Altier v. Worley Catastrophe Response, LLC et al
Filing
312
ORDER AND REASONS denying 298 Motion for Leave to File and granting 301 Joint Motion to Approve Settlement and for Conditional Dismissal; finding as moot 234 Motion for Partial Summary Judgment, 257 Motion for Partial Summary Judgment, 263 Motion Pursuant to Rule 56(d) as set forth in document. Signed by Magistrate Judge Joseph C. Wilkinson, Jr. (Reference: ALL CASES)(car, )
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
JOHN J. ALTIER
CIVIL ACTION
VERSUS
NO. 11-241 c/w 11-242
WORLEY CATASTROPHE
RESPONSE, LLC ET AL.
MAGISTRATE JUDGE
JOSEPH C. WILKINSON, JR.
ORDER AND REASONS ON MOTIONS
In these consolidated cases, plaintiffs bring claims for unpaid overtime pay and
liquidated damages under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et
seq., and for breach of contract under Louisiana law. Plaintiffs and the remaining
defendants have reached a settlement of all claims and have filed a Joint Motion to
Approve Settlement and for Conditional Dismissal in both consolidated actions. Record
Doc. No. 301. Also pending before me is a Motion for Leave to File Petition in
Intervention filed by five non-parties who seek to join these consolidated actions as
plaintiffs solely to object, not to the settlement, but only to certain terms of the settlement
agreement between the existing parties. Record Doc. No. 298.
This matter was referred to a United States Magistrate Judge for all proceedings
and entry of judgment in accordance with 28 U.S.C. § 636(c) upon written consent of all
parties. Record Doc. No. 138.
I.
PROCEDURAL BACKGROUND
Plaintiff, John J. Altier, brought Civil Action No. 11-241 as a putative collective
and class action, pursuant to the FLSA and Fed. R. Civ. P. 23. The original defendants
were BP Exploration & Production Inc. (“BP”), Worley Catastrophe Response, LLC, and
Worley Catastrophe Services, LLC (collectively “Worley”). After the April 2010
blowout in the Gulf of Mexico of BP’s Deepwater Horizon offshore well and the
subsequent catastrophic oil spill, Worley, which had a contract with BP, hired Altier and
other claims adjusters to evaluate claims brought against BP by third parties. Altier filed
this action individually and on behalf of similarly situated persons to recover unpaid
overtime wages and liquidated damages under the FLSA. Altier alleges that he and
similarly situated claims adjusters routinely worked more than 40 hours per work week
and that defendants willfully violated the FLSA by improperly classifying the claims
adjusters as employees who are exempt from the FLSA overtime provisions.
Altier also brought Civil Action No. 11-242 as a contract-based putative class
action pursuant to Louisiana substantive law and Fed. R. Civ. P. 23 against a single
defendant, Worley Catastrophe Response, LLC. Additional plaintiffs joined in both
actions. A total of 98 plaintiffs filed consent forms to opt in to the FLSA collective
action, while 56 of the same plaintiffs joined the contract action.
2
BP’s motion to dismiss was granted in Civil Action No. 11-241 and plaintiffs’
claims against BP in that matter were dismissed with prejudice. Record Doc. Nos. 87,
107. However, I denied BP’s Motion for Entry of Final Judgment Pursuant to Fed. R.
Civ. P. 54(b). Record Doc. Nos. 125, 153.
Upon plaintiffs’ motion in Civil Action No. 11-241, I conditionally certified a
collective action for unpaid overtime under the FLSA. Record Doc. No. 171. Courtapproved notices were sent to all members of the conditionally certified collective action.
Record Doc. Nos. 189, 191. I denied plaintiffs’ motion for certification of a contractbased Rule 23 class action in consolidated Civil Action No. 11-242. Record Doc.
No. 187.
The parties engaged in extensive discovery and motion practice, including
plaintiffs’ opposed motions for partial summary judgment. At counsel’s request,
I continued the hearings and submission dates on the summary judgment motions so that
the parties could discuss settlement. They did so extensively and with great effort,
including preliminary negotiations, a thorough-going private mediation and several
subsequent court-supervised settlement conferences with me, which ended in a settlement
agreement. The parties’ proposed final agreement includes provision for payment of
plaintiffs’ attorney’s fees and costs.
3
On December 22, 2011, plaintiffs and Worley filed a Joint Motion to Dismiss,
Record Doc. No. 296, in which they also asked the court to approve their confidential
settlement agreement. I denied the motion as premature because some provisions of the
proposed agreement required amplification and clarification and because the motion was
not supported by any evidence regarding the reasonableness of the agreed-upon
attorney’s fees and costs. I ordered the parties to file a revised motion with the additional
information and clarification requested by the court. Record Doc. No. 299.
Five days after the parties filed their Joint Motion to Dismiss, non-parties Michael
Sullivan, Charles Baldwin, Johnny Knighten, Jimmy Phillips and Ron Dickerson (the
“Sullivan Plaintiffs”) filed a Motion for Leave to File Petition in Intervention. Record
Doc. No. 298. The Sullivan Plaintiffs are the named plaintiffs in a separate class action
that was filed in state court against Worley, Michael Sullivan et al. v. Worley Companies
et al., No. 599,055, Nineteenth Judicial District Court, Parish of East Baton Rouge, State
of Louisiana, a few days after the instant federal consolidated actions were filed. In that
state court class action brought under Louisiana law, the Sullivan Plaintiffs, individually
and on behalf of a putative class of approximately 1,200 claims adjusters, allege that
Worley breached its employment agreement with the putative class members and failed
to pay them wages due. All of the plaintiffs in the FLSA action in this court are putative
class members in the Sullivan litigation.
4
The state court granted the Sullivan Plaintiffs’ motion to certify a class in that
action on September 9, 2011. The scope of the class has not yet been defined and no
notices have been distributed to the putative class members. Worley appealed the class
certification order and that appeal is pending. The Sullivan Plaintiffs seek to intervene
as plaintiffs in the consolidated actions in this court as a matter of right under Fed. R.
Civ. P. 24(a)(2) and Fed. R. Civ. P. 23(d)(1), solely to object to the settlement agreement
(which they have not seen because it is confidential) and only to the extent it contains
terms that waive and release any contractual claims that the members of the FLSA
collective action might have against Worley.
Plaintiffs and Worley filed separate memoranda in opposition to the Sullivan
Plaintiffs’ motion to intervene. Record Doc. Nos. 303, 308. The Sullivan Plaintiffs
received leave to file two reply memoranda in support of their motion. Record Doc.
Nos. 304, 305, 306, 309, 310, 311.
Plaintiffs and Worley filed in both consolidated actions their revised Joint Motion
to Approve Settlement and for Conditional Dismissal, which is supported by affidavits
and several exhibits. Record Doc. No. 301. They submitted their confidential settlement
agreement to me for in camera review. Although the Sullivan Plaintiffs’ motion to
intervene has not been granted and they are not yet parties to these actions, they filed a
memorandum in opposition to the parties’ Joint Motion to Approve Settlement and for
5
Conditional Dismissal. Record Doc. No. 302. I have considered their memorandum,
which reiterates the arguments they make in their motion to intervene.
I continued without date the submission of and oral argument on the pending
summary judgment motions, Record Doc. Nos. 234, 257 and 263, pending my review of
the Joint Motion to Approve Settlement and for Conditional Dismissal. Record Doc. No.
307. A two-week jury trial in this matter is currently scheduled for August 20, 2012,
with a final pretrial conference set for August 6, 2012.
Having reviewed the complaint, as amended, the record, the submissions of the
parties and the proposed intervenors, and the applicable law, and for the following
reasons, the court enters the following orders on all pending motions.
IT IS ORDERED that the Sullivan Plaintiffs’ Motion for Leave to File Petition
in Intervention, Record Doc. No. 298, is DENIED.
IT IS FURTHER ORDERED that the parties’ Joint Motion to Approve
Settlement and for Conditional Dismissal, Record Doc. No. 301, is GRANTED, as
provided herein.
IT IS FURTHER ORDERED that plaintiffs’ motions for partial
summary judgment, Record Doc. Nos. 234, 257 and Defendants’ Motion Pursuant to
Rule 56(d), Record Doc. No. 263, are DISMISSED AS MOOT.
6
IT IS FURTHER ORDERED that the court reconsiders sua sponte its previous
order, Record Doc. No. 153, denying BP’s Motion for Entry of Final Judgment Pursuant
to Fed. R. Civ. P. 54(b), Record Doc. No. 125, and that BP’s motion is GRANTED.
II.
THE SULLIVAN PLAINTIFFS’ MOTION FOR LEAVE TO INTERVENE
A.
The Undersigned Magistrate Judge Has Jurisdiction to Rule on the Motion
As a threshold matter, all parties in this matter have consented in writing to its
referral to a United States Magistrate Judge for all proceedings and entry of judgment in
accordance with 28 U.S.C. § 636(c), but the proposed intervenors have not so consented.
Although neither the existing parties nor the Sullivan Plaintiffs have questioned whether
I have the authority to rule definitively on the pending Motion for Leave to File Petition
in Intervention, I address the issue because it is jurisdictional. Barber v. Shinseki, 660
F.3d 877, 879 (5th Cir. 2011).
Section 636(c)(1) provides that, “[u]pon the consent of the parties, a full-time
United States magistrate judge . . . may conduct any or all proceedings in a jury or
nonjury civil matter and order the entry of judgment in the case, when specially
designated to exercise such jurisdiction by the district court or courts he serves.”
Compliance with the requirements of Section 636(c) “gives the magistrate judge full
authority over dispositive motions, conduct of trial, and entry of final judgment, all
7
without district court review.” Roell v. Withrow, 538 U.S. 580, 585 (2003); accord Hill
v. City of Seven Points, 230 F.3d 167, 168-69 (5th Cir. 2000).
My research has located only two appellate courts that have addressed whether a
magistrate judge may enter a final ruling on a motion to intervene in a consent case under
Section 636(c), and those courts reached conflicting results. The Second Circuit found
in N.Y. Chinese TV Programs, Inc. v. U.E. Enters., Inc., 996 F.2d 21, 25 (2d Cir. 1993),
that a magistrate judge lacks the authority to rule on a motion to intervene, despite the
prior written consent of the existing parties under Section 636(c). The court emphasized
the “critical role” of consent in Section 636(c) referrals because “the consent of each
party is essential to the validity of the statutory system that allows a magistrate judge to
make binding adjudications.” Id. at 24. The appeals court held that, absent the consent
of the proposed intervenors, “the magistrate judge was not authorized to enter a final
order denying intervention; her decision on the motion is deemed to be a report and
recommendation to the district judge.” Id. at 25; see also Stackhouse v. McKnight, No.
05-0607-cv, 2006 WL 406292, at *2 (2d Cir. Feb. 22, 2006) (“[W]hen intervenors seek
to join the litigation as named parties they are ordinarily seeking to protect interests
adverse to the existing parties to the litigation. Therefore, intervenors have the right to
have their motion heard in an Article III forum.”). The Second Circuit did not analyze
8
in either of these opinions how a proposed intervenor, who is not yet a “party,” falls
within the statutory language requiring “the consent of the parties.”
In People Who Care v. Rockford Bd. of Educ., 171 F.3d 1083 (7th Cir. 1999), the
Seventh Circuit disagreed with the Second Circuit and held that a magistrate judge has
the authority to enter a final ruling on a motion to intervene in a consent case.
Although the power of a magistrate judge to enter binding judgments
depends on the consent of the parties, it would erode that power unduly if
would-be intervenors had to consent as well. If the motion to intervene
were submitted to and granted by a district judge, the intervenors would
become parties, and the case could not proceed to judgment by the
magistrate judge without their consent. . . . [If they did] not consent, . . .
the entire case, or at least the parts of it on which their claims bore, would
be shifted to a different adjudicator. The consequences would be delay,
confusion, duplication of effort, the possibility of inconsistent
determinations, and a drain on judicial resources. Some of these
consequences would ensue even if the district judge denied the motion to
intervene. For to rule on the motion he would have to familiarize himself
with a case pending before another adjudicator, and the case would be
frozen, as a practical matter, while he was mulling over his ruling.
Id. at 1089 (citations omitted). The Seventh Circuit
conclude[d] that the power to rule on motions to intervene is a necessary
and proper incident of the magistrate judge’s power to decide the
underlying case. This conclusion does no violence to the language of §
636(c)(1), which requires only the consent of ‘parties’ to the magistrate
judge’s entering dispositive orders; an applicant for intervention is not a
party, . . . – he wants to become a party.
Id. (citations omitted).
9
“[D]istrict courts faced with this same consent issue have acknowledged that
authorities are split as to whether a proposed intervenor must consent to a magistrate
judge’s jurisdiction where the existing parties have already consented.” Centrue Bank
v. Golf Discount of St. Louis, Inc., No. 4:10CV16 TIA, 2010 WL 2802034, at *2 (E.D.
Mo. July 15, 2010) (citing Natural Res. Defense Council v. Gutierrez, No. C 01-0421 JL,
2007 WL 1518359, at *2 (N.D. Cal. May 22, 2007); McWhorter v. Elsea, Inc., No. 2:00cv-473, 2006 WL 3526405, at *1 (S.D. Ohio Dec. 6, 2006); United States v. 1731-1735
No. Fourth St., No. 2:04-cv-0764, 2006 WL 3793305, at *3 (S.D. Ohio Nov. 21, 2006);
USCOC of N.H. RSA # 2, Inc. v. Town of Bow, No. 05-CV-327-JM, 2006 WL 624880,
at *1 (D.N.H. Mar. 7, 2006); Perles, P.C. v. Kagy, 394 F. Supp. 2d 68, 71 (D.D.C.
2005)).
In the absence of any binding precedent in the Fifth Circuit, I find persuasive the
reasoning of the Seventh Circuit in People Who Care and those district courts that have
followed People Who Care in circuits where their own appellate court has not yet
addressed the issue. Centrue Bank, 2010 WL 2802034, at *2; Natural Res. Defense
Council, 2007 WL 1518359, at *2; Perles, P.C., 394 F. Supp. 2d at 70-71. Thus, I find
that I have the authority to rule on the Sullivan Plaintiffs’ motion to intervene.
In the alternative, I clearly have the authority to rule on this non-dispositive
pretrial motion under 28 U.S.C. § 636(b)(1)(A) and Local Rule 72.1(A).
10
Section 636(b)(1)(A) provides:
(b)(1) Notwithstanding any provision of law to the contrary–
(A) a judge may designate a magistrate judge to hear and
determine any pretrial matter pending before the court, except
a motion for injunctive relief, for judgment on the pleadings,
for summary judgment, to dismiss or quash an indictment or
information made by the defendant, to suppress evidence in
a criminal case, to dismiss or to permit maintenance of a class
action, to dismiss for failure to state a claim upon which relief
can be granted, and to involuntarily dismiss an action. A
judge of the court may reconsider any pretrial matter under
this subparagraph (A) where it has been shown that the
magistrate judge’s order is clearly erroneous or contrary to
law.
28 U.S.C. § 636(b)(1)(A) (emphasis added). A motion for leave to intervene is not one
of the motions listed in the statute that a magistrate judge may not decide without the
consent of the parties.
In implementing Section 636(b)(1)(A), Fed. R. Civ. P. 72 distinguishes between
pretrial matters that are not dispositive of a party’s claim or defense, which may be
referred to a magistrate judge to decide and then appealed to the presiding district judge
under a clearly erroneous or contrary to law standard, Fed. R. Civ. P. 72(a), and
dispositive matters, which may be referred to a magistrate judge only for findings and
recommendation, with a final decision reserved to the district judge upon de novo review
of any objections. Fed. R. Civ. P. 72(b). Consistent with Fed. R. Civ. P. 72, this court’s
Local Rule 72.1(A) automatically refers for decision all contested motions for leave to
11
intervene to the magistrate judge to whom an action is allotted and allows for district
court review under the clearly erroneous standard for non-dispositive motions. WFK &
Assocs., LLC v. Tangipahoa Parish, No. 06-6684, 2007 WL 1537633, at *1 (E.D. La.
May 23, 2007) (Feldman, J.); Sunrise Shipping, Ltd. v. M/V Am. Chemist, No. 96-2849,
1997 WL 289349, at *1 (E.D. La. May 29, 1997) (Berrigan, J.).
B.
The Sullivan Plaintiffs Are Not Entitled to Intervene
1.
The Arguments of the Sullivan Plaintiffs
The Sullivan Plaintiffs seek to intervene in this matter solely to object to any term
of the settlement agreement by which opt-in plaintiffs in the instant consolidated cases
who wish to participate in the settlement will be required to waive and release all claims
they have against Worley arising out of their employment by Worley. Such a release
would necessarily include all claims that the plaintiffs in the consolidated cases have
against Worley for breach of contract and unpaid wages as putative class members in the
Sullivan litigation. The Sullivan Plaintiffs argue that “there is a substantial risk that such
a waiver or release will not be made knowingly and with full knowledge of the
consequences of such a waiver or release” and that the waiver or release “would
prejudice or compromise . . . the claim of the class members, and plaintiffs [in the instant
consolidated actions], being litigated in the” Sullivan litigation. Record Doc. No. 298-1,
at p. 2. The Sullivan Plaintiffs contend that they are entitled to intervene of right under
12
Fed. R. Civ. P. 24(a) because their interest “in protecting their claim in the” Sullivan
litigation is “directly related to the subject matter of the litigation pending before this
court.” Id. at p. 3. Counsel for the Sullivan Plaintiffs argue that, as state court class
counsel, they represent not just the five named Sullivan Plaintiffs in seeking to intervene,
but that they represent all Sullivan class members, including plaintiffs in the instant
FLSA action. The Sullivan Plaintiffs assert that they have standing to intervene because
class counsel have an obligation to protect the rights of the plaintiffs in this court to the
extent that they are also members of the Sullivan class.
The Sullivan Plaintiffs’ Motion for Leave to File Petition in Intervention cites Fed.
R. Civ. P. 23(d)(1) and 24(a)(2) as bases for their alleged right to intervene. However,
Rule 23 governs only class actions. The captioned consolidated cases are not Rule 23
class actions. Instead, they are a conditionally certified collective action under the FLSA
and its consolidated breach of contract action, in which the court has denied plaintiffs’
motion for class certification under Rule 23. Record Doc. No. 187. Thus, only Rule 24
applies to the motion to intervene.
2.
Legal Standards for Allowing Intervention
As to intervention of right, Rule 24(a) states:
On timely motion, the court must permit anyone to intervene who: (1) is
given an unconditional right to intervene by a federal statute; or (2) claims
an interest relating to the property or transaction that is the subject of the
action, and is so situated that disposing of the action may as a practical
13
matter impair or impede the movant’s ability to protect its interest, unless
existing parties adequately represent that interest.
Fed. R. Civ. P. 24(a). Thus, a party is entitled to an intervention of right if (1) the motion
to intervene is timely; (2) the potential intervenor asserts a “direct, substantial [and]
legally protectable” interest that is related to the property or transaction that forms the
basis of the controversy in the case into which it seeks to intervene; (3) the disposition
of that case may impair or impede the potential intervenor’s ability to protect its interest;
and (4) the existing parties do not adequately represent the potential intervenor’s interest.
In re Lease Oil Antitrust Litig., 570 F.3d 244, 247, 250 (5th Cir. 2009) (quotation
omitted); Ross, 426 F.3d at 753; Heaton v. Monogram Credit Card Bank, 297 F.3d 416,
422 (5th Cir. 2002); Ford v. City of Huntsville, 242 F.3d 235, 239 (5th Cir. 2001);
Edwards v. City of Houston, 78 F.3d 983, 1000 (5th Cir. 1996); Espy, 18 F.3d at 120405, 1207 (quoting Piambino v. Bailey, 610 F.3d 1306, 1321 (5th Cir. 1980)). “In the
absence of any of these elements, intervention as of right must be denied.” Graham v.
Evangeline Parish Sch. Bd., 132 F. App’x 507, 511 (5th Cir. 2005) (citing United States
v. Franklin Parish Sch. Bd., 47 F.3d 755, 758 (5th Cir. 1995)).
As to permissive intervention, Fed. R. Civ. P. 24(b) provides in pertinent part:
(1) In General. On timely motion, the court may permit anyone to
intervene who:
(A) is given a conditional right to intervene by a federal
statute; or
14
(B) has a claim or defense that shares with the main action a
common question of law or fact.
* * *
(3) Delay or Prejudice. In exercising its discretion, the court must consider
whether the intervention will unduly delay or prejudice the adjudication of
the original parties’ rights.
Fed. R. Civ. P. 24(b)(1), (3) (emphasis added). “Federal courts should allow intervention
where ‘no one would be hurt and greater justice could be attained.’” Ross v. Marshall,
426 F.3d 745, 753 (5th Cir. 2005) (quoting Sierra Club v. Espy, 18 F.3d 1202, 1205 (5th
Cir. 1994).
Both permissive interventions and interventions of right may be permitted only
“upon timely application,” Fed. R. Civ. P. 24(a), because “the requirement of timeliness
applies whether intervention is sought as a matter of right or as a matter of discretion.”
7C Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and
Procedure § 1916 at 527-28 (3d ed. 2007). The concept of “timeliness” in connection
with motions for leave to intervene is a flexible one, which is left to the sound discretion
of the trial court. Id. at 529 (citing Grubbs v. Norris, 870 F.2d 343, 345 (6th Cir. 1989);
Holland v. Sterling Enters., Inc., 777 F.2d 1288, 1293 (7th Cir. 1985); McDonald v. E.J.
Lavino Co., 430 F.2d 1065, 1074 (5th Cir. 1970)); accord In re Lease Oil Antitrust Litig.,
570 F.3d at 248. “‘The requirement of timeliness is not a tool of retribution to punish the
tardy would-be intervenor, but rather a guard against prejudicing the original parties by
the failure to apply sooner.’” Heaton v. Monogram Credit Card Bank, 297 F.3d 416, 422
15
(5th Cir. 2002) (quoting Espy, 18 F.3d at 1205). “Th[is] analysis is contextual; absolute
measures of timeliness should be ignored.” Espy, 18 F.3d at 1205; accord Heaton, 297
F.3d at 422. “A court should ignore ‘how far the litigation has progressed when
intervention is sought[,] . . . the amount of time that may have elapsed since the
institution of the action . . . [, and] the likelihood that intervention may interfere with the
orderly judicial processes.’” Am. V Ships Ltd. v. Norica Eng’g Servs., 34 F. App’x 151,
2002 WL 496377, at *3 (5th Cir. 2002) (quoting John Doe # 1 v. Glickman, 256 F.3d
371, 376 (5th Cir. 2001)).
“Recognizing these considerations, this court has fashioned a four-factor test for
determining whether a motion to intervene is timely.” Id. Thus, when determining
whether a motion to intervene is timely, a court must consider (1) how long the potential
intervenor knew or reasonably should have known of his stake in the case into which he
seeks to intervene; (2) the prejudice, if any, the existing parties may suffer because the
potential intervenor failed to intervene when he knew or reasonably should have known
of his stake in that case; (3) the prejudice, if any, the potential intervenor may suffer if
the court does not let him intervene; and (4) any unusual circumstances that weigh in
favor of or against a finding of timeliness. In re Lease Oil Antitrust Litig., 570 F.3d at
247-48 (citing Stallworth v. Monsanto Co., 558 F.2d 257, 263-66 (5th Cir. 1977));
Effjohn Int’l Cruise Holdings, Inc. v. A&L Sales, Inc., 346 F.3d 552, 560-61 (5th Cir.
16
2003). “These factors are not a formula for determining timeliness; instead, it should be
determined based on all the circumstances.” Id. at 561 (quotation omitted).
3.
The Motion to Intervene Is Untimely
The Sullivan Plaintiffs’ motion to intervene is untimely. The two consolidated
actions were filed in this court on February 4, 2011. The Sullivan case was filed in state
court three days later. Counsel for Worley deposed two of the lead Sullivan Plaintiffs,
Michael Sullivan and Johnny Knighten, in the state court lawsuit during the first week
of July 2011, and both of them acknowledged that they were aware of the overtime
lawsuit in federal court. Defendants’ Exhs. 2 and 3, Record Doc. Nos. 308-2 and 308-3.
The record establishes that counsel for the Sullivan Plaintiffs has been “monitoring” the
instant FLSA action since at least July 15, 2011, when counsel for plaintiffs in the instant
case filed a Notice of Related Case in the Sullivan litigation. Plaintiffs’ Exh. A, Record
Doc. No. 303-1, letter dated July 19, 2011 from counsel for the Sullivan Plaintiffs to
plaintiffs’ counsel. Plaintiffs in the instant case also moved to intervene in the Sullivan
litigation on July 22 and September 23, 2011. Record Doc. No. 303-3 and 303-4,
Plaintiff’s Exhs. C and D. All of the Sullivan Plaintiffs, who were also potential
members of the FLSA collective action in this court, were individually notified of the
collective action on August 22, 2011 when the Notice of Collective Action and Consent
17
to Become a Plaintiff form was sent to them. Plaintiff’s Exh. B, Record Doc. No. 303-2,
declaration under penalty of perjury of Michelle M. La Count.
Thus, all Sullivan Plaintiffs and their counsel knew or reasonably should have
known of their stake in this case at least by July 15, 2011, but certainly no later than the
end of August 2011. Despite that actual or constructive knowledge, they did not file their
motion to intervene until December 27, 2011, after a settlement had been reached. They
argue that they did not become aware of the proposed settlement agreement until the
parties filed their first Joint Motion to Dismiss, and then the Sullivan Plaintiffs decided
to intervene. This explanation is inadequate to excuse their untimely filing. Obviously,
“it is always a possibility that the present parties will settle a lawsuit.” Bush v. Viterna,
740 F.2d 350, 358 (5th Cir. 1984); accord Great Atl. & Pac. Tea Co. v. Town of East
Hampton, 178 F.R.D. 39, 44 (E.D.N.Y. 1998).
A release of all claims that the settling plaintiffs have against the settling
defendant is extremely common in settlement agreements. “‘[T]he very nature of a
general release is that the parties desire to settle all matters forever . . . [and a] general
release . . . not only settles enumerated specific differences, but claims of every kind or
character, known or unknown.’” DeHoyos v. Allstate Corp., 240 F.R.D. 269, 311-12
(W.D. Tex. 2007) (quoting Zandford v. Prudential-Bache Sec., Inc., 112 F.3d 723, 727
(4th Cir. 1997)); accord Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 106 (2d
18
Cir. 2005); United States v. Allegheny-Ludlum Indus. Inc., 517 F.2d 826, 853 (5th Cir.
1975). Such releases are enforceable because a “contrary result would not contribute
significantly to the public policy of encouraging the settlement of differences and
compromise of disputes in which the execution and exchange of releases is the common
and legally accepted means of consummation.” Ingram Corp. v. J. Ray McDermott &
Co., 698 F.2d 1295, 1312 (5th Cir. 1983); accord Newby v. Enron Corp., 394 F.3d 296,
305 n.15 (5th Cir. 2004). Thus, the Sullivan Plaintiffs could and should have moved to
intervene earlier if they believe that they have an interest to protect related to a potential
settlement of the instant litigation, which could have happened at any time and in which
Worley was almost certain to have required the release of all claims as a condition of any
settlement agreement.
As to the second prong of the Rule 24 timeliness test, the existing parties will
suffer serious prejudice because the potential intervenors failed to intervene when they
knew or reasonably should have known of their purported stake in this case. “The
inquiry for this factor is whether other parties were prejudiced by the delay, not whether
they would be prejudiced by the addition of the claim (obviously, in the sense that they
may obtain less, existing parties are always prejudiced by new claims).” Effjohn Int’l
Cruise Holdings, Inc., 346 F.3d at 561 (citation omitted). Here, the existing parties are
prejudiced by the proposed intervenors’ delay because the parties relied on the presence
19
of the existing plaintiffs and the absence of any additional plaintiffs in determining their
litigation, negotiation and settlement strategies. The existing parties are represented by
able counsel, who effectively and zealously litigated this case during months of discovery
and motion practice and who negotiated for many hours over the past few months to
reach a compromise that will benefit both sides by avoiding the risks and costs of
ongoing litigation, providing plaintiffs with significant compensation for their FLSA
claims and putting an end to all claims of the settling plaintiffs against Worley. Allowing
the Sullivan Plaintiffs, who failed to move to intervene earlier despite their knowledge
of their purported interest in this litigation, to sidetrack this process and attempt to
negotiate new terms when the settlement is nearly complete would be highly prejudicial
to the parties by prolonging the lawsuit, increasing its cost and risking the annulment of
a complex settlement agreement. Choike v. Slippery Rock Univ., 297 F. App’x 138, 141
(3d Cir. 2008); Hollywood Cmty. Synagogue, Inc. v. City of Hollywood, 254 F. App’x
769, 771 (11th Cir. 2007); Lelsz v. Kavanagh, 710 F.2d 1040, 1045 (5th Cir. 1983).
As to the third prong of the Rule 24 timeliness test, the Sullivan Plaintiffs will
suffer no prejudice if they do not intervene. The Sullivan Plaintiffs argue that they and
their counsel, as state court class representatives and state court class counsel, represent
the plaintiffs in this case. However, the Sullivan Plaintiffs have no standing to intervene
as purported representatives of plaintiffs in either of these consolidated actions because
20
all plaintiffs in both actions are already represented by counsel of record. Adequacy of
representation is “critical to the . . . inquiry” into the third timeliness factor. Lelsz, 710
F.2d at 1046. “If the proposed intervenors’ interests are adequately represented, then the
prejudice from keeping them out will be slight.” Id.
There is no possible prejudice to the existing plaintiffs by allowing them, advised
by their chosen counsel of record, to choose between accepting the settlement terms and
releasing all of their claims against Worley in exchange for significant compensation, or
rejecting the settlement and continuing to prosecute their contract claims in either the
Sullivan litigation or this court, as the settlement agreement and this court’s order will
provide. In addition, the members of the putative Sullivan class who did not join in the
actions in this court will not be prejudiced in any way because those putative class
members’ interests in prosecuting their own claims in the Sullivan litigation will be
unaffected by the settlement agreement in the instant actions. “Moreover, [the proposed
intervenors are] not a stranger to the litigation [who] became aware of [their] . . . claim
only shortly before the [the attempt to intervene]; nor, for example, [are they] an
unsophisticated ward of the court. In short, the prejudice to [the intervenors, if any] was
of [their] own making.” Effjohn Int’l Cruise Holdings, Inc., 346 F.3d at 561-62.
Finally, no unusual circumstances, such as an inability to act upon their
longstanding knowledge of the instant actions, including the ever-present possibility of
21
settlement, weigh in favor of a finding of timeliness. Stallworth, 558 F.3d at 266. The
motion to intervene is untimely.
Accordingly, the motion is denied.
4.
Sullivan Plaintiffs Fail to Meet the Other Criteria for Intervention
Even if the motion was timely, the Sullivan Plaintiffs have failed to carry their
burden to satisfy the other criteria of Rule 24(a)(2) for an intervention of right or of Rule
24(b) for a permissive intervention.
Consideration of the three remaining Rule 24(a)(2) factors weighs heavily in favor
of denying the motion to intervene. As to the second factor, the Sullivan Plaintiffs do not
assert a direct, substantial and legally protectable interest that is related to the property
or transaction that forms the basis of the controversy in this case. They have no interest
in the settlement of the plaintiffs’ FLSA claims, as they admittedly do not intend to
object to any terms of the settlement agreement other than any waiver or release
provision.
The Sullivan Plaintiffs also lack a direct, substantial and legally protectable
interest in representing a Sullivan litigation class in this court because the state court has
not yet defined the scope of the class, no notice of the state court class action has been
formalized or sent to putative class members, and Worley has appealed the state court’s
order certifying a class. As a result, the putative state court class members have not
22
received notice of their rights, including the opportunity to exclude themselves from the
class, which is required both by Louisiana Code of Civil Procedure article 592(B) and
to establish due process. Albach v. Kennedy, 801 So. 2d 476, 480 (La. App. 1st Cir.
2001); Ducote v. City of Alexandria, 670 So.2d 1378, 95-1197 (La. App. 3d Cir. 1996).
Any interest the putative class members may have in a Sullivan class remains contingent
on the state appeal court’s decision on Worley’s appeal, a definition of the scope of the
class, notice to class members and expiration of the opt-out period. Until these
contingencies occur, the named Sullivan Plaintiffs and their counsel do not represent any
members of the putative Sullivan class, except those who have agreed to be represented
by counsel, and do not represent those who have elected to proceed with their claims in
this court, where they are represented by their own counsel of record. See In re Katrina
Canal Breaches Consolidated. Litig., No. 05-4182, 2008 WL 4401970, at *3 (E.D. La.
Sept. 22, 2008) (citing ABA Comm. on Ethics and Prof’l Responsibility, Formal Op. 07445, at 3 (2007)) (“A client-lawyer relationship with a potential member of the class does
not begin until the class has been certified and the time for opting out by a potential
member of the class has expired. . . . Therefore, putative class members are not
represented parties for purposes of the Model Rules prior to certification of the class and
the expiration of the opt-out period.”).
23
As to the third Rule 24(a)(2) factor for intervention of right, the disposition of the
instant case will in no way impair or impede the potential intervenors’ ability to protect
their interests. The five named Sullivan Plaintiffs and any putative Sullivan state court
class members who are not plaintiffs in the consolidated actions in this court have no
interest whatsoever in the outcome of these consolidated actions. Each plaintiff in this
court will have the choice either to accept the settlement terms or to reject them and
maintain his or her individual claims either in the Sullivan litigation or in this court. The
Sullivan Plaintiffs have adduced no reason why individual plaintiffs in an FLSA
collective action should not be entitled to accept or reject individual settlement offers.
Case law supports such a right. In re Shell Oil Refinery, 152 F.R.D. 526, 535 (E.D. La.
1989) (citing In re General Motors Corp. Engine Interchange Litig., 594 F.2d 1106,
1137-40 (7th Cir. 1979); Vernon J. Rockler & Co., Inc. v. Mpls. Shareholders Co., 425
F. Supp. 145, 149-50 (D. Minn.1977); Chrapliwy v. Uniroyal, Inc., 71 F.R.D. 461, 464
(N.D. Ind. 1976); Rodgers v. U.S. Steel Corp., 70 F.R.D. 639, 642-43 (W.D. Pa. 1976)).
Regardless of the decisions of any plaintiffs regarding settlement in the instant cases,
those who do not participate and are putative members of the Sullivan class can still
pursue their claims in the state court litigation, which is the only interest that they have.
The Sullivan Plaintiffs also have not established the fourth factor in a Rule
24(a)(2) analysis: that the existing parties do not adequately represent the Sullivan
24
Plaintiffs’ alleged interest in ensuring that the plaintiffs in these cases are fully advised
of their rights regarding the settlement agreement and its consequences on their claims
in the Sullivan matter. The Sullivan Plaintiffs have produced nothing but speculation
that there is a “substantial risk” that plaintiffs in this action will not knowingly waive or
release their contract claims against Worley. On the contrary, plaintiffs in these actions
are represented by able counsel who have proven themselves competent, professionally
responsible and capable of advising plaintiffs fully regarding the terms of the settlement
agreement. There is no evidence that counsel of record for plaintiffs in this court will not
adequately represent the interest of their clients that the Sullivan Plaintiffs attempt to
assert. “When the party seeking to intervene has the same ultimate objective as a party
to the suit, the existing party is presumed to adequately represent the party seeking to
intervene unless that party demonstrates adversity of interest, collusion, or nonfeasance.”
Franklin Parish Sch. Bd., 47 F.3d at 757 (quotation omitted). No such negative interests
have been established.
Although counsel for the Sullivan Plaintiffs might wish to advise plaintiffs in these
actions differently regarding the proposed settlement, mere “tactical differences do not
make inadequate the representation of those whose interests are identical.” Bush, 740
F.2d at 358 (citing Bumgarner v. Ute Indian Tribe, 417 F.2d 1305, 1308 (10th Cir. 1969);
Acuff v. United Papermakers, 404 F.2d 169 (5th Cir. 1968)).
25
Representation is not inadequate simply because “the applicant would insist
on more elaborate . . . pre-settlement procedures or press for more drastic
relief, or where the applicant and the existing party have different views on
the facts, the applicable law, or the likelihood of success of a particular
litigation strategy.” Generally, [the proposed intervenor] would need to
demonstrate that it has a legal interest that not only differs from the [the
existing plaintiffs’] interest, but would permit [the proposed intervenor] to
assert a justification . . . that could not be equally asserted by the [existing
plaintiffs].
Schwartz v. Town of Huntington, 191 F.R.D. 357, 359 (E.D.N.Y. 2000) (quoting United
States v. City of N.Y., 198 F.3d 360, 367 (2d Cir. 1999)) (citing Wash. Elec. Coop., Inc.
v. Mass. Mun. Wholesale Elec. Co., 922 F.2d 92, 97 (2d Cir. 1990)) (additional citations
omitted). Under these standards, the Sullivan Plaintiffs have not shown that the existing
plaintiffs do not adequately represent the Sullivan Plaintiffs’ alleged interest in ensuring
that plaintiffs are fully advised of their rights regarding the settlement agreement.
Having failed to satisfy any of the criteria of Rule 24(a)(2), the Sullivan Plaintiffs are not
entitled to intervene of right.
Permissive intervention pursuant to Fed. R. Civ. P. 24(b) “is appropriate where ‘an
applicant’s claim or defense and the main action have a question of law or fact in
common.’” Trans Chem. Ltd. v. China Nat’l Mach. Import & Export Corp., 332 F.3d
815, 824 (5th Cir. 2003) (quoting Fed. R. Civ. P. 24(b)(2)). However, permissive
intervention “is a matter wholly discretionary with the [district] court . . . even though
there is a common question of law or fact, or the requirements of Rule 24(b) are
26
otherwise satisfied.” Staley v. Harris County, 160 F. App’x 410, 414 (5th Cir. 2005)
(quotation omitted) (brackets and ellipsis by the Fifth Circuit). Thus, “a district court
may deny permissive intervention if such would unduly delay or prejudice the
adjudication of the rights of the original parties.” Graham, 132 F. App’x at 514
(quotation omitted).
The Sullivan Plaintiffs do not expressly seek permissive intervention and do not
assert that they have a claim or defense that shares a common question of law or fact with
the main action. Nonetheless, for the same reasons discussed above in finding that the
Sullivan Plaintiffs are not entitled to intervene of right, I find that there are no common
questions of law or fact inherent in the Sullivan Plaintiffs’ alleged interest in representing
plaintiffs who are already adequately represented and when the Sullivan Plaintiffs will
experience no prejudice if intervention is denied, while the existing parties will suffer
clear prejudice if intervention is allowed. Therefore, I deny the Sullivan Plaintiffs’
motion to the extent it might seek permissive intervention under Rule 24(b).
Accordingly, the Sullivan Plaintiffs’ Motion for Leave to File Petition in
Intervention, Record Doc. No. 298, is denied.
27
III.
THE MOTION TO APPROVE THE SETTLEMENT AGREEMENT
A.
Legal Standards for Approval of Settlement in an FLSA Collective Action
“Because this case arises under the Fair Labor Standards Act, the Court must
scrutinize the settlement for fairness before issuing its approval. This is because ‘[t]he
provisions of the [FLSA] are mandatory, and not subject to negotiation and bargaining
between employers and employees.’” Domingue v. Sun Elec. & Instrumentation, Inc.,
No. 09-682, 2010 WL 1688793, at *1 (M.D. La. Apr. 26, 2010) (Vance, J.) (quoting
Collins v. Sanderson Farms, Inc., 568 F. Supp. 2d 714, 717 (E.D. La. 2008) (Berrigan,
J.)) (citing 29 U.S.C. § 201 et seq.; Schulte v. Gangi, 328 U.S. 108, 113 n.8 (1946);
Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350, 1352-55 (11th Cir. 1982)).
Before approving a settlement in an FLSA collective action, the court must
determine whether (1) the settlement involves the resolution of a bona fide dispute over
an FLSA provision and (2) the settlement is fair and reasonable. Lynn’s Food Stores,
679 F.2d at 1352-55; Jarrad v. S. Shipbldg. Corp., 163 F.2d 960, 960 (5th Cir. 1947);
Domingue, 2010 WL 1688793, at *1 (citing Lynn’s Food Stores, 679 F.2d at 1355);
Liger v. New Orleans Hornets NBA Ltd. P’ship, No. 05-1969, 2009 WL 2856246, at *1
(E.D. La. Aug. 28, 2009) (Berrigan, J.) (citing Lynn’s Food Stores, 679 F.2d at 1355;
Collins, 568 F. Supp. 2d at 717; Camp v. Progressive Corp., No. 01-2680, 2004 WL
2149079, at *4 (E.D. La. Sept. 23, 2004) (Wilkinson, M.J.)).
28
“The primary focus of the Court’s inquiry in determining whether to approve the
settlement of a FLSA collective action is not, as it would be for a Rule 23 class action,
on due process concerns, . . . but rather on ensuring that an employer does not take
advantage of its employees in settling their claim for wages.” Collins, 568 F. Supp. 2d
at 719 (citations and footnote omitted).
Although the provisions of Fed. R. Civ. P. 23 , which governs class actions, do not
apply to collective actions under the FLSA, Rule 23(e) is similar in that it requires court
approval before a proposed class action settlement may be finalized. A class action
settlement must be “fair, adequate and reasonable” and cannot be the product of collusion
between the parties. In re Beef Indus. Antitrust Litig., 607 F.2d 167, 179 (5th Cir. 1976);
Ruiz v. McKaskle, 724 F.2d 1149, 1152 (5th Cir. 1984); Cotton v. Hinton, 559 F.2d
1326, 1330 (5th Cir. 1977).
Thus, the Rule 23(e) standard encompasses the “fair and reasonable” settlement
standard of the FLSA collective action, and cases interpreting Rule 23(e) are analogous
and applicable to the instant FLSA action. Liger, 2009 WL 2856246, at *2 (citing
Hitchcock v. Orange County, No. 604CV1722ORL28JGG, 2006 WL 3614925 (M.D. Fla.
Dec. 11, 2006); Brask v. Heartland Auto. Servs., Inc., No. 06-CV-00011, 2006 WL
2524212 (D. Minn. Aug. 15, 2006); Camp, 2004 WL 2149079, at *5).
29
In determining whether a settlement is fair, adequate and reasonable, the court
should consider the following six factors:
(1) the existence of fraud or collusion behind the settlement; (2) the
complexity, expense, and likely duration of the litigation; (3) the stage of
the proceedings and the amount of discovery completed; (4) the probability
of plaintiffs’ success on the merits; (5) the range of possible recovery; and
(6) the opinions of the class counsel, class representatives, and absent class
members.
Reed v. Gen. Motors Corp., 703 F.2d 170, 172 (5th Cir. 1983) (citing Parker v.
Anderson, 667 F.2d 1204, 1209 (5th Cir. 1982)); accord Liger, 2009 WL 2856246, at *2;
Collins, 568 F. Supp. 2d at 722.
When considering these factors, the court should keep in mind the “strong
presumption” in favor of finding a settlement fair. Cotton, 559 F.2d at 1331; Henderson
v. Eaton, No. 01-0138, 2002 WL 31415728, at *2 (E.D. La. Oct. 25, 2002) (Vance, J.).
Moreover, the court is aware, as the parties must also be, that a “settlement is a
compromise, a yielding of the highest hopes in exchange for certainty and resolution.”
In re Gen. Motors Corp. Pick-Up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768, 806
(3d Cir. 1995) (citing Cotton, 559 F.2d at 1330).
B.
A Bona Fide Dispute Exists
Having reviewed the record as a whole, including the submissions of the parties
in connection with the instant motion, as well as the complaint, as amended; defendants’
answers; plaintiffs’ previously filed motion for conditional certification as a collective
30
action; plaintiffs’ previously filed motions for partial summary judgment; and
defendants’ responses to plaintiffs’ previously filed motions, I find that the instant action
presents bona fide disputes over FLSA provisions, including but not limited to whether
the administrative exemption, the highly compensated employee exemption and/or the
executive exemption from overtime pay is or are applicable to the collective action
members; whether collective action members were paid on a salaried basis; whether they
were similarly situated for purposes of final certification of a collective action; which
defendant was plaintiffs’ employer;1 whether the employer willfully violated the statute;
whether the employer acted in good faith; the extent of overtime each collective action
member actually worked; the amount of overtime pay that may be due to each collective
action member; and the possibility of recovery of liquidated damages. “A disagreements
[sic] over ‘hours worked or compensation due’ clearly establishes a bona fide dispute.
The institution of a federal court litigation followed [by] aggressive prosecution and
strenuous defense demonstrates the palpable bona fides of this dispute.” Bredbenner v.
Liberty Travel, Inc., No. 09-905, 2011 WL 1344745, at *18 (D.N.J. Apr. 8, 2011)
(quoting Hohnke v. United States, 69 Fed. Cl. 170, 175 (Fed. Cl. 2005)) (citing D.A.
1
Defendant Worley Catastrophe Response, LLC has consistently denied that it employed any
plaintiffs.
31
Schulte, Inc. v. Gangi, 328 U.S. 108, 113 n.8 (1946); Lynn’s Food Stores, 679 F.2d at
1354); accord Liger, 2009 WL 2856246, at *3 (citing Hohnke, 69 Fed. Cl. at 175).
This court has observed both aggressive prosecution and strenuous defense in this
case. Thus, the first prong of the settlement approval process is satisfied.
C.
The Settlement Is Fair and Reasonable
Having considered all of the Reed factors, 703 F.2d at 172, in light of the
circumstances of this case, as discussed below, I find that the proposed settlement is fair,
reasonable and adequate to the collective action members.
1.
No Evidence of Fraud or Collusion
The court may presume that a proposed settlement is fair and reasonable when it
is the result of arm’s-length negotiations. 4 Newberg on Class Actions § 11.41 (4th ed.)
(avail. on Westlaw without pagination; database updated Nov. 2011); accord Liger, 2009
WL 2856246, at *3; Collins, 568 F. Supp. 2d at 725. While approval of a proposed
settlement is discretionary, “it is clear that the court should not give rubber-stamp
approval.” Newberg on Class Actions § 11.41. There is also a presumption that no fraud
or collusion occurred between counsel, in the absence of any evidence to the contrary.
Id. § 11.51; accord Liger, 2009 WL 2856246 at *3; Collins, 568 F. Supp. 2d at 725.
In the instant case, no evidence refutes these presumptions. On the contrary, the
evidence and the court’s record and observations establish that the parties conducted
32
extensive settlement discussions, including a lengthy private mediation and, at the
request of all counsel, several additional settlement conferences conducted by me that led
to finalization of the settlement agreement. Depositions were taken, voluminous
discovery requests were propounded, thousands of pages of documents were produced
and more than 360 docket entries were filed into the court’s record. Counsel for both
sides are experienced in complex litigation of this sort, and they have demonstrated to
the court throughout these proceedings, and particularly when they reached the
settlement agreement, their thorough familiarity with the facts and legal issues.
The settlement agreement treats all collective action members uniformly. Benefits
will be distributed based on objective criteria of employment status, wages paid while
each member was employed and the amount of overtime worked.
Reasonable additional amounts are awarded to collective action representative
Altier and another plaintiff, Sandra Brennan, who both participated directly in
depositions and discovery. Such incentive awards
are not uncommon in class action litigation and particularly where . . . a
common fund has been created for the benefit of the entire class. The
purpose of these payments is to compensate named plaintiffs for the
services they provided and the risks they incurred during the course of class
action litigation, and to reward the public service of contributing to the
enforcement of mandatory laws.
33
Sullivan v. DB Invs., Inc., No. 08-2784, 2011 WL 6367740, at *41 n.65 (3d Cir. Dec. 20,
2011) (quotations and citations omitted); accord Henderson, 2002 WL 31415728, at *6
(citing In re S. Ohio Corr. Facility, 175 F.R.D. 270, 272-73 (S.D. Ohio 1997)).
Accordingly, I find that the settlement agreement is the result of arm’s-length
negotiations and that there is no evidence of fraud or collusion. I therefore presume that
the proposed settlement is fair and reasonable.
2.
3.
The Complexity, Expense and Likely Duration of the Litigation
The Stage of the Proceedings and the Amount of Discovery
These two related factors weigh heavily in favor of finding that the settlement is
fair and reasonable. The FLSA lawsuit was filed on February 4, 2011. A collective
action was conditionally certified on July 11, 2011, and the court ordered that notice be
given to potential collective action members that they must opt in to the case in writing
no later than 60 days after the notice was sent, which occurred on August 22, 2011.
The discovery process was painstaking and complex. The parties exchanged
extensive written discovery, produced thousands of documents and conducted six
depositions in this case, as well as obtaining deposition testimony of eleven witnesses
taken in the related Sullivan litigation in state court. Counsel had to travel to Illinois and
Florida to depose plaintiffs Altier and Brennan and would have been required to travel
to the home states of other plaintiffs who reside outside Louisiana for additional
depositions if the case proceeded to trial.
34
To narrow the issues, plaintiffs filed partially dispositive motions that are still
pending, but were deferred while the parties conducted their extensive settlement
negotiations. Counsel vigorously engaged their opponents on the legal issues and the
facts. Virtually every motion filed in this action engendered opposition memoranda and
often reply memoranda.
The court held numerous motion hearings and status
conferences during the eleven months that this litigation has been ongoing in this court.
A jury trial in this matter is scheduled for August 20, 2012, with a final pretrial
conference set for August 6, 2012. Before that would occur, Worley intended to file a
motion to decertify the collective action, which would have required extensive briefing
by both parties, with numerous exhibits presented to address the multiple legal and
factual questions raised by a motion to decertify, and a lengthy hearing and ultimate
opinion by the court. Trial in this matter would become more complicated and expensive
if these claims proceeded as individual suits. Worley most likely would have filed
summary judgment motions following a decision on decertification. Even if not
decertified, given the precise damages to be proven, the parties estimate that trial would
last approximately two weeks. The ultimate results after trial would probably be
appealed by the unsuccessful parties, which would delay any possible payments to the
plaintiffs until the end of a long process.
35
After engaging in preliminary negotiations, the parties participated in a
professional private mediation at which they succeeded in resolving many issues leading
to an overall settlement. I later conducted settlement conferences with counsel to assist
them with resolving and clarifying the few remaining issues necessary for final
agreement.
Thus, this litigation, including the settlement effort, has been complex, expensive
and time-consuming for the named plaintiffs, counsel, the parties and the court, and was
scheduled to continue at least into August 2012.
“Issues of decertification and
dispositive motions were avoided because of the progress of settlement negotiations.”
Collins, 568 F. Supp. 2d at 726. These factors weigh in favor of approving the
settlement.
4.
The Probability of Plaintiffs’ Success on the Merits
This factor also militates in favor of approving the settlement. When examining
the fairness of a proposed settlement, the court should not engage in a trial on the merits
because the very purpose of the compromise is to avoid the delay and expense of a trial.
Reed, 703 F.3d at 172. However, the court must analyze the law and facts to some extent
to examine the probability of plaintiffs’ success on the merits.
Plaintiffs allege that Worley required them to work as claims adjusters in the
aftermath of the Deepwater Horizon oil spill for 12-hour days six or seven days per week,
36
totaling 72 or 84 hours per week, and paid them only a pre-set daily rate of pay for each
day worked. They argue that Worley’s failure to pay them for overtime work violated
Section 207(a)(1) of the FLSA, which requires an employer to pay overtime
compensation to non-exempt employees who work more than 40 hours per week. 29
U.S.C. § 207(a)(1). They also contend that Worley’s violations were willful, which
would increase the potential damages.
However, the FLSA exempts from the overtime provisions of Section 207(a)(1)
“any employee employed in a bona fide executive, administrative, or professional
capacity.” Id. § 213(a)(1). Worley argues that the claims adjusters were executive,
administrative and/or highly compensated employees who were exempt from the
overtime compensation mandate of Section 207(a)(1). See 29 C.F.R. §§ 541.200,
541.214(a) (administrative employee); id. § 541.100 (executive employee); id. § 541.601
(highly compensated employees). Worley also contends that some of the plaintiffs had
contracts, while others did not, and that different managers hired the claims adjusters and
established their pay, work schedules and other job expectations. If Worley was found
to have violated the FLSA overtime provision, it has asserted a defense that it did so in
good faith, which would, if successful, limit its liability for liquidated damages. A
finding of a lack of willful violation would also favor defendant’s good faith defense as
to liquidated damages.
37
The court granted conditional certification of the FLSA collective action because
plaintiffs’ evidence of Worley’s generally applicable pay policy to similarly situated
employees was sufficient to satisfy the lenient standard for conditional certification at the
notice stage. However, Worley has raised legitimate issues regarding whether the
collective action members are similarly situated, including the extent of individualized
damages and whether any employees were exempt from the overtime provisions of the
FLSA, which would be addressed at the motion for decertification stage, after discovery
had revealed more specific evidence. If the court would have granted Worley’s eventual
motion to decertify the collective action, the likelihood of each collective action member
succeeding on the merits would be significantly diminished, dependent as it would be on
individualized proof.
The court has not ruled on plaintiffs’ motions for partial summary judgment, in
which plaintiffs argue (1) that they were not paid on a salaried basis and they therefore
did not fall under either the administrative, executive or highly compensated employee
exemptions, Record Doc. No. 234, and (2) that Worley cannot establish a good faith
defense to the imposition of liquidated damages. Record Doc. No. 257. My preliminary
assessment of these motions and Worley’s opposition memoranda is that the motions
would most likely be denied on the basis that material fact issues are in dispute regarding
each issue.
38
Thus, plaintiffs would still bear the burden of proving both liability and damages
at trial, as well as proving that Worley Catastrophe Response, LLC was their employer.
Worley would bear the burden of proving that plaintiffs were exempt administrative,
executive or highly compensated employees. Although plaintiffs believe that they have
a good case, they acknowledge in their memorandum in support of their attorney’s fees
request that this “case presents a novel and difficult question . . . of whether a reasonable
relationship should exist between a guaranteed salary and the final amount paid to
employees. There were few authorities backing the positions of either side on this
particular question[,] causing much uncertainty about the final result.” Record Doc. No.
301-1 at p. 7. Plaintiffs also acknowledge that their status as skilled, highly paid claims
adjusters makes it more difficult for them to argue and prove that they were entitled to
overtime pay. Id. In addition, the confidential individual form that each plaintiff must
sign to participate in the settlement acknowledges a certain weakness in plaintiffs’ claims
that was revealed during discovery, which reduced the potential value of any recovery
in these consolidated actions. Exhibit C to the Confidential Settlement Agreement.
In sum, while Worley’s defenses to plaintiffs’ FLSA claims appear somewhat
more meritorious at this stage of the litigation, the court understands that the case
depends on outstanding procedural and substantive issues yet to be decided, which could
39
change the case significantly before trial. Such uncertainty about the outcome weighs
heavily in favor of approving the settlement agreement.
5.
The Range of Possible Recovery
The parties have not provided the court with any estimates of the possible range of
recovery. However, based on my in camera review of the confidential settlement terms,
I find that the amount offered in the settlement, which is more than the amount of regular
overtime claimed by plaintiffs, is fair and reasonable. The total amount to be paid to each
participating plaintiff, which has been set out in particularized detail to the court, Exhibit
A to the Confidential Settlement Agreement, will be allocated between liquidated
damages, which will not be treated as wages and as to which no income taxes will be
withheld, and wages, as to which each individual’s statutory income taxes will be
withheld. Worley will pay out of its own funds the employer’s share of any taxes due on
the wages portion of the settlement funds.
6.
The Opinions of Plaintiffs’ Counsel, Collective Action
Representatives and Absent Members of the Collective Action
The parties join in requesting approval of the settlement, which was arrived at after
extensive negotiation by counsel. “The Court is entitled to rely on the judgment of
experienced counsel in its evaluation of the merits of a class action settlement.” Liger,
2009 WL 2856246, at *4 (citing Cotton, 559 F.2d at 1330). Although a potential conflict
of interest always exists between an attorney and members of a collective action, id.
40
(citing City of Detroit v. Grinnell Corp., 495 F.2d 448, 462 (2d Cir. 1974); In re Employee
Benefit Plans Sec. Litig., No. 3-92-708, 1993 WL 330595, at *5 (D. Minn. 1993)), there
is no evidence that plaintiffs’ counsel have not worked in good faith to secure a
reasonable compromise.
Unlike an ordinary class action, there are no absent class members in an FLSA
collective action. However, I have reviewed and evaluated the arguments of the
prospective intervenors, the Sullivan Plaintiffs, in opposition to the parties’ joint motion
for approval of the settlement agreement. The Sullivan Plaintiffs do not object to the
settlement, only to any release of participating plaintiffs’ claims against Worley in the
state court Sullivan litigation. The Sullivan Plaintiffs do not provide any valid reason not
to approve the agreement. All plaintiffs in this action will be fully advised regarding the
settlement terms, including any waiver and release provisions.
Given the relevant factors discussed above, especially the relatively low chance of
success on the merits and the comparatively better damages case, I find that the amounts
allocated to each collective action member in the settlement agreement are fair, adequate
and reasonable. Accordingly, the motion to approve the settlement agreement is granted.
IV.
THE MOTION FOR APPROVAL OF ATTORNEY’S FEES AND COSTS
Under the FLSA, the court may award reasonable attorney’s fees to the prevailing
party. Saizan v. Delta Concrete Prods. Co., 448 F.3d 795, 799 (5th Cir. 2006). The
41
statute provides that a court “shall, in addition to any judgment awarded to the plaintiff
or plaintiffs, allow a reasonable attorney’s fee to be paid by the defendant, and costs of
the action.” 29 U.S.C. § 216(b). “Though the attorney’s fee provision of the FLSA does
not mention ‘prevailing party,’ we typically cite prevailing party fee-shifting
jurisprudence in FLSA cases.” Saizan, 448 F.3d at 799 n.7 (citing Tyler v. Union Oil Co.,
304 F.3d 379, 404 (5th Cir. 2002)).
As part of its fairness determination, the court must determine independently that
the proposed attorney’s fees and costs to be awarded to plaintiffs’ counsel are reasonable.
Collins, 568 F. Supp. 2d at 717 (citing Strong v. BellSouth Telecomms., Inc., 137 F.3d
844, 849-50 (5th Cir. 1998); Camp, 2004 WL 2149079 at *18). In this case, the court does
not have to apportion the fees among plaintiffs’ counsel because counsel have agreed to
divide the fees pursuant to a fee-sharing agreement, a procedure that the Fifth Circuit has
approved. In re High Sulfur Content Gasoline Prods. Liab. Litig., 517 F.3d 220, 228 (5th
Cir. 2008); Longden v. Sunderman, 979 F.2d 1095, 1101 (5th Cir. 1992). Plaintiffs’
counsel have submitted the fee-sharing agreement to the court for in camera review and
have asked the court to retain jurisdiction to enforce that agreement.
Plaintiffs’ counsel seek 25 percent of the total settlement amount as attorney’s fees,
plus a specified amount for costs. Record Doc. No. 301-1 at p. 1. Although Worley does
not object to the requested fees or costs, I denied the parties’ initial Joint Motion to
42
Dismiss and to approve the settlement agreement, and ordered plaintiffs to provide
documentation of the reasonableness of the requested fees so that I could independently
evaluate the reasonableness of the fees without reliance solely on defendants’ lack of
opposition to the requested amount. Record Doc. No. 299. Plaintiffs have done so by
filing a memorandum of authorities in support of the requested fees, Record Doc. No.
301-1, and providing for in camera review copies of the contemporaneous time sheets
kept by their lawyers and an affidavit of one of their lead counsel, J.P. Hughes, Jr.,
attesting to the accuracy, reasonableness and necessity of the hours expended. Plaintiffs’
Exhs. D and F (submitted in camera). I have carefully reviewed and independently
evaluated all of these submissions.
A.
Legal Standards for an Award of Reasonable Attorney’s Fees
Citing Blum v. Stenson, 465 U.S. 866, 900 (1984), and Goldberger v. Integrated
Res., Inc., 203 F.3d 43, 49 (2d Cir. 2000) (citing cases from other circuits), plaintiffs
argue that a “blended percentage of the recovery method” is appropriate in this case of a
common fund settlement. They note that many collective action members who consented
to join this lawsuit before a collective action was either conditionally or finally certified
agreed in writing to a contingent attorney’s fee of 33 and 1/3 percent, which they assert
is an indication of the reasonableness of a lesser percentage amount. Plaintiffs also
43
contend that a “lodestar cross-check” confirms the reasonableness of the requested 25
percent fee.
The methods used by various federal courts to assess reasonable attorney’s fees in
a class or collective action involving a common settlement fund
include the ‘lodestar’ method, which entails multiplying the reasonable
hours expended on the litigation by an adjusted reasonable hourly rate; the
percentage method, in which the Court compensates attorneys who
recovered some identifiable sum by awarding them a fraction of that sum;
or, more recently, a combination of both methods in which a percentage is
awarded and checked for reasonableness by use of the lodestar method.
In re Vioxx Prods. Liab. Litig., 760 F. Supp. 2d 640, 651 (E.D. La. 2010) (Fallon, J.)
(citation omitted). Under any of these methods, “the ultimate goal is reasonableness.”
Id. at 650-51.
The Fifth Circuit has traditionally used the lodestar method to calculate reasonable
attorney’s fees in all types of cases.
While the United States Supreme Court has approved the percentage
method in common fund cases, it has never formally adopted the lodestar
method in common fund cases. Conversely, the Fifth Circuit appears to be
the only Court of Appeals that has not explicitly endorsed the percentage
method. However, neither has the Fifth Circuit “explicitly disapproved of
the percentage method of calculating fees in common fund cases.”
Therefore, the Fifth Circuit appears to tolerate the percentage method, so
long as the Johnson framework is utilized to ensure that the fee awarded is
reasonable.
Id. at 651 (quoting In re OCA, Inc. Sec. & Derivative Litig., No. 05-2165, 2009 WL
512081, at *18 (E.D. La. Mar. 2, 2009) (Vance, J.)) (citing Blum, 465 U.S. at 900 n.16;
44
Strong, 137 F.3d at 851-52 & n.5; Forbush v. J.C. Penney Co., 98 F.3d 817, 823-25 (5th
Cir. 1996); Camden I Condo. Ass’n v. Dunkle, 946 F.2d 768, 773-74 (11th Cir. 1991); In
re Prudential-Bache Energy Income P’ships Sec. Litig., MDL No. 888, 1994 WL 150742
(E.D. La. Apr. 13, 1994) (Livaudais, J.); Manual for Complex Litigation (Fourth) § 14.121
(2004)).
The Fifth Circuit recently stated that “[t]his circuit requires district courts to use the
‘lodestar method’ to assess attorneys’ fees in class action suits.” In re High Sulfur
Content Gasoline, 517 F.3d at 228 (emphasis added). However, High Sulfur Content
Gasoline is not directly on point because the issue before that court was not whether the
amount of attorney’s fees awarded to the class members was fair and reasonable, but
whether the trial judge had used appropriate procedures to allocate the award of fees
among numerous plaintiffs’ attorneys, who disputed the allocation among themselves.
In addition, the Fifth Circuit’s refusal in Strong either to adopt or disapprove the
percentage method is also not directly on point because there was no common fund
settlement in that case. Klein v. O’Neal, Inc., 705 F. Supp. 2d 632, 674 (N.D. Tex. 2010)
(citing Strong, 137 F.3d at 852; In re OCA, Inc. Sec. & Derivative Litig., 2009 WL
512081, at *17).
In light of these uncertainties, I will address plaintiffs’ motion to approve their fee
application under both the percentage and the lodestar methods. I will first examine the
45
request for attorney’s fees under the Fifth Circuit’s apparently preferred lodestar method,
then perform a cross-check comparison under the percentage method.
B.
The Lodestar Method
The Fifth Circuit recently summarized the law concerning the lodestar calculation,
as follows.
In determining the appropriateness of awards of attorneys’ fees,
district courts engage in a two-step process . . . . The first step requires the
district court to “determine the reasonable number of hours expended on the
litigation and the reasonable hourly rates for the participating lawyers.
Then, the district court must multiply the reasonable hours by the reasonable
hourly rates.” This first-step determination is known as the lodestar
calculation. . . . In the second-step, the lodestar, which is presumptively
reasonable, can be adjusted upward or downward by the district court based
on the district court’s considerations of the Johnson factors. . . . In Johnson
v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974), we laid out
twelve factors to be considered in deciding whether the lodestar ought to be
adjusted. See id. at 718. Those factors are:
(1) the time and labor required for the litigation; (2) the
novelty and difficulty of the questions presented; (3) the skill
required to perform the legal services properly; (4) the
preclusion of other employment by the attorney by acceptance
of the case; (5) the customary fee; (6) whether the fee is fixed
or contingent; (7) time limitations imposed by the client or
circumstances; (8) the amount involved and the result
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.
46
Alexander v. City of Jackson, No. 11-60254, 2011 WL 6847792, at *1-2 (5th Cir. Dec. 30,
2011) (quoting La. Power & Light Co. v. Kellstrom, 50 F.3d 319, 324 (5th Cir. 1995))
(additional citations omitted).
“[O]f the Johnson factors, the court should give special heed to the time and labor
involved, the customary fee, the amount involved and the result obtained, and the
experience, reputation and ability of counsel.” Migis v. Pearle Vision, Inc., 135 F.3d
1041, 1047 (5th Cir. 1998) (citation omitted); accord Saizan, 448 F.3d at 800. Three of
the Johnson factors, complexity of the issues, results obtained and preclusion of other
employment, are presumably fully reflected and subsumed in the lodestar amount.
Heidtman, 171 F.3d at 1043 (quoting Pennsylvania v. Del. Valley Citizens’ Council for
Clean Air, 478 U.S. 546, 565 (1986); Shipes, 987 F.2d at 319-22 & n.9). After Johnson
was decided, the “Supreme Court has barred any use of the sixth factor,” whether the fee
is fixed or contingent. Walker v. United States Dep’t of Housing & Urban Dev., 99 F.3d
761, 772 (5th Cir. 1996) (citing City of Burlington, 505 U.S. at 567; Shipes, 987 F.2d at
323). Nonetheless, an increase in the lodestar “due to superior performance and results
. . . is permitted in extraordinary circumstances.” Perdue v. Kenny A., 130 S. Ct. 1662,
1669 (2010).
47
1.
Reasonable Hourly Rates
First, I must determine whether the hourly rates charged by plaintiffs’ counsel were
reasonable. The qualifications and experience of plaintiffs’ counsel are established by
their memorandum, Record Doc. No. 301-1 at p. 5; Hughes’s affidavit and its attachments
submitted in camera, Plaintiffs’ Exh. D; and the affidavits of plaintiffs’ attorneys filed in
connection with their motion for class certification, Record Doc. No. 120, Plaintiffs’ Exhs.
27-30. All of the partner level attorneys have substantial experience in FLSA collective
and class actions.
Plaintiffs’ counsel assert that they have in the past collected the following hourly
rates for their work.
Michael A. Starzyk
April L. Walter
Joseph E. Fieschko, Jr.
John R. Linkosky
J.P. Hughes, Jr.
Steven R. Ricks
Raven Applebaum $275
Nicholas Brown
Hessam Parzivand
J. Paul Rinnan
$400
$375
$350
$350
$350
$300
$275
$225
$150
In addition, paralegals and law clerks billed for their work at the following hourly
rates:
Kelley Kaigler
Sara Nowell
Kim Hammonds
$95
$95
$105
48
Victoria Hanson
Megan McGregor
$105
$105
An attorney’s requested hourly rate is prima facie reasonable when he requests that
the lodestar be computed at his or her customary billing rate, the rate is within the range
of prevailing market rates and the rate is not contested. LP&L, 50 F.3d at 328. Worley
does not contest any of the hourly rates.
Hourly rates are to be computed according to the prevailing rates in the relevant
legal market, McClain v. Lufkin Indus., Inc., 649 F.3d 374, 381 (5th Cir. 2011), which is
the Eastern District of Louisiana in this case. I find that the hourly rates for these
plaintiffs’ attorneys, while at the high end of the range of prevailing market rates for
lawyers with comparable experience and expertise in litigation of this type, are entirely
reasonable in this case. Thompson, 553 F.3d at 868; Hornbeck Offshore Servs., L.L.C.
v. Salazar, No. 10-1663, 2011 WL 2214765, at *9 (E.D. La. June 1, 2011) (Wilkinson,
M.J.), report & recommendation adopted as modified on other grounds, 2011 WL
2516907 (E.D. La. June 23, 2011) (Feldman, J.); Cedotal v. Whitney Nat’l Bank, No. 9401397, 2010 WL 5582989, at *13 (E.D. La. Nov. 10, 2010) (Chasez, M.J.), report &
recommendation adopted as modified on other grounds, 2011 WL 127157 (E.D. La. Jan.
14, 2011) (Lemmon, J.); Ranger Steel Servs., LP v. Orleans Materials & Equip., Co., No.
10-112, 2010 WL 3488236, at *1, *3 (E.D. La. Aug. 27, 2010) (Barbier, J.); Hebert v.
49
Rodriguez, No. 08-5240, 2010 WL 2360718, at *2 (E.D. La. June 8, 2010) (Barbier, J.),
aff’d, 430 F. App’x 253 (5th Cir. 2011).
I also find that the rates billed for paralegals and law clerks are reasonable and
recoverable. Missouri v. Jenkins, 491 U.S. 274, 288 (1989); Thompson, 553 F.3d at 868;
Braud v. Transp. Serv. Co., No. 05-1898, 2010 WL 3283398, at *15 (E.D. La. Aug. 17,
2010) (Knowles, M.J.).
2.
The Reasonable Hours Worked
Next, I must determine the reasonable number of hours that plaintiffs’ counsel
expended on the litigation. As a general proposition, all time that is excessive, duplicative
or inadequately documented should be excluded. Watkins, 7 F.3d at 457. Attorneys must
exercise “billing judgment” by “writing off unproductive, excessive, or redundant hours”
when seeking fee awards. Green v. Admin’rs of Tulane Educ. Fund, 284 F.3d 642, 662
(5th Cir. 2002), abrogated in part on other grounds by Burlington N. & Santa Fe Ry. v.
White, 548 U.S. 53, 63-64 (2006) (citing Walker, 99 F.3d at 769); accord Hensley, 461
U.S. at 433-34. The fee seeker’s attorneys are “charged with the burden of showing the
reasonableness of the hours they bill and, accordingly, are charged with proving that they
exercised billing judgment.” Walker, 99 F.3d at 770. “The proper remedy when there is
no evidence of billing judgment is to reduce the hours awarded by a percentage intended
50
to substitute for the exercise of billing judgment.” Id.; accord Saizan, 448 F.3d at 800;
Hopwood v. Texas, 236 F.3d 256, 279 (5th Cir. 2000).
In this case, plaintiffs’ counsel worked a total of 5,452 hours as of December 29,
2011. This does not include the time that plaintiffs’ counsel spent after December 29,
2011 in preparing the instant motion with its voluminous supporting documentation and
in responding to the motion to intervene filed by the Sullivan Plaintiffs, all of which
would also be compensable time.
Counsel’s representation of plaintiffs throughout this matter has been thoroughly
conscientious and uniformly excellent. I find that the hours spent were reasonable and
even on the low side, considering the complex legal, organizational, strategic and
evidentiary burdens imposed by representation of a very large group of plaintiffs in this
collective action. My review of counsel’s time sheets and the hours expended by each
attorney and paralegal reveals no deficiencies significant enough to warrant a reduction
in the hours sought. Thus, the lodestar amount consists of counsel’s reasonable hours
multiplied by each attorney’s and paralegal’s reasonable hourly rate.
The lodestar amount “is presumptively reasonable and should be modified only in
exceptional cases.” Watkins, 7 F.3d at 457. Based on the Johnson factors, plaintiffs
request enhancement of their fees by a multiplier of 2.17, and Worley does not object to
the enhancement.
51
The use of multipliers is acceptable in a common fund case and multipliers in the
range of 2.17 or higher are regularly awarded. See Vizcaino v. Microsoft Corp., 290 F.3d
1043, 1051 n.6 (9th Cir. 2002) (citing In re Prudential Ins. Co. Am. Sales Practice Litig.
Agent Actions, 148 F.3d 283, 341 (3d Cir. 1998); 3 Newberg on Class Actions § 14.03
at 14-5)) (surveying multipliers in common fund cases and finding a range of 0.6 to 19.6,
with more than three-fourths between 1.0 and 4.0 and a bare majority in the 1.5 to 3.0
range); In re Enron Corp. Sec., Derivative & ERISA Litig., 586 F. Supp. 2d 732, 798-801
(S.D. Tex. Sept. 8, 2008) (discussing multipliers awarded and used as lodestar crosschecks in mega-fund cases); cf. In re Educ. Testing Serv. Praxis Principles of Learning
& Teaching, Grades 7-12 Litig., 447 F. Supp. 2d 612, 633 (E.D. La. 2006) (Vance, J.)
(multiplier of 1.6 is appropriate when two of the Johnson factors, the results obtained and
the undesirability of the case, warrant an increase and this multiplier produces a fee that
is higher than the average fee for recoveries of a similar size).
In the instant case, faced with novel and difficult questions of law, significant
defenses vigorously advanced by skilled and equally conscientious defense counsel, and
uncertainties of proof, the results achieved by plaintiffs’ counsel are extraordinary and
warrant an upward adjustment of the lodestar. Counsel has obtained for the participating
collective action members net settlement payments that amount to more than their wage
damages and that appear to be better than the amounts received in typical FLSA collective
52
actions. See Charlotte S. Alexander, Would an Opt In Requirement Fix the Class Action
Settlement? Evidence from the Fair Labor Standards Act, 80 Miss. L.J. 443, 488-89
Fig. 9 (Winter 2010) (analyzing recovery data from 25 collective actions and finding that
the ratio of recovery to plaintiffs’ losses ranged from four percent to 100 percent (but only
in one case where plaintiffs’ actual losses were extremely low), while the median ratio
was 28 percent). Plaintiffs’ counsel in this case succeeded in collecting opt-in consent
forms from 544 of 1,304 putative members of this collective action, which is a very high
rate of 42 percent of potential plaintiffs choosing to opt in. See id. at 466-67, 489-91,
Fig. 10 (median opt-in rate was 15 percent, while 30 of 38 cases studied had opt-in rates
below 20 percent); id. at 468 (citing Andrew C. Brunsden, Hybrid Class Actions, Dual
Certification, and Wage Law Enforcement in Federal Courts, 29 Berkeley J. Emp. &
Lab. L. 269, 292-94 (2008)) (Brunsden’s study of 21 FLSA collective actions calculated
average opt-in rate of 15.71 percent).
In addition, the legal, factual and procedural difficulties cited above, combined with
the problems involved in prosecuting a collective action against two defendants when one
denied that it was the employer, while the other may not have been financially capable of
paying a large judgment, contributed to the “undesirability” of the instant case. This
factor also weighs in favor of an upward adjustment.
53
As to the other factors that are not subsumed in the lodestar or prohibited from
consideration, the customary fee and awards in similar cases have already been evaluated
in establishing a reasonable hourly rate. The nature and length of the professional
relationship with plaintiffs’ attorneys is not relevant in this case.
Having weighed the Johnson factors, I find that the requested multiplier is
reasonable in this case.
C.
The Percentage Method
“Courts have endorsed the practice of using the other method of determining
reasonableness of fees in class actions, percentage of recovery, to double check the fee.”
Collins, 568 F. Supp. 2d at 729 (citing In re Linerboard Antitrust Litig., No. MDL 1261,
2004 WL 1221350, at *3 (E.D. Pa. June 2, 2004)). In this case, plaintiffs request
attorney’s fees in the amount of 25 percent of the settlement amount, which Worley does
not contest.
The Manual on Complex Litigation states that a fee of 25 percent of a common
fund “‘represents a typical benchmark’” in common fund cases, while the “Ninth Circuit
has adopted a benchmark of 25% in common fund cases” and common fee awards in
securities suits “generally fall within the 20 to 33 per cent range.” In re OCA, Inc. Sec.
& Derivative Litig., 2009 WL 512081, at *19 (quoting Manual on Complex Litigation
(4th) § 14.121)) (citing Staton v. Boeing Co., 327 F.3d 938, 968 (9th Cir. 2003); Newberg
54
on Class Actions § 14.6 (4th ed.)). “In order to prevent windfalls to attorneys, the
percentage of attorneys’ fees awarded typically decreases as the settlement award
increases in size.” Id. (citing In re Ikon Office Solutions, Inc. Sec. Litig., 194 F.R.D. 166,
195 (E.D. Pa. 2000); Hicks v. Stanley, No. 01 Civ. 10071(RJH), 2005 WL 2757792 at *9
(S.D.N.Y. 2005)).
Judges in this court have awarded percentage amounts to class counsel in common
fund settlements ranging from 6.5 percent in a multi-billion dollar settlement of the Vioxx
drug litigation to the 20 to 29 percent range in cases with millions of dollars in the
settlement fund. See In re Vioxx Prods. Liab. Litig., 760 F. Supp. 2d at 651-52 (awarding
6.5 percent of $4.85 billion settlement amount); In re OCA, Inc. Sec. & Derivative Litig.,
2009 WL 512081, at *20 (After reviewing data on fee awards in scholarly studies of class
action settlements, the court set a benchmark of 27 percent for a $6.5 million recovery,
which was the average of the mean fee percentages in “settlements of comparable size and
is also roughly the average of the fee awards in the sampling of reported securities cases
collected by this Court involving similar-sized settlements.”); Collins, 568 F. Supp. 2d at
729 (citing In re Harrah’s Ent’mt, Inc., No. 95-3925, 1998 WL 832574, at *4 (E.D. La.
Nov. 25, 1998) (Clement, J.); In re Prudential-Bache Energy Income P’ships Secs. Litig.,
1994 WL 150742, at *1-2, 4)) (using the percentage method as a cross-check of the
lodestar and approving award of 24 percent of the $3,120,000 settlement amount, which
55
“is lower than the caselaw would support.”); Turner v. Murphy Oil, USA, Inc., 472 F.
Supp. 2d 830, 864 (E.D. La. 2007) (Fallon, J.) (setting initial benchmark of 15 percent,
adjusted upward to 17 percent after consideration of the Johnson factors, in $195 million
settlement); In re Educ. Testing Serv., 447 F. Supp. 2d at 628-29 (Vance, J.) (in an $11.1
million recovery, initial benchmark of 25 percent was adjusted upward to 29 percent
because two of the Johnson factors warranted an upward adjustment).
Based on the studies cited by the judges of this court and their analyses in these
cases, compared to the settlement fund in the instant case and the Johnson factors that
have already been discussed, which warrant an upward adjustment, I find that an award
of attorney’s fees in the amount of 25 percent of the settlement amount is fair and
reasonable as a cross-check of the lodestar amount.
D.
Costs
The parties have agreed that a certain amount of the settlement funds shall be
allocated as costs, which the agreement specifically defines as out-of-pocket costs in
several categories, including expert witness fees and the cost of notice administration by
the third-party administrator that handles collective action notices. The amount available
to pay costs is capped at a specific number, which is about 1.44 percent of the total
settlement value. The agreement provides that any amount left in the costs fund after all
of the actual costs are paid will revert to the participating plaintiffs, to be allocated among
56
them according to the same percentages by which the main settlement fund will be
allocated. Worley has also agreed to pay the cost of the private mediator out of its own
funds. I find that the amount allocated for costs is fair and reasonable.
IV.
BP’S MOTION FOR ENTRY OF PARTIAL FINAL JUDGMENT
After the court granted BP’s motion to dismiss all claims against it in Civil Action
No. 11-241, Record Doc. No. 87, I denied BP’s Motion for Entry of Final Judgment
Pursuant to Fed. R. Civ. P. 54(b). Record Doc. Nos. 125, 153. I now reconsider that
ruling sua sponte.
Rule 54(b) provides that, “[w]hen an action presents more than one claim for
relief–whether as a claim, counterclaim, crossclaim, or third-party claim–or when multiple
parties are involved, the court may direct entry of a final judgment as to one or more, but
fewer than all, claims or parties only if the court expressly determines that there is no just
reason for delay.” Fed. R. Civ. P. 54(b) (emphasis added). “Rule 54(b) requests should
not be granted routinely.” Brown v. Miss. Valley State Univ., 311 F.3d 328, 332 (5th Cir.
2002) (emphasis added).
“To enter a Rule 54(b) final judgment, the district court must have disposed of ‘one
or more . . . claims or parties.’ That requirement is jurisdictional . . . .” Eldredge v.
Martin Marietta Corp., 207 F.3d 737, 740 (5th Cir. 2000) (quoting Fed. R. Civ. P. 54(b)).
This court’s previous dismissal order disposed of all of plaintiffs’ claims against BP.
57
Thus, the only issue is whether “there is no just reason for delay” in entering a Rule 54(b)
final judgment in BP’s favor. This question is left to the district court’s “sound judicial
discretion.” Brown, 311 F.3d at 332.
“Rule 54(b) judgments are not favored and should be awarded only when necessary
to avoid injustice . . . .” Fitch v. Wells Fargo Bank, N.A., No. 08-1639, 2010 WL
4553455, at *1-2 (E.D. La. Oct. 28, 2010) (Vance, J.) (citing PYCA Indus., Inc. v.
Harrison County Waste Water Mgmt. Dist., 81 F.3d 1412, 1421 (5th Cir. 1996)); accord
Ordemann v. Livingston, No. 06-4796, 2007 WL 1651979, at *1 (E.D. La. June 7, 2007)
(Feldman, J.). “One of the primary policies behind requiring a justification for Rule 54(b)
certification is to avoid piecemeal appeals. A district court should grant certification only
when there exists some danger of hardship or injustice through delay which would be
alleviated by immediate appeal; it should not be entered routinely as a courtesy to
counsel.” PYCA Indus., Inc., 81 F.3d at 1421 (citing Sears, Roebuck & Co. v. Mackey,
351 U.S. 427, 437 (1956); Ansam Assocs., Inc. v. Cola Petroleum, Ltd., 760 F.2d 442,
445 (2d Cir. 1985)).
“A major factor the district court should consider is whether the appellate court
‘would have to decide the same issues more than once even if there were subsequent
appeals.’” Fitch, 2010 WL 4553455, at *1 (quoting H & W Indus., Inc. v. Formosa
58
Plastics Corp., 860 F.2d 172, 175 (5th Cir. 1988)) (internal quotation omitted); accord
Ordemann, 2007 WL 1651979, at *1.
The court has now granted the remaining parties’ Joint Motion to Approve
Settlement and for Conditional Dismissal and has approved the settlement agreement,
which specifically releases all claims by participating plaintiffs against BP, and will
dismiss all of the participating plaintiffs’ claims against Worley. Even if some plaintiffs
choose not to participate in the settlement and they proceed to trial against Worley and
lose, or summary judgment is entered against them, they will most likely not appeal the
dismissal of BP. BP will not appeal its own dismissal. After weighing the appropriate
factors, I find that Rule 54(b) certification is now appropriate regarding the previously
ordered dismissal of BP and that there is no just reason for delay in entering a Rule 54(b)
final judgment in BP’s favor.
Accordingly, IT IS ORDERED that BP’s Motion for Entry of Partial Final
Judgment Pursuant to Fed. R. Civ. P. 54(b), Record Doc. No. 125, is granted. Judgment
will be separately entered.
V.
ORDER APPROVING SETTLEMENT AGREEMENT
CONDITIONALLY DISMISSING THESE ACTIONS
AND
I have considered the parties’ Joint Motion to Approve Settlement and for
Conditional Dismissal, evaluated the Confidential Settlement Agreement between the
parties and the attachments thereto, and found their terms to be fair and reasonable, as
59
discussed in detail above. I have also reviewed the parties’ proposed order of approval
and dismissal, which I found less than sufficiently explanatory in part and somewhat too
restrictive in other regards, and which I have revised herein to clarify the options available
to any plaintiff who does not want to participate in the settlement and chooses instead to
pursue his or her individual claims.
Accordingly, IT IS ORDERED that the Joint Motion to Approve Settlement and
for Conditional Dismissal, Record Doc. No. 301, is GRANTED, for the reasons set out
above and subject to the following order.
IT IS FURTHER ORDERED that these consolidated actions are hereby
DISMISSED, each party to bear its own fees and costs except as provided in the
Confidential Settlement Agreement, WITHOUT PREJUDICE to the rights of the parties
to move for summary judgment to enforce the settlement, as provided in Local Rule 41.2,
if the settlement is not consummated within a reasonable time. The court specifically
approves the terms of the settlement agreement, including the attorneys’ fee-sharing
agreement that was submitted to the court for in camera review as Plaintiffs’ Exhibit F,
and incorporates those terms into this order of dismissal. The court retains jurisdiction
over the parties and their settlement agreement, including the fee-sharing agreement and
the scope of both agreements, for purposes of enforcing the agreements, should any
60
controversy arise about the terms of the agreement or any party’s performance of its
obligations under the agreement.
IT IS FURTHER ORDERED that, no later than three (3) days after entry of this
order, plaintiffs’ counsel must file into the record of Civil Action No. 11-241 the signed
consent forms of those plaintiffs listed in Exhibit A to the Confidential Settlement
Agreement, after redacting residential street addresses, home telephone numbers, cell
phone numbers and e-mail addresses, except that plaintiffs’ counsel is not required to file
consent forms for any of the plaintiffs whose opt-in consent forms have previously been
filed in this action.
IT IS FURTHER ORDERED that, upon the court’s receipt of a joint motion to
dismiss to be filed by the parties no later than sixty (60) days after June 1, 2012, the court
will enter a final order dismissing WITH PREJUDICE all claims of all Participating
Plaintiffs (defined as those plaintiffs who return the signed form specified in the
Confidential Settlement Agreement to the designated third-party administrator no later
than March 16, 2012) in these consolidated actions, each party to bear its own fees and
costs except as provided in the Confidential Settlement Agreement.
IT IS FURTHER ORDERED that the court’s final order will dismiss the claims
of any Non-Participating Plaintiffs (defined as those plaintiffs who fail to return the
signed form specified in the Confidential Settlement Agreement to the designated third61
party administrator by March 16, 2012) WITHOUT PREJUDICE to any rights such NonParticipating Plaintiffs may have either to re-file such claims in the United States District
Court for the Eastern District of Louisiana or to pursue their individual claims either in
the existing cases or elsewhere. In their joint motion to dismiss, the parties must identify
the names of any Non-Participating Plaintiffs or indicate that there are no NonParticipating Plaintiffs, as the case may be.
New Orleans, Louisiana, this
18th
day of January, 2012.
JOSEPH C. WILKINSON, JR.
UNITED STATES MAGISTRATE JUDGE
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