Farley v. Family Dollar Stores, Inc. et al
ORDER granting 130 Motion for Attorney Fees; granting 131 Motion for Order for approval of settlement agreement. This case is dismissed and the Clerk of Court is directed to close this case. By Judge Raymond P. Moore on 10/30/2014.(tscha, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Raymond P. Moore
Civil Action No. 12-cv-00325-RM-MJW
JULIE FARLEY, on behalf of herself and all similarly situated persons,
FAMILY DOLLAR STORES, INC., and
FAMILY DOLLAR STORES OF COLORADO, INC.,
(1) UNOPPOSED MOTION FOR APPROVAL OF ATTORNEY’S FEES
AND COSTS (ECF NO. 130); AND
(2) JOINT MOTION FOR APPROVAL OF SETTLEMENT AGREEMENT
(ECF NO. 131)
Plaintiff, for herself and on behalf of Defendants’ other Colorado “Store Managers,” filed
this Rule 23, Fed. R. Civ. P., class action complaint alleging Defendants improperly
misclassified the Store Managers as exempt from overtime pay under Colorado law and,
therefore, improperly denied them overtime pay. Plaintiff’s claims are brought under the
Colorado Wage Claim Act, C.R.S. § 8-4-101, et seq., and for breach of contract. This Court has
subject matter jurisdiction pursuant to 28 U.S.C. § 1332(d). The parties have resolved this action
and now seek approval of their settlement through the Joint Motion for Approval of Settlement
Agreement (ECF No. 131) and related Plaintiff’s Unopposed Motion for Final Approval of
Attorney’s Fees and Costs (ECF No. 130). Based on the papers filed and representations of
counsel, and on the bases stated herein, the Court finds the requested attorney’s fees and costs
are reasonable, and the settlement is fair, adequate and reasonable. Accordingly, the motions are
approved and granted.
Defendants operate a chain of discount retail stores in which Plaintiff was a Store
Manager. Plaintiff claimed that she and other Store Managers were or are salaried employees
who regularly worked in excess of twelve hours a day or forty hours per week with no overtime
pay because Defendants improperly considered Store Managers to be overtime-exempt
executives/supervisors. Defendants denied liability. Plaintiff sought compensation, attorney’s
fees, costs, statutory penalties and/or liquidated damages, and/or prejudgment interest. The
parties disputed the proper method to calculate overtime damages, if any, that were due.
By Order dated February 11, 2013, the Honorable R. Brooke Jackson, before whom the
case was then pending, eliminated all claims from the period prior to February 7, 2009. (ECF
No. 36.) Over Defendants’ objections, Judge Jackson granted class certification. Defendants’
petition for leave to appeal the class certification decision was denied by the United States Court
of Appeals for the Tenth Circuit. The parties thereafter engaged in motions practice and
extensive discovery, and, ultimately, with the assistance of an experienced mediator, agreed to
settle their dispute.
The Settlement Agreement, Plan of Allocation, and Preliminary Approval
Under the Settlement Agreement, Defendants are required to pay $2.3 Million as the
settlement amount. The settlement is non-reversionary. All required payments are to be paid
from this settlement fund, including an enhancement to Ms. Farley of $15,000.00; attorney’s fees
and costs to Class Counsel of $759,000.00 (33% of the $2.3 Million); and the settlement
administrator’s fee of $24,500.00. The balance of $1,501,500.00 would be divided among Class
Members, including Ms. Farley, per an agreed formula.
The parties requested the Court to preliminarily approve the Settlement Agreement,
approve the proposed Notice of settlement to Class Members, and schedule a Fairness Hearing.
On July 16, 2014, the Court held a hearing on the parties’ request, and, after discussion, ordered
certain modifications be made to the proposed Notice. Thereafter, by Order dated July 21, 2014,
the Court preliminarily approved the parties’ proposed Settlement Agreement, approved the
Notice (with modifications), and set the Fairness Hearing.
Notice, Objections, and Fairness Hearing
On August 25, 2014, Notices were mailed to 490 Class Members. (ECF Nos. 131-1, 1312.) Those Notices advised the Class Members of the proposed settlement, including how the
proposed gross settlement amount would be distributed and Class Counsel’s intent to request an
award of $759,000 in attorney’s fees and costs; their rights, including the right to be excluded
from or to file objections to the Settlement Agreement; and the date and place of the Fairness
Hearing. (ECF Nos. 131-1, 131-2.) As of October 9, 2014, the deadline for any Class Member
to be excluded from or to object to the settlement, two members had opted out but no member
had objected. (ECF Nos. 131-1, 131-3.)
On October 10, 2014, Ms. Farley filed the Unopposed Motion for Approval of Attorney’s
Fees and Costs, and, on October 15, 2014, the parties filed the Joint Motion for Final Approval
of Settlement Agreement.
On October 24, 2014, the Court conducted a fairness hearing to determine if the proposed
Settlement Agreement was fair, reasonable and adequate. Counsel for the parties were present
and represented that the agreement was reached after substantial litigation of the disputed issues
and reiterated that the settlement was not objected to by any Class Member. Counsel also
confirmed the $2.3 Million settlement funds would be distributed as originally proposed.
Defendants were granted time to advise the Court if they disagreed with Plaintiff’s representation
of the differences in the Class Members’ payouts if the settlement is approved versus if they
were to prevail in this action on the merits. Defendants have not submitted any information for
the Court’s consideration and the time for Defendants to do so has passed.
The Fairness of the Settlement
A class action settlement may be approved only after hearing and on a finding that it is
fair, reasonable, and adequate. Fed. R. Civ. P. 23(e). The approval of a class action settlement is
committed to the sound discretion of the trial court. Gottlieb v. Wiles, 11 F.3d 1004, 1014 (10th
Cir. 1993), overruled in part on other grounds, Devlin v. Scardelletti, 531 U.S. 1 (2002). In
assessing whether a proposed settlement is fair, reasonable and adequate, the Court considers
these four factors: “(1) whether the proposed settlement was fairly and honestly negotiated; (2)
whether serious questions of law and fact exist, placing the ultimate outcome of the litigation in
doubt; (3) whether the value of an immediate recovery outweighs the mere possibility of future
relief after protracted and expensive litigation; and (4) the judgment of the parties that the
settlement is fair and reasonable.” Rutter & Wilbanks Corp. v. Shell Oil Co., 314 F.3d 1180,
1188 (10th Cir. 2002).
In evaluating the fairness of settlements, courts should not decide the merits of the
lawsuit or substitute its own judgment for that of the parties. Carson v. American Brands, Inc.,
450 U.S. 79, 88 n.14 (1981); Wilkerson v. Marin Marietta Corp., 171 F.R.D. 271, 284 (D. Colo.
1997); Belote v. Rivet Software, Inc., No. 12-cv-02792, 2014 WL 3906205, at * 4 (D. Colo. Aug.
11, 2014). However, “the district court must independently analyze the evidence before it in
making its determination; it may not rely solely upon the assertions of the proponents of the
settlement as to what the evidence shows.” Gottlieb, 11 F.3d at 1015 (italics omitted).
Settlements in class actions are generally favored. William B. Rubenstein, 4 Newberg on Class
Actions § 13:44 (5th ed. 2014).
The parties have represented the agreement is fair, reasonable, and adequate. Based on
an independent analysis of the record under the applicable law, the Court agrees. First, the Court
finds the proposed settlement was fairly and honestly negotiated. The parties extensively
litigated this action, engaging in motions practice and comprehensive discovery, before
commencing settlement discussions. The lawyers are experienced attorneys who conducted
negotiations with the assistance of a knowledgeable and qualified employment mediator before
reaching the terms of the settlement. There is no evidence that the agreement was a product of
collusion or coercion. As such, the first factor is satisfied.
Next, the Court finds there are serious questions of law and fact at issue, placing the
ultimate outcome of the litigation in doubt. There are risks in determining liability. Plaintiff
argued that Defendants violated the Colorado wage laws and implied contracts by improperly
misclassifying her and other Store Managers at the Colorado stores. Defendants, however,
asserted Plaintiff was properly classified as an exempt executive/supervisor, denied that any
contract existed between the parties, and moved for summary judgment. There are also
uncertainties as to damages, as the parties disputed whether the half-time or “time-and-a-half”
overtime method of damages applied. Finally, Defendants vigorously disputed the class of store
managers was appropriate for certification, asserting the status of each store manager must be
analyzed on a case-by-case basis. Defendants moved to decertify the class. In light of the
foregoing, the ultimate outcome as to liability and damages should this matter be litigated further
is uncertain. Accordingly, the second factor is also met.
On the third factor, the Court finds the value of an immediate recovery outweighs the
mere possibility of future relief after protracted and expensive litigation. Here, the settlement
provides the Class Members with a certainty of approximately $1.5 Million in payment now, as
compared with the uncertainty of whether they will receive any payment after additional
litigation of this case on its merits. Based on the parties’ representation that the Colorado
Division of Labor (“CDOL”) would have calculated damages at approximately $2.975 Million,
the Class Members would be receiving a little over fifty-percent (50%) of this amount under the
settlement. Of course, CDOL’s calculation assumes it would have been fully successful, an
outcome of significant uncertainty in light of the pending motions and contested issues. As such,
the third factor is also met.
Finally, the fourth factor considers the judgment of the parties that the settlement is fair
and reasonable. “‘Counsels’ judgment as to the fairness of the agreement is entitled to
considerable weight.’” Lucas v. Kmart Corp., 234 F.R.D. 688, 695 (D. Colo. 2006) (quoting
Marcus v. Kansas Dept. of Revenue, 209 F. Supp. 2d 1179, 1183 (D. Kan. 2002)). And, as
previously stated, this Court should not substitute its own judgment for that of the parties. On
this record, the Court finds this factor is also met.
In making its findings, the Court also considered the fact that no Class Member objected
to the settlement, and evaluated the reasonableness of the proposed reductions to the settlement
fund. The Court finds the enhancement to be paid to Ms. Farley, in addition to her share of the
net proceeds as a Class Member, while on the high side, is nonetheless appropriate and
reasonable in light of her role as sole Plaintiff and representative for more than two-and-a-half
years. In addition, the Court finds the payment to the claims administrator is also reasonable and
necessary. Finally, as discussed below, the reduction for payment to Class Counsel is
The Requested Attorney’s Fees and Costs
In connection with the $2.3 Million settlement, Plaintiff requests an award of
$759,000.00 (33% of the $2.3 Million) to be paid to Class Counsel from the settlement fund,
consisting of $698,049.32 (30.3%) in attorney’s fees and $60,950.68 in costs. Plaintiff’s request
is made pursuant to C.R.S. § 8-4-110 and the equitable common fund doctrine.
Under C.R.S. § 8-4-110, reasonable costs and attorney fees may be awarded where,
among other things, the employee recovers a sum greater than “the amount tendered by the
employer.” Without evidentiary support as to what amount, if any, was tendered by the
employer, Plaintiff argues that “it is undisputed that [Class Members]” will receive in settlement
a greater amount. In the absence of such evidence, however, the Court finds an award under this
statute is inappropriate.
An award is appropriate, however, under the equitable common fund doctrine. In this
case, the settlement created a “common fund” from which the Class Members obtained a benefit.
The Tenth Circuit has recognized that attorney’s fees may appropriately be awarded from that
fund. Gottlieb v. Barry, 43 F.3d 474, 482 (10th Cir. 1994). In determining attorney’s fees in
common fund cases, the “hybrid” approach is used which combines the percentage of the fund
method with the twelve factors originally developed in Johnson v. Georgia Highway Express,
Inc., 488 F.2d 714, 717–19 (5th Cir. 1974). The Johnson factors are: “the time and labor
required, the novelty and difficulty of the question presented by the case, the skill requisite to
perform the legal service properly, the preclusion of other employment by the attorneys due to
acceptance of the case, the customary fee, whether the fee is fixed or contingent, any time
limitations imposed by the client or the circumstances, the amount involved and the results
obtained, the experience, reputation and ability of the attorneys, the ‘undesirability’ of the case,
the nature and length of the professional relationship with the client, and awards in similar cases.
. . . [T]he weight given to different factors may vary in common fund, as opposed to statutory fee
shifting cases.” Gottlieb, 43 F.3d at 482 n.4 (internal citation omitted). The trial judge may
exercise its judgment in assigning different relative weights to the factors, and may determine
one factor is not applicable or give greater weight to one factor over another, where the bases for
doing so are clearly reflected in the record. Brown v. Phillips Petro. Co., 838 F.2d at 451, 456
(10th Cir. 1988).
In this case, Class Counsel’s requested fee recovery constitutes 30.3% of the total
settlement, and requested fee and cost recovery constitutes 33% of the total settlement. These
percentages fall within the range of what is reasonable in this District. See, e.g., Whittington v.
Taco Bell of Am., Inc., No. 10-cv-01884, 2013 WL 6022972, at * 6 (D. Colo. Nov. 13, 2013)
(finding attorney’s fees and costs of 39% of total recovery within the normal range, and
attorney’s fees of 33% of total recovery “not unreasonable”); Lucken Family Ltd. Partnership,
LLLP v. Ultra Resources, Inc., No. 09-cv-01543, 2010 WL 5387559, at *5 (D. Colo. Dec. 22,
2010) (“The customary fee awarded to class counsel in a common fund settlement is
approximately one third of the total economic benefit bestowed on the class.”). The
reasonableness of the fees requested is supported by an analysis of the twelve Johnson factors.
1. Time and Labor Involved
Class Counsel and their staff have expended a total of 1,588 hours in prosecution of this
action. Their work includes researching and preparing pleadings, briefs and other papers filed in
this action; engaging in extensive discovery, including reviewing documents and taking and
defending depositions; and participating in mediation and post-mediation activities. These facts
supports Class Counsel’s request.
2. Novelty and Difficulty of the Question Presented
Class Counsel was faced with difficult and highly contested legal and factual questions
regarding not only whether the Store Managers were exempt from overtime pay but also the
propriety of the class certification. As such, this factor also supports the proposed fee award.
3. Skill Required to Perform the Legal Service Properly, and Experience,
Reputation and Ability of Class Counsel
Class action overtime cases involve a specialized area of the law which is often complex
and difficult, where some degree of extra skill is needed to litigate the cases properly. See
Whittington, 2013 WL 6022972, at *6. And, as supported by Class Counsel’s declarations, they
have the requisite skill and experience to perform the legal services required in this case.
Accordingly, these two factors weigh in favor of the requested award.
4. Preclusion of Other Employment
Class Counsel’s declarations indicate they were still able to engage in other
wage/overtime law cases while handling this case. Nonetheless, the Court recognizes the
preclusion of at least some other work inherent in litigating class actions on behalf of a large
number of workers seeking overtime compensation. See Whittington, 2013 WL 6022972, at *6.
As such, this factor affords some weight in favor of the fees requested.
5. Customary Fee, Whether the Fee is Fixed or Contingent, and Awards in
Typically, the customary fee award is derived from utilizing the percentage method in
common fund cases. See Gottlieb, 43 F.3d at 482 (recognizing, in 1994, the trend in utilizing the
percentage of the fund method). And, in this case, Class Counsel represented Plaintiff on a
contingency basis, bearing the risk of no recovery after expending what would have been more
than three years prosecuting this case had it been fully litigated. As discussed above, the
requested fee award is about 30% of the settlement fund, within the range of awards in similar
cases. The Court is not required to reduce the calculation of a reasonable fee to a mathematical
precision. See Johnson, 488 F.2d at 720. Therefore, the Court finds these three factors weigh in
favor of the fee award.
6. Time Limitations, and the Nature and Length of the Professional
Class Counsel represents time limitations were not at issue. In addition, Class Counsel
states that it is unlikely that many Class Members will be seeking additional representation from
Class Counsel, in light of the nature of this case. In this case, the Court finds these two factors
7. Amount Involved and Results Obtained
The Court finds the $2.3 Million settlement reflects a significant recovery on behalf of
the class, especially in light of the pending motions for summary judgment and for class
decertification. Accordingly, this factor supports the requested fee award.
8. “Undesirability” of the Case
In this case, the Class Members were not highly paid employees and ordinarily may not
have the means to individually hire counsel on an hourly basis, rendering litigation of a class
action through a contingency fee arrangement as the only effective means to address their claims.
By their nature, class actions require counsel to expend substantial time and effort with no
guarantee of success. The Court finds this factor weighs in favor of the fee request.
9. Other Considerations
The Court also considered the fact that the Class Members were advised of the fees and
costs request in the Notice but no one objected. In summary, upon considering and weighing the
factors under the facts and circumstances of this case, the Court finds that the requested amount
of attorney’s fees is reasonable. The Court also finds that costs incurred in prosecution should be
Based on the foregoing, it is ORDERED as follows:
1. That Plaintiff’s Unopposed Motion for Approval of Attorney’s Fees and Costs (ECF
No. 130) is GRANTED;
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