MICHAUD v. MONRO MUFFLER BRAKE INC
Filing
85
ORDER granting 78 Motion for preliminary approval of settlement and authorization to send settlement notices ; granting 78 Motion for class/collective certification; granting 81 Motion to seal. The court also grants the Plaintiff's request to appoint class counsel. By JUDGE NANCY TORRESEN. (rmb)
UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
CHRISTOPHER MICHAUD,
ANDREW LASICK,
TONY CASANOVA, and
FREDERICK SCHNACKENBERG III,
individually and on behalf of all others
similarly situated,
Plaintiffs,
v.
MONRO MUFFLER BRAKE, INC.,
Defendant.
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ORDER ON MOTION FOR CLASS/COLLECTIVE CERTIFICATION,
PRELIMINARY APPROVAL OF SETTLEMENT, AUTHORIZATION TO
SEND SETTLEMENT NOTICES, AND APPOINTMENT OF CLASS
COUNSEL
Before the Court is the Plaintiffs’ unopposed motion for class/collective
certification, preliminary approval of the settlement of all claims at issue in this suit,
authorization to send settlement notices, and appointment of class counsel (ECF No.
78). For the reasons stated below, the motion is GRANTED.
BACKGROUND
Plaintiffs Christopher Michaud, Andrew Lasick, Tony Casanova, and
Frederick Schnackenberg III (the “Plaintiffs”) bring suit on behalf of themselves and
all other similarly situated technicians and assistant store managers employed by
Defendant Monro Muffler Brake, Inc. (“Monro Muffler”). The Complaint alleges
that the Plaintiffs all worked at Monro Muffler establishments focused on tire sales
and services. Third Am. Compl. (“Compl.”) ¶¶ 5-8 (ECF No. 67). The Plaintiffs were
non-exempt employees paid on an hourly basis. Compl. ¶¶ 12, 20. The Complaint
describes two general categories of claims.
First, the Plaintiffs allege that they earned additional compensation, called
“spiffs,” when they completed tire installations and alignments. Compl. ¶ 65. Monro
Muffler reported these spiff payments on employees’ pay stubs. Compl. ¶ 15.
However, for overtime, Monro Muffler paid employees 1.5 times their respective
hourly rates of pay, which did not include spiff payments. Compl. ¶¶ 15-17. The
Complaint alleges that the practice of failing to account for spiff payments in
calculating overtime pay violates the Fair Labor Standards Act (the “FLSA”), 29
U.S.C. §§ 207, 255, as well as state wage and hour laws in Maine, 26 M.R.S. § 664(3),
Massachusetts, M.G.L. Ch. 151 § 1A, New Hampshire, N.H. Rev. Stat. § 279:21(VIII),
and Vermont, 21 V.S. § 384(b) (the “Spiff Claims”).
Next, Plaintiff Michaud alleges that Monro Muffler routinely required him and
other assistant store managers to perform off-the-clock work during their half-hour
lunch breaks and after the end of their shifts. Michaud contends that, on average, he
worked through his lunch break one to two times per week, Compl. ¶ 26, and
performed post-shift work three to four times per week for approximately fifteen to
forty-five minutes each time. Compl. ¶ 33. The Complaint alleges that Monro
Muffler’s practice of requiring off-the-clock—and therefore uncompensated—work of
its assistant store managers violates FLSA, 29 U.S.C. §§ 207, 255 and Maine wage
and hour laws, 26 M.R.S. § 629(1), 664(3) (the “ASM Claims”).
2
The Court is now called upon to resolve the Plaintiffs’ unopposed motion for
class/collective certification and preliminary approval of agreements settling the Spiff
Claims and the ASM Claims, to authorize settlement notices, and to appoint class
counsel. This motion has presented a series of procedural difficulties, as the Plaintiffs
seek to certify several distinct—but at times overlapping—classes and collective
actions in order to set the stage for finally resolving all claims in this action. Rather
than having class and collective action certification briefed and decided in advance of
settlement, the Plaintiffs ask the Court to take action on several distinct requests in
one swoop, without the benefit of adversarial briefing.1 After multiple unopposed
briefs from the Plaintiffs and conferences of counsel, the Court has parsed out each
distinct request and resolves the motion as described below.
DISCUSSION
I.
Certification
A.
Rule 23 Class Actions
1.
Legal Standard
A party seeking class certification must first demonstrate that all
requirements of Federal Rule of Civil Procedure 23(a) are satisfied. Wal-Mart Stores,
Inc. v. Dukes, 131 S. Ct. 2541, 2548 (2011). These requirements are:
1
Adding an additional layer of complexity, this matter is a so-called “hybrid” action, because it
simultaneously brings collective action claims under the FLSA and class action claims under
individual state wage and hour laws. See generally Busk v. Integrity Staffing Solutions, Inc., 713 F.3d
525, 530 (9th Cir. 2013) (noting the “practical concern[s]” that may arise where FLSA’s “opt-in”
requirement and Rule 23’s “opt-out” requirement proceed within the same action), rev’d 135 S. Ct. 513
(2014); McCormick v. Festiva Dev. Grp., No. 09-365-P-S, 2010 WL 582218, at *8 & n.6 (D. Me. Feb. 11,
2010) (noting the “management difficulties” and “potential for confusion” for class/collective action
members when opt-in and opt-out mechanisms proceed side-by-side).
3
(1) the class is so numerous that joinder of all members is impracticable;
(2) there are questions of law or fact common to the class; (3) the claims
or defenses of the representative parties are typical of the claims or
defenses of the class; and (4) the representative parties will fairly and
adequately protect the interests of the class.
Fed. R. Civ. P. 23(a). Next, the named plaintiff must show that the class is
maintainable under one of the types of class actions described in Rule 23(b). WalMart Stores, Inc., 131 S. Ct. at 2548. “To qualify for certification under Rule 23(b)(3),
a class must meet two requirements beyond the Rule 23(a) prerequisites: Common
questions must ‘predominate over any questions affecting only individual members’;
and class resolution must be ‘superior to other available methods for the fair and
efficient adjudication of the controversy.’ ” Amchem Prods., Inc. v. Windsor, 521 U.S.
591, 615 (1997) (quoting Fed. R. Civ. P. 23(b)(3)).
2.
Application: Spiff & ASM Claims
The Rule 23 classes proposed for the Spiff Claims are state claim classes
covering employees in Maine (the “Maine Spiff Class”), Massachusetts (the
“Massachusetts Spiff Class”), New Hampshire (the “New Hampshire Spiff
Class”), and Vermont (the “Vermont Spiff Class”) (together, the “State Claim
Spiff Classes”).2 The Rule 23 class proposed for the ASM Claims is a Maine state
claim class covering employees in Maine (the “Maine ASM Class”).3 As discussed
2
The Spiff Claim settlement agreement defines the State Claim Spiff Classes as follows: “All
persons who were employed by Defendant on an hourly basis at Tire Warehouse stores in the state of
[Maine/Massachusetts/New Hampshire/Vermont], who worked overtime and received additional
compensation.” Am. Spiff Class/Collective Action Settlement Agreement & Release 5 (ECF No. 78-2).
The State Claim Spiff Classes include employees who worked for Monro Muffler from October 4, 2009
to April 27, 2013. Revised Notice of Settlement-Spiff Claims 5 (ECF No. 84-1).
The ASM Claim settlement agreement defines the Maine ASM Class as follows: “All persons
who were employed by Defendant on an hourly basis at Tire Warehouse stores as assistant store
managers in the state of Maine and who do not opt out of the settlement as provided herein.” ASM
3
4
below, the State Claim Spiff Classes and the Maine ASM Class meet the Rule 23(a)
and (b)(3) requirements for class certification.
a.
Rule 23(a) Requirements
The State Claim Spiff Classes and the Maine ASM Class meet the Rule 23(a)
requirements of numerosity, commonality, typicality, and adequacy.
i.
Numerosity
Rule 23(a)(1) requires that the class be “so numerous that joinder of all
members is impracticable.” “ ‘Impracticability’ does not mean ‘impossibility,’ but only
the difficulty or inconvenience of joining all members of the class.” Advertising
Specialty Nat. Assoc. v. Federal Trade Commission, 238 F.2d 108, 119 (1st Cir. 1956).
The State Claim Spiff Classes include varying numbers of class members: Maine-103,
New Hampshire-97, Massachusetts-44, and Vermont-23. The Maine ASM Class has
66 members. Second Unopposed Mot. for Class/Collective Certification & Prelim.
Approval of Settlement Agreement 17-18.
Rule 23(a)(1) does not mandate any strict numerical cut-off for class
certification, but courts in this circuit have generally found that a class of 40 or more
individuals satisfies the numerosity requirement. See, e.g., Coffin v. Bowater, Inc.,
228 F.R.D. 397, 402 (D. Me. 2005). While the Vermont Spiff Class is made up of only
23 individuals, “[t]he numerosity requirement is more readily met where a class
contains employees suing their present employer. This is because class members may
Class/Collective Action Settlement Agreement & Release 6-7 (ECF No. 78-5). The Maine ASM Class
includes employees who worked for Monro Muffler from January 25, 2010 to February 15, 2014.
Revised Notice of Settlement-ASM Claims 5 (ECF No. 84).
5
be unwilling to sue their employer out of fear of retaliation.” Romero v. Producers
Dairy Foods, Inc., 235 F.R.D. 474, 485 (E.D. Ca. 2006); accord Mullen v. Treasure
Chest Casino, LLC, 186 F.3d 620, 624 (5th Cir. 1999). In addition, adjudicating the
Vermont spiff claims as a class action would promote judicial economy by avoiding
the potential for a series of highly similar individual actions. See William B.
Rubenstein, Newberg on Class Actions § 3:12 (5th ed. 2014). The numerosity
requirement has been met for all four State Claim Spiff Classes and the Maine ASM
Class.
ii.
Commonality
Rule 23(a)(2) requires that “there are questions of law or fact common to the
class.” In other words, the class members’ “claims must depend upon a common
contention.” Dukes, 131 S. Ct. at 2551. The Supreme Court has explained that the
“common contention . . . must be of such a nature that it is capable of classwide
resolution—which means that determination of its truth or falsity will resolve an
issue that is central to the validity of each one of the claims in one stroke.” Id.
With respect to the Spiff Claims, the Plaintiffs have established the following
common contentions: (1) Monro Muffler failed to account for spiff payments in its
overtime calculations; and (2) that failure violates state overtime laws in Maine,
Massachusetts, New Hampshire, and Vermont. The resolution of either of these
common contentions would resolve a central issue in each individual spiff claim. The
Plaintiffs have satisfied the commonality requirement for the State Claim Spiff
Classes.
6
With respect to the ASM Claims, Plaintiff Michaud alleges that in his role as
an assistant store manager, he routinely worked through his daily half-hour lunch
break, but that Monro Muffler had a policy and practice of automatically deducting
thirty minutes of pay per shift without determining if he had actually taken a break.
Plaintiff Michaud further claims that Monro Muffler routinely required him to
perform work after clocking out. Plaintiff Michaud alleges that similarly situated
assistant store managers were also required to work over lunch and after hours
without compensation. Compl. ¶ 34. The common contentions in the ASM context
include: (1) Monro Muffler automatically deducted time for lunch breaks without
making sure that assistant store managers actually took breaks from work; and (2)
Monro Muffler required assistant store managers to perform uncompensated postshift duties. As above, the resolution of either of these common contentions would
resolve a central issue in each individual ASM claim. The Plaintiffs have satisfied the
commonality requirement for the Maine ASM Class.
iii.
Typicality
Rule 23(a)(3) requires “that the claims or defenses of the representative parties
are typical of the claims or defenses of the class.” Typicality is satisfied when the
representative plaintiff’s “injuries arise from the same events or course of conduct as
do the injuries of the class and when plaintiff’s claims and those of the class are based
on the same legal theory.” In re Credit Suisse-AOL Sec. Litig., 253 F.R.D. 17, 23 (D.
Mass. 2008).
The named plaintiff for each State Claim Spiff Class alleges that he was
injured by Monro Muffler’s practice of failing to account for spiff payments in
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calculating overtime pay, in violation of either Maine, Massachusetts, New
Hampshire, or Vermont law. The proposed State Claim Spiff Classes include hourly
employees in each state who worked overtime and received spiff payments. Thus,
each named plaintiff’s injury arises from the same course of conduct as the injuries
of each proposed class member, and is based on the same legal theory. The Plaintiffs
have established typicality with respect to the State Claim Spiff Classes.
Plaintiff Michaud alleges that in his role as an assistant store manager, he was
injured by Monro Muffler’s practice of failing to compensate him for work performed
during lunch periods and after clocking out at the end of his shift, in violation of
Maine overtime law. The proposed Maine ASM Class includes assistant store
managers employed by Monro Muffler in Maine. The Complaint alleges that Plaintiff
Michaud was personally aware of other assistant store managers who regularly
worked through lunch breaks. Compl. ¶ 27. Further, Plaintiff Michaud asserts that
assistant store managers were required to perform discrete tasks that could only be
completed once all store employees had clocked out for the day and computer
operations had been shut down. Compl. ¶ 31. Accordingly, the named plaintiff’s
injuries arises from the same course of conduct as the injuries of each of the proposed
class members, and are based on the same legal theory. Plaintiff Michaud has
established typicality with respect to the Maine ASM Class.
iv.
Adequacy
Rule 23(a)(4) requires that “the representative parties will fairly and
adequately protect the interests of the class.” The adequacy requirement “serves to
uncover conflicts of interest between named parties and the class they seek to
8
represent,” and “factors in competency and conflicts of class counsel.” Amchem Prods.,
Inc., 521 U.S. at 625, 626 n.20.
Here, the interests of the named plaintiffs align with the members of the
classes they seek to represent. There is no evidence of adequacy-defeating conflicts of
interest, such as differences in the type of relief sought, a theory of law or fact that
benefits some class members, but harms others, or a scenario where some class
members benefit from the defendant’s conduct. See Rubenstein, supra, § 3:58. The
adequacy requirement is met for the State Claim Spiff Classes and the Maine ASM
Class.
b.
Rule 23(b)(3) Requirements
As discussed above, once a plaintiff has established the Rule 23(a)
prerequisites, the Court must also find that common questions predominate over any
individual questions, and that handling the matter as a class action is superior to
other methods of resolving the controversy. Fed. R. Civ. P. 23(b)(3). This analysis
includes consideration of
(A) the class members’ interests in individually controlling the
prosecution or defense of separate actions; (B) the extent and nature of
any litigation concerning the controversy already begun by or against
class members; (C) the desirability or undesirability of concentrating the
litigation of the claims in the particular forum; and (D) the likely
difficulties in managing a class action.
Fed. R. Civ. P. 23(b)(3).4
4
The Court does not examine the Rule 23(b)(3)(D) factor here because these are settlement
classes and there are no trial management issues to consider. See Amchem Prods., 521 U.S. at 620.
9
Here, with respect to the State Claim Spiff Classes, common questions
predominate because all class members’ claims arise out of the same compensation
practice—the exclusion of spiff payments in calculating overtime pay, and implicate
the same law—the overtime provisions in either Maine, Massachusetts, New
Hampshire, or Vermont. Damage awards will vary among individual class members
depending on the number of spiffs performed and the amount of overtime worked, but
these individualized factual determinations are not predominance-defeating,
particularly where they are easily resolved with the Defendant’s payroll records. See
Smilow v. Sw. Bell Mobile Sys., Inc., 323 F.3d 32, 40 (1st Cir. 2003) (“Common issues
predominate where individual factual determinations can be accomplished using
computer records, clerical assistance, and objective criteria—thus rendering
unnecessary an evidentiary hearing on each claim.”); Second Unopposed Mot. for
Class/Collective Certification & Prelim. Approval of Settlement Agreement 5 (ECF
No. 78) (explaining that the parties consulted the Defendant’s payroll records to
determine actual damages for the Spiff Claims). The issues here are amenable to
general, class-wide resolution.
With respect to the state law ASM Claims, common questions likewise
predominate because all class members’ claims relate to the practices of
automatically deducting lunch break time regardless of whether the assistant store
manager actually took a break and requiring assistant store managers to perform
discrete, post-shift tasks. The Plaintiffs contend that these practices led to
uncompensated off-the-clock work in violation of Maine wage laws 26 M.R.S. § 629(1)
10
and 664(3). There are, however, also individualized factual issues relevant to
resolving the ASM Claims. For example, while Plaintiff Michaud alleges that he
typically worked through his lunch break one to two times per week, Compl. ¶ 26,
and performed post-shift work three to four times per week for approximately fifteen
to forty-five minutes each time, Compl. ¶ 33, other assistant store managers may
have spent more or less time performing off-the-clock work. However, individualized
damage calculations do not generally thwart Rule 23(b)(3) class certification. See In
re New Motor Vehicles Canadian Export Antitrust Litig., 522 F.3d 6, 28 (1st Cir. 2008)
(“Predominance is not defeated by individual damage questions as long as liability is
still subject to common proof.”). Overall, the ASM claims are also amendable to
general, class-wide resolution.
A class action is also a superior method for adjudicating both the state law
Spiff and ASM Claims because it will resolve the claims at issue in a single,
consolidated proceeding. Requiring multiple, near-identical suits would create an
unnecessary burden for class members and the courts. It makes sense to concentrate
this litigation in this forum, as this Court is already familiar with the underlying
facts and theories of the case. See Klay v. Humana, Inc., 382 F.3d 1241, 1271 (11th
Cir. 2004), abrogated in part on other grounds by Bridge v. Phoenix Bond & Indem.
Co., 553 U.S. 639 (2008). The Court is not aware of any pending individual litigation
by any member of the proposed classes, nor has there been any indication that
individual class members have an interest in bringing separate actions. Many class
members will only be entitled to small sums, making it less likely that they would
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pursue claims on an individual basis. The Plaintiffs have satisfied the predominance
and superiority requirements in Rule 23(b)(3).
3.
Appointment of Class Counsel
Rule 23(g) directs courts to appoint class counsel when certifying a class.
Courts must consider the following in appointing class counsel: “(i) the work counsel
has done in identifying or investigating potential claims in the action; (ii) counsel’s
experience in handling class actions, other complex litigation, and the types of claims
asserted in the action; (iii) counsel’s knowledge of the applicable law; and (iv) the
resources that counsel will commit to representing the class. Fed. R. Civ. P.
23(g)(1)(A). In addition, “[c]lass counsel must fairly and adequately represent the
interests of the class,” Fed. R. Civ. P. 23(g)(4), and the Court may consider any other
matter pertinent to that determination. Fed. R. Civ. P. 23(g)(1)(B).
The Plaintiffs do not mention Rule 23(g) in their brief, but have attached a
declaration with information on the law firm Nichols Kaster, PLLP and partner
Matthew H. Morgan to their motion. See July 24, 2014 Decl. of Matthew H. Morgan
(“Morgan Decl.”) (ECF No. 78-1). Nichols Kaster, PLLP has a dedicated wage and
hour division and attorneys at the firm have practiced employment law for over 25
years. Morgan Decl. ¶ 9. Morgan himself has “tried many cases and [has] extensive
experience litigating and settling class and collective actions and wage and hour
claims.” Morgan Decl. ¶ 10. The Plaintiffs’ brief also reports that proposed local class
counsel Donald F. Fontaine has more than 35 years of experience in labor and
employment actions and lists two cases as examples. See Second Unopposed Mot. for
Class/Collective Certification & Prelim. Approval of Settlement Agreement 20 (ECF
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No. 78). The Plaintiffs have satisfied the Court that proposed class counsel has
sufficient experience to represent them.
With respect to work performed on this litigation, proposed class counsel has
investigated the work performed by technicians and assistant store managers and
the manner in which Monro Muffler compensated them. Morgan Decl. ¶ 2. Proposed
class counsel interviewed the named Plaintiffs and analyzed state and federal laws
applicable to their claims. Morgan Decl. ¶¶ 3, 4. The Plaintiffs’ brief in support of
preliminary settlement approval references “informal and formal discovery,”
including depositions. Second Unopposed Mot. for Class/Collective Certification &
Prelim. Approval of Settlement Agreement 7, 12.
Proposed class counsel has demonstrated knowledge of the FLSA and state
wage and hour law in connection with their briefing and participation in conferences
with the Court. Proposed class counsel has already committed resources to
representing the class through filings with this Court, engagement in discovery, and
participation in settlement negotiations. Proposed class counsel will continue to
commit resources to representing the class through the dissemination of notice to
potential class/collective members, appearance at the fairness hearing, and execution
of settlement administration. The Court does not perceive any conflicts that would
prevent proposed class counsel from fairly and adequately representing the interests
of the various classes/collectives.
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The Court finds it appropriate to appoint Matthew H. Morgan of Nichols
Kaster, PLLP and Donald F. Fontaine of the Law Office of Donald F. Fontaine as
class counsel.
B.
FLSA Collective Action
1.
Legal Standard
Employees seeking certification of a collective action under 29 U.S.C. § 216(b)
must demonstrate that they are “similarly situated.” In general, employees are
“similarly situated” when they “have similar (not identical) job duties and pay
provisions, and are ‘victims of a common policy or plan that violated the law.’ ”
Prescott v. Prudential Ins. Co., 729 F.Supp.2d 357, 364 (D. Me. 2010) (internal
citations omitted).
Courts in the First Circuit typically employ a “two tier” approach to FLSA
collective action certification. See, e.g. Johnson v. VCG Holding Corp., 802 F.Supp.2d
227, 233 (D. Me. 2011). First, a court determines whether notice should be given to
potential collective action members. Id. at 233-34 (internal citation omitted). This
first stage usually takes place early in a case, before substantial discovery, based on
the pleadings and any affidavits. Id. at 234. A plaintiff must simply demonstrate “a
reasonable basis for [her] claim that there are other similarly situated employees.”
Prescott, 729 F.Supp.2d at 364 (internal quotations and citations omitted). The second
stage typically takes place after the close of discovery, when an employer moves to
decertify the collective action. Id. “Factors relevant to the stage-two determination
include: factual and employment settings of the individual[ ] plaintiffs, the different
defenses to which the plaintiffs may be subject on an individual basis, [and] the
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degree of fairness and procedural impact of certifying the action as a collective
action.” Id. at 364-65 (internal quotations and citations omitted).
2.
Application: Spiff Claims5
In addition to the State Claim Spiff Classes, there is also an overarching FLSA
Spiff Claim collective consisting of hourly Monro Muffler employees in Maine,
Massachusetts, New Hampshire, Rhode Island, and Vermont who earned spiffs, but
did not have that additional compensation accounted for in their overtime pay (the
“FLSA Spiff Collective”).6 In order to conditionally certify the FLSA Spiff
Collective, the Court must find that these employees are “similarly situated.” 29
U.S.C. § 216(b). Procedurally, the Court evaluates the Plaintiffs’ request for collective
action certification under the initial, pre-notice stage.7 Accordingly, the Plaintiffs
must only make a “modest factual showing” that, with similar but not necessarily
5
A FLSA ASM Claim collective (the “FLSA ASM Collective”), defined as “all hourly-paid
assistant store managers working at the defendant’s Tire Warehouse locations within three years
before the date of entry of this order (May 8, 2013),” has already been conditionally certified. Order on
Conditional Collective Action Certification, Court Authorized Judicial Notice, and Discovery (ECF No.
37). The parties, however, have proposed that the FLSA ASM Collective include assistant store
managers who worked for Monro Muffler from January 25, 2010 to February 15, 2014. Revised Notice
of Settlement-ASM Claims 5. The Court adopts the parties’ proposed time frame for the FLSA ASM
Collective.
The Spiff Claim settlement agreement defines the FLSA Spiff Collective as follows: “All hourlypaid employees who worked for Monro Muffler Brake, Inc. at Tire Warehouse stores in Maine,
Massachusetts, New Hampshire, Rhode Island, and Vermont who did not have any and all additional
compensation included in their overtime pay calculation.” Am. Spiff Class/Collective Action Settlement
Agreement & Release 5. The FLSA Spiff Collective includes employees who worked for Monro Muffler
from October 4, 2009 to April 27, 2013. Revised Notice of Settlement-Spiff Claims 5.
6
7
Given that this motion for collective action certification is unopposed and arrives in connection
with settlement efforts, the Court does not expect to undertake “tier two” collective action analysis in
connection with a motion to decertify from Monro Muffler.
15
identical jobs, potential collective action members suffered from a common unlawful
policy or plan. See Comer v. Wal-Mart Stores, Inc., 454 F.3d 544, 547 (6th Cir. 2006).
Here, the Plaintiffs are technicians and assistant store managers in locations
that focus primarily on tire sales and services. Compl. ¶¶ 5-8. The proposed collective
action does not explicitly limit membership by job title, but instead includes any nonexempt hourly employees who earned spiff payments, but did not have those
payments included in their overtime pay calculations. The Plaintiffs have identified
278 potential collective action members. See Spiff Allocation Sheet (ECF No. 78-3).
The Complaint alleges that potential opt-in members of the Spiff Collective are
“similarly situated” to Plaintiff Michaud because “[t]hey all hold or have held the
same job position8 and had or have had substantially similar job requirements and
pay provisions.” Compl. ¶ 41. The Complaint further alleges that potential opt-in
members “are or were subject to the same common practices, policies, and plans that
permit(ted) them to work for less than the correct overtime rate.” Compl. ¶ 41. There
is a reasonable basis for Plaintiff Michaud’s claim that there are other similarly
situated employees. As such, the FLSA Spiff Collective is conditionally certified.
II.
Proposed Settlement
In addition to their requests for class/collective certification, the Plaintiffs have
also asked the Court to “preliminarily” approve settlement agreements resolving the
Spiff Claims and the ASM Claims.
8
The Complaint alleges that Monro Muffler first employed Plaintiff Michaud as a technician,
and later as an assistant store manager. Compl. ¶ 5.
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A.
Legal Standard
1.
Rule 23
Under Federal Rule of Civil Procedure 23(e), the following procedural
framework applies to the approval of a proposed settlement:
(1) The court must direct notice in a reasonable manner to all class
members who would be bound by the proposal.
(2) If the proposal would bind class members, the court may approve it
only after a hearing and on finding that it is fair, reasonable, and
adequate.
(3) The parties seeking approval must file a statement identifying any
agreement made in connection with the proposal.
(4) If the class action was previously certified under Rule 23(b)(3), the
court may refuse to approve a settlement unless it affords a new
opportunity to request exclusion to individual class members who
had an earlier opportunity to request exclusion but did not do so.
(5) Any class member may object to the proposal if it requires court
approval under this subdivision (e); the objection may be withdrawn
only with the court’s approval.
Fed. R. Civ. P. 23(e).
Court approval of a Rule 23 class action settlement generally proceeds in two
stages. Manual for Complex Litigation (Fourth) § 21.632 (2011). First, counsel
submits the terms of the proposed settlement, and the court makes “a preliminary
determination on the fairness, reasonableness, and adequacy of the settlement terms”
and directs notice to class members on the certification, proposed settlement, and
date of the final fairness hearing. Id. At this initial stage, the court’s role is limited
to deciding “whether the proposed settlement appears to fall within the range of
possible final approval.” Trombley v. Bank of Am. Corp., No. 08-cv-456-JD, 2011 WL
3740488, at *4 (D.R.I. Aug. 24, 2011). However, Judge Hornby has observed that
despite the Complex Litigation Manual’s adoption of the term, Rule 23 does not itself
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provide for “preliminary approval” of class action settlements. See In re New Motor
Vehicles Canadian Export Antitrust Litig., 236 F.R.D. 53, 55-56 (D. Me. 2006). In his
view, “it makes sense for a judge to say that a particular settlement has no chance of
approval” before ordering class notice, but any determination as to a settlement’s
fairness, reasonableness, and adequacy should be reserved for the fairness hearing.
Id. In accordance with Judge Hornby’s observations and the text of Rule 23(e), the
Court will reserve its determination as to the proposed settlement’s fairness,
reasonableness, and adequacy until after the fairness hearing.
Following notice to the class, the court holds a fairness hearing where the
settlement proponents must demonstrate that the proposed settlement is fair,
reasonable, and adequate. Manual for Complex Litigation § 21.634 (internal citations
omitted). Typically, a court’s final approval of a class action settlement “involves
balancing the advantages and disadvantages of the proposed settlement as against
the consequences of going to trial or other possible but perhaps unattainable
variations on the proffered settlement.” Nat’l Ass’n of Chain Drug Stores v. New
England Carpenters, 582 F.3d 30, 44 (1st Cir. 2009). The following factors are
relevant for a court evaluating whether to approve a Rule 23 settlement: “(1)
comparison of the proposed settlement with the likely result of litigation; (2) stage of
the litigation and the amount of discovery completed; (3) reaction of the class to the
settlement; (4) quality of counsel; (5) conduct of the negotiations; (6) prospects of the
case, including risk, complexity, expense and duration.” Scovil v. FedEx Ground
18
Package Sys., Inc., No. 1:10-cv-515-DBH, 2014 WL 1057079, at *2 (D. Me. Mar. 14,
2014).
2.
FLSA
With respect to settlement of FLSA claims, either court approval or supervision
by the United States Secretary of Labor is required for employees’ waiver of their
rights through settlement to be binding. Prescott v. Prudential Ins. Co., No. 2:09-cv00322-DBH, 2011 WL 6662288, at *1 (D. Me. Dec. 20, 2011) (citing Lynn’s Food
Stores, Inc. v. United States, 679 F.2d 1350, 1352-53 (11th Cir. 1982)). A court may
approve a FLSA settlement if it is “a fair and reasonable resolution of a bona fide
dispute over FLSA provisions,” Lynn’s Food Stores, 679 F.2d at 1355, and at least one
named plaintiff is willing to sign the agreement. Scovil, 2014 WL 1057079, at *1. The
factors supporting approval of a Rule 23 settlement of state wage and hour claims
may also support approval of a collective action settlement of FLSA claims. See, e.g.,
Scovil, 2014 WL 1057079, at *8.
B.
Application
At this pre-fairness hearing stage, the Plaintiffs have demonstrated that the
Spiff Claim and the ASM Claim settlement agreements both “fall within the range of
possible final approval.” Trombley, 2011 WL 3740488, at *4. It therefore makes sense
at this time to provide notice of the proposed settlements to the potential class and
collective members. At the fairness hearing, the Court will specifically probe the
parties on each of the Scovil factors and finally determine whether the “settlement is
fair, reasonable and adequate (the class action standard)” and whether “it is a fair
and reasonable resolution of a bona fide dispute over FLSA provisions (the collective
19
action standard).” Scovil, 2014 WL 1057079, at *1 (internal quotation and citation
omitted).
a.
Spiff Claims
The total settlement funds allotted to class/collective members on the Spiff
Claims is $35,000. This amount reflects the employees’ total actual wage loss
($21,110.39), plus some amount of liquidated damages. Employees in Maine, New
Hampshire, and Vermont all receive at least 131% of their actual lost wages. See Spiff
Allocation Sheet. The Court understands that the liquidated damage portion arose
from the parties’ settlement negotiations and reflects uncertainty as to whether the
employees would ultimately prevail on a liquidated damage award at trial.9
Employees in Massachusetts receive at least 197% of their actual lost wages. See Spiff
Allocation Sheet. This higher percentage accounts for the availability of treble, as
opposed to liquidated (double), damages under Massachusetts law. See M.G.L. 151 §
1B; Supplemental Mem. in Supp. of Unopposed Mot. for Class/Collective Certification
& Prelim. Approval of Settlement Agreement 2 (ECF No. 82). The parties further
determined that each employee should receive a minimum of $25 in the settlement,
even if their lost wages were minimal. See Spiff Allocation Sheet.
9
Courts applying the FLSA may decline to award liquidated damages if the employer makes
out a “good faith” defense. See 29 U.S.C. § 260. At the fairness hearing, the Court will question the
parties on the strengths and weaknesses of the Defendant’s “good faith” defense. The Court will further
inquire as to whether liquidated damage awards are mandatory or discretionary under the applicable
state laws.
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The proposed settlement falls within a range of possible final approval under
both Rule 23 and the FLSA.10 However, the Court will apply heightened scrutiny at
the fairness hearing, given that the settlement agreement: (1) provides for $50,000 in
attorneys’ fees (which is well over the $35,000 that the entire Spiff Claim
class/collective members receive overall)11; (2) states that the “Defendant does not
object to such requests (for attorneys’ fees)”12; and (3) arrives at the same time as an
unopposed motion for class certification.13
b.
ASM Claims
The Defendant has agreed to pay $175,000 in connection with the ASM
settlement. Proposed class counsel has indicated that they will petition the Court for
The parties indicated at a December 12, 2014 Conference of Counsel that “double recoveries”
are not available because the FLSA and state law claims here cover the same lost income. A review of
case law confirms this assertion. See, e.g., Bolduc v. Nat’l Semiconductor Corp., 35 F.Supp.2d 106, 117
(D. Me. 1998); Carroca v. All Star Enters. & Collision Ctr., Inc., No. 12-11202, 2013 WL 3496537, at
*4 (D. Mass. July 10, 2013). The Court will, however, question the parties at the fairness hearing on
the damages available under the FLSA versus state overtime laws, to ensure that each employee is
receiving a fair settlement.
10
11
The First circuit recognizes two general methods for calculating attorneys’ fees in the class
action context: (1) the “percentage of fund” method; and (2) the “lodestar” method. Under the
percentage of fund method, counsel is awarded a reasonable percentage of the common fund, typically
in the 20-30% range. Under the lodestar method, courts evaluate the time spent on the matter, hourly
rates for attorneys, and any multipliers or discounts for special circumstances. The touchstone of either
method is reasonableness. See Bezdek v. Vibram USA Inc., Nos. 12-10513, 13-10764, 2015 WL 223786,
at *19 (D. Mass. Jan. 16, 2015). The Court would not approve the attorneys’ fees contemplated in the
Spiff Claim settlement agreement through the percentage of fund method. Accordingly, any motion for
attorneys’ fees with respect to the Spiff Claims should be made using the lodestar method with
appropriate accompanying documentation.
Am. Spiff Class/Collective Action Settlement Agreement & Release 7. An agreement from a
defendant not to oppose plaintiffs’ counsel’s application for attorneys’ fees—called a “clear sailing
provision”—calls for the Court to apply heightened scrutiny to the settlement agreement. See
Weinberger v. Great N. Nekoosa Corp., 925 F.2d 518 (1st Cir. 1991).
12
13
See Trombley v. Bank of Am. Corp., No. 08-cv-456, 2012 WL 1599041, at *3 (D.R.I. May 4,
2012) (“When a settlement is reached before the class is certified, the settlement agreement is subject
to heightened scrutiny for fairness.”).
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$58,333 in attorneys’ fees and $6,236.32 in costs from the total settlement amount.
The parties also request a service payment of $500 for each class member who sat for
a deposition. The $110,430 remaining after these proposed deductions would be
distributed to class/collective members on a pro rata basis according to the number
of weeks worked.14 Each employee will receive the equivalent of approximately two
extra hours of pay ($23.65) per week worked,15 though each employee will receive at
least $100 regardless of the number of weeks worked. The parties arrived at this
settlement amount and distribution model after “informal and formal discovery” and
months-long negotiations. Second Unopposed Mot. for Class/Collective Certification
& Prelim. Approval of Settlement Agreement 12. On this record, the Court does not
perceive any obviously fatal defects to the ASM settlement under either the Rule 23
or FLSA standards. However, as with the Spiff Claim settlement agreement, the
The parties identified qualifying assistant store managers as follows. First, they singled out
all assistant store managers who ran an end-of-day report during (1) the FLSA three-year statutory
period for willful violations (for opt-in collective action members) and (2) the Maine state law six-year
statutory period (for opt-out class members). Then, they summarized this data on a weekly basis by
identifying all weeks in which each assistant store manager ran at least one end-of-day report. This
process resulted in a list showing the total number of eligible weeks each assistant store manager ran
at least one end-of-day report. Supplemental Mem. in Supp. of Unopposed Mot. for Class/Collective
Certification & Prelim. Approval of Settlement Agreement 3. This method does not appear to account
for ASMs who worked through lunch, but did not run an end-of-day report. The Court will inquire at
the fairness hearing as to how the parties’ method fairly accounts for uncompensated lunch break
work.
14
15
The Plaintiffs explain that the parties “performed extensive calculations to determine the
amount of time potentially spent performing ‘end of day’ tasks after clock out time. The amount of
travel time required to perform bank deposits was calculated for each location and included in this
analysis. Based on these calculations, a total potential damages number was determined and a
settlement value identified based on litigation risks.” Supplemental Mem. in Supp. of Unopposed Mot.
for Class/Collective Certification & Prelim. Approval of Settlement Agreement 3-4. In accordance with
the first Scovil factor, the Court will probe the parties further on the ASM Claims settlement. For
example, did end-of-day report runners also drive to the bank? Does the two hour figure reflect an
average travel time? Was any time added for working through lunch? Was there any accounting for
liquidated damages available under the FLSA or Maine law on top of wages owed?
22
Court will engage in heightened scrutiny of the ASM Claim settlement agreement,
given the Plaintiffs’ impending motion for 33% of the common fund in attorneys’
fees,16 what appears to be a clear sailing provision in the settlement agreement,17 and
agreement to settle prior to class certification.
C.
Settlement Notices
The Court has reviewed the Revised Notice of Settlement-Spiff Claims and the
Revised Notice of Settlement-ASM Claims and finds that they are “reasonably
calculated to reach the class members and inform them of the existence of and the
opportunity to object to the settlement.” Nilsen v. York Cnty., 382 F.Supp.2d 206, 210
(D. Me. 2005). Accordingly, the notices satisfy Rule 23(e) and due process
requirements. Id. The notices are also appropriate under the FLSA because they
communicate accurate information about the suit in order to enable potential
collective action members to “make informed decisions about whether to participate.”
Hoffman-La Roche Inc. v. Sperling, 493 U.S. 165, 171 (1989).18
CONCLUSION
For the reasons stated above, the Court GRANTS the Plaintiffs’ motion for
class certification of the Maine Spiff Class, Massachusetts Spiff Class, New
Hampshire Spiff Class, Vermont Spiff Class, and Maine ASM Class; GRANTS the
16
ASM Class/Collective Action Settlement Agreement & Release 6-7.
17
ASM Class/Collective Action Settlement Agreement & Release 7.
18
Pursuant to the Court’s request, the parties have filed revised notices of settlement, which
inform employees of the time frame covered by each class and collective action. See Revised Notice of
Settlement-Spiff Claims 5; Revised Notice of Settlement-ASM Claims 5.
23
Plaintiffs’ motion for conditional certification of the FLSA Spiff Collective;
AUTHORIZES the Plaintiffs to circulate Revised Notices of Settlement (ECF Nos.
84, 84-1), as described in the Amended Settlement Agreements (ECF Nos. 78-2, 785); and GRANTS the Plaintiffs’ request to appoint Nichols Kaster, PLLP and Donald
Fontaine as class counsel and settlement administrator.
The Court also GRANTS the Plaintiffs’ unopposed motion for leave to file their
legal services agreement with Plaintiff Michaud under seal (ECF No. 81).
The Clerk’s Office will schedule a final fairness hearing within the next 60 days
in accordance with this Order.
SO ORDERED.
/s/ Nancy Torresen
United States Chief District Judge
Dated this 17th day of March, 2015.
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