517 (N.D. Cal. 2010). In this regard, the Court already determined that a corrective notice 25 was necessary to address the inadequacy of the release agreements at issue and ordered the 26 distribution of such a notice. (See Dkt. Nos. 430, 469.) 27 The issue remaining is "what, if anything, should occur with respect to the payments 28 already made and received." (Dkt. No. 430.) Here, the inquiry centers on TCS's conduct as 4 1 compared to the rights of the class members. The critical inflection point in this interaction is the 2 Court's December 27, 2017 certification order, which substantially clarified and expanded the 3 scope of this litigation. (Cert. Order at 35 (certifying a class of an estimated 896 to 1,116 4 members).) The timing and distribution of the releases at issue does not reflect a sudden or 5 significant increase following certification. (See List of Class Releases at ECF 11.) Rather, only 5 6 of the 370 agreements were executed on or after December 27, 2017. (Id.) Moreover, the fact that 7 "[a] small number of individuals. . . brought up this lawsuit in an effort to negotiate higher 8 severance pay, and TCS rejected those efforts," supports the conclusion that prior to the December 9 27, 2017 certification order, TCS did not view the instant action as a genuine issue and that the 10 payments made do not represent an effort to "discourage participation in the case." See Guifu Li, 11 270 F.R.D. at 517. Nor does the Court find evidence in the record showing an affirmative attempt 12 to circumvent the protections of a Rule 23 action. See, by contrast, Marino v. CACafe, Inc., No. Northern District of California United States District Court 13 16-cv-6291-YGR, 2017 WL 1540717, at *3 (N.D. Cal. Apr. 28, 2017) (finding releases invalid 14 where they were "obtained by deceptive omissions of material information") (emphasis supplied). 15 III. CONCLUSION 16 Accordingly, for the reasons discussed above, the Court DENIES plaintiffs' motion to 17 invalidate the Release Agreements. 18 This Order terminates Docket Number 371. 19 IT IS SO ORDERED. 20 21 Dated: September 10, 2018 YVONNE GONZALEZ ROGERS 22 UNITED STATES DISTRICT COURT JUDGE 23 24 25 26 27 28 5