Marquez et al v. Midwest Division MMC, LLC et al
Filing
103
MEMORANDUM AND ORDER granting #101 RENEWED AND CONSOLIDATED UNOPPOSED MOTION for Order Preliminarily Approving Class and Collective Action Settlement, Attorneys' Fees Award, Litigation Costs, Settlement Administrator, and Class Representative Service Awards and Directing Notice to the Class and Scheduling Final Fairness Hearing. The Court directs the parties to provide notice to the class and collective action members, consistent with the Order. See order for further details. Signed by District Judge Daniel D. Crabtree on 11/21/2022. (kas)
Case 2:19-cv-02362-DDC-ADM Document 103 Filed 11/21/22 Page 1 of 26
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
TAMMIE MARQUEZ, et al., on behalf
of themselves and all others similarly
situated,
Plaintiffs,
Case No. 19-2362-DDC-ADM
v.
MIDWEST DIVISION MMC, LLC, et al.,
Defendants.
_____________________________________
MEMORANDUM AND ORDER
Plaintiffs have filed a “Renewed and Consolidated Unopposed Motion for Order
Preliminarily Approving Class and Collective Action Settlement, Attorneys’ Fees Award,
Litigation Costs, Settlement Administrator, and Class Representative Service Awards and
Directing Notice to the Class and Scheduling Final Fairness Hearing.” Doc. 101. Plaintiffs filed
this renewed motion in response to the court’s Memorandum and Order granting in part and
denying in part an earlier motion that plaintiffs had filed seeking approval of their hybrid Rule 23
and FLSA collective action settlement. Doc. 100. Specifically, the court’s last Order granted the
requests: (1) to certify a Rule 23 class and FLSA collective action for settlement purposes, (2) to
appoint plaintiffs Tammie Marquez, Neesha Perez, and Josiah Chumba as class representatives,
and (3) to appoint Mary Katherine Paulus and Jessica M. McDowell of Cornerstone Law Firm as
class counsel. Id. at 42–43. But the court denied without prejudice to refiling plaintiffs’ motion
to approve preliminarily the parties’ proposed settlement, direct notice to the class, and schedule
a Final Approval Hearing. Id. at 2, 43. The court explained that it could not approve the
proposed settlement because the parties’ Settlement Agreement included an agreement by
Case 2:19-cv-02362-DDC-ADM Document 103 Filed 11/21/22 Page 2 of 26
defendants not to contest the amount of the service awards in exchange for the named plaintiffs’
agreement to an overly broad and general release of all claims against defendants. See id. at 2–3,
29–34. Plaintiffs’ renewed motion explains that the parties have removed this provision from
their Amended Settlement Agreement. Doc. 102 at 2 (citing Doc. 102-1 at 23–24 (Amended
Settlement Agreement ¶¶ 49, 51)). With this amendment to the parties’ Amended Settlement
Agreement, the court preliminarily approves the parties’ proposed settlement. Also, the court
directs the parties to provide notice to the class and collective members consistent with this
Order. And the court schedules a fairness hearing for February 9, 2023. The court explains
how it reaches these decisions, below.
I.
Factual Background
The court more thoroughly described this case’s factual and procedural background in
its last Memorandum and Order. Doc. 100 at 3–7. But, for context, the court provides a brief
summary of the parties and claims at issue in the case.
Plaintiffs Tammie Marquez, Neesha Perez, and Josiah Chumba are registered nurses
(RNs) who worked for entities affiliated with HCA Healthcare. Plaintiffs bring class and
collective action claims against defendants for unpaid compensation and related penalties and
damages under the Fair Labor Standards Act (FLSA), 29 U.S.C. §§ 201–19, and the Kansas
Wage Payment Act (KWPA), Kan. Stat. Ann. §§ 44-313–44-327. Doc. 27 at 13–17, 19–22
(Second Am. Compl. ¶¶ 68–94, 106–124). Also, invoking Kansas common law, plaintiffs assert
class claims for unjust enrichment and quantum meruit claims under Fed. R. Civ. P. 23. Id. at
17–19 (Second Am. Compl. ¶¶ 95–105).
After many months of prosecuting this lawsuit, the parties reached an agreement to settle
plaintiffs’ claims. Plaintiffs now ask the court to issue an Order: (1) preliminarily approving the
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parties’ proposed class and collective action settlement, (2) approving the form and manner of
notice, (3) scheduling a hearing date for final settlement approval, and (4) approving an
attorneys’ fee award, litigation costs, settlement administrator fees, and class representative
service awards. The court addresses these requests, below.
II.
Legal Standard
“Court approval is required to settle both Rule 23 class actions and FLSA claims.”
Florece v. Jose Pepper’s Rests., LLC, No. 20-2339-ADM, 2021 WL 5038773, at *2 (D. Kan.
Oct. 29, 2021) (first citing Pliego v. Los Arcos Mexican Rests., Inc., 313 F.R.D. 117, 127–28 (D.
Colo. 2016); then citing Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350, 1353 (11th
Cir. 1982); and then citing Fed. R. Civ. P. 23(e)). When “the court has not yet certified an FLSA
collective action or a Rule 23 class action, the court must first consider certification before
addressing the proposed settlement.” Id. (citing Flerlage v. US Foods, Inc., No. 18-2614-DDCTJJ, 2020 WL 4673155, at *2–4, *8 (D. Kan. Aug. 12, 2020)). The court’s last Order considered
the certification question and granted plaintiffs’ request to certify, conditionally, a settlementonly class under 29 U.S.C. § 216(b) of the FLSA and a Rule 23 settlement-only class for their
KWPA claims. Doc. 100 at 8–16. Thus, the court considers, below, whether it should approve
preliminarily the settlement agreement as a fair, reasonable, and adequate settlement.
III.
Analysis
As already explained, plaintiffs’ renewed motion asks the court to enter an Order that
does four things: (1) preliminarily approves the parties’ proposed class and collective action
settlement, (2) approves the form and manner of notice, (3) schedules a hearing date for final
settlement approval, and (4) approves an attorneys’ fee award, litigation costs, settlement
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administrator fees, and class representative service awards. The court addresses each request, in
turn, below.
A. Preliminary Approval of the Proposed Settlement
First, plaintiffs ask the court to approve preliminarily the settlement of their FLSA
collective action claims and their KWPA Rule 23 class action claims. The court’s last Order
provided a thorough summary of the Settlement Agreement’s key terms. See Doc. 100 at 16–21.
The parties’ Amended Settlement Agreement includes the same key terms.
The Amended Settlement Agreement includes an agreement by defendants to pay a
maximum, total Global Settlement Fund of $1,800,000, to resolve this matter fully. Doc. 102-1
at 4, 8 (Amended Settlement Agreement ¶¶ 6, 18). The Global Settlement Fund includes: (1) all
settlement awards to participating class members; (2) any service awards to the named plaintiffs
that the court approves; (3) payment to plaintiffs’ counsel for any amounts of attorneys’ fees,
expenses, and costs that the court approves; and (4) payment for settlement administration costs.
Id. at 4 (Amended Settlement Agreement ¶ 6). After deducting amounts for any approved
service awards, attorneys’ fees, and Settlement Administrator’s fees and expenses from the
Global Settlement Fund, the remaining funds will comprise the Net Settlement Fund. Id. at 4–5
(Amended Settlement Agreement ¶ 7). The Net Settlement Fund will represent the amount
available to distribute as awards to the settlement class members based on their KWPA class and
FLSA collective action claims. Id.
Plaintiffs seek—and defendants don’t oppose—an attorneys’ fee award amounting to
30% of the Global Settlement Fund. Doc. 102 at 9, 12; see also Doc. 102-1 at 8, 23 (Amended
Settlement Agreement ¶¶ 18, 48). This proportion equals $540,000. Id. Also, plaintiffs ask the
court to approve $2,100 litigation costs. Doc. 102 at 15; see also Doc. 102-1 at 8 (Amended
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Settlement Agreement ¶ 18). Plaintiffs ask the court to approve a total of $36,000 in service
awards to the named plaintiffs ($18,000 to plaintiff Chumba, $12,000 to plaintiff Marquez, and
$6,000 to plaintiff Perez). Doc. 102 at 15–18; see also Doc. 102-1 at 23 (Amended Settlement
Agreement ¶ 49). And plaintiffs ask the court to approve setting aside $30,000 in Settlement
Administrator costs. Doc. 102 at 19–20; Doc. 102-1 at 8 (Amended Settlement Agreement ¶ 18).
Also, the parties have agreed to a proposed Plan of Allocation that will pay each class
member a pro rata settlement share of designated FLSA Allocated Funds and designated KWPA
Allocated Funds for their class cohort (which is determined based on the entity who employed
the class member). The court’s last Order thoroughly explained the parties’ Proposed Plan of
Allocation. Doc. 100 at 17–21. The court doesn’t repeat that summary here.
The court now evaluates whether preliminarily approving the proposed settlement
comports with the FLSA and Rule 23.
1. Preliminary Approval of FLSA Settlement
To approve an FLSA settlement, the court must determine whether: “(1) the litigation
involves a bona fide dispute, (2) the proposed settlement is fair and equitable to all parties
concerned[,] and (3) the proposed settlement contains an award of reasonable attorneys’ fees.”
Barbosa v. Nat’l Beef Packing Co., No. 12-2311-KHV, 2015 WL 4920292, at *5 (D. Kan. Aug.
18, 2015) (citing McCaffrey v. Mortg. Sources, Corp., No. 08-2660-KHV, 2011 WL 32436, at *2
(D. Kan. Jan. 5, 2011)). The court addresses each consideration, below.
a.
Bona Fide Dispute
First, the court previously concluded that this case’s claims present a bona fide dispute
whether defendants violated the FLSA. Doc. 100 at 23. Thus, the first requirement for FLSA
settlement approval is satisfied here.
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b. Fairness and Equity
Second, the court addresses whether the proposed settlement is fair and equitable. To
qualify as “fair and reasonable, an FLSA settlement must provide adequate compensation to the
employee and must not frustrate the FLSA policy rationales.” Solis v. Top Brass, Inc., No. 14cv-00219-KMT, 2014 WL 4357486, at *3 (D. Colo. Sept. 3, 2014). To determine if the
proposed settlement is fair and equitable, courts regularly examine the same factors that apply to
proposed class action settlements under Rule 23(e). Barbosa v. Nat’l Beef Packing Co., LLC,
No. 12-2311-KHV, 2014 WL 5099423, at *7 (D. Kan. Oct. 10, 2014); Tommey v. Comput. Scis.
Corp., No. 11-CV-02214-EFM, 2015 WL 1623025, at *2 (D. Kan. Apr. 13, 2015). Those
factors include:
(1) whether the proposed settlement has been fairly and honestly negotiated, (2)
whether serious questions of law and fact exist which place 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.
Barbosa, 2014 WL 5099423, at *7. The court previously concluded that all four of these factors
favor approving the parties’ proposed settlement as fair and equitable. Doc. 100 at 24–25.
The court also recognized that these four factors may demonstrate that a settlement
agreement is fair and reasonable, but they are not determinative. See McCaffrey, 2011 WL
32436, at *5 (explaining that the Rule 23(e) factors “provide a general framework for the Court’s
determination whether an FLSA settlement is fair, but they are not determinative”). In addition
to the four factors listed above, the court also must determine “that the proposed settlement is
fair and equitable to all parties in light of the history and policy of the FLSA.” Gambrell v.
Weber Carpet, Inc., No. 10-2131-KHV, 2012 WL 5306273, at *5 (D. Kan. Oct. 29, 2012).
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The court previously explained that it had “reviewed the parties’ proposed settlement
with those considerations in mind” and “for the most part, the court [found] that the proposed
settlements’ terms are fair and equitable.” Doc. 100 at 25–26. But the court declined to approve
a portion of the parties’ proposed Settlement Agreement. This part of the Agreement recited
defendants’ agreement not to oppose the named plaintiffs’ requested service awards in exchange
for named plaintiffs’ release of defendants from all claims “regarding any and all subject matters
whatsoever[.]” Id. at 26 (citing Doc. 96-1 at 24–25 (Settlement Agreement ¶¶ 49, 51)). The
court explained that the release was overly broad, and it refused to approve the Settlement
Agreement because it contained the provision. Id. at 29–34.
The parties since have amended that portion of their Settlement Agreement. Their
Amended Settlement Agreement includes an agreement that plaintiffs will ask the court to
approve service awards for the named plaintiffs in an amount not exceeding $36,000. Doc. 1021 at 23 (Amended Settlement Agreement ¶ 49). And defendants have agreed not to oppose
plaintiffs’ application to the court for a service fee award. Id. But the Amended Settlement
Agreement omits the provision making defendants’ agreement not to oppose the requested
service awards contingent on plaintiffs’ release of all claims. See id.
Also, the parties have amended their Settlement Agreement to remove the overly broad
release of claims by the named plaintiffs. The Amended Settlement Agreement limits plaintiffs’
release to claims arising from wage and hour violations. See id. at 6–7, 24 (Amended Settlement
Agreement ¶¶ 16, 51). The Amended Settlement Agreement’s release now aligns with the case
law prohibiting an FLSA plaintiff from agreeing to a general release of all claims and, instead,
permitting only a release of wage-related claims against an employer. See Florece, 2021 WL
5038773, at *10 (recognizing that a release “focused on wage-related claims . . . is permissible”
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(citing Brittle v. Metamorphosis, LLC, No. 20 CIV. 3880 (ER), 2021 WL 606244, at *4
(S.D.N.Y. Jan. 22, 2021)); see also Gambrell v. Weber Carpet, Inc., No. 10-2131-KHV, 2013
WL 1659591, at *3 (D. Kan. Apr. 17, 2013) (approving amended settlement agreement that
included “a release of only wage-related claims, which alleviate[d] the [c]ourt’s previous
concerns regarding a general release”). Thus, the court finds plaintiffs’ releases here fair and
equitable.
The court also finds that the amounts of the requested service awards are fair and
reasonable. As already recited, plaintiffs seek an $18,000 service award for plaintiff Chumba, a
$12,000 service award for plaintiff Marquez, and a $6,000 service award for plaintiff Perez.
Doc. 102 at 15–18. The court’s last Order considered these requested amounts in light of the
reported hours that each named plaintiff devoted to working on this case. Doc. 100 at 34–36.
The court recognized that the requested amounts produce hourly rates for the work performed
that are on the higher end of hourly rates approved by our court. Id. at 35. But also, the hourly
rates don’t depart significantly from previously-approved rates. Id.
And, the court recognized, several other factors “favor the proposed service awards,
including ‘the named [p]laintiffs’ typical hourly rates of approximately $45.00 or more in their
regular employment (pay which they had to forego when missing work due to their participation
in this lawsuit), the reputational risk they undertook by serving as named plaintiffs in a case
against a current or former employer . . . , and the amount of time they have devoted to this
lawsuit—particularly under the uniquely challenging circumstances of the COVID-19
pandemic.’” Id. at 36 (quoting Doc. 99 at 14). The only issue the court had with the requested
service awards was that the proposed Settlement Agreement conditioned those service awards on
plaintiffs’ overly broad release of all claims. Id. But, as discussed, the parties have cured that
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problem with the Amended Settlement Agreement removing the language the court previously
refused to approve.
Because the court already has found “for the most part . . . that the proposed settlements’
terms are fair and equitable[,]” Doc. 100 at 25–26, and the parties have fixed the problems that
the court identified with their first proposed settlement agreement, the court finds that their
Amended Settlement Agreement is a fair and equitable settlement under the Rule 23(e) factors,
as well as other considerations “in light of the history and policy of the FLSA.” Gambrell, 2012
WL 5306273, at *5. The court thus finds that the parties’ settlement here is a fair and equitable
settlement under the FLSA.
c. Attorneys’ Fees and Costs
Last, the FLSA requires a settlement of FLSA claims to include an award of reasonable
attorneys’ fees and the costs of the action. 29 U.S.C. § 216(b); see also McCaffrey, 2011 WL
32436, at *2 (citing Lee v. The Timberland Co., No. C 07-2367-JF, 2008 WL 2492295, at *2
(N.D. Cal. June 19, 2008)). The court has discretion to determine the amount and reasonableness
of the FLSA fee, but the fee award nevertheless is mandatory. Barbosa, 2015 WL 4920292, at
*4 (citations omitted).
Here, the parties’ Amended Settlement Agreement limits plaintiffs’ counsel to seeking an
award of $540,000 in attorneys’ fees, or 30% of the Global Settlement Fund, and $2,100 in
expenses and costs. Doc. 102-1 at 8 (Amended Settlement Agreement ¶ 18). Also, the
Settlement Agreement limits the amount of Settlement Administration Costs (defined as all fees
and costs incurred by the Settlement Administrator, including sending Notice) to $30,000. Id.
Defendants have agreed not to oppose plaintiffs’ application for attorneys’ fees. Id. at 23
(Amended Settlement Agreement ¶ 48). As our court has recognized, when “defendant agrees
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[not to] oppose an award of attorneys’ fees from a common fund, defendant has no incentive to
bargain for lower fees.” Barbosa, 2014 WL 5099423, at *9. So, in those circumstances, our
court “skeptically examine[s] and analyze[s] the fee and cost proposal.” Id.
The Tenth Circuit applies a hybrid approach when deciding whether a requested fee
award is reasonable, combining the percentage fee method with the specific factors traditionally
used to calculate the lodestar. Barbosa, 2015 WL 4920292, at *7. When applying the
percentage fee method, the court must find that the award is “reasonable and . . . must articulate
specific reasons for fee awards demonstrating the reasonableness of the percentage and thus the
reasonableness of the fee award.” Id. (citing Brown v. Phillips Petroleum Co., 838 F.2d 451, 454
(10th Cir. 1988)). The hybrid approach also requires the court to consider the lodestar amount,
“which represents the number of hours reasonably expended multiplied by a reasonable hourly
rate.” Solis, 2014 WL 4357486, at *4 (citing Hensley v. Eckerhart, 461 U.S. 424, 433 (1983)
(further citation omitted)); see also Hobbs v. Tandem Env’t Sols., Inc., No. 10-1204-KHV, 2012
WL 4747166, at *3 (D. Kan. Oct. 4, 2012). Also, the court considers the 12 factors set out in
Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974), abrogated on other
grounds by Blanchard v. Bergeron, 489 U.S. 87 (1989). Hobbs, 2012 WL 4747166, at *3.
Those factors are:
(1) time and labor required, (2) novelty and difficulty of the questions presented by
the case, (3) skill requisite to perform the legal service properly, (4) preclusion of
other employment by the attorneys due to acceptance of the case, (5) customary
fee, (6) whether the fee is fixed or contingent, (7) any time limitations imposed by
the client or circumstances, (8) amount involved and results obtained, (9)
experience, reputation, and ability of the attorneys, (10) “undesirability” of the case,
(11) nature and length of the professional relationship with the client and (12)
awards in similar cases.
Id. at *4 (first citing Rosenbaum v. MacAllister, 64 F.3d 1439, 1445 (10th Cir. 1995); then citing
Johnson, 488 F.2d at 717–19). The court analyzes these 12 factors below.
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i.
Factor 1: Time and Labor Required
Plaintiffs’ counsel represents that they have devoted 639.2 hours to this matter during its
more than three-year life span. Doc. 102-2 at 3 (Third Paulus Decl. ¶ 8). Their work included
serving and responding to written discovery; meeting and conferring with defense counsel about
discovery; preparing for and defending depositions; forming a strategy with co-counsel for
preparing motions for conditional and class certification; preparing for and participating in
mediation; analyzing time records to formulate a damage calculation model; reviewing and
revising the settlement agreement, notice, and claims forms; researching and analyzing the
disputed settlement terms; preparing for and attending a second mediation, negotiating the
remaining disputed settlement terms; corresponding with the named plaintiffs; drafting and filing
the motion seeking approval of the settlement; communicating with defense counsel about
revising the Settlement Agreement’s terms; revising the Settlement Agreement; and drafting the
renewed motion seeking approval of the settlement. Doc. 99-1 at 2–6 (Second Paulus Decl. ¶¶
8–11); Doc. 102-2 at 2–3 (Third Paulus Decl. ¶ 6). The court finds the amount of time that
counsel devoted to the lawsuit is reasonable in light of the work they have completed.
Two partners with an hourly rate of $600 and one associate with an hourly rate of $350
from the Cornerstone Law Firm billed all the hours devoted to the lawsuit. These lawyers have
extensive experience litigating class and collective action wage and hour lawsuits. Doc. 94-2 at
27–30 (First Paulus Decl. ¶¶ 99–103). Although these hourly rates are on the higher end of rates
typically approved by our court, they are comparable to hourly rates that the court has approved
in FLSA cases involving counsel with similar experience. See Florece v. Jose Pepper’s Rests.,
LLC, No. 20-2339-ADM, 2021 WL 5042715, at *7 (D. Kan. Oct. 29, 2021) (approving $575 and
$475 hourly rates in FLSA case); see also Hoffman v. Poulsen Pizza LLC, No. 15-2640-DDC-
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KGG, 2017 WL 25386, at *7 (D. Kan. Jan. 3, 2017) (approving hourly rates of $600, $450, and
$400 in an FLSA settlement even “though on the high end of the approvable range”); Bruner v.
Sprint/United Mgmt. Co., Nos. 07-2164-KHV, 08-2133-KHV, 08-2149-KHV, 2009 WL
2058762, at *10 (D. Kan. July 14, 2009) (awarding plaintiffs’ counsel a “generous” fee award in
an FLSA settlement using an hourly rate of $590.91).
Applying the attorneys’ standard hourly rates to the 639.2 hours they worked on this
matter, plaintiffs’ counsel calculates a lodestar of $358,395.1 Doc. 102-2 at 3 (Third Paulus
Decl. ¶ 8). The lodestar is almost $200,000 less than the $540,000 attorneys’ fee award that
counsel seeks in this case. As plaintiffs’ counsel correctly calculates, the requested award
represents a 1.5 multiplier of counsel’s customary lodestar fee. Doc. 102 at 9. Nevertheless, our
court and others have approved requested fee awards when the multiplier for the lodestar amount
is 1.5 or greater. See Florece, 2021 WL 5042715, at *7 (approving fees with a 2.65 multiplier on
the lodestar amount); In re Syngenta AG MIR 162 Corn Litig., 357 F. Supp. 3d 1094, 1115 (D.
Kan. 2018) (noting that multipliers of 2 and 3 “are well within the range accepted by other
courts, even in cases without trials”); Chieftain Royalty Co. v. XTO Energy Inc., No. CIV-11-29KEW, 2018 WL 2296588, at *10 (E.D. Okla. Mar. 27, 2018) (finding that a “multiplier of
2.58408” was “well within the range of multipliers approved in the Tenth Circuit, and other
circuits, when a lodestar cross-check is used”); Mishkin v. Zynex, Inc., No. 09-cv-00780-REBKLM, 2012 WL 4069295, at *2 (D. Colo. Sept. 14, 2012) (collecting Colorado federal cases
approving lodestar multipliers ranging from 2.5 to 4.6).
The Declaration recites that the lodestar calculation is “$358,390.00.” Doc. 102-2 at 3 (Third
Paulus Decl. ¶ 8). But the chart showing the lodestar amount for each attorney correctly lists the amounts
as $216,000, $107,220, and $35,175. Id. Adding these three amounts together produces a lodestar
calculation of $358,395.
1
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Also, the court recognizes that counsel will incur additional time to complete the
settlement and conclude the litigation. They will need to draft a motion seeking the court’s final
approval of the settlement, prepare for and attend the final fairness hearing, and work with the
Settlement Administrator to process the class and collective action members’ claims, answer
their questions, and distribute their settlement awards. Counsel has not yet recorded time for
these tasks. Thus, the lodestar does not reflect this anticipated work. The lodestar will continue
to increase as counsel performs this additional work, and it will exceed the requested award by
an even greater amount.
For all these reasons, the court concludes that the requested $540,000 attorneys’ fees
award is consistent with the time and labor required in this matter. This first factor thus favors
approving the award.
ii.
Factors 2 and 3: Novelty and Difficulty of the Questions
Presented and Skill Required to Perform the Legal Service
Properly
Plaintiffs’ counsel asserts that this wage and hour case presented difficult issues of fact
and law. The court agrees. As described in the court’s last Order, plaintiffs allege that
defendants edited their time records in a computerized system to reflect—inaccurately—that they
had worked less time than they actually had worked. Doc. 100 at 4–5. And, because of these
changes to their time records, plaintiffs assert defendants failed to compensate them for all of the
time that they actually had worked. Id. Defendants strongly disputed plaintiffs’ allegations. Id.
at 6. Also, they asserted a preemption defense against the claims under the Labor Management
Relations Act. Id.
To calculate the class and collective members’ alleged damages, plaintiffs’ counsel
reviewed an extensive amount of information—consisting of defendants’ time records and other
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aggregated data. Id. at 18. Using that data, counsel formulated a damages calculation model for
settlement class members. Id. It estimates the frequency of time adjustments that—in plaintiffs’
counsel’s opinion—class members would have experienced. Id. Then, counsel used that model
to estimate the alleged damages for all class and collective action settlement members. Id. The
parties then used that model to develop their Plan of Allocation—i.e., their plan for distributing
the settlement funds to class and collective action members. Id. at 17–21. The parties’ Amended
Settlement Agreement incorporates that Plan of Allocation. Doc. 102-1 at 5, 15–16 (Amended
Settlement Agreement ¶¶ 14, 33–34). And the court’s last Order approved that Plan of
Allocation, finding that it “provides adequate compensation to collective action members that is
fair and equitable.” Doc. 100 at 27.
These facts demonstrate that the case involved complex and difficult factual and legal
issues. Also, they show that plaintiffs’ counsel had the requisite skills to litigate this wage and
hour case—skills that required detailed review of employee time records and forming a
comprehensive damages calculation model. Plaintiffs’ counsel has extensive experience in this
area of law. And this skill and experience most likely contributed to their success in resolving
the litigation through a settlement that benefits class and collective members. The court thus
finds that these two factors favor approving the requested fee award.
iii.
Factor 4: Preclusion of Other Employment
Plaintiffs’ counsel represents that the time devoted to this lawsuit—more than 600
hours—has precluded them from accepting other engagements. Doc. 99-1 at 6–7 (Second Paulus
Decl. ¶¶ 16, 18). Plaintiffs’ counsel represents that they only can litigate “a handful” of wage
and hour class and collective action cases “at any given time” due to “the size and complexity
of” these kind of cases and “the time and resources required to litigate” them. Id. at 7 (Second
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Paulus Decl. ¶ 18). The court agrees that the time and effort spent litigating the case—along
with the size and complexity of the litigation—demonstrates that the lawsuit precluded plaintiffs’
counsel from working on other matters. This factor thus favors approving the fee award.
iv.
Factor 5: Customary Fee
Our court has recognized that while “the Tenth Circuit applies a hybrid approach in
determining the reasonableness of fees in common fund cases, the customary fee award is
typically a percentage of the fund.” Barbosa, 2015 WL 4920292, at *11 (first citing Rosenbaum,
64 F.3d at 1445; then citing Gottlieb v. Barry, 43 F.3d 474, 482 (10th Cir. 1994)). Our court
“typically applie[s] the percentage of the fund method when awarding fees in common fund,
FLSA collective actions.” Id. (citing Bruner, 2009 WL 2058762, at *7). “Fee awards in these
cases have ranged from four per cent to 58 per cent of the common fund and resulted in total fee
awards ranging from a few thousand dollars to over five million dollars.” Id. (citing Bruner,
2009 WL 2058762, at *7).
Here, plaintiffs’ counsel requests a fee award amounting to 30% of the Settlement Fund.
This percentage is less than the 40% contingency fee agreement between plaintiffs’ counsel and
the representative plaintiffs. See Doc. 99-1 at 6 (Second Paulus Decl. ¶ 14) (reciting that
plaintiffs “Marquez, Chumba, and Perez each entered into a fee agreement with
[plaintiffs’ counsel’s] firm to seek up to a maximum contingency of 40% of any total potential
recovery in this lawsuit”). Also, the requested fee award here is less than the customary fee
range which plaintiffs’ counsel claims to charge in similar matters. See id. (Second Paulus Decl.
¶ 13) (asserting that plaintiffs’ counsel’s firm “typically and customarily enters into 40%
contingency fee agreements with named and representative plaintiffs in putative class and/or
collective actions”). And plaintiffs’ fee request here—seeking fees in an amount that is 30% of
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the Global Settlement Fund—falls within the range of percentage fee awards that our court
typically approves. See, e.g., Elston v. Horizon Glob. Ams., Inc., No. 19-2070-KHV, 2020 WL
6318660, at *7 (D. Kan. Oct. 28, 2020) (explaining that “attorneys’ fees of one-third or
thereabouts are generally deemed reasonable” (citation and internal quotation marks omitted));
Barbosa, 2015 WL 4920292, at *11 (finding that attorney fee request that was “33 per cent of
the total settlement amount” was “within the customary percentage of the fund approved by this
Court”). Thus, this factor also favors approving the requested fee award.
v.
Factor 6: Whether the Fee Is Fixed or Contingent
Plaintiffs’ counsel took this case on a contingency basis “with the understanding and
expectation that it would require the expenditure of significant amounts of time and resources, a
under the risk that [plaintiffs’ counsel] may ultimately recover nothing.” Doc. 99-1 at 6 (Second
Paulus Decl. ¶ 15). Our court has recognized the “risk undertaken” when counsel agrees to
pursue “claims on a contingent-fee basis.” In re Syngenta AG MIR 162 Corn Litig., 357 F. Supp.
3d 1094, 1115 (D. Kan. 2018). But our court also has recognized that it’s the job of the courts,
not the parties, to determine the fees in FLSA actions. See Bruner, 2009 WL 2058762, at *8. A
contingency fee agreement is only one of many relevant factors, and it provides no conclusive
evidence of the fee award’s reasonableness. Id. This factor thus is neutral.
vi.
Factor 7: Time Limitations
Plaintiffs’ counsel asserts that they faced time limitations in this lawsuit stemming from
the COVID-19 pandemic. Doc. 99-1 at 7 (Second Paulus Decl. ¶ 19). Plaintiffs’ counsel
contends that the pandemic has “more of an impact on this case than it did on many other
employment litigation matters” because “all of the parties to this case are in the healthcare
industry, and thus,” the parties on both sides of the caption felt “burdened by additional time
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constraints and stresses unique to that industry—all of which resulted in delays and other
logistical concerns impacting this litigation.” Id. The court recognizes the time constraints
imposed on counsel were real. But the court finds that those time limitations are inherent in any
engagement and not specific to an FLSA action like this one (even if litigated during a
pandemic). The court finds this factor a neutral one.
vii.
Factor 8: Amount Involved and Results Obtained
Plaintiffs’ counsel secured a favorable result. As the court discussed in its last Order,
“the proposed Plan of Allocation produces settlement awards ranging from about 80–90% of
class members’ total, estimated alleged damages—including liquidated damages—as calculated
by counsel.” Doc. 100 at 27 (citing Doc. 94-2 at 25 (Paulus Decl. ¶ 91)). The “‘pro rata
settlement shares in the Plan of Allocation are premised on [p]laintiffs’ counsel’s admittedly
aggressive damage calculations—in which [counsel] assume[d] that every edit to class members’
time records is improper, and thus, an alleged violation of the FLSA or KWPA[.]’” Id. (quoting
Doc. 94-2 at 25–26 (Paulus Decl. ¶ 92)). Thus, according to plaintiffs’ counsel, “‘the settlement
awards likely exceed any true “best day in court” recovery that class members could potentially
achieve were they to prevail on these claims.’” Id. (quoting Doc. 94-2 at 25–26 (Paulus Decl. ¶
92)).
Meanwhile, defendants continue to contest their liability. The ultimate outcome of this
litigation (if it not settled) thus remains in doubt. The settlement avoids the uncertainty and
rigors of class and collective action certification, summary judgment practice, and trial and
produces a favorable result for the opt-in plaintiffs. This factor favors approving the fee award.
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viii.
Factor 9: Attorneys’ Experience, Reputation, and Ability
The court already has discussed the experience, reputation, and ability of the attorneys
above. As noted, plaintiffs’ counsel has extensive experience litigating class and collective
action wage and hour lawsuits. The skill and experience of counsel is reflected in the hourly
rates that the court approved above. Thus, the court already has accounted for this factor. And
so, the court finds, this factor is a neutral one.
ix.
Factor 10: Undesirability of the Case
Plaintiffs’ counsel concedes that they didn’t find this case undesirable. Doc. 102 at 13.
But, they argue that other attorneys might have found the case undesirable because it involved a
contingency arrangement that “risked investing their time and money and recovering nothing.”
Florece, 2021 WL 5042715, at *8 (finding this Johnson factor favored “approving the requested
fee” because “many other attorneys might” have found the case undesirable “because of the risks
involved”). The court already has considered the contingency nature of the representation above.
And the court declines to find the case undesirable simply because it involved a contingency fee
agreement and the risk that comes with such an arrangement. Thus, this tenth Johnson factor is
neutral to the analysis.
x.
Factor 11: Nature and Length of the Professional
Relationship
Our court has explained “[t]he meaning of this factor . . . and its effect on the calculation
of a reasonable fee has always been unclear, and courts applying the Johnson factors typically
state that this particular standard is irrelevant or immaterial.” Barbosa, 2015 WL 4920292, at
*12 (citing Bruner, 2009 WL 2058762, at *9 (further citation omitted)). Plaintiffs’ counsel
agrees. This factor either is neutral or irrelevant to the court’s decision whether it should
approve the requested fees as reasonable. Doc. 102 at 14. The court agrees.
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xi.
Factor 12: Awards in Similar Cases
As already discussed, the requested fee award comports with awards approved in similar
cases. The court finds that this last Johnson factor favors approving the settlement as reasonable.
xii.
Sum total of Johnson Factors
Seven of Johnson’s 12 factors favor approving the proposed fee award. Five factors are
neutral. And none disfavor approval. Based on this analysis of the lodestar and Johnson factors,
the court concludes the attorneys’ fees requested are fair and reasonable. The court thus grants
plaintiffs’ request and approves the $540,000 requested attorneys’ fees award.
Also, the court grants plaintiffs’ counsel request for an award of $2,075.33 in costs. Doc.
99-1 at 9–10 (Second Paulus Decl. ¶ 25). Plaintiffs’ counsel explains that they incurred these
costs for court filing fees, service of process, and deposition transcripts. Id. The court finds
these costs incurred reasonable.
And the court finds reasonable plaintiffs’ counsel request that the court approve—
preliminarily—up to $30,000 for Settlement Administrator fees. Id. at 11 (Second Paulus Decl.
¶ 28). Plaintiffs’ counsel explains that the Settlement Administrator has provided a total
settlement administration and claims processing costs estimate of $19,280–$24,000. Id. at 10
(Second Paulus Decl. ¶ 27). The estimated amount is comparable to other settlement
administration fees that our court has approved as reasonable in FLSA cases. See Florece, 2021
WL 5042715, at *2, *9 (approving as reasonable claims administrator’s anticipated costs and
expenses of $21,500, that was payable from the gross settlement fund); see also James v. Boyd
Gaming Corp., No. 19-2260-DDC-ADM, 2022 WL 4482477, at *12 (D. Kan. Sept. 27, 2022)
(approving as reasonable $16,436 for settlement administration fees). But plaintiffs’ counsel
asks the court to approve more than that amount—up to $30,000 for settlement administration
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fees—because “the parties’ final Settlement Agreement ultimately included some additional
potential settlement administration tasks, such as providing regular reporting to the parties’
counsel during and immediately after the close of the 75-day Claims Period and calculating the
pro rata redistribution increases of unclaimed settlement funds to participating class members up
to their individual ‘capped’ amounts of alleged overtime and straight time damages[.]” Doc. 991 at 11 (Second Paulus Decl. ¶ 28). And, plaintiffs’ counsel asserts, these additional settlement
administration tasks “might result in additional costs or fees from [the Settlement Administrator]
in excess of their original estimated total costs[.]” Id. Based on plaintiffs’ counsel explanation
and the potential additional work involved here for the Settlement Administrator, the court
approves preliminarily approve up to $30,000.00 for Settlement Administrator fees.
d. Conclusion: FLSA Preliminary Approval
For reasons explained, the court finds that (1) this litigation involves a bona fide dispute,
(2) the proposed Amended Settlement Agreement is fair and equitable to all parties, and (3) the
proposed Amended Settlement Agreement contains an award of reasonable attorneys’ fees,
expenses, and costs. The court thus grants preliminary approval of the Amended Settlement
Agreement under the FLSA.
2. 23(e) Settlement Approval
Next, the court addresses plaintiffs’ request to approve the KWPA settlement under Rule
23. Rule 23(e) requires court approval of the parties’ settlement of a certified class action. The
court may approve a settlement only after finding that it is “fair, reasonable, and adequate[.]”
Fed. R. Civ. P. 23(e)(2). When making this determination, Rule 23(e)(2) instructs courts to
consider whether:
(A) the class representatives and class counsel have adequately represented the
class;
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(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.
Rule 23(e)(2). Also, the Tenth Circuit has instructed courts to consider the following four
factors when assessing whether a proposed settlement 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).
The class settlement approval process typically occurs in two phases. First, the court
considers whether preliminary approval of the settlement is appropriate. William B. Rubenstein,
Newberg on Class Actions § 13:10 (5th ed. 2020); Freebird, Inc. v. Merit Energy Co., No. 101154-KHV, 2012 WL 6085135, at *4–5 (D. Kan. Dec. 6, 2012). “If the [c]ourt grants
preliminary approval, it directs notice to class members and sets a hearing at which it will make a
final determination on the fairness of the class settlement.” In re Motor Fuel Temperature Sales
Pracs. Litig., 286 F.R.D. 488, 492 (D. Kan. 2012); see also Newberg on Class Actions § 13:10
(“[T]he court’s primary objective [at the preliminary approval stage] is to establish whether to
direct notice of the proposed settlement to the class, invite the class’s reaction, and schedule a
final fairness hearing.”). Second, “taking account of all of the information learned during [the
preliminary approval] process, the court decides whether or not to give ‘final approval’ to the
settlement.” Newberg on Class Actions § 13:10.
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The court’s last Order explained that it couldn’t “discern whether the settlement ‘treats
class members equitably relative to each other[,]’ because it contain[ed] the named plaintiffs’
broad release which serves as consideration for defendants’ agreement not to contest their
requested service awards.” Doc. 100 at 39 (quoting Fed. R. Civ. P. 23(e)(2)(D)). As discussed,
the parties have eliminated those provisions from their Amended Settlement Agreement. And,
for reasons explained below, the court finds that the proposed settlement satisfies the other Rule
23(e) factors as well.
First, the class representatives and class counsel have represented the class adequately, as
Rule 23(e)(2)(A) requires. As our court has observed, other courts “have analyzed the adequacy
of representation” under Rule 23(e)(2)(A) “by evaluating adequacy under Rule 23(a)(4).”
Chavez Rodriguez v. Hermes Landscaping, Inc., No. 17-2142-JWB-KGG, 2020 WL 3288059, at
*2 (D. Kan. June 18, 2020). The court’s last Order found that the Rule 23(a)(4) adequacy
requirement was met because plaintiffs—represented by qualified counsel—had prosecuted the
lawsuit vigorously to date and there was nothing to suggest a conflict that would make plaintiffs
or their counsel inadequate. Doc. 100 at 12. The same is true today. The court finds this first
factor satisfied.
Second, the parties negotiated their settlement fairly and honestly at arms’ length. As the
court’s last Order explained, the parties mediated this case after many months of contentious
litigation. Doc. 100 at 24. They negotiated the settlement through experienced counsel and with
the services of a neutral, third-party mediator. Id. Thus, the requirements of Rule 23(e)(2)(B)
are met here.
Third, the proposed settlement agreement provides adequate relief for the class as Rule
23(e)(2)(C) requires. As the court already has explained, the litigation involves serious questions
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of law and fact that place the ultimate outcome of the litigation in doubt. Doc. 100 at 25. The
proposed settlement provides immediate recovery to the class and collective action members—
recovery that might never come if plaintiffs couldn’t prevail on their claims against defendants.
The parties’ proposed Plan of Allocation provides effective and adequate recovery by producing
settlement awards ranging from about 80–90% of class members’ total, estimated alleged
damages—including liquidated damages—as calculated by counsel. Doc. 100 at 27 (citing Doc.
94-2 at 25 (Paulus Decl. ¶ 91)). And, as discussed, the parties’ proposed settlement contains an
attorneys’ fee award that is fair and reasonable. All of these facts demonstrate that the proposed
settlement agreement provides adequate relief for the class.
Last, the proposed settlement agreement treats class members equitably relative to one
another, as Rule 23(e)(2)(D) requires. The court’s last Order thoroughly reviewed the proposed
Plan of Allocation. Doc. 100 at 26–27. After explaining how it distributes the settlement awards
to class and collective action members, the court found it “provides adequate compensation to
collective action members that is fair and reasonable.” Id. at 27. Thus, Rule 23(e)(2)(D)’s last
factor is satisfied here.
The proposed settlement also satisfies each of the Rutter factors for reasons already
discussed in the court’s last Order and the preceding paragraphs. That is, (1) the proposed
settlement was fairly and honestly negotiated; (2) serious questions of law and fact still exist, and
these questions place the ultimate outcome of the litigation in doubt; (3) the value of the
proposed settlement’s immediate recovery outweighs the mere possibility of future relief after
protracted and expensive litigation; and (4) the parties are of the judgment that the settlement is
fair and reasonable. Rutter, 314 F.3d at 1188.
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Thus, the court finds that the parties’ proposed settlement of the KWPA claims is “fair,
reasonable, and adequate,” as Fed. R. Civ. P. 23(e)(2) requires. The court thus approves the
parties’ proposed settlement preliminarily under Rule 23(e).
B. Notice
Last, plaintiffs ask the court to approve the form and manner of providing notice to the
class and collective action members. Rule 23 requires that class members receive “the best
notice that is practicable under the circumstances, including individual notice to all members
who can be identified through reasonable effort.” Fed. R. Civ. P. 23(c)(2)(B). Also, FLSA
collective action members must “receiv[e] accurate and timely notice concerning the pendency
of the collective action, so that they can make informed decisions about whether to participate.”
Hoffmann-La Roche Inc. v. Sperling, 493 U.S. 165, 170 (1989).
In its last Order, the court found it premature to approve the proposed Notice and Claim
Form because the court had declined to approve preliminarily the parties’ Settlement Agreement.
Doc. 100 at 42. But nevertheless, the court reviewed the parties’ proposed Notice and Claim
Form to discern whether it presented any “areas of concern” that the parties could correct “in
advance of filing a renewed motion for preliminary settlement approval.” Florece, 2021 WL
5038773, at *14. The court found none. Just the opposite, it found that “the proposed Notice
and Claim Form ‘is fair and accurate[.]’” Doc. 100 at 42 (quoting Christeson v.
Amazon.com.ksdc, LLC, No. 18-2043-KHV, 2019 WL 2137282, at *4 (D. Kan. May 16, 2019)).
Also, the court concluded that the proposed Notice and Claim Form contains the information
required by Rules 23(c)(2)(B) and (e). Id. The court advised the parties that it was “prepared to
approve the Notice and Claim Form if the parties submit an amended Settlement Agreement that
secures the court’s preliminary approval of the settlement.” Id. Because the parties now have
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secured the court’s approval of their proposed Amended Settlement Agreement and because the
court already has found that the proposed Notice and Claim Form is fair and accurate, the court
approves the form and manner of notice. And it directs the parties to provide the Notice and
Claim Form to class and collective action members in the manner they have proposed.
IV.
Conclusion
For reasons explained, the court grants plaintiffs’ “Renewed and Consolidated
Unopposed Motion for Order Preliminarily Approving Class and Collective Action Settlement,
Attorneys’ Fees Award, Litigation Costs, Settlement Administrator, and Class Representative
Service Awards and Directing Notice to the Class and Scheduling Final Fairness Hearing” (Doc.
101).
The court’s last Order—issued on September 20, 2022—granted requests:
to certify a Rule 23 class action for settlement purposes;
to certify conditionally an FLSA collective action for settlement purposes;
to appoint plaintiffs Tammie Marquez, Neesha Perez, and Josiah Chumba as
class representatives; and
to appoint Mary Katherine Paulus and Jessica M. McDowell of Cornerstone Law
Firm as class counsel.
Doc. 100 at 43. And the court certified a Rule 23 settlement-only class for plaintiffs’ KWPA
claims and certified conditionally a settlement-only class under 29 U.S.C. § 216(b) of the FLSA,
defined as: “all hourly Registered Nurses who performed work for Defendants at Menorah
Medical Center between July 3, 2016 and February 28, 2019.” Id.
With this Order, the court grants each additional request made by plaintiffs’ renewed
motion. Specifically, the court:
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preliminarily approves the parties’ proposed class and collective action
settlement;
approves the form and manner of notice;
schedules a hearing date for Final Settlement Approval on February 9, 2023; and
approves the requested attorneys’ fee award, litigation costs, settlement
administrator fees, and class representative service awards.
IT IS THEREFORE ORDERED BY THE COURT THAT plaintiffs’ “Renewed and
Consolidated Unopposed Motion for Order Preliminarily Approving Class and Collective Action
Settlement, Attorneys’ Fees Award, Litigation Costs, Settlement Administrator, and Class
Representative Service Awards and Directing Notice to the Class and Scheduling Final Fairness
Hearing” (Doc. 101) is granted.
IT IS FURTHER ORDERED THAT the court directs the parties to provide notice to
the class and collective action members, consistent with the Order.
IT IS FURTHER ORDERED THAT the court schedules a Final Settlement Approval
Hearing on February 9, 2023, at 11:00 a.m., Central Time, at the United States District Court for
the District of Kansas, 500 State Avenue, Kansas City, Kansas 66101, Courtroom 476.
IT IS SO ORDERED.
Dated this 21st day of November, 2022, at Kansas City, Kansas.
s/ Daniel D. Crabtree
Daniel D. Crabtree
United States District Judge
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