## Facts

- Borrowers filed a Rule 23(b)(3) class action against a bank alleging, among other claims, that the bank promised to tie interest rates to its announced prime rate but secretly offered lower rates to favored customers.
- After extensive discovery, the district court certified certain contract claims for a class of approximately 8,600 potential members.
- Concerned that unilateral, pre–opt-out communications could intimidate borrowers and deter participation, the district court entered a protective order limiting communications and allowing only limited depositions of a small number of class members before the opt-out deadline.
- While the protective order was in effect, the bank—working through officers and under direction of defense counsel—conducted a concealed campaign to solicit exclusions from class members.
- The bank prepared lists, scripts, and form letters and used phone and in-person contacts to encourage class members to opt out; thousands were contacted and thousands submitted exclusion requests.
- The district court learned of the effort through later proceedings, held evidentiary and disciplinary hearings, and found knowing violations that threatened the integrity of the opt-out process and risked chilling participation.
- The district court imposed remedial measures, including disregarding many opt-out requests obtained through the campaign, and imposed $50,000 in monetary sanctions on defense counsel.

## Issues

1. Whether the First Amendment limits recognized in Gulf Oil Co. v. Bernard bar sanctions for secretly soliciting opt-out requests from Rule 23(b)(3) class members in violation of a protective order.
2. Whether the district court abused its discretion under Rule 23 and its inherent authority by restricting communications, disregarding opt-outs obtained through the improper campaign, and sanctioning defense counsel.

## Decision

- The Eleventh Circuit affirmed the district court’s remedial and sanction orders.
- The court held that Gulf Oil did not immunize communications that intentionally circumvented a specific court order governing class-member contact.
- The court held that the district court acted within its broad discretion to manage class actions, protect absent class members, and prevent coercion or distortion of the opt-out process.
- The court upheld the remedy disregarding opt-outs obtained through the improper solicitation and upheld the $50,000 sanctions against counsel as a proper exercise of authority to deter and address misconduct.

## Legal Principles

- District courts have broad discretion under Rule 23 to regulate communications with putative and absent class members to prevent coercion, confusion, and manipulation of the class mechanism.
- Restrictions on class communications are permissible when supported by a record showing potential or actual abuse and when tailored to protect the integrity of the class action and absent members’ due process interests.
- The First Amendment does not excuse disobedience of a valid court order; counsel and parties may be sanctioned for secret or improper class-member contact that violates court-imposed safeguards.
- Courts may use remedial measures, including disregarding tainted opt-out requests and imposing monetary sanctions, under Rule 23 supervision and inherent authority to protect judicial proceedings.

## Conclusion

The Eleventh Circuit upheld sanctions and corrective orders where a defendant and its counsel deliberately violated a protective order by secretly soliciting class-member opt-outs, emphasizing the district court’s authority to control class communications and safeguard the fairness of the Rule 23 process and absent members’ rights.


Kleiner v. First Nat’l Bank of Atlanta, 751 F.2d 1193 (11th Cir. 1985)