McArthur v. Edge Fitness, LLC
Filing
106
ORDER Granting Final Approval of FLSA Collective and Rule 23 Class Action Settlement Following Rule 23 Fairness Hearing. Signed by Judge Robert M. Spector on 2/20/2019.(Watson, M.)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF CONNECTICUT
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:
MELISSA MCARTHUR, individually and :
on behalf of others similarly situated
:
individuals
:
:
V.
:
:
EDGE FITNESS, LLC
:
:
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3:17 CV 1554 (RMS)
DATE: FEB. 20, 2019
ORDER GRANTING FINAL APPROVAL OF CLASS ACTION SETTLEMENT
FOLLOWING RULE 23 FAIRNESS HEARING
Before the Court is the Proposed Order Granting Final Approval to a Fair Labor Standards
Act (“FLSA”) Collective and Rule 23 Class Action Settlement. (Doc. No. 104, Ex.1). On
November 6, 2018, the parties consented to the jurisdiction of this United States Magistrate Judge,
and the case was transferred accordingly. (Doc. No. 98). Upon consideration of the Parties’ Joint
Motion for Modified Order to Approve FLSA and Rule 23 Connecticut Wage Act Settlement (Doc.
No. 101; see Doc. Nos. 92, 97), all of the supporting materials filed in connection therewith, the
Proposed Order Granting Final Approval to a FLSA Collective and Rule 23 Class Action
Settlement (Doc. No. 104, Ex. 1D), the Settlement Agreement (Doc. No. 104, Ex. 1), the
distribution charts (Doc. No. 104, Exs. 1A-1B), the Modified Notice to the Class (Doc. No. 104,
Ex. 1E), and the Declaration of Class Counsel (Doc. No. 104, Ex. 3), the Court, having heard from
the parties at the February 12, 2019 Fairness Hearing and, for the reasons stated in open court on
February 12, 2019, hereby enters this order granting Final Approval of the Settlement.
I.
STANDARD
Federal Rule of Civil Procedure 23(e) provides that the “claims, issues, or defenses of a
certified class may be settled, voluntarily dismissed, or compromised only with the court’s
approval.” Pursuant to Rule 23(e),
(1)
The court must direct notice in a reasonable manner to all class members
who would be bound by the proposal.
(2)
If the proposal would bind class members, the court may approve it only
after a hearing and on finding that it is fair, reasonable, and adequate.
Fed. R. Civ. P. 23(e)(1)-(2).
To properly approve the settlement, the Court must find that the settlement provides
“reasonable notice to the class members of the settlement proposal and the settlement must be
procedurally and substantively fair, reasonable, and adequate.” O’Connor v. AR Resources, Inc.,
No. 3:08 CV 1703(VLB), 2012 WL 12743, at *2 (D. Conn. Jan. 4, 2012).
Notice requirements, as defined in Federal Rule of Civil Procedure 23(c)(2)(B), provide as
follows:
the court must direct to class members the best notice that is practicable under the
circumstances, including individual notice to all members who can be identified
through reasonable effort. . . . The notice must clearly and concisely state in plain,
easily understood language:
(i)
the nature of the action;
(ii)
the definition of the class certified;
(iii)
the class claims, issues, or defenses;
(iv)
that a class member may enter an appearance through an attorney if
the member so desires;
(v)
that the court will exclude from the class any member who requests
exclusion; and
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(vi)
the binding effect of a class judgment on members under Rule
23(c)(3).
Fed. R. Civ. P. 23(c)(2)(B).
“To determine procedural fairness, courts examine the negotiating process leading to the
settlement.” Matheson v. T-Bone Restaurant, LLC, No. 09 Civ. 4214, 2011 WL 6268216, at *3
(S.D.N.Y. Dec. 13, 2011) (citing Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 113 (2d
Cir. 2005) (additional citation omitted)). “To determine substantive fairness, courts determine
whether the settlement’s terms are fair, adequate, and reasonable according to the factors set forth
in City of Detroit v. Grinnell Corp., 495 F.2d 448 (2d Cir. 1974).” Matheson, 2011 WL 6268216,
at *3. The Grinnell factors are:
(1) the complexity, expense and likely duration of the litigation; (2) the reaction of
the class to the settlement; (3) the stage of the proceedings and the amount of
discovery completed; (4) the risks of establishing liability; (5) the risks of
establishing damages; (6) the risks of maintaining the class action through the trial;
(7) the ability of the defendant[] to withstand a greater judgment; (8) the range of
reasonableness of the settlement fund in light of the best possible recovery; [and]
(9) the range of reasonableness of the settlement fund to a possible recovery in light
of all the attendant risks of litigation.
Grinnell Corp., 495 F.2d at 463 (internal citations omitted), abrogated on other grounds by
Goldberger v. Integrated Res., 209 F.3d 43 (2d Cir. 2000). “Courts examine procedural and
substantive fairness in light of the ‘strong judicial policy in favor of settlement[]’ of class action
suits.” Matheson, 2011 WL 6268216, at *4 (quoting Wal-Mart Stores, 396 F.3d at 116).
A class action settlement may be approved
if it is fair, adequate, and reasonable, and not a product of collusion. A court
determines a settlement’s fairness by looking at both the settlement’s terms and the
negotiating process leading to settlement. A presumption of fairness, adequacy, and
reasonableness may attach to a class settlement in arm’s-length negotiations
between experienced, capable counsel after meaningful discovery. We are mindful
of the strong judicial policy in favor of settlements, particularly in the class action
context. The compromise of complex litigation is encouraged by the courts and
favored by public policy.
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Wal-Mart, 396 F.3d at 116-17 (internal citations and quotations omitted).
II.
FINDINGS AND ORDER
The Court makes the following findings of fact and conclusion of law:
1.
This litigation was initiated by a complaint filed on September 15, 2017 by the
Named Plaintiff, Melissa McArthur, against the Defendant, Edge Fitness, LLC.
(Doc. No. 1; see Doc. No. 58 (Amended Complaint)).
2.
The Named Plaintiff asserted claims for unpaid overtime compensation under the
FLSA on her own behalf and on behalf of a putative collective group of allegedly
similarly situated employees of Edge Fitness who worked as Membership Advisors
(“MAs”). The Named Plaintiff alleged that the Defendant misclassified the MAs
as exempt from overtime from September 15, 2014 to November 24, 2016, and by
failing to pay for any overtime hours worked, violated the FLSA and the CWA.
The Named Plaintiff further alleged that, when the Defendant reclassified MAs as
non-exempt from overtime on November 25, 2016, the Defendant undercalculated
the amount of overtime due by failing to include commissions in the wage rate paid
to employees, and thereby violated the FLSA and CWA by failing to pay for all
overtime wages due from that date up to and including the date of final judgment.
3.
The Defendant denied that any MAs were ever misclassified before November 25,
2016, but asserted that the Defendant properly classified MAs as exempt from
overtime pursuant to the Administrative exemptions of the FLSA and CWA. The
Defendant further asserted that overtime was properly calculated from November
25, 2016 to the date of final judgment, and that the MAs were properly paid all
amounts due.
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4.
The parties entered the Settlement Agreement following a one-day private
mediation before Joseph Garrison, a mediator experienced in wage and hour
collective and class actions, followed by a full day settlement conference before
this Court.
5.
After a hearing on November 5, 2018, this Court granted preliminary approval to
the resulting Settlement Agreement. (Doc. No. 96).
6.
The parties discovered clerical errors that required modification to distribution
amounts in the interests of fairness to the class. Thus, following a status conference
with the Court, and a hearing held on the record on November 19, 2018, the parties
sought a modification of the Settlement Agreement, with modified distribution lists,
a continued date for the Fairness Hearing, and consent to review by this Court.
(Doc. No. 101).1
7.
On December 3, 2018, this Court issued the modified order granting preliminary
approval of Settlement Agreement (“Preliminary Approval Order”).
8.
The Court held a Fairness Hearing on February 12, 2019. (Doc. No. 102).
9.
The Court finds that the proposed Rule 23 Class, as defined in the Settlement
Agreement, meets the requirements of Rule 23(a) and Rule 23(b)(3) of the Federal
Rules of Civil Procedure. Accordingly, the Court certifies the following proposed
Rule 23 Class, as defined for purposes of settlement only:
All individuals who, at any time during the period between September 15,
2014 and January 1, 2018, were employed within the State of Connecticut
as Membership Advisors.
1
This case was transferred to this Magistrate Judge on consent on November 6, 2018. (Doc. No. 98).
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The parties agreed upon a list of those individuals who are designated, for
settlement purposes only, as Rule 23 Class Members.
10.
For the purposes of the Settlement, the Court approves the Named Plaintiff, Melissa
McArthur, as the Class Representative.
11.
For the purposes of the Settlement, the Court appoints as Class Counsel for the Rule
23 Class Richard E. Hayber of the Hayber Law Firm, LLC, 221 Main Street, Suite
502, Hartford, CT 06106.
12.
As part of the Preliminary Approval Order, this Court approved the Modified
Notice of Proposed Class Action Settlement and Fairness Hearing (“Notice”),
pursuant to which Class members were to be provided notice of the proposed
Settlement Agreement. The Notice approved provided an opportunity for the Class
members to file objections to the Settlement Agreement and an opportunity to optout of the Settlement.
13.
As included in the Notice, any Rule 23 Class Member who requested to be excluded
from the class was directed to submit a signed request for exclusion to Class
Counsel. To be effective, such request for exclusion must have included the
individual’s name and an unequivocal statement that the individual requested to be
excluded from the class, and it must have been received by Class Counsel within
30 days following the date of the initial mailing of the Notice, or, at minimum, must
have been postmarked by that deadline and received by Class Counsel within seven
days thereafter. Any individual who requested to be excluded from the class, but
who changed his/her mind and wished to still participate, could withdraw that
request in writing at any time prior to the Fairness Hearing.
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14.
As included in the Notice, any Rule 23 Class Members who wished to present
objections to the proposed settlement at the Fairness Hearing were required to do
so first in writing, sent to the Class Counsel via First Class United States mail and
received by Class Counsel by a date 30 days after the initial mailing by Class
Counsel of the Notice, or, at minimum, must have been postmarked by that deadline
and received by Class Counsel within seven days thereafter. An objector who
timely submitted a written objection could appear at the Fairness Hearing in person
(with or without counsel hired by the objector); however, an objector who wished
to appear at the Fairness Hearing must have stated his or her intention to do so at
the time he or she submitted his or her written objections. An objector could
withdraw his or her objections at any time. No Rule 23 Class Member could appear
at the Fairness Hearing for the purpose of presenting objections unless he or she
filed a timely objection that complied with the procedures explained in the Notice.
Any Rule 23 Class Member who requested exclusion from the class could not
submit objections to the settlement. The parties were directed to file with the Court
written responses to any filed objection no later than fourteen days before the
Fairness Hearing.
15.
The Named Plaintiff filed with the Court a Declaration of Attorney Michael Petela
(Doc. No. 104, Exh. 3), declaring that in accordance with the procedures approved
in the Preliminary Approval Order, he oversaw a mailing of the Notice to the class
of MAs who were employed at Edge Fitness, LLC from September 15, 2014
through December 31, 2017. The notice mailing to the applicable class was sent
out on December 7, 2018. In the weeks that followed, the Hayber Law Firm
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received numerous inquiries from MAs, mostly updating their addresses for the
purposes of distribution, which further confirmed accurate mailing of the notice to
the class. A number of MAs notice mailings were returned to Class Counsel. Class
Counsel reviewed the Hayber Law Firm’s business records and determined that
private search services, in particular, Instant Checkmate, were used to search when
MAs mailings were returned to sender.
16.
Class Counsel informed the Court that only one participating member requested
exclusion from the class, and that member’s opt out letter was attached to Class
Counsel’s submission of the proposed Final Order of Settlement. (Doc. No. 104,
Ex. 2).
17.
No Rule 23 Class Member submitted an objection to the Settlement. At the Final
Fairness Hearing on February 12, 2019, the Named Plaintiff and only one Rule 23
Class Member appeared, and that individual voiced his support for the Settlement.
18.
The Court finds that Notice was provided to the Class in accordance with the
Settlement Agreement and this Court’s Preliminary Approval Order. The Court
finds and determines that the Notice provided in this case was the best notice
practicable. The Notice was accurate, objective, informative, and provided
members of the Class with the information necessary to make an informed decision
regarding their participation in the Settlement and its fairness. The Notice provided
Rule 23 Class Members with fair and adequate notice of the terms of the Settlement
Agreement and the Fairness Hearing, and of their right to exclude themselves from
the class or to object to the settlement. The Court finds that the Notice satisfied the
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requirements for notice under Rule 23 of the Federal Rules of Civil Procedure, as
well as constitutional due process.
19.
On the basis of all of the issues in this litigation, and the provisions of the Settlement
Agreement, the Court is of the opinion that an agreement was reached as the result
of arms’ length negotiations, including a one-day private mediation before Joseph
Garrison, a mediator experienced in wage and hour collective and class actions,
followed by a full-day settlement conference before this Court.
20.
The Settlement Agreement is a fair and reasonable resolution of a bona fide dispute
involving claims for unpaid overtime wages under the FLSA and CWA.
21.
The Court finds that the Settlement Agreement: (a) is fair to all parties; (b)
reasonably resolved a bona fide disagreement between the parties with regard to
the merits of the claims of the Named Plaintiff, the FLSA Collective and the Rule
23 Class members; and (c) demonstrates a good faith intention by the parties that
these claims be fully and finally resolved, not subject to appellate review, and not
re-litigated in whole or in part at any point in the future. The Court therefore
approves the Agreement, including its release of all claims.
22.
There are a number of factors that the Court has considered in affirming this
Settlement Agreement, including the following:
a.
The liability issues in this case have been vigorously contested.
b.
This Settlement Agreement has the benefit of providing relief to the Named
Plaintiff, the FLSA Collective and the Rule 23 Class Members now, without
further litigation, under circumstances where the liability issues are still
contested among the parties to this litigation. The Settlement Agreement
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provides the Named Plaintiff, the FLSA Collective and the Rule 23 Class
members with a monetary benefit.
c.
The Settlement Agreement is the byproduct of litigation between the
Parties, and not a result of any collusion on the part of Class Counsel or
counsel for the Defendant.
23.
By operation of the Settlement Agreement and this Order, and except as to such
rights or claims as may be created by the Settlement Agreement or those nonwaivable by law, the Named Plaintiff and all Participating FLSA Collective and
Rule 23 Class Members are hereby irrevocably and unconditionally deemed to have
forever and fully released Defendant and all Released Parties from any and all
Released Claims. The Named Plaintiff and the Participating FLSA Collective and
Rule 23 Class Members are forever barred from bringing or presenting any action
or proceeding against Defendant or any of the Released Parties that involve or assert
any of the Released Claims.
24.
The Agreement shall be administered in accordance with its terms and the
$566,875.00 Total Settlement Amount will be distributed as follows:
a.
The amount of $375,196.32 will be allocated to the class, inclusive of
service payments to the Named Plaintiff.
b.
Unclaimed amounts from the $375,196.32 will be allocated to the Wounded
Warriors Project.
c.
The amount of $188,958.33 will be allocated to reasonable attorneys’ fees.
d.
The amount of $2,720.34 will be allocated to repayment of reasonable
litigation expenses advanced in litigation.
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25.
The Notice provided Class members notice of Class Counsel’s attorneys’ fees,
costs, and expenses consistent with the terms of the Settlement Agreement and this
Court’s Preliminary Approval Order. The Court has considered the lack of any
objections, the case law and precedent showing that the request is within the range
of attorneys’ fees in comparable cases, the reasonable and appropriate nature of the
expenses, and the governing authority. (See Doc. Nos. 92, Exs. 2, 3, 3-1). The
Court finds that the final approval of attorneys’ fees in the amount of $188,958.33
is warranted and appropriate, and the approval of the repayment of $2,720.34 for
reasonable litigation expenses advanced in litigation is reasonable.
26.
The Court approves the Settlement Agreement and finds that it is a reasonable
compromise of the claims of the Rule 23 Class Members. The Settlement
Agreement is fair, just, reasonable, and in the best interest of, the Rule 23 Class
Members. It achieves a definite and certain result for the benefit of the Rule 23
Class Members that is preferable to continuing litigation in which the Rule 23 Class
Members would necessarily confront substantial risk (including the risk of noncertification of a class and the risk of loss), uncertainty, delay, and cost. This Order
constitutes final approval of the Agreement. The Agreement is binding on the
parties to it and on all members of the Rule 23 Class excepting only those
individuals, if any, who excluded themselves from the Class in accordance with the
terms of the Agreement.
27.
Without affecting the finality of this judgment, the Court reserves jurisdiction over
the implementation, administration, and enforcement of this judgment and the
Agreement and all matters ancillary to the same.
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28.
The Settlement Agreement reflects a compromise of disputed claims. The findings
and rulings in this Final Approval Order are made for the purposes of settlement
only. Nothing in the Settlement Agreement or this Final Approval Order, or in any
ancillary documents, actions, statements, or filings made in furtherance of
settlement, shall be deemed admissible or used as evidence of (or as an admission
of) liability by Defendant or any of the Released Parties, or of any fault or
wrongdoing whatsoever, or as evidence that (or as an admission that) this action
may proceed as a class action under Rule 23 of the Federal Rules of Civil Procedure
for any purpose other than settlement.
29.
This action is dismissed with prejudice.
IT IS SO ORDERED.
Dated this 20th day of February, 2019 at New Haven, Connecticut.
_/s/Robert M. Spector, USMJ
Robert M. Spector
United States Magistrate Judge
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