A Colorado federal court has sanctioned a class action defendant because of a letter sent by the defendant’s COO to former employees who were prospective class members. Sloan v. Ameristar Casinos, Inc., No. 12-1126 (D. Colo. Mar. 12, 2013) (order re defendant’s motion to stay). Magistrate Judge Kathleen Tafoya deemed the letter to be “misleading, coercive and . . . a blatant attempt to undermine the purposes of a collective action and to undermine the Notice approved by the court.” Order at 1-2. The Sloan sanction ruling closely coincides with a similar ruling sanctioning an FLSA defendant in a New York federal court. See Zamboni v. Pepe West 48th Street LLC, No 12-3157 (S.D.N.Y. Mar. 12, 2013).
Chiefly at issue in Sloan was a letter from Ameristar COO Larry Hodges, which was sent to putative class members who were former employees before any plaintiffs had opted into the conditionally-certified FLSA action. Judge Tafoya found a stay to be warranted, but not on the terms urged by the defendant. She determined that recipients of the letter “were misinformed about the case, the plaintiff, the plaintiff’s motives, the law and about any negative monetary ramifications of the case on opt-in plaintiffs” and that “it is imperative that all the putative class members receive correct information moving forward.” Order at 3. Judge Tafoya went on to say that “any stay, however, must be imposed on the case as a whole, . . . [and] until a corrective notice, at least, is sent to the putative class, the case is stalled.” Order at 4. Moreover, due to the defendant’s egregious conduct, she refused to stay the order enjoining defendants from communicating with absent class members. Id.