MEMORANDUM

JAMES M. MUNLEY, United States District Judge.

Before the court for disposition is the plaintiffs' motion for an emergency protective order to regulate the defendants' alleged unauthorized communications with plaintiffs and the class and for corrective disclosure. For purposes of the motion and this memorandum, the relevant defendant is Chase Manhattan Mortgage Corporation (hereinafter "Chase" or "defendant"). For the reasons that follow, the plaintiffs' motion will be denied.

Background

The instant case is styled as a class action instituted on behalf of all persons who purchased new construction houses in or around Tobyhanna, Monroe County Pennsylvania trough the "Why-Rent" program operated and controlled by Defendant Gene Percudani. The suit concerns houses built by either Chapel Creek Homes, Inc. or Raintree Homes, Inc., whose mortgages were originated or later purchased by Defendant Chase. The suit seeks to recover damages caused by the defendants alleged violations of, inter alia, the federal Racketeering and Enterprise Corruption statute ("RICO"), the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 P.S. § 201-1 et seq., and various common laws of the Commonwealth of Pennsylvania. Compl. ¶ 1.

Plaintiff filed suit in June 2001. During the time relevant to this motion, the parties were engaging in discovery for purposes of a pending motion for class certification. On April 3, 2002, counsel for Defendant Chase Manhattan (hereinafter "Chase" or "defendant"), sent a letter, via facsimile machine, to counsel for the plaintiffs informing them that a form letter was being mailed that day to the plaintiffs and prospective class members regarding the mortgages at issue in the instant case. The letter offered a modification plan that would allegedly reduce the borrowers' monthly principal and interest payments.

Subsequently, the plaintiffs filed a motion to 1) restrict further non-ordinary course communications with plaintiffs and the class and 2) to order that the defendant make corrective disclosure. The plaintiffs seek to curtail further communication between Chase and the plaintiffs or class members and to have the court order Chase to make corrective disclosure regarding the letter. Defendant Chase argues that the communication is entirely lawful and that there is no legal or factual justification for an order suspending Chase's loan modification plan.

Discussion

Initially, the plaintiffs make the assertion that Pennsylvania Rules of Professional Conduct provide that corporate employees may not, pursuant to the direction of their employer's counsel, contact an opposing party without the consent of that party's counsel. While making no determination as to whether this statement of the law is accurate, we note that there is no evidence in the instant case that Defendant Chase contacted the plaintiffs and potential plaintiffs at the direction of Chase's counsel. Moreover, as discussed more fully below, the law with regard to communications between counsel and parties to potential class members is more fully developed and provides us with the principles we need to decide this motion.

"Because of the potential for abuse, a district court has both the duty and the broad authority to exercise control over a class action and to enter appropriate orders governing the conduct of counsel and parties. But this discretion is not unlimited, and indeed is bounded by the relevant provision of the Federal Rules." Gulf Oil Co. v. Bernard, 452 U.S. 89, 103 (1981).

Rule 23(d) of the Federal Rules of Civil Procedure governs the instant motion. The rule reads in pertinent part as follows:

Orders in Conduct of Actions. In the conduct of actions to which this rule applies, the court may make appropriate orders . . . (2) requiring, for the protection of the members of the class or otherwise for the fair conduct of the action, that notice be given in such manner as the court may direct to some or all of the members of any step in the action, or of the proposed extent of the judgment, or of the opportunity of members to signify whether they consider the representation fair and adequate, to intervene and present claims or defenses, or otherwise to come into action; (3) imposing conditions on the representative parties or on intervenors; [and] . . . (5) dealing with similar procedural matters.

Fed.R.Civ.P. 23(d)

To enter an order restricting communications between the defendants and plaintiffs/potential class members, there must be 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. The United States Supreme Court explained that:

[T]o the extent that the district court is empowered . . . to restrict certain communications in order to prevent frustration of the polices of Rule 23, it may not exercise the power without a specific record showing by the moving party of the particular abuses by which it is threatened. Moreover, the district court must find that the showing provides a satisfactory basis for the relief and that relief sought would be consistent with the policies of Rule 23 giving explicit consideration to the narrowest possible relief which would protect the respective parties."

In the instant case, the plaintiffs claim that the letter is "abusive" in that it contains misleading information. The Third Circuit Court of Appeals has explained that misleading communications to class members concerning the litigation pose a serious threat to the fairness of the litigation process, the adequacy of the representation and the administration of justice. In re School Asbestos Litigation, 842 F.2d at 680. However, orders regulating communications between litigants, pose a grave threat to first amendment freedom of speech. Id. Accordingly, a district court's discretion to issue such orders must be exercised within the bounds of the First Amendment and the Federal Rules. Id.

The issue we are presented with then becomes whether the plaintiffs have established a need for the regulation of communications. In other words, have they established that the letter was misleading. After a careful review of the record, we find that the plaintiffs have not met the burden of establishing that the letter is misleading. The plaintiff presents four affidavits in support of its motion. However, these affidavits provide little support for us to base a finding that the letter contained misleading information.

Plaintiffs claim that the following statement from the letter is misleading: "We understand that the investment in your home may be at risk as property values decline in your community." See Exhibit to Stephen Weiss Affidavit, Letter from Chase Manhattan Mortgage Company dated April 3, 2002. They claim it is misleading because the property values at issue never declined but were artificially inflated by the defendant's own conduct. In addition, the letter states: "Likewise, the value of Chase's collateral securing a loan is also at risk as property values decline." Id. Plaintiffs claim that this statement misleads because it indicates that the risk to collateral was due to general market conditions, when truthfully it is due to the defendant's own behavior. Plaintiffs, however, presented no evidence to support their contention that the statement is misleading. Therefore, we cannot grant the requested relief on this basis.

Defendants also claim that the following statement is misleading: "Chase's loan modification plan provides you with an opportunity to reduce your monthly principal and interest payments at no cost to you."Id. Plaintiffs claim that this statement is misleading because if they accept the offer it may have an affect on their ability to receive treble and punitive damages. Again the plaintiffs have provided no basis, either legal or factual, to support their contention that the defendant's actions in sending this letter will affect the defendant's liability for actions alleged in the complaint.

Plaintiffs also complain that the letter is misleading in that it gives the impression that the Government has "certified" their action. N.T. at 10. The letter provides:

For your information, we recently shared the terms of our loan modification plan with the Pennsylvania Office of Attorney General. The Attorney General positively views Chase's effort to stabilize property values in the community by helping to keep borrowers in their homes. You may contact the Office of the Attorney General at (570) 963-1650 if you have any questions regarding the Chase program that the Chase representatives are unable to address.

Plaintiffs presented absolutely no evidence that this statement is either legally or factually misleading. As such it cannot serve as a basis for the relief the plaintiffs are seeking.

For the reasons set forth above, we cannot find that the letter is misleading. Moreover, we cannot find that it is an abuse merely because Chase contacted the plaintiffs and other mortgage holders. It should be pointed out that Chase has a continuing relationship with the borrowers based upon the existing mortgages.

In addition, nothing on the face of the letter indicates that the potential plaintiffs will be giving up rights or remedies by participating in the plan offered by the letter. Cf. In re School Asbestos Litigation, 842 F.2d 671 (3d Cir. 1988) (holding that the defendants could be restricted from sending the plaintiffs a misleading booklet in an attempt to reduce the defendants' liability). A reading of the letter does not reveal any improper motive on the part of Chase. No indication is made that Chase requires anything from the borrowers in exchange for participation in the plan. No conditions, such as the execution of a release, are presented in the letter. In its brief, Defendant Chase states: "[A]ny prospective member of the class may elect to take advantage of the loan modification offer and still participate in this action should a class be certified." Def. Brief in Oppo. to Pl.'s Motion, pg 4. Accordingly, we cannot find that the letter attempts to convince the plaintiffs and potential class members to relinquish any rights or remedies they may have.

It would be an abuse of our discretion to grant the plaintiffs' motion. No case has been cited by the plaintiffs where communications were restricted under circumstances similar to those presented in the instant case. Such a ruling by us would be contrary to the law. Plaintiffs have not established that the communication is misleading, and nothing in the letter demonstrates that Chase is attempting to encourage putative class members not to join the class, or to undermine prospective class members' cooperation with class counsel or purporting to advise class members regarding their legal rights. The motion will thus be denied. An appropriate order follows.

ORDER

AND NOW, to wit, this 18th day of April 2002, the plaintiffs' "Motion To Enjoin Further Non-Ordinary Course Communications with Plaintiffs and the Class and for Corrective Disclosure" [103-1] is hereby DENIED. The motion of defendants Chase Manhattan Mortgage and William Spaner to set briefing and hearing schedule [107-1] is DENIED.