CURTIS et al v. SCHOLARSHIP STORAGE INC et al
Filing
90
ORDER ON FINAL SETTLEMENT APPROVAL AND ATTORNEYS' FEES re: 83 Motion For Approval of Settlement Claims and 84 Motion for Attorney Fees; By JUDGE NANCY TORRESEN. (mjlt)
UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
ROBERT CURTIS, et al.,
Plaintiffs,
v.
SCHOLARSHIP STORAGE INC., et
al.,
Defendants.
)
)
)
)
) Docket No. 2:14-cv-303-NT
)
)
)
)
)
ORDER ON FINAL SETTLEMENT APPROVAL AND ATTORNEYS’ FEES
Before the Court is a request for final approval of the settlement of all claims
in this suit (ECF No. 83) and a motion for attorneys’ fees and costs (ECF No. 84). For
the reasons stated below, the settlement is APPROVED and the motion for
attorneys’ fees is GRANTED.
BACKGROUND
This case concerns wages owed to delivery and shuttle drivers of Scholarship
Storage d/b/a Business as Usual (“BAU”) under the Fair Labor Standards Act (the
“FLSA”), 29 U.S.C. §§ 207, 255, and under Maine law, 26 M.R.S. §§ 664(3), 629(1).
Through negotiations, the parties agreed to settle their dispute in advance of trial.
In January 2016 I authorized Plaintiffs to circulate notices of the proposed settlement
to potential class and collective action members. Order Notice to Class and
Establishing Schedule for Further Action (ECF No. 69). In February 2016, after
notice had been sent to the class, Plaintiffs’ attorney notified me that he had failed to
notify approximately 42 class members of the proposed settlement and that the
individual settlement computations sent to those class members were inaccurate.
Letter from Jeffrey Neil Young Esq. (ECF No. 87). In March 2016, I authorized
counsel to send an amended notice to the class. Counsel then appeared before me for
a final fairness hearing on May 23, 2016. I must now decide whether to finally
approve the settlement of all claims in this matter and whether to award attorneys’
fees to Plaintiffs’ counsel.
DISCUSSION
I.
Settlement
A.
Legal Standard
1.
Rule 23
Federal Rule of Civil Procedure 23(e) requires the following for approval of a
class action 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). The following factors are relevant for determining whether a
settlement is “fair, reasonable, and adequate” under Rule 23(e)(2):
2
(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 negotiations;
(6) prospects of the case, including risk, complexity, expense and
duration.
Scovil v. FedEx Ground Package Sys., Inc., No. 1:10-cv-515-DBH, 2014 WL 1057079,
at *2 (D. Me. Mar. 14, 2014).
2.
FLSA
The settlement of FLSA claims requires either court approval or supervision
by the United States Secretary of Labor in order for employees’ waiver of their rights
through settlement to be binding. See Prescott v. Prudential Ins. Co., No. 2:09-cv-322DBH, 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, Inc., 679 F.2d at 1355. The court’s role is to
ensure that the settlement “reflect[s] a reasonable compromise over issues . . . that
are actually in dispute,” rather than a pure discount on clearly-owed wages. Lynn’s
Food Stores, Inc., 679 F.2d at 1354. 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.
3
B.
Application
1.
Rule 23
With respect to Rule 23(e) requirements: (1) notice has been directed to all
potential class members who would be bound by the settlement; (2) a fairness hearing
was held; (3) the parties have filed their settlement agreement and have confirmed
that there are no additional agreements made in connection with the settlements; (4)
there have been no previous class certifications under Rule 23(b)(3); and (5) no
objectors have appeared.
With respect to the Scovil factors, I take the following into account in my
determination of whether the settlement is “fair, reasonable, and adequate” as
required by Fed. R. Civ. P. 23(e)(2).
a.
Comparison of Proposed Settlement with Likely
Result of Litigation
The total amount of the settlement in this case is $450,000. Plaintiffs assert
that the potential recovery in this case is $283,000 to $850,000. Motion for Final
Approval of Class Action Settlement (ECF No. 83). The class/collective action
members will receive a total of $291,413.82 under the settlement agreement.
Settlement Allocation Spreadsheet (ECF No. 85-2). The $291,413.82 figure reflects
$258,413.82 in total actual wage loss, plus $33,000 in incentive and bonus payments.
This case was unusually challenging because of the lack of records and division
among the courts about proof of damages for unreimbursed automobile expenses. The
settlement amount takes into account potential weaknesses in Plaintiffs’ case and
the difficulty of proving damages. I find that the settlement fairly and reasonably
4
compensates employees for their lost wages given the challenges the class members
would have were they to litigate their claims. This factor favors approval.
b.
Stage of the Litigation and Amount of Discovery
Completed
The parties agreed to settle approximately sixteen months after Plaintiffs filed
suit. Before agreeing to settle, Plaintiffs filed an initial complaint and the parties
briefed the Motion for Conditional Certification of the FLSA Collective Action. The
parties pursued some formal and informal discovery. Substantial discovery had been
completed when settlement was reached. Both parties had answered written
discovery; Defendants had provided documentation identifying the class members,
routes, and wage and payroll information as well as documents concerning policies
and procedures; and the named plaintiffs and 10 opt-ins had answered requests for
the production of documents and interrogatories. November 16, 2015 Young Decl. ¶
6 (ECF No. 60). Oral discovery had been discussed but not yet scheduled. November
16, 2015 Young Decl. ¶ 7. While the parties did reach agreement before many of the
complex issues were raised, I am satisfied that they had sufficient information about
the strengths and weaknesses of the claims at issue to make informed decisions about
settlement. This factor favors approval.
c.
Class Reaction
Plaintiffs sent notice of settlement to 101 current and former BAU delivery and
shuttle drivers. May 11, 2016 Young Decl. ¶¶ 4-6 (ECF No. 85). Two notices were
ultimately returned to Plaintiffs’ counsel. May 11, 2016 Young Decl. ¶ 9. There have
been no written objections to the settlement. One former employee appeared at the
5
fairness hearing to voice support for the settlement in person. Plaintiffs’ attorneys
and paralegals have spoken to 21 individuals about their individual allocations
and/or contact information following the mailing of the settlement notice. May 11,
2016 Young Decl. ¶ 8.
None of the 21 individuals who called objected to the
settlement. This factor favors approval.
d.
Quality of Counsel
Because this case settled early in the litigation, my experience with counsel
has been largely limited to their briefing and appearances advocating for settlement.
Counsel has been effective in their advocacy of settlement and responsive to my
inquiries during the settlement process. They have committed time and resources to
this suit. This factor favors settlement approval.
e.
Conduct of Negotiations
Counsel explained at the fairness hearing that they engaged in two full days
of arm’s length mediation with retired Justice Warren Silver. Prior to the mediation,
the parties had exchanged substantial financial information to evaluate potential
liability. At the fairness hearing, the parties provided helpful details about the
negotiation process. This factor favors settlement approval.
f.
Prospects of the Case
This case involved substantial risk to Plaintiffs. To prevail on their wage and
hour claims, Plaintiffs would have had to prove that they were employees and not
independent contractors, and, without the benefit of records would have had to
demonstrate reimbursable out-of-pocket expenses. Thus, there was a very real
possibility that Plaintiffs might have recovered nothing in this case. Equally daunting
6
was the prospective expense and duration of the litigation. At the time the case
settled, the litigation already had spanned almost one and a half years. Almost six
years will have passed since the employees should have begun receiving
reimbursement for their out of pocket expenses as drivers. It is reasonable to believe
that another two years easily could transpire before this litigation is finally resolved,
considering time for trial, potential post-trial motions, and appeal of the issues raised.
I find that the settlement accounts for the risks and likely costs associated with
continued litigation. This factor weighs in favor of approval.
2.
FLSA
In order to approve a FLSA settlement, I must determine that it is “a fair and
reasonable resolution of a bona fide dispute over FLSA provisions.” Lynn’s Food
Stores, Inc., 679 F.2d at 1355. My analysis approving of the class action settlement
supports approval of the FLSA settlement as well.
3.
Service and Incentive Payments
Plaintiffs’ attorney has proposed that lead Plaintiff Robert Curtis receive
$6000 to reflect his time and efforts in the case, including having to take two unpaid
days from work to attend the mediation as well as numerous meetings and phone
calls. Plaintiffs’ attorney also proposes to award opt-in Plaintiff Robert Lowell, who
served as a de facto named plaintiff, $4000 for his services, which were similar in
kind to Curtis. Plaintiffs’ attorney further proposes to award Benjamin Krauter
$2000 for his services as a named plaintiff. Although Mr. Krauter did not attend
either of the two days of the mediation and was less active than Mr. Curtis and Mr.
Lowell, he did agree to serve as a named plaintiff. In addition, counsel proposes that
7
each of the 21 opt-ins receive $1000 in recognition of the fact that they came forward
when others did not, and most answered written discovery. I find these service
payments to Mr. Curtis, Mr. Lowell, Mr. Krauter and the 21 opt-ins are appropriate
in light of the time they devoted to the case and the significant role they played in
motivating settlement.
II.
Attorneys’ Fees
Under Rule 23(h), “[i]n a certified class action, the court may award reasonable
attorney’s fees and nontaxable costs that are authorized by law or by the parties’
agreement.”1 The First Circuit recognizes two general methods for awarding
attorneys’ fees in class actions: (1) the “percentage of fund” method; and (2) the
“lodestar” method. Plaintiffs’ counsel requests that I use the percentage of fund
method to award the attorneys’ fees in this case.
Plaintiffs’ counsel has requested one third of the $450,000 settlement amount
in attorneys’ fees or $150,000 and $8,586.18 in costs. Plaintiffs’ counsel has indicated
that the legal services agreements with the class representatives and nine of the optins provide for a contingent fee of one-third of the recovery. May 11, 2016 Young Decl.
¶ 16. A one-third contingent fee is common in wage-and-hour cases. Scovil, 2014 WL
1057079, at *5. I note that the costs do not include the expenses for sending out the
amended notice and individual settlement calculations. Those costs are being paid
by Attorney Young’s firm as a result of an error on his part in not including 42 of the
1
Attorneys’ fees are also available through the FLSA. See 29 U.S.C. § 216(b).
8
101 class members in individual settlement calculations or the first notice of
settlement in this case. May 11, 2016 Young Decl. ¶ 2.
In the almost two years since this case was filed, Plaintiffs’ counsel has drafted
the original complaint, conferred with Plaintiffs to gather facts and evidence, drafted
and served discovery on BAU, performed damage calculations, and prepared for and
engaged in settlement discussions. The fee petitions indicate that Plaintiffs’ attorneys
lodestar is approximately $278,000. May 11, 2016 Young Decl. ¶ 15. Plaintiffs’
counsel performed this work on a contingent fee basis, assuming the risk that there
would be no recovery and therefore no compensation. I find that Plaintiffs’ counsels
request for attorneys’ fees and costs are reasonable.
III.
Class Action Fairness Act
Under the Class Action Fairness Act (“CAFA”), no later than 10 days after a
proposed settlement of a class action is filed in court, the defendant is required to
serve notice of the proposed settlement with the appropriate federal and state
officials. See 28 U.S.C. § 1715(b). A court may not finally approve a settlement until
90 days after the delivery of such notice. See 28 U.S.C. § 1715(d).
Defense counsel have advised me that the appropriate state and federal
officials have been notified. Defendants’ Notice of Compliance with CAFA ¶¶ 3-4
(ECF No. 89).
The parties have now reported that they have not received any
objections to from state or federal officials. Defendants’ Notice of Compliance with
CAFA ¶ 5. Final approval is now appropriate because more than 90 days have passed
since defense counsel sent the appropriate documents to the federal and state
officials. See 28 U.S.C. § 1715(d).
9
CONCLUSION
For the reasons stated above, I APPROVE final settlement of all claims in
this matter and GRANT Plaintiffs’ counsels’ motion for attorneys’ fees and costs
(ECF Nos. 83 and 84).
SO ORDERED.
/s/ Nancy Torresen
United States Chief District Judge
Dated this 31st day of May, 2016.
10
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?