Craig et al v. FedEx Ground Package System Inc
Filing
253
OPINION AND ORDER: GRANTING 2862 Plaintiffs' unopposed motion for final approval of the Kansas class action settlement calling for payment of $15,900,000 to the plaintiffs; GRANTING IN PART the 2789 motion for attorney's fees and costs; and DISMISSING all claims, except the ERISA claim, with prejudice, specifically including the Released Claims with each party to bear its own costs and attorney's fees except as provided in the Opinion and Order. Signed by Judge Robert L Miller, Jr on 6/19/2017. Associated Cases: 3:05-md-00527-RLM-MGG, 3:05-cv-00530-RLM-MGG(jld)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
SOUTH BEND DIVISION
In re FEDEX GROUND PACKAGE
SYSTEM, INC., EMPLOYMENT
PRACTICES LITIGATION
THIS DOCUMENT RELATES TO:
Carlene Craig, et al. v. FedEx
Ground Package System, Inc.,
Case No. 3:05cv530 RLM-MGG (KS)
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Case No. 3:05-MD-527 RLM
(MDL 1700)
OPINION AND ORDER
Twenty proposed class actions in this multi-district litigation docket came
before me on March 13-14 for fairness hearings. The cases are on limited remand
from the court of appeals, where nineteen of them awaited resolution. The
Judicial Panel on Multi-District Litigation centralized the cases under 28 U.S.C.
§ 1407, but the cases haven’t been consolidated, so each proposed settlement
must be examined separately. At the parties’ request, this case wasn’t decided
with the other nineteen. On June 16, the parties moved to amend the complaint
in anticipation of settling the ERISA claim, and asking the court to enter partial
judgment under Rule 54(b) with respect to the matters addressed at the fairness
hearing. The plaintiff class presents multiple claims, and today I resolve all but
the ERISA claim. There is no just reason for delay.
I. HISTORY OF THE MDL DOCKET
In July 2005, the JPMDL granted (over the plaintiffs’ objections) FedEx
Ground’s second request to centralize a series of cases in which FedEx Ground
drivers claimed to be employees, rather than the independent contractors their
employment contracts announced. The Panel reasoned that economies were to
be gained because all drivers were governed by the same contract. The MDL
process proved cumbersome. Even if the wording of each contract was the same,
each state’s agency law varied, and differences in operation from one terminal to
the next had the potential of affecting the decision.
The number of cases in the MDL docket eventually grew to 40. I appointed
attorneys from three law firms to serve as co-lead counsel: Lockridge Grindal
Nauen P.L.L.P. of Minneapolis, Harwood Feffer LLP of New York City, and
Leonard Carder LLP of Oakland. I also appointed attorneys from three other firms
– Cureton Caplan, P.C. of Delran, NJ; Siegel, Brill, Greupner, Duffy & Foster,
P.A. of Minneapolis; and Zimmerman Reed P.L.L.P. of Minneapolis – to complete
the plaintiffs’ steering committee.
The stakes were enormous. Not only did the plaintiffs’ co-lead counsel seek
to represent upwards of 10,000 arguably under-compensated drivers, but the
attack on drivers’ independent contractor status threatened FedEx Ground’s
entire business model.
Consistent with those stakes, discovery was more than extensive.
Although damages discovery was deferred, merits discovery and class discovery
were conducted simultaneously. Some 3.2 million documents were produced and
analyzed; seventeen sets of interrogatories were answered; 215 named plaintiffs
answered fifteen requests for admission and sat for depositions; 105 FedEx
2
Ground personnel sat for daylong depositions; 20 expert witnesses produced
reports and sat for daylong depositions; Daubert motions were filed and
defended. The class representatives were heavily involved in tracking down
records and documents, as well as in preparing for, and giving, their own
depositions.
The plaintiffs filed class certification motions in each of the cases; FedEx
Ground opposed each motion. The plaintiffs filed an omnibus fact memorandum
supported by 65 bankers’ boxes of documents. In 2007 and 2008, I certified
classes in 26 of the then-40 cases, and in all of the 20 on limited remand from
the court of appeals. FedEx Ground sought interlocutory appellate review of the
certification grants, and the plaintiffs successfully opposed that effort. Class
notifications were hampered by spotty databases.
Sixty summary judgment motions and briefing followed. The drivers filed
a 75-page statement of undisputed material facts with citations to 12 volumes.
In 2010 and 2011, I denied a few of FedEx Ground’s summary judgment motions
but granted most, and granted all in the 20 cases now on limited remand. With
respect to some of the cases, I suggested remand and the Panel sent the cases
back to the transferor courts. Co-lead counsel appealed the summary judgment
grants in these 20 cases to the United States Court of Appeals for the Seventh
Circuit; in most of those cases, FedEx Ground cross-appealed the class
certifications.
In both this court and the court of appeals, the parties recommended that
the Kansas Craig case be addressed first, as something of a quasi-bellwether
case. After briefing and argument, the court of appeals certified the
3
employee/independent contractor case to the Kansas Supreme Court, which
devised a new 18-part test and answered the certified question in the drivers’
favor. Craig v. FedEx Ground Package Sys., Inc., 335 P.3d 66 (Kan. 2014). The
court of appeals ultimately reversed my grant of summary judgment to FedEx
Ground in Craig, and remanded the case. In re FedEx Ground Package Sys., Inc.
Emp’t Practices Litig., 792 F.3d 818 (7th Cir. 2015). In addition to the reversal
in the Kansas case, rulings in other courts were trending toward findings of
employee status, see Alexander v. FedEx Ground Package Sys., Inc., 765 F.3d
981 (9th Cir. 2014) (California law); Slayman v. FedEx Ground Package Sys.,
Inc., 765 F.3d 1033 (9th Cir. 2015) (Oregon law), or at least toward fact issues
for trial. See Gray v. FedEx Ground Package Sys., Inc., 799 F.3d 995 (8th Cir.
2015) (Missouri law); Carlson v. FedEx Ground Package Sys., Inc., 787 F.3d 1313
(11th Cir. 2015) (Florida law).
The parties didn’t immediately ask me to find for the Kansas drivers on
liability and suggest remand to the United States District Court for the District
of Kansas. Instead, the parties had chosen a mediator in an effort to resolve all
of the cases remaining in the Seventh Circuit.
Each case was mediated separately, with some cases requiring several
sessions. Each case was mediated with an eye on the governing law, which varied
from case to case. The mediation spanned four weeks. The drivers and FedEx
Ground exchanged experts’ views as to the maximum recovery for each case if
the drivers prevailed across the board. Settlements were reached in each case,
and the court granted preliminary approval of each of the settlements. The
plaintiffs then retained Rust Consulting to administer the settlements.
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I conducted fairness hearings on March 13 and 14, 2017, and on March
15 and 16, I notified the court of appeals of my inclination to enter final approval
of the class settlements. The court of appeals entered a second limited remand
order on March 22 to allow me to do so.
II. FAIRNESS OF THE SETTLEMENT
Parties can’t settle class actions without the court finding that the
proposed settlement is “fair, reasonable, and adequate.” Fed. R. Civ. P.
23(e); Synfuel Technologies, Inc. v. DHL Express (USA), Inc., 463 F.3d 646, 652
(7th Cir. 2006); see also EEOC v. Hiram Walker & Sons, Inc., 768 F.2d 884, 889
(7th Cir. 1985) (“The district court may not deny approval of a consent decree
unless it is unfair, unreasonable, or inadequate.”). In that effort, we in this circuit
consider several circumstantial factors:
(1) the strength of the case for plaintiffs on the merits, balanced
against the extent of settlement offer; (2) the complexity, length, and
expense of further litigation; (3) the amount of opposition to the
settlement; (4) the reaction of members of the class to the
settlement; (5) the opinion of competent counsel; and (6) stage of the
proceedings and the amount of discovery completed.
Wong v. Accretive Health, Inc., 773 F.3d 859, 863 (7th Cir. 2014)
(quoting Gautreaux v. Pierce, 690 F.2d 616, 631 (7th Cir. 1982)). Of those, the
first is the most important. Martin v. Reid, 818 F.3d 302, 306 (7th Cir. 2016).
The Craig case was filed in a Jefferson County, Kansas court in February
2003, and, after removal to federal court, was centralized in this court under 28
U.S.C. § 1407 in August 2005. At the parties’ request, the attorneys and I
advanced this case to the front of the line, treating it as a quasi-belIwether. I
granted the plaintiffs’ motion for certification of a class in October 2007 and
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granted summary judgment to FedEx Ground in August 2010, finding that the
plaintiffs were independent contractors under Kansas law. The class appealed.
The court of appeals, too, treated this as the lead case and stayed briefing
in the other cases while this one proceeded. After briefing and argument, the
court of appeals certified the question of Kansas law to the Kansas Supreme
Court. Craig v. FedEx Ground Package Sys., Inc., 686 F.3d 423 (7th Cir. 2012).
After briefing and argument, the Kansas Supreme Court adopted a new test for
deciding whether one is an employee or an independent contractor, under which
the Kansas drivers were independent contractors rather than employees. Craig
v. FedEx Ground Package Sys., Inc., 335 P.3d 66 (Kan. 2014). After further
briefing and argument, the federal court of appeals reversed my ruling and
remanded the case. In re FedEx Ground Package Sys. Inc., 792 F.3d 818 (7th
Cir. 2015).
At that point, the parties began settlement discussions. In addition to the
reversal in the Kansas case, rulings in other courts were trending toward findings
of employee status, see Alexander v. FedEx Ground Package Sys., Inc., 765 F.3d
981 (9th Cir. 2014) (California law); Slayman v. FedEx Ground Package Sys.,
Inc., 765 F.3d 1033 (9th Cir. 2015) (Oregon law), or at least toward fact issues
for trial, see Gray v. FedEx Ground Package Sys., Inc., 799 F.3d 995 (8th Cir.
2015) (Missouri law); Carlson v. FedEx Ground Package Sys., Inc., 787 F.3d 1313
(11th Cir. 2015) (Florida law).
In June 2016, the parties reached a proposed settlement. FedEx Ground
would pay $15,900,000 to the plaintiffs. For each workweek of 35 or more hours
during the class period, each class member would receive $92.26; for each
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workweek of 16-35 hours, each class member would receive $32.29. No class
member would receive less than a $250 lump sum. The average recovery per
class member would be $25,722, with the highest share being $117,828. No
plaintiff would be required to fill out, or collect the information needed for, a
claim form. No part of the settlement fund would revert to FedEx Ground if
anything were left over.
The proposed settlement resulted from arms-length negotiations with a
private mediator. Each side took stock of potential liability and damages under
Kansas law. The class consulted an expert in accounting and damages, who
concluded that the maximum recovery the plaintiffs could achieve would be
$25,896,157. FedEx Ground assessed the claims’ value at less than that. The
proposed settlement amounts to about 61 percent of a perfect outcome.
A perfect outcome would be a long way off. With the guidance of the Kansas
Supreme Court, the court of appeals had already deemed the drivers to be
employees, but a trial in the District of Kansas is needed to determine damages.
If the plaintiffs did well at trial, FedEx Ground would likely appeal. Receipt of
any money by any plaintiffs would be a long time off, well beyond the eleven
years already invested in this litigation.
The plan for giving notice of the proposed settlement, and the third party
administrator’s execution of the plan, are detailed thoroughly in the papers
supporting the plaintiffs’ motions, and comply with the preliminary approval
order, Federal Rule of Civil Procedure 23(e), and 28 U.S.C. § 1715.
None of the 479 class members has objected to the proposed settlement.
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Every settlement is a compromise, but this settlement achieves an
exceptional percentage of what the plaintiffs might have won had the case ever
reached trial. In the absence of settlement, the best case scenario for the class
is probably complex, would very likely take many more years, and is certain to
be expensive – perhaps more than what has been incurred to get to this point.
There is no opposition or objection. There is no indication or suggestion of
collusion. Based on all of this, I find that the proposed settlement is fair,
reasonable and adequate.
III. ATTORNEY FEES
Plaintiffs’ co-lead counsel seek an award of attorney fees of $5,247,000
from the settlement amount. Our court of appeals favors the percentage-of-thefund fee in common fund cases because it provides the best hope of estimating
what a willing seller and a willing buyer seeking the largest recovery in the
shortest time would have agreed to ex ante. See In re Synthroid Marketing Litig.,
325 F.3d 974, 979-980 (7th Cir. 2003). As co-lead counsel calculate, that would
be 33 percent of the $15.9 million settlement fund. As I understand the law of
this circuit, I must take another step or two before I can determine attorney fees.
In Redman v. RadioShack Corp., 768 F.3d 622, 630 (7th Cir. 2014), the
court of appeals explained that if we simply divide the gross settlement figure by
the attorney fee request, we saddle the class members with the costs of
administration, which benefit the attorneys as well as the class members.
Accordingly, the court explained, “[t]he ratio that is relevant to assessing the
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reasonableness of the attorneys’ fee that the parties agreed to is the ratio of (1)
the fee to (2) the fee plus what the class members received.” Id.
In their memorandum in support of the motion for final approval, co-lead
counsel expect the $15.9 million class settlement fund to be allocated and
distributed this way: about $10,297,000 to the class; $5,247,000 (if I award what
counsel seek) for attorney’s fees and costs; $47,000 to the third-party
administrator for settlement administration; $15,000 (if I award what counsel
seek) in service fees for each of the 10 named class representative who sat for
depositions in this action; and about $159,000 (1 percent of the settlement) for
a reserve fund for later payments to any self-identified class members.
The affidavit of the third-party administrator’s representative in support of
the plaintiffs’ motion for final approval estimates that about $63,520 is needed
for settlement administration [Doc. No. 2938]. The exhibit attached to the
settlement
agreement
itself
estimates
about
$45,877
for
settlement
administration [Doc. No. 2638-8]. I will base the estimated amount withheld for
administrative costs on the third-party administrator’s estimates, and will
authorize payment up to $75,000 for the cost of settlement administration, to
provide an adequate buffer for any additional costs that may be incurred. The
service fees and the reserve fund would go to class members, so the total going
to class members plus the requested attorney fees (and costs) would be
$15,825,000. A 33 percent fee, as calculated in accordance with Redman v.
RadioShack, would be $5,222,250.
The objectors in the New Jersey case filed a motion to treat all of the
settlements as an aggregate “megafund,” and award much lower percentages for
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attorney fees across the board. At the fairness hearing, counsel for the New
Jersey objectors didn’t persuade me that the New Jersey objectors have standing
to object to proposed settlements in cases to which they aren’t parties. I am
denying their requests to treat these cases as a single “megafund,” but the ruling
and its reasoning are to be found only in the opinion and order in the New Jersey
case – the case in which the objectors have standing.
The Manual for Complex Litigation reports that in deciding an award of
attorney fees, courts should consider the size of the fund to be shared by the
attorneys and class members; the number of class members who will share; any
understandings on attorney compensation methods actually reached at the
outset of the attorney-client relationship; any side agreements class counsel
might have made; any objections by class members; the attorneys’ skill and
efficiency; the litigation’s complexity and duration; the risks of nonrecovery and
nonpayment; the amount of time reasonably devoted to the case by counsel (a
factor not favored in our circuit); and awards in similar cases. Manual for
Complex Litigation (Fourth) § 14.121 (2004). Guides to determining a prevailing
market rate include comparable contracts, data from large common-pool cases
where fees were privately negotiated, and information on class-counsel
auctions. In re Synthroid Marketing Litig., 264 F.3d 712, 719-722 (7th Cir.
2001). I must bear in mind that the greater the fee award, the lower the recovery
by each class member. Redman v. RadioShack, 768 F.3d at 629. In evaluating
these factors, I have relied on the convincing affidavit of Professor Brian T.
Fitzpatrick, as well as the rest of the record in this case.
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There have been no objections to the fee request, I have no information
that any side agreements are involved, and the attorneys involved as co-lead
counsel are very capable and experienced in wage and hour litigation (and they
faced very capable and experienced attorneys that FedEx Ground hired). The size
of the common fund is $15,825,000 after the third party administrator is paid,
and up to 479 class members will share in the recovery.
The named plaintiffs and their attorneys agreed at the outset of the
litigation that counsel would be compensated with 40 percent of any recovery.
The duration of the litigation has been far greater than usual – this case
is 14 years old. In part, that duration reflects this case’s having been co-mingled
with the other cases in the MDL docket – it would have taken a judge in the
District of Kansas far less time to resolve class certification issues and summary
judgment motions under Kansas law than it took me to decide such things under
the laws of 40 or so states – but it also reflects the complexity and risk involved.
This class attacked FedEx Ground’s business model, which was firmly grounded
on the principle of using independent contractors rather than employees. The
class members had a lot at stake, as shown by the damages expert’s opinion that
the class might recover nearly $26 million, if everything broke for the plaintiffs.
This was no nuisance suit or likely coupon settlement. A hard battle was
predictable from day one.
The attorneys handled this case on a pure contingent fee basis. Whatever
investment they made in discovery and briefing of class certification and
summary judgment motion was made largely between 2004 and 2008 – 11 years
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ago, give or take a year. That’s much longer than average for contingent fee
attorneys in class actions, according to Professor Fitzpatrick.
The plaintiffs faced legal challenges they needed to overcome to establish
their employee status and obtain meaningful damages. My grant of summary
judgment to FedEx Ground demonstrates the risk involved in the case. The court
of appeals might have decided I was wrong under Kansas law as it existed then,
but the Kansas Supreme Court hadn’t restated its test for distinguishing
between an employee and an independent contractor. The law on liability didn’t
favor the drivers in February 2003 as much as it does now. The plaintiffs faced
(and overcame) a challenge in obtaining certification of a statewide class that
included drivers with single routes, drivers with multiple routes, drivers who
hired others to handle a route, drivers who signed employment contracts and
those who signed as corporate entities. So while the plaintiffs’ bar generally views
wage and hour cases as undesirable, Ms. Craig and her fellow drivers presented
challenges that went well beyond the normal wage and hour case. The risk of
non-liability and no compensation was great; these plaintiffs went to the court
of appeals trying to reverse a finding of no-liability.
With all of that in their way, class counsel – armed primarily by a new
direction in Kansas law and a few federal court of appeals decisions in cases the
Panel remanded to transferor courts – achieved a truly remarkable result. FedEx
Ground agreed to pay $15.9 million, reflecting well over half of what the plaintiffs
thought they could recover if they ran the table.
Professor Fitzpatrick’s analysis of recent cases from our circuit – which
seems to have a greater preference than other circuits for the percentage-of-the-
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fund method of valuation – supports a fee award of 33 percent of the fund to be
shared by counsel and class members. He reports that the average and median
findings of market rate in contingent fee awards in labor and employment cases
were 34.3 percent and 33.3 percent. He also noted that the awards he studied
addressed only attorney fees and not expenses; co-lead counsel have included
expenses within their requests. Plaintiffs’ counsel report that expenses incurred
in the MDL docket (not just in the Kansas case) exceeded $7,713,000.
In some settings, the prevailing market rate for class counsel depends in
part on the expected size of the payout at the end of the litigation. Professor
Fitzpatrick concedes that his sample of awards in labor and employment class
actions didn’t include recoveries in large amounts. In the setting of a securities
class action, the court of appeals said “[d]ata show that 27.5% is well above the
norm for cases in which $100 million or more changes hands. Eisenberg and
Miller find that the mean award from settlements in the $100 to $250 million
range is 12% and the median 10.2%.” Silverman v. Motorola Solutions, Inc., 739
F.3d 956, 958 (7th Cir. 2013).
The size of this class action settlement is much smaller than the $200
million involved in Silverman v. Motorola Solutions. But it blinks reality to ignore
that while this case was settled individually, it’s one of 20 that remain on the
MDL docket, and the aggregate proposed settlements total more than $200
million, and far more when counting cases that have already been remanded.
The remanded California case settled for $226.5 million on its own.
See Alexander v. FedEx Ground Package Sys., Inc., No. 05-cv-38, 2016 WL
3351017 (N.D. Cal. June 15, 2016). There’s no doubt that much of the discovery
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behind these cases overlapped, and that co-lead counsel applied a concerted
strategy in moving them to settlement. On the other hand, class counsel applied
laws specific to Kansas and conducted case-specific discovery. The settlement I
am considering at this point only involves the Kansas plaintiffs and fees.
Silverman v. Motorola Solutions doesn’t present an apples-to-apples
analysis. First, Professor Fitzpatrick points out that securities cases like
Silverman v. Motorola Solutions differ from wage and hour litigation in many
ways, not least of which that class certification in securities cases is nearly
automatic under today’s laws. In Craig v. FedEx Ground, as with all the other
cases in this MDL docket, class counsel fought hard to get large classes certified,
and (at the time of the settlements) would have seen those certifications revisited
in every case in which they prevailed at the court of appeals.
Second, it’s not clear that the Silverman v. Motorola Solutions analysis
applies, or applies fully, to our case. As already noted, the settlement amount in
this case – the Craig v. FedEx Ground case – isn’t even in the ballpark of what
was involved in Silverman v. Motorola Solutions; I have to look at many other
cases even to reach the $50 million amount the Silverman court also mentioned.
It’s also not clear whether I am expected, or even allowed, to consider the
nature of the plaintiffs involved in a case. The plaintiffs in Silverman were
investors
in
Motorola;
the
class
representatives
were
institutional
investors. Silverman v. Motorola, Inc., No. 07-C-4507, 2012 WL 1597388, at *4
(N.D. Ill. May 7, 2012). Institutional investors are likely to be more sophisticated
in the market for legal services than the individual drivers in this case, and so
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likelier to agree at the outset to a tapered fee arrangement rather than a simple
percentage-of-the-recovery arrangement.
Third, the class representative in this case agreed that the attorneys would
be compensated by 40 percent of any recovery, and the attorneys now seek a
smaller percentage. If I am to consider the other settlements in this MDL docket,
it seems appropriate to consider as well that many of the named plaintiffs agreed
at the outset to pay the attorney 33 percent (and some as much as 40 percent)
of any recovery, without limitation as to how much the recovery might be. None
of the class representatives in the 20 cases remanded to me have fee agreements
for any percentage less than 33 percent.
Co-lead counsel’s request for compensation at 33 percent of the recovery
is higher than what they sought in the other cases on remand from the court of
appeals: in the 19 other cases, they sought 30 percent. They might have
succeeded in those cases had they sought a rate of 33 percent, but what I have
to decide is whether, if 30 percent reflects the market rate in 19 other cases
presenting the same basic issues, the market rate for the Kansas case would be
higher.
Yes, it would have been higher. The Kansas case was filed almost 3 years
before any of the other cases, and for that time was alone in venturing down this
path. For the same reason, it was pending far longer than most of the other
cases; whatever was invested in the case in its early days has either been
unavailable to the firms or accruing interest for nearly an eighth of a century.
While none of the other 19 cases reached briefing or argument in the court of
appeals, this case was briefed and argued twice in the court of appeals, with an
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intervening round of briefing and argument in the Kansas Supreme Court. This
is the only one of the 20 cases that produced a holding favoring the drivers on
the merits, and that holding helped shepherd the parties into the 2016
mediations. A willing client would have promised a higher portion of any recovery
in this case than in the other cases to entice attorneys to handle this challenging
case.
The actual facts support that finding. In very few of the other 19 cases, the
actual retention agreement called for compensation at 40 percent. Several called
for 33 percent, and the rest didn’t specify the percentage. No class
representatives in the other cases agreed to a higher rate than the 40 percent to
which Ms. Craig and her fellow Kansas class representatives agreed.
A lodestar cross-check – inquiring into billable hours and billing rates –
isn’t encouraged in this circuit, see Williams v. Rohm and Haas Pension Plan,
658 F.3d 629, 638 (7th Cir. 2011); Cook v. Niedert, 142 F.3d 1004, 1013 (7th
Cir. 1998), and I’m not undertaking such a cross-check. A very complex
examination of time sheets, hourly rates in various markets, and records would
be needed to arrive at a true lodestar figure for this case alone. Co-lead counsel
report, just in case, that across this litigation (not just this case), co-lead counsel
and their firms have devoted more than 149,393 hours, producing an
unadjusted collective lodestar fee of $74,540,341 had they billed by the hour. It
would take only a modest 1.3 multiplier, co-lead counsel tell me, for the lodestar
calculation to match the percentage-of-the-fund calculation across the litigation.
Even identifying the precise amount attributable to work on the cases
remaining in the MDL would be difficult. In Alexander v. FedEx Ground, for
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example, Judge Chen attributed about $12.4 million in lodestar work on the
MDL to Alexander. See Alexander v. FedEx Ground, No. 05-cv-38, 2016 WL
3351017, at *3 (N.D. Cal. June 15, 2016). This would need to be subtracted out
of co-lead counsel’s estimated lodestar figure for the MDL, but the fee award in
that case is on appeal and might be adjusted. The fee award is unpaid. Fee
awards in other remanded cases total $6,304,893, and I would need to deduct
the amount of fees expected to be paid in those that can be attributed to work
on cases still in the MDL. I don’t have an accurate way to calculate the
denominator from which I can then derive a multiplier.
It seems inescapable that there is a significant spillover between the 20
cases remaining in MDL-1700. For example, the appeal/certification/reargument in the Craig v. FedEx Ground case from Kansas clearly benefitted all
of the classes; it was part of the trend in the law that seemed to be shifting away
from FedEx Ground’s legal position. The depositions co-lead counsel took of
FedEx Ground’s national officers produced information that applied to all of the
cases. But the spillover might be less than it appears at first blush. Substantial
discovery surrounded local dispatch terminals, and the lion’s share of the briefs
on class certification and summary judgment were devoted to the specific laws
of the various states.
For me to count up, or assign weight to, the various points I have
discussed (effectively transforming them into “factors”) would be inconsistent
with the law of our circuit. It would be what our court of appeals has called
“chopped salad”. In Re Synthroid Marketing Litig., 264 F.3d at 719. But these
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are the reasons I conclude that the requested 30 percent (after accounting for
the costs of administration) produces a reasonable attorney fee:
1. At the outset of the attorney-client relationship, it would have been
plain to the clients and attorneys that this litigation would be hard
fought and would take years. FedEx Ground’s very business model was
at stake, and, if the class was defined broadly, the drivers would have
hundreds of thousands – maybe millions – at stake. The history of this
case – what would have been the future at the outset of the relationship
– was even worse, with the case being centralized in a multidistrict
litigation docket, the extensive discovery already discussed, and a
decade of litigation, and no end in sight that would benefit the plaintiffs.
2. Because of the anticipated duration of the case, it also would have been
plain to all that the attorneys would have to turn away prospective
clients and tie up their own funds for the life of the case.
3. Counsel produced exceptional results in the face of long odds. Kansas
law provided no assurance of success, and these plaintiffs lost at the
trial level. See Redman v. RadioShack, 768 F.3d at 633 (“the central
consideration is what class counsel achieved for the members of the
class rather than how much effort class counsel invested in the
litigation.”).
4. The amount of recovery would have been a fraction of what this
settlement proposal contains had counsel not persuaded me to certify
a class that included drivers with a single work area, drivers with
multiple work areas, drivers who contracted with FedEx Ground under
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a corporate identity, and drivers who simply hired others to cover some
of their assigned routes.
5. Of the 20 fee contracts in the cases that remain in MDL-1700, none set
a percentage of the recovery less than the 33 percent requested here,
and several set the percentage at one-third of any recovery. The
agreement in this case called for 40 percent.
6. There is nothing from which I can infer that unsophisticated (in the
market for legal services) clients – when compared with institutional
plaintiffs – would request a tapered-fee arrangement.
7. The fee request, unlike those to which it might be compared, includes
expenses rather than seeking them separately. While I can’t say how
much is attributable to the Kansas case as opposed to the others colead counsel was handling, the overall total of expenses was $7.7
million.
8. Nobody has objected to co-lead counsel’s fee request.
For all of these reasons, I approve, in large part, the proposed settlement
agreement’s proposed award of attorneys’ fees and expenses in the total amount
of $5,222,250 (30 percent of the gross settlement amount, less the cost of
administration).
IV. SERVICE AWARDS TO CLASS REPRESENTATIVE
Class counsel request service awards of $15,000 to each of the 10 named
plaintiffs. That count excludes lead plaintiff Carlene Craig, who withdrew as a
named plaintiff in November 2006. They explain that (in addition to the
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extraordinary duration of their service) the class representatives did far more
than the average class representative. Reams of records had to be collected, the
class representatives (like each class representative in the companion cases) sat
for grueling day-long depositions. Class counsel notes that the requested awards
are in line with several that have been approved in cases from within this circuit,
citing Cook v. Niedert, 142 F.3d at 1016 ($25,000); In re Southwest Airlines
Voucher Litig., No. 11 C 8176, 2013 WL 4510197, at *11 (N.D. Ill., Aug. 26, 2013)
($15,000 to 2 plaintiffs); Heekin v. Anthem, Inc., No. 05-cv-1908, 2012 WL
5878032 at *1 (S.D. Ind. Nov. 20, 2012) ($25,000); Am. Int’l Grp., Inc. v. ACE
INA Holdings, Inc., No. 07 C 2898, 2012 WL 651727, at *17 (N.D. Ill. Feb. 28,
2012); ($25,000 to each of 7 plaintiffs); Will v. Gen. Dynamics Corp., Civ. No. 06698, 2010 WL 4818174 at *4 (S.D. Ill. Nov. 22, 2010) ($25,000 to 3 plaintiffs).
No objections were directed to this request.
The request for $15,000 service awards for each of the 10 class
representatives – $150,000 in all – is just, fair and reasonable.
V. CONCLUSION
Based on the foregoing, the court:
(1) GRANTS the plaintiffs’ unopposed motion for final approval of the
Kansas class action settlement calling for payment of $15,900,000 to the
plaintiffs [Doc. No. 2862].
(2) GRANTS IN PART the plaintiffs’ motion for attorney’s fees and costs
[Doc. No. 2789]; AWARDS class representatives Keith Barry, Neal Bergkamp, Jeff
Bramlage, Matthew Cook, Heidi Law, Lawrence Liable, Mike Moore, Sylvia
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O’Brien, Leo Rittenhouse, and Kent Whistler $15,000 each for their services in
this case; DIRECTS payment of that amount from the class settlement fund to
them, in accordance with the terms of the settlement agreement; and AWARDS
plaintiffs’ counsel $5,222,250 for their services and expenses on this case, and
DIRECTS payment of that amount from the class settlement fund to them.
(3) ORDERS that:
A. The parties shall perform, or cause to be performed, the remaining
terms of the settlement as set forth in the settlement agreement. The court
authorizes the payment by the settlement administrator of the settlement funds
in accordance with the terms of the settlement agreement.
B. Prior timely opt-outs on the list maintained by the claims administrator
are not included in or bound by this order and final judgment. Those timely optouts are not entitled to any recovery from the settlement proceeds obtained
through this settlement.
C.
The
court
hereby
DISMISSES these claims with
prejudice,
specifically including the Released Claims, with each party to bear its own
costs and attorney’s fees, except as provided below. The court incorporates the
Class Action Settlement Agreement [Doc. No. 2638-1] by reference in this order.
As set forth in the Settlement Agreement, “Released Claims” means all
claims, actions, causes of action, administrative claims, demands, debts,
damages, penalties, costs, interest, attorneys’ fees, obligations, judgments,
expenses, or liabilities, in law or in equity, whether now known or unknown,
contingent or absolute, which: (i) are owned or held by the plaintiffs and class
members and/or by their affiliated business entities (if any), or any of them, as
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against Releasees, or any of them; (ii) arise under any statutory or common law
claim which was asserted in this lawsuit or, whether or not asserted, could have
been brought arising out of or related to the allegations of misclassification of
plaintiffs and class members as independent contractors set forth in the
operative complaint; and (iii) pertain to any time in the Release Period. The
Released Claims include any known or unknown claims for damages and
injunctive relief. The Released Claims include but are not limited to claims under
Kan. Stat. Ann. § 44-319, et seq., the Declaratory Judgment Act, 28 U.S.C. §
2201, and common law claims for fraud, breach of contract, rescission, or
declaratory judgment. The release excludes claims arising under the Employee
Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 et seq. Further
definitions of “Released Claims” can be found in Sec. I, para. R of the Settlement
Agreement [Doc. No. 2638-1].
“Releasees” means: “(a) [FedEx Ground], and its consolidated subsidiaries,
successors, predecessors, assigns, affiliates, parent companies, shareholders,
officers, directors, agents, insurers, attorneys, and employees; and (b) [FedEx
Ground’s] past, present, and future shareholders, officers, directors, agents,
employees, attorneys, and insurers.” (Settlement Agreement, Sec I, para. S).
“Release Period” refers to the time period from February 11, 1998 through April
30, 2016. (Settlement Agreement, Sec. I, para. T). [Doc. No. 2638-1].
D. Upon the entry of this order, the plaintiffs and all class members shall
be deemed to have fully, finally, and forever released, relinquished, and
discharged all Released Claims against all Releasees. “Class members” include
“All persons who: 1) entered into a FedEx Ground or FedEx Home Delivery Form
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Operating Agreement (now known as OP-149 and Form OP-149-RES); 2) drove a
vehicle on a full-time basis (meaning exclusive of time off for commonly excused
employment absences) from February 11, 1998 through October 15, 2007 to
provide package pick-up and delivery services pursuant to the Operating
Agreement; and 3) were dispatched out of a terminal in the state of Kansas.”
[Doc. No. 2638-1]. A list of the class members is attached to this order as Exhibit
A. To the extent additional individuals are identified who qualify as class
members under the terms of the settlement agreement, they will be bound by
this order.
E. Upon the entry of this final approval order, the plaintiffs and all class
members are barred and enjoined from asserting, filing, maintaining, or
prosecuting, or in any way participating in the assertion, filing, maintenance or
prosecution, of any action asserting any Released Claim against any of the
Releasees, as set forth in and in accordance with the terms of the settlement
agreement. Nothing in this order shall in any way impair or restrict the right of
the parties to enforce the terms of the settlement.
F. The Parties’ agreed upon procedure for disbursement of the $159,000
reserve fund provided for in the Settlement Agreement and the Plaintiffs’ Motion
for Final Approval [Doc. No. 2862], with such claims to be paid approximately
220 days after checks are issued to pay the claims of persons who fit the class
definition but who were not previously identified as members of the plaintiff class
according to the settlement formula described in the Settlement Agreement, is
APPROVED. FedEx Ground will submit a list containing the names of such
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persons within 220 days of this order; this list will supplement the class member
list attached as Exhibit A and such persons will be bound by this order.
F. The parties’ request for appointment of Kansas Legal Services, 712 S.
Kansas Ave, Suite 200, Topeka, KS 66603 to be the cy pres beneficiary is
APPROVED.
H. Neither the settlement, nor any act performed or document executed
pursuant to or in furtherance of the settlement, is or may be deemed to be or
may be used as: (a) an admission of, or evidence of, the validity of any Released
Claim or any wrongdoing or liability of any Releasee; (b) an admission or
concession by the plaintiff or any class member of any infirmity in the claims
asserted in the operative complaint filed in this action; (c) an admission of, or
evidence of, any fault or omission of any of the Releasees in any civil, criminal,
or administrative proceeding in any court, administrative agency, or other
tribunal.
I. The third-party administrator, Rust Consulting, Inc., may retain up to
$75,000 as compensation for settlement administration.
J. Without affecting the finality of this judgment in any way, the court
retains continuing jurisdiction over: (1) the enforcement of this order and final
judgment; (2) the enforcement of the settlement agreement; (3) the distribution
of the settlement proceeds to the class members and the cy pres beneficiary; and
(4) class counsel’s proposed allocation of attorney’s fees to plaintiffs’ counsel to
be submitted to the court.
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This order resolves all claims other than the ERISA claim. No just reason
exists for delay in entry of judgment, so the clerk of this court is directed to enter
judgment accordingly.
SO ORDERED.
ENTERED: June 19, 2017
/s/ Robert L. Miller, Jr.
Judge
United States District Court
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