Rodriguez v. Hermes Landscaping, Inc.
Filing
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MEMORANDUM AND ORDER granting 112 Motion for Settlement. The parties are directed to implement and consummate the class settlement according to the terms and provisions of the Settlement Agreement [101-1]. The court dismisses with prejudice all claims in this action and, except as otherwise explicitly provided for in the Settlement Agreement [101-1], does so without costs awarded to either side. Signed by District Judge John W. Broomes on 6/18/2020. (sz)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
ANTONIO CHAVEZ RODRIGUEZ,
on behalf of himself and all others
similarly situated, et al.,
Plaintiffs,
v.
No. 17-2142-JWB-KGG
HERMES LANDSCAPING, INC.,
Defendant.
MEMORANDUM AND ORDER
This matter is before the court on Plaintiffs’ unopposed Motion for Final Settlement
Approval (Doc. 112). After a Final Settlement Hearing (“Hearing”) on June 3, 2020, with no class
members appearing to object or having filed any written objections and notice of the Hearing being
provided as required by the Preliminary Approval Order (Doc. 103), the matter is fully briefed.
For the reasons stated herein, Plaintiffs’ motion to approve the proposed Settlement Agreement is
GRANTED.
I.
Background and Facts
The named Plaintiffs in this action – Antonio Chavez Rodriguez, Isaac Chavez Duarte, and
Jose Alfredo Soto Servin – and the class members are Mexican nationals who came to Kansas to
work for Defendant Hermes Landscaping, Inc. (“Hermes”) as part of the guest worker visa
program commonly known as the “H-2B program.” (Second Am. Compl. ¶ 25.) Plaintiffs brought
this action as both an opt-in collective action under the Fair Labor Standards Act (“FLSA”) and as
a class action under Federal Rule of Civil Procedure 23 (“Rule 23”). Plaintiffs allege violations
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related to the wages paid to the H-2B worker class members and the expenses incurred by the
workers for visas, recruitment, and travel.
On September 5, 2018, Judge Murguia granted Rule 23 certification for three classes under
this action:
a Main Class, defined as: all employees who worked for Hermes as H-2B or H2R visa holders from March 6, 2012 through the date of preliminary approval
of the class; (2) an Hours Worked Subclass, defined as: all employees who
worked for Hermes as H-2B or H-2R visa holders from March 6, 2012 through
the date of preliminary approval of the class who worked as crew members
(Doc. 55 at 5); and (3) a 2013 Subclass defined as all employees who worked
for Hermes as H-2B or H-2R visa holders between July 9, 2013 and the end of
2013.
(Doc. 76 at 3-4.)
After depositions and significant discovery, the parties settled all claims through mediation
with the assistance of Joe Eischens, an experienced labor and employment attorney and mediator.
Under the agreement, Hermes will pay, in two installments, a total of $415,000, in addition to
bearing the cost of mediation. The settlement benefits as many as 154 current and former
employees and will resolve all claims in the case. Attorneys’ fees will comprise 33% of the funds
to be paid under the Settlement – an amount of $133,333 – after deduction of expenses in the
amount of $15,000 from the common fund. Although the settlement primarily disposes of the
Plaintiffs’ Rule 23 class action claims, the six individuals who joined the action as opt-in plaintiffs
under 29 U.S.C. § 216(b) will also release their FLSA claims.
Class members and opt-in Plaintiffs will receive settlement amounts ranging from a
minimum of $250 to a maximum of $4,200 (before required withholdings). (May 29, 2020 Decl.
of Patricia Kakalec (“Kakalec Decl.”) ¶ 5.) As provided by the agreement, the amounts are
determined primarily by the length of time that class members worked for Hermes. The six optin Plaintiffs receive additional compensation for their FLSA claims while the three named
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Plaintiffs each receive an additional $7,500 as service awards. (Doc. 101-1; Ex. C §5.) The notice
provided to the class members informed them of the specific amount they would receive under the
agreement and provided a method by which they could object to the agreement.
The parties then sought preliminary approval of their settlement agreement, which was
granted by Judge Murguia. (Doc. 103.) Plaintiffs sent notice of the settlement as provided in the
agreement. With no objections to the settlement being received, Plaintiffs filed an unopposed
Motion for Final Settlement Approval (Doc. 112.) A hearing on the final settlement agreement
was held on June 3, 2020.
II.
Standard
Decisions approving class action settlements fall within the district courts’ sound
discretion. Jones v. Nuclear Pharmacy, Inc., 741 F.2d 322, 324 (10th Cir. 1984). The court may
approve a proposed settlement “only after a hearing and only on finding that it is fair, reasonable,
and adequate.” Fed. R. Civ. P. 23(e)(2).
III.
Analysis
Traditionally, the Tenth Circuit has instructed courts to analyze four factors when deciding
if a Rule 23 agreement is fair, reasonable, and adequate:
(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).
However, new amendments to Rule 23 became effective on December 1, 2018. These
amendments gave four new factors a court must find to render an agreement as fair, reasonable,
and adequate:
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(A) the class representatives and class counsel have adequately represented the
class; (B) the proposal was negotiated at arm’s length; (C) the relief provided
for the class is adequate, taking into account: (i) the costs, risks, and delay of
trial and appeal; (ii) the effectiveness of any proposed method of distributing
relief to the class, including the method of processing class-member claims; (iii)
the terms of any proposed award of attorney’s fees, including timing of
payment; and (iv) any agreement required to be identified under Rule 23(e)(3);
and (D) the proposal treats class members equitably relative to each other.
Fed. R. Civ. P. 23(e)(2).
The advisory committee noted these new factors were not meant to displace any circuit’s
unique factors, but rather focus courts on the core concerns in deciding whether to approve a
proposed settlement. See Fed. R. Civ. P. 23, advisory committee’s note to 2018 amendment. The
Tenth Circuit’s additional factors largely overlap, with only the fourth factor not being subsumed
into the new Rule 23. Accordingly, the court considers the Rule 23(e)(2) factors as the main tool
in evaluating the propriety of the settlement but still addresses the Tenth Circuit’s factors below.
A. The Settlement Class was Adequately Represented
Courts have analyzed the adequacy of representation by evaluating adequacy under Rule
23(a)(4). See In re: Samsung Top-Load Washing Mach. Mktg., Sales Practices and Prod. Liab.
Litig., No. 17-ml-2792-D, 2020 WL 2616711 (W.D. Ok. May 22, 2020); O’Connor v. Uber Techs.,
Inc., No. 13-3826, 2019 WL 143711, at *6 (N.D. Cal. Mar. 29, 2019); In re Payment Card
Interchange Fee & Merch. Disc. Antitrust Litig., No. 05-1720, 2019 WL 359981, at *15 (E.D.N.Y.
Jan. 28, 2019). Both class counsel and class representatives were previously found to be adequate
by Judge Murguia under this standard. (Doc. 76 at 8.) While this was a past evaluation of
competence, the facts illustrate adequate representation throughout the case.
Class counsel drafted motions opposing applications for interlocutory appeal, defended
attacks on class certifications, and traveled to Mexico City for depositions. The named Plaintiffs—
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the class representatives—all reside in Mexico and traveled 17 hours each way to Mexico City
from their homes to participate in the deposition process. Further, class representatives spent
several days in Mexico City preparing for and giving their depositions in the case. Balancing the
entirety of the case with the ultimate resolution and settlement reached supports a finding of
adequate representation.
B. Proposal was Negotiated at Arm’s Length
The Tenth Circuit’s fair and honest negotiation requirement can be subsumed under Rule
23’s second factor—arm’s-length negotiation. Counsel for both parties are experienced class
action attorneys. The Settlement Agreement was negotiated through a formal mediation with Joe
Eischens—an experienced labor and employment attorney—serving as mediator. This mediation
took place after significant discovery, including depositions. Nothing in the record suggests the
settlement agreement was the product of collusion. On the facts, the settlement agreement before
the court is a product of an arm’s length negotiation.
C. Relief Provided to the Settlement Class is Adequate
Next, the Tenth Circuit requires the court to consider “whether serious questions of law
and fact exist, placing the ultimate outcome of the litigation in doubt” and “whether the value of
an immediate recovery outweighs the mere possibility of future relief after protracted and
expensive litigation.” Rutter, 314 F.3d at 1188. These considerations largely overlap and can be
subsumed under Rule 23’s requirement that the settlement agreement’s adequacy be measured
against the “costs, risks, and delay of trial and appeal” of the underlying case. Rule 23(e)(2)(C)(i).
If the case were to move forward in litigation, there are serious questions of law and fact
that place Class Members’ ability to recover in jeopardy. First, the case presented significant
questions about the applicability of the Motor Carrier Exemption to the FLSA, which if applicable
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could preclude or substantially limit class H-2B workers’ claims for overtime wages. 29 U.S.C.
13(b)(1). Second, Plaintiffs’ claims that a higher prevailing wage rate was required to be paid to
H-2B workers in 2013 was placed in serious doubt as the Secretary of Labor recently issued a
notice indicating employers need not pay the higher wages at issue. See Notice of Withdrawal, 85
Fed. Reg. 14706 (Mar. 9, 2020). With most of Plaintiffs’ damages being based upon overtime
wages, anything undercutting the viability of overtime damages could have significantly
diminished the value of the case. Further, with class counsel representing in the Hearing there
would be significant discovery—with added costs of travel since most plaintiffs were in Mexico—
combined with defendant’s readiness to move for decertifying the class and the resulting appeals
process from that, the costs and time of moving forward in litigation would be substantial.
Next, the court considers adequacy of the effectiveness of the “proposed method of
distributing relief to the class, including the method of processing class-member claims.” Rule
23(e)(2)(C)(ii). Counsel represented in the Hearing that checks will be distributed by hand by
Defendant to those class members who are employed by Defendant at the time of distribution.
Checks will be mailed to other class members using Estafeta, a private courier providing service
between the United States and Mexico. Further, the calculations of awards were done using data
provided by Defendant and with the help of a data analyst. The court is satisfied the Settlement
Agreement ensures proper process of claims and efficient distribution of relief.
Finally, with the proposed award of attorneys’ fees being discussed below, the court
considers the adequacy of the timing of the attorneys’ fees and the Settlement Agreement.
Payment of attorneys’ fees will be made half at the time of the first settlement payment and half at
the time of the second settlement payment. The Settlement Agreement contains standardized terms
and does not raise any concerns about Class Members not receiving their fair share or being
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required to surrender rights that should require separate negotiations. The court finds the relief
provided to Class Members is adequate.
D. Settlement Agreement treats the Settlement Class equitably
The fourth and final factor the court must consider is whether the proposed agreement
“treats class members equitably relative to each other.” Rule 23 (e)(2)(D). When a service award
“perform[s] the legitimate function of encouraging individuals to undertake the frequently onerous
responsibility of [serving as the] named class representative” additional money awards are
reasonable. Nieberding v. Barrette Outdoor Living. Inc., 129 F. Supp. 3d 1236, 1251 (D. Kan.
2016).
The amount received by each Class Member is based upon the number of weeks that
individual worked for Defendant, the number of years that individual worked (for travel
reimbursement), whether the individual worked in 2013 (for which there is a separate wage claim),
and whether the individual opted into the action to bring an FLSA claim. Additionally, the named
plaintiffs—receiving service awards—conferred with Class Counsel, provided statements and
discovery responses, travelled to Mexico City and participated in depositions, and fulfilled all their
duties as class representatives. The court finds the Settlement Agreement treats all class members
equitably and the service awards of $7,500 to each of the three named plaintiffs are fair.
While the fourth Tenth Circuit factor does not directly overlap with Rule 23’s final factor,
if all Class Members are treated equitably, counsel for both sides agree the outcome is good, and
there are no objections to the Settlement Agreement, it appears the parties agree the settlement is
fair and reasonable. Thus, the court finds this Settlement Agreement is fair, reasonable, and
adequate under both the Tenth Circuit factors and the newly amended Rule 23(e)(2) factors.1
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While the Settlement Agreement primarily disposes of Plaintiffs’ Rule 23 class action claims, those Class Members
who joined the action under 29 U.S.C. § 216(b) will also release their FLSA claims. Approving an FLSA settlement
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E. Attorneys’ Fees and Costs are Reasonable
Finally, the court considers Plaintiffs’ attorneys’ request that 33% of the settlement amount
after costs—$133,333—be paid as reasonable attorneys’ fees, and $15,000 in costs be paid from
the settlement amount as reasonable and necessary expenses. When considering a fee application
as part of a class settlement, courts consider whether the fees are reasonable. See Brown v. Phillips
Petroleum Co., 838 F.2d 451, 453 (10th Cir. 1988); see also Fed. R. Civ. P. 23(h). Attorneys’ fees
may be appropriately awarded from a class action settlement fund “on the theory ‘that persons who
obtain the benefit of a lawsuit without contributing to its costs are unjustly enriched at the
successful litigant’s expense.’” See In re: Urethene Antitrust Litig., No. 04-01616, 2016 WL
4060156, at *4 (D. Kan. July 29, 2016) (citing Gottlieb v. Barry, 43 F.3d 474, 482 (10th Cir. 1994)
(quoting Boeing Co. v. Van Gemert, 444 U.S. 472, 478 (1980)). In fact, “[t]he Tenth Circuit has
expressed a preference for the percentage-of-the-fund method of awarding attorney fees in
common fund cases.” Id. (citing Rosenbaum v. MacAllister, 64 F.3d 1439, 1445 (10th Cir. 1995)).
When setting percentage fee awards in common fund cases, the Tenth Circuit has endorsed
the use of the Johnson factors. See Brown, 838 F.2d at 454-55; (noting “rarely are all of the
Johnson factors applicable; this is particularly so in a common fund situation.”) Id. The twelve
Johnson factors include:
(1) the time and labor involved; (2) the novelty and difficulty of the questions;
(3) the skill requisite to perform the legal service properly; (4) the
preclusion of other employment by the attorney due to acceptance of the
case; (5) the customary fee; (6) any prearranged fee—this is helpful but not
determinative; (7) time limitations imposed by the client or the circumstances;
(8) the amount involved and the results obtained; (9) the experience, reputation,
and ability of the attorneys; (10) the undesirability of the case; (11) the nature
and length of the professional relationship with the client; and (12) awards in
similar cases.
only requires the court to find “the litigation involves a bona fide dispute and that the proposed settlement is fair and
equitable to all parties concerned.” Barbosa v. Nat’l Beef Packing Co., LLC., No. 12-2311-KHV, 2015 WL 4920292,
at *3 (D. Kan. Aug. 18, 2015). This settlement satisfies the FLSA’s lower standard.
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Id.
The time and labor undertaken by Plaintiffs’ counsel has been significant; counsel has
worked on this case for over three years—logging over 500 hours during this time. Counsel filed
a motion for preliminary certification under the FLSA, a motion for leave to conduct depositions
in Mexico, a motion for class certification, and an opposition to Defendant’s motion for leave for
interlocutory appeal to the Tenth Circuit. Counsel traveled to Mexico City to meet with the named
Plaintiffs and defend their depositions. Counsel served and responded to discovery requests for
both the named plaintiffs and the six opt-in plaintiffs, a task made significantly more complex
because most Plaintiffs reside in Mexico and are mono-lingual Spanish speakers. Counsel worked
with translators to provide translated interrogatory responses and various statements throughout
the litigation.
In addition, this case presented novel and difficult issues as it required analysis of the
regulations under the H-2B program, a specific area in which Plaintiffs’ counsel Patricia Kakalec
has significant experience. Moreover, both class counsel firms are small firms and had to forego
other employment for time spent litigating this case. The one-third contingent fee is the amount
agreed to under Plaintiffs’ counsel’s retainer (Kakalec Decl., Ex. B) and is a customary percentage
in a case such as this. No class member has objected to the fees in this case. Plaintiffs have
recovered meaningful sums – most in the range of several thousand dollars each – as part of the
settlement. As set forth in Plaintiffs’ counsels’ declarations, both attorneys are experienced with
federal collective and class litigation. Due to the case being brought on behalf of non-English
speakers residing in another country, the case was likely undesirable to other firms. Counsel has
not represented the Plaintiffs in prior (or subsequent) cases.
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Finally, counsel’s out-of-pocket costs totaling $15,000, which are primarily mediation
expenses, deposition-related costs, translation expenses, travel to Mexico for depositions,
distribution expenses, and court fees, are reasonable. Thus, the court finds the attorney’s fee and
expenses sought by Plaintiffs’ counsel are reasonable.
IV.
Conclusion
Plaintiffs’ unopposed Motion for Final Settlement Approval (Doc. 112), including
attorneys’ fees and costs as set forth in this Order, is GRANTED. The parties are directed to
implement and consummate the class settlement according to the terms and provisions of the
Settlement Agreement (Doc. 101-1). The court dismisses with prejudice all claims in this action
and, except as otherwise explicitly provided for in the Settlement Agreement (Doc. 101-1), does
so without costs awarded to either side.
IT IS SO ORDERED this 18th day of June, 2020.
____s/ John W. Broomes____________
JOHN W. BROOMES
UNITED STATES DISTRICT JUDGE
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