SCOVIL et al v. FEDEX GROUND PACKAGE SYSTEM INC

Filing 249

PROCEDURAL ORDER ON MOTION FOR AUTHORIZATION OF NOTICE OF CLASS AND COLLECTIVE ACTION SETTLEMENT - By JUDGE D. BROCK HORNBY. (mnw)

UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
WAYNE SCOVIL,

ET AL.,

PLAINTIFFS
v.
FEDEX GROUND PACKAGE
SYSTEM, INC. d/b/a FedEx
Home Delivery,
DEFENDANT

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NO. 1:10-CV-515-DBH

PROCEDURAL ORDER ON MOTION FOR AUTHORIZATION OF
NOTICE OF CLASS AND COLLECTIVE ACTION SETTLEMENT
The parties have worked long and hard in reaching a Settlement
Agreement of this class and collective action and much of the Settlement
Agreement is admirable.

But I will not approve notice of a final fairness

hearing at this time because I conclude, even before a final fairness hearing,
that I cannot approve the Settlement Agreement in its current form.

My

primary concerns are these:
1.

Some of the proposed incentive awards to the representative

plaintiffs are extremely generous. The Ninth Circuit has cautioned trial courts
about the risks of large incentive awards, instructing them “to scrutinize
carefully the awards so that they do not undermine the adequacy of the class
representatives.”

Radcliffe v. Experian Information Solutions, Inc., 715 F.3d

1157, 1163 (9th Cir. 2013):

Where a class representative supports the settlement and is
treated equally by the settlement, “the likelihood that the
settlement is forwarding the class’s interest to the
maximum degree practically possible increases.” But if
“such members of the class are provided with special
‘incentives’ in the settlement agreement, they may be more
concerned with maximizing those incentives than with
judging the adequacy of the settlement as it applies to class
members at large.”

Id. (citation omitted).

After a preliminary hearing, the plaintiffs’ lawyer

provided information in support of the proposed awards. It does appear that
some of the representative plaintiffs have provided many hours of service and
may well deserve incentive awards in some amount. Obviously I will make no
decision on that, or the amounts, until the final fairness hearing where
objectors, if any, can speak. But the Settlement Agreement provides that if I do
not

award

the

requested

amount

for

a

representative

plaintiff,

that

representative plaintiff can opt out of the class action, and FXG can walk away
from the Settlement Agreement if a representative plaintiff opts out.1
Representative plaintiffs are often described as fiduciaries for the class. Yet the
proposed arrangement would allow a representative plaintiff to effectively
scuttle the settlement for the entire class if he or she does not like the amount
of incentive award I allow that representative plaintiff. That also puts me as
the presiding judge in a difficult position realizing that, at that late stage after
the expense of notice and hearing, if I approve an amount lower than
requested, I might scuttle the settlement for the entire class.

1 FXG is given complete discretion in deciding whether to terminate the agreement on that
account. Settlement Agreement Section V(I) (ECF No. 247-1).

2

2.

The Settlement Agreement provides that if a representative plaintiff

is unhappy with the incentive award I approve and opts out, the amount of
that incentive award reverts back to FXG, not into the pool for distribution to
the other class members. (The same is true if I approve a diminished amount
but the representative plaintiff chooses not to opt out. Then the amount of the
reduction goes to FXG, capped at $50,000.)

That arrangement, along with

FXG’s unilateral discretion to walk away if a representative plaintiff opts out,
makes it appear that FXG is buying these particular plaintiffs’ participation in
the agreement.

That gives me discomfort in whether I can rely upon these

representative plaintiffs as fiduciaries for the class, as opposed to pursuing
their own interests.

See Radcliffe supra.

At the preliminary hearing, the

plaintiffs’ lawyer said that the opt-out opportunity for those individuals “was
something that we were required to agree to.”
Settlement at 19 (ECF No. 241).

Tr. of Prelmin. Hr’g on

He also told me that “some of the named

plaintiffs believed that they should have had a better incentive payment
because they had done so much work on the matter,” and that FXG agreed to
add $50,000 to the settlement but “they wanted at least that part reverted
because we had a—they wanted that part reverted.” Id. at 21. FXG’s lawyer
offered me no reason for the reversion requirement.
3.

The

Settlement

Agreement

provides

that,

apart

from

the

representative plaintiff issues described above, FXG can also walk away if more
than 1% of the class opts out. We know the size of the class, and that 1%
figure means that if only two class members opt out, FXG is no longer bound.
3

That strikes me as an exceedingly demanding requirement and it would
essentially allow two representative plaintiffs to scuttle the deal, even if the
Settlement Agreement were amended to address concerns 1 and 2 above.
4.

The Settlement Agreement provides that “No Class Member may be

heard at the Fairness Hearing who has not sent in an appropriate objection.”
Settlement Agreement Section V(E)(2) (ECF No. 247-1). Who will be heard at
the Fairness Hearing is for the court to decide, not for the parties to determine
in their Settlement Agreement.
5.

Section IX, the Confidentiality provision, is very broad. It purports

to bind class members and prohibit them from disclosing how much they
individually received. It also extends the prohibition on disclosure to the total
settlement amount and the plaintiffs’ attorney fees. I believe there is a public
interest in knowing about class action settlements, what amounts plaintiffs’
counsel receive in such lawsuits, and how the award relates to the total
recovered.

Some of the amounts that the Settlement Agreement treats as

confidential are already a matter of public record on the court’s docket.
Although I am not concerned about restrictions on class counsel publishing or
advertising their success, I see no reason why class members should be bound
by this confidentiality provision.
It is not for me to amend the Settlement Agreement, but it is my role to
determine what I will approve and there is no point in giving notice of a hearing
if it is already apparent that I will not approve the Settlement Agreement in its

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current form. If counsel believe that a conference would be helpful, they may
request one. 
SO ORDERED.
DATED THIS 26TH DAY OF SEPTEMBER, 2013
/S/D. BROCK HORNBY
D. BROCK HORNBY
UNITED STATES DISTRICT JUDGE

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