SAN FRANCISCO (Legal Newsline) - Lawyers who simultaneously told some of their clients to accept a $6 million settlement of wage-and-hour claims against Walgreens while telling others to reject it can’t appeal a judge’s order invalidating the decision of some class members to opt out of the settlement, the Ninth Circuit Court of Appeals ruled.
Saying it had no jurisdiction to hear an appeal of the lower court’s decision until it reached final judgment, a three-judge panel rejected the petition by the law firms of Gallo LLP and Wynne Law Firm challenging orders requiring a “corrective notice” to class members and invalidating some of the opt-outs.
In an understatement, the Ninth Circuit panel opened by noting: “This case has a complicated procedural background.” In October 2018, Gallo/Wynne filed a proposed class action in San Francisco Superior Court on behalf of Walgreens managers. Less than a month later, lawyers with Miller Shah and the Edgar Law Firm filed their own wage-and-hour action in federal court for the Eastern District of California. In May 2019, the state court in San Francisco granted Walgreens’ motion to stay that action in favor of the federal lawsuit.
In an effort to save their own cases, Gallow/Wynne sent four mailings to class members, including two “newsletters” and two “attorney marketing” letters urging Walgreens managers to see if they “may personally benefit” from hiring Gallo/Wynne to represent them. They then filed a proposed “mass action” on behalf of the managers in state court in Marin County, only to have Walgreens remove it to federal court. A mass action differs from a class action in that the plaintiffs don’t claim to represent a larger class.
Walgreens settled the federal class action for $6 million in February 2020 with a period for class members to opt out and pursue their own cases. Gallo/Wynne then sent another letter to the class, “seemingly designed to mimic the appearance of the court-approved class notice,” telling managers the agreement was “not fair” and their claims were worth $200,000 apiece. By the deadline, 102 class members had opted out.
Walgreens and the Miller/Edgar lawyers objected, with Walgreens saying Gallo/Wynne was trying to sabotage the settlement and had a conflict because it represented 39 members of the class it had advised to accept the settlement, while simultaneously telling others to reject it. The trial court agreed, ordering a corrective letter explaining to class members that Walgreens hadn’t admitted fault, the claim “$200,000 looks about right” was only the Gallo/Wynne lawyers’ opinion, and those lawyers had “a financial interest in having you opt out of the settlement.” The court ordered a second opt-out period for the people whose decisions it had invalidated and didn’t place any restrictions on future communications from Gallo/Wynne.
The Gallo/Wynne lawyers filed an interlocutory appeal to block the orders but the panel rejected it, saying there was no emergency justifying mandamus relief and Gallo/Wynne’s clients weren’t in any danger of losing their right to be represented by the lawyers of their choice. The court’s finding that the lawyers were “per se conflicted” was not clearly erroneous, the panel concluded, and the corrective notice “contains only true statements.”