VENEGAS v. GLOBAL AIRCRAFT SERVICE INC et al
DECISION AND ORDER ON CLASS ACTION SETTLEMENT AND ATTORNEY FEES re: granting 176 Motion for Approval of Settlement; granting 177 Motion for Attorney Fees and Expenses By JUDGE NANCY TORRESEN. (MMB) Modified on 6/26/2017 to add the title of the order. (mjlt).
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UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
CHAISTOPHER VENEGAS et al.,
GLOBAL AIRCRAFT SERVICE, INC.
and LUFTHANASA TECHNIK
NORTH AMERICA HOLDING
) Docket No. 2:14-cv-249-NT
DECISION AND ORDER ON CLASS ACTION
SETTLEMENT AND ATTORNEY FEES
Before me is the Plaintiffs’ unopposed motion for final approval of class action
settlement (ECF No. 176) and the Plaintiffs’ unopposed motion for attorney fees and
reimbursement of litigation expenses (ECF No. 177). The Plaintiffs are sheet metal
workers, mechanics, and painters working on an aircraft restoration project in
Auburn, Maine who allege that Global Aircraft Service, Inc. (“GAS”) and Lufthansa
Technik North America Holding Corporation (“LTNA”) improperly classified them as
independent contractors rather than employees and seek unpaid overtime wages. The
parties have come to an agreement to settle the case.
I previously authorized the Plaintiffs to send notice of the settlement out to the
class members. Order Authorizing Notice of Class Action Settlement (ECF No. 174).
Notice of the settlement has been successful, reaching 76 of 81 class members.
Seventy class members have filed claims forms and are entitled to a distribution from
the settlement fund.
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After conducting a fairness hearing on June 15, 2017, as Federal Rule of Civil
Procedure 23(e) requires, I conclude that the settlement is fair, reasonable, and
adequate, that the attorney fees and expenses are reasonable, and that the service
award to Mr. Venegas is warranted and reasonable.
CLASS ACTION SETTLEMENT
Settlement and Plan of Distribution
A proposed class action settlement is subject to the following procedure:
(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
(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 subdivision (e); the objection may be withdrawn only
with the court’s approval.
Fed. R. Civ. P. 23(e).
Here, class members received individual notice of the
settlement; there has been a hearing; there are no side agreements; no class members
filed written objections; no class members appeared at the hearing. What remains,
then, is for me to determine whether the settlement is “fair, reasonable, and
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I consider the following factors to assess a class 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; and (6) prospects of the case,
including risk, complexity, expense and duration. In re New Motor Vehicles Canadian
Export Antitrust Litigation, 2011 WL 1398485, *2 & n.16 (D. Me. April 13, 2011)
(citing additional sources).
Proposed Settlement Compared to Likely Trial Outcome
The parties settled the lawsuit before trial for $1,100,000, which leaves the
class $760,636.76 after fees and expenses. Settlement Agreement ¶ 1.31 (ECF No.
164-1). The potential maximum recovery for the class at the time of settlement was
$1,350,773.03 over the six-year class period. Comparing the benefits obtained from
the settlement to the likely results of the litigation, the monetary relief afforded to
the class members is approximately 56% of the maximum recovery each class member
would be entitled to receive if they recovered payment in full for the amount of
overtime worked. GAS separately provided $10,000 toward administrative expenses.
Settlement Agreement ¶ 2.7.1.
The class’s recovery here is reasonable because there was no assurance of
success on the merits. At trial, the Plaintiffs would still have borne the burden of
proving that they were employees and were eligible for the overtime payment that
they sought. Additionally, there was extensive summary judgment briefing in this
case that centered on: 1) whether the Defendants were exempt from the payment of
overtime wages under the FLSA because of a common carrier status under the
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Railway Labor Act (“RLA”) and 2) whether the Airline Deregulation Act preempted
Plaintiffs’ claims under the Maine Wage and Overtime Act. Order on Defs.’ Mot. for
Summ. J. (ECF No. 146). Although the Plaintiffs overcame summary judgment on
the FLSA claims as to both of the Defendants, the Court granted summary judgment
in favor of LTNA on the Maine Wage and Overtime Act claims. Id. As a result, at
trial, the Plaintiffs would have been required to rebut the Defendants’ RLA defense
and show that the work they performed was not typical of the work performed by air
carrier employees and that the services they performed were not essential to the
transportation operation of an air carrier, an uncertain undertaking given the fact
that the work in question was being performed on an aircraft for Lufthansa. Hence,
there was substantial risk that Plaintiffs would not prevail at trial and would have
been left with no reward of damages at all.
Stage of Litigation
Also significant is the amount of work completed by the parties prior to
settlement. Discovery was complete when settlement was reached. Both sides had
answered written discovery and together the parties had taken eleven depositions.
At the time of settlement, the parties had engaged in significant motions practice,
including a motion for conditional certification of a collective action under the FLSA,
a motion for class certification, and the Defendants’ motion for summary judgment.
The next step, had the parties not reached a settlement in November 2016, would
have been a trial, likely in January 2017. Given the years of contested litigation and
discovery efforts that preceded negotiations, the settlement here was achieved with
a clear view as to the strengths and weaknesses of the case.
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The reaction of the class strongly favors approval of the settlement. After a
successful direct mail notice program, none of the class members lodged an objection
to the settlement terms or requested to be excluded. The complete absence of
objections or exclusions here supports approval. Accordingly, the class’s implicit
support weighs in favor of the fairness and reasonableness of the settlement terms.
Conduct of Negotiations and Quality of Counsel
The parties’ arm’s-length settlement negotiations also support a determination
that the settlement was fair and that it was not a product of collusion or fraud among
the parties. Indeed, this litigation had been pending for over two years before
settlement was reached. During that time, the parties fully briefed the Defendants’
joint motion for summary judgment. It was only after that motion proved
unsuccessful that the parties engaged in any serious settlement discussions.
Counsel for both sides then zealously negotiated on behalf of their clients. The
settlement was achieved after a ten-hour day of negotiations with the Magistrate
Judge. The result was a compromise of the claims that took into account the risks of
establishing liability and damages. The Plaintiffs’ attorneys from The Employment
Law Group, PC and Johnson Webbert & Young, LLP have extensive experience in
labor law and class action cases. The conduct of the negotiations and the quality of
counsel support final approval of the class settlement.
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Case Prospects, Including Risk, Complexity, Expense, and
This case involved substantial risk to the Plaintiffs. As detailed above, to
prevail on their wage and hour claims, the Plaintiffs not only would have had to prove
as a threshold matter that they were employees and not independent contractors, but
also that they could overcome the RLA affirmative defense. Thus, there was a very
real possibility that the Plaintiffs might have recovered nothing in this case. Equally
daunting was the prospective expense and duration of the rest of litigation. At the
time the case settled, the litigation already had spanned well over two years. This
case settled for $1,100,000.00 and the parties state that this amount was predicated,
in part, on GAS’s ability to pay.
Under the terms of the retainer and the Settlement Agreement, the Plaintiffs’
attorneys are also entitled to $308,000 in fees and expenses that amount to
$18,084.63. In addition to the $10,000 that GAS is paying to the claims
administration, the Plaintiffs also allocate $5,000 of the settlement amount for claims
administration and so the total expenses are $23,084.63. The Plaintiffs also allocate
$8,278.63 to the named Plaintiff as a service award. That means the money to be
divided amongst the class members is $1,100,000.00 minus $308,000, minus
$23,084.63, minus, $8,278.61, or $760,636.76. Because of GAS’s inability to pay its
share of the settlement at once, the class will be paid in full at the outset, and counsel
for the Plaintiffs have agreed to receive their fees on an installment basis. But for the
settlement, it is reasonable to believe that had this case gone to trial, the additional
expenditure of money and time by all the parties would have been significant.
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Reasonableness of Settlement
After considering all these factors, I conclude that the proposed settlement is
fair, reasonable, and adequate. The assured compensation now is a fair trade-off for
the uncertainties of trial and appeal and the accompanying delay in receiving any
damages. I also find that the plan of distribution to each class member is fair,
reasonable, and adequate.
The Plaintiffs seek attorney fees, apart from the settlement fund, in line with
the settlement agreement. Rule 23(h) provides that a court may award reasonable
attorney fees and costs. Class members or a party may object to an attorney fees
request. A court may hold a hearing, and a court “must find the facts and state its
legal conclusions under Rule 52(a).” Fed. R. Civ. P. 23(h).
The Plaintiffs’ have requested an attorney fee award of 28% of the $1,100,000
settlement or $308,000 plus costs of $23,084.63. Pls.’ Mot. for Attorneys’ Fees and
Litigation Expenses 1 (ECF No. 177). The Settlement Agreement and notice sent to
the class members states that the Plaintiffs’ attorneys will seek fees of no more than
28% and litigation expenses. Settlement Agreement 24; Notice 3 (ECF No. 173). I
heard the motion at the final fairness hearing on June 15, 2017, and neither the
Defendants nor class members objected to the attorney fees request.
Because of GAS’s inability to pay its share of the settlement at once, the
attorney fees will be paid on an installment basis. The Plaintiffs’ attorneys will
receive $108,000.00 for fees from the initial settlement monies. Thereafter, GAS will
make a direct payment to The Employment Law Group, PC of $100,000.00 on
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January 1, 2018, and GAS will make another direct payment to The Employment
Law Group, PC of $100,000.00 on January 1, 2019. Understanding the complexities
and risks of the case and the relatively modest size of the potential recovery of the
class, I find the attorney fees award of 28% of the settlement fund and the expenses
in this case are reasonable and consistent with other awards in wage and hour cases.
A named plaintiff is a necessary component of any class action, and thus, a
service award may be appropriate to induce an individual to take part in the suit. See
Scovil v. FedEx Ground Package System, Inc., 2014 WL 1057079 at *6 (citing Cook v.
Niedert, 142 F.3d 1004, 1016 (7th Cir. 1998)). In determining whether an incentive
award is called for, courts consider the actions that the named plaintiffs have taken
to protect the interests of the class, the amount of time and effort they have expended
in pursing the litigation, the degree to which the class has benefited from the named
plaintiffs’ efforts, and any negative effects they have risked. Scovil, 2014 WL
1057079, at *6.
The parties propose that Christopher Venegas be paid $8,278.61 as a service
award. The service award plus his share of the damage award represents the full
amount of overtime pay that would have been owed to Mr. Venegas if he had prevailed
on his claims. No class member objected to the award. I conclude that the award is
reasonable given the time and energy Mr. Venegas committed to the case.
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There is no reasonable basis to believe that the Plaintiff class could achieve a
higher settlement amount, and there are significant risks posed by continued
litigation. I therefore APPROVE the settlement agreement and plan of distribution,
including the service award to the named Plaintiff. I also APPROVE the requested
attorney fees and expenses. The parties shall report to me regarding any settlement
funds remaining for cy pres distribution on, or before, October 2, 2017.
The case is DISMISSED with prejudice; provided, however, that, without
affecting the finality of this Judgment and Order of Dismissal with Prejudice, the
Court hereby retains exclusive and continuing jurisdiction for purposes of
Judgment and Order of Dismissal with Prejudice, as well as the Settlement
/s/ Nancy Torresen
United States Chief District Judge
Dated this 26th day of June, 2017.
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