Shaver v. Gills Eldersburg, Inc. et al

Filing 89

MEMORANDUM AND ORDER granting 85 Motion for Preliminary Approval of the Settlement and Certification of the Settlement Class; setting final fairness hearing. Signed by Magistrate Judge J. Mark Coulson on 4/25/2016. (nd2s, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
KRISTINA SHAVER, et al,

*

Plaintiffs,

*

v.

*

GILLS ELDERSBURG, INC., et al,

*

Defendants.

Civil Case No. 14-3977-JMC

*
*******
MEMORANDUM AND ORDER

This case involves wage-and-hour claims brought by Plaintiffs, on behalf of themselves
and all others similarly situated, against Defendants, their former employers, who at times
relevant to this action owned or operated two Denny’s franchise restaurants in Westminster and
Eldersburg, Maryland. Plaintiffs assert a collective action claim under the Fair Labor Standards
Act (“FLSA”), 29 U.S.C. § 216(b) and class action claims under the Maryland Wage and Hour
Law (“MWHL”), the Maryland Wage Payment and Collection Law (“MWPCL”), Md. Code
Ann., Lab. & Empl. §§ 3-427, 3-507, and Federal Rule of Civil Procedure 23. (Am. Compl.,
ECF No. 39.) In support of Plaintiffs’ claims, they allege that Defendants required employees to
work off the clock and shaved employees’ recorded hours without proper compensation, such
that employees did not receive minimum wage or overtime pay. The action was initiated by
Plaintiff Kristina Shaver on December 19, 2014, and Plaintiffs Marisa Furr and Ryan Lane later
opted-in. (ECF No. 1, 24, 25.) On October 6, 2015, this Court conditionally certified the FLSA
collective as encompassing all hourly employees of Defendants Gurdip Gill, Gills Eldersburg,
Inc., and Gills Westminster, Inc., from January 18, 2013 to that date. (ECF No. 60.) On that
same date, the parties reached a settlement agreement to resolve Plaintiffs’ FLSA and Maryland

law claims on a class-wide basis. Presently pending before the Court is the parties’ Joint Motion
for Preliminary Approval of the Settlement and Certification of the Settlement Class. (ECF No.
85.)
The Settlement Agreement executed by the parties requires Defendants to pay up to
$300,000.00, to be divided as follows: (1) attorney’s fees and costs to Settlement Class Counsel,
in an amount to be approved by the Court before the Final Fairness Hearing, but not to exceed
$90,000.00; (2) incentive awards to the Class Representatives, in the amount of $8,500.00 to
named Plaintiff Kristina Shaver, and $2,000.00 each to opt-in Plaintiffs Marisa Furr and Ryan
Lane; (3) an administration fee to the Claims Administrator in the amount of $22,500.00 for
administrating the settlement; and (4) distribution to the settlement class members of at least
$175,000.00 (exclusive of the incentive awards outlined above). The Settlement Agreement
provides for the distribution to the settlement class members based on a formula which multiplies
a “settlement ratio” (.08) by the applicable minimum wage ($7.25/hour) by an “enhancement
multiplier” (1.25). (Settlement Agreement § 10(m), Joint Mot. Ex. E, ECF No. 85-6.)
The payment structure reflects the hybrid nature of Plaintiffs’ Amended Complaint and
the different procedures governing Rule 23 class actions and FLSA collective actions. The
agreement anticipates that a potential settlement class member may submit a claim form by
which that member will indicate that he wishes to fully participate in the settlement and release
federal and state claims against Defendants. (Settlement Agreement §10(c)-(d); Claim Form,
Joint Mot. Ex. B, ECF No. 85-3.) By submitting the claim form, a member both opts-in to the
FLSA settlement collective and declines to opt-out of the Rule 23 state law class. In the
alternative, a potential settlement class member may opt-out of the settlement by submitting an
opt-out form. (Settlement Agreement § 10(e); Opt-Out Form, Joint Mot. Ex. C, ECF No. 85-4.)

2

By submitting the opt-out form, a potential member receives no payment, is not bound by the
settlement, and does not release state or federal wage-and-hour claims against Defendants. In the
event that a potential class member neither opts-in to the FLSA collective by submitting the
claim form, nor opts-out of the Rule 23 state law class by submitting the opt-out form, that
member will receive a portion of the settlement distribution he would be entitled to under the
distribution formula. (Settlement Agreement § 10(m)(E).) By virtue of his failure to opt-out of
the Rule 23 state law class, a member in this category is deemed only to release his state law
wage-and-hour claims against Defendants.
Approval of a Rule 23 class action settlement generally involves a two-step process. At
the first stage, the terms of the proposed settlement must be reviewed in order to issue a
preliminary fairness evaluation. Preliminary approval should be granted when a proposed
settlement is “within the range of possible approval,” subject to further consideration after a final
fairness hearing at which interested parties have had an opportunity to object. Benway v.
Resource Real Estate Servs., LLC, No. 05-cv-3250-WMN, 2011 WL 1045597, at *4 (D. Md.
Mar. 16, 2011) (citing Horton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 855 F. Supp. 825,
827 (E.D.N.C. 1994)). Where a class-wide settlement is presented for approval prior to class
certification, there must also be a preliminary determination that the proposed settlement class
satisfies the prerequisites set forth in Federal Rule of Civil Procedure 23(a) and at least one of
the subsections of Rule 23(b). Cf. Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 620 (1997)
(explaining that the “dominant concern” of the Rule 23 (a) and (b) safeguards – “whether a
proposed class has sufficient unity so that absent members can fairly be bound by decisions of
class representatives” – persists even where the case is resolved via settlement). The parties
must also be directed to provide notice to the putative class members regarding the terms of the

3

proposed settlement and the date of a final fairness hearing, where arguments and evidence may
be presented in support of, and in opposition to, the settlement. See Fed. R. Civ. P. 23(e). At the
second stage, following the final fairness hearing, final approval will be granted if the parties
establish that a settlement is fair and adequate. See e.g. Whitaker v. Navy Fed. Credit Union, No.
09-cv-2288-RDB, 2010 WL 3928616, at *2 (D. Md. Oct. 4, 2010) (citing In re Jiffy Lube Sec.
Litig., 927 F.2d 155, 158-59 (4th Cir. 1991)).
A similar process is involved when parties seek approval of a settlement agreement that
purports to resolve FLSA claims on behalf of a yet-to-be-certified collective action class. 1 First,
an initial inquiry must be undertaken to determine whether the named plaintiff is similarly
situated to the putative class members so that the class may be conditionally certified and so that
notice may be sent to the putative class members. See e.g., Edelen v. Am. Residential Servs.,
LLC, No. 11-cv-2744-DKC, 2013 WL 3816986, at *2 (D. Md. Jul. 22, 2013) (explaining that the
FLSA class was conditionally certified in the preliminary approval order). After putative class
members have had the opportunity to object, it must be determined whether final certification of
the class is warranted, and whether the settlement presents a fair and reasonable compromise of a
bona fide dispute among the parties under the FLSA. See Leigh v. Bottling Grp., LLC, No. 10cv-0218-DKC, 2011 WL 1231161, at *4 (D. Md. Mar. 29, 2011); cf. Lynn’s Food Stores, Inc. v.
United States, 679 F.2d 1350, 1354 (11th Cir. 1982) (setting forth the framework for approval of
FLSA settlement agreements).
1

Because Judge Hollander previously conditionally certified an FLSA collective in this case, it is unclear whether I
need to take this step. However, the collective certified by Judge Hollander encompassed a shorter time frame than
the collective for which Defendants now seek approval, so I will briefly address conditional certification below. In
doing so, I note that the shorter time frame of the collective certified by Judge Hollander was apparently due to
concerns over the fact that the motion for conditional certification was filed prior to the joinder of two additional
Defendants, such that those Defendants were not subject to the motion and had not opposed it. (See ECF Nos. 57,
59.) By contrast, all Defendants were parties to the Settlement Agreement and join in the instant motion for
approval, so the issues confronted by Judge Hollander at that stage no longer impede conditional certification of the
FLSA collective during the requested time frame.

4

Upon consideration of the parties’ joint motion and a thorough review of the Settlement
Agreement, and subject to further consideration at the hearing described in paragraph 11 below,
it is this 25th day of April, 2016 ORDERED as follows:
1.

The parties’ Joint Motion for Preliminary Approval of the Settlement and

Certification of the Settlement Class is GRANTED;
2.

Subject to further consideration at the Final Fairness Hearing, the terms of the

Settlement Agreement, attached as Exhibit E to the parties’ joint motion (ECF No. 85-6), are
preliminarily approved (a) as fair, reasonable, and adequate within the meaning of Federal Rule
of Civil Procedure 23(e); and (b) as a fair and reasonable compromise of a bona fide dispute
between the parties under the FLSA.
3.
Fairness

For settlement purposes only, and subject to further consideration at the Final
Hearing,

the

following

class

of

individuals

(“the

Class

Members”)

is

CONDITIONALLY CERTIFIED both (a) as a class action pursuant to Federal Rule of Civil
Procedure 23(a) and 23(b)(3) (“the Rule 23 Class”); and (b) as a collective action pursuant to 29
U.S.C. § 216(b) (“the Collective Class”):
Hourly paid workers (including servers, cooks, hosts, dishwashers, and hourly
supervisors) employed by Defendants at Denny’s Westminster or Denny’s
Eldersburg between December 19, 2011 and December 19, 2014.
5.

The Court preliminarily finds that the Rule 23 Class meets the prerequisites for a

class action under Federal Rule of Civil Procedure 23(a) and (b)(3) insofar as:
a.

The number of class members – approximately 400 – is so numerous that joinder
of all members thereof is impracticable;

b.

There are questions of law and fact common to the Rule 23 Class, including but
not limited to the question of whether Defendants’ alleged practice of requiring

5

employees to work off the clock and shaving employees’ recorded hours without
proper compensation between December 19, 2011 and December 19, 2014
violated the MWHL and the MWPCL;
c.

Plaintiffs’ claims are typical of the claims of the Rule 23 Class they seek to
represent because their claims arise from the same factual and legal circumstances
that form the bases of those claims – namely Defendants’ alleged practice of
requiring employees to work off the clock and shaving employees’ recorded hours
without proper compensation;

d.

Plaintiffs and Class Counsel have and will fairly and adequately represent the
interests of the Rule 23 Class because Plaintiffs’ interests are not at odds with
those of the Class Members and because Class Counsel are qualified,
experienced, and competent (see ECF Nos. 85-8, 85-9, 85-10);

e.

The questions of law or fact common to the Rule 23 Class predominate over any
factual or legal variations among the Class Members, including any variation in
the number of uncompensated hours worked by Class Members between
December 19, 2011 and December 19, 2014;

f.

Class adjudication of Class Members’ MWHL and MWCPL claims is superior to
individual adjudication because it will conserve judicial resources and is more
efficient for Class Members, whose MWHL and MWCPL claims are relatively
small; and because, to Plaintiffs’ knowledge, no Class Member has initiated other
litigation challenging Defendants’ method of calculating pay for hourly
employees of Denny’s Eldersburg or Denny’s Westminster during the period
between December 19, 2011 and December 19, 2014;

6

5.

The Court preliminarily finds that the Collective Class meets the prerequisites for

a collective action under 29 U.S.C. § 216(b) because the Class Members are similarly situated by
virtue of Defendants’ alleged practice of requiring employees to work off the clock and shaving
employees’ recorded hours without proper compensation at Denny’s Eldersburg and Denny’s
Westminster during the period between December 19, 2011 and December 19, 2014;
6.

Plaintiffs Kristina Shaver, Marisa Furr, and Ryan Lane are APPOINTED to serve

as the Class Representatives of both the Rule 23 Class and the Collective Class;
7.

Jason T. Brown and Zijian “Coco” Guan, of JTB Law Group, and James E.

Rubin, of Rubin Employment Law Firm, P.C., are APPOINTED to serve as Class Counsel for
the Rule 23 Class pursuant to Federal Rule of Civil Procedure 23(g) and for the Collective Class;
8.

Kurtzman Carson Consultants (“KCC”) is APPOINTED to serve as the Claims

Administrator for the Settlement Agreement;
9.

The Notice, attached to the Joint Motion as Exhibit A, and the notice protocols set

forth in Section 10 of the Settlement Agreement are APPROVED pursuant to Federal Rule of
Civil Procedure 23(c)(2)(B), and the parties are directed to strictly follow the agreed upon
protocols;
10.

Class Members who wish to object to the Settlement Agreement must follow the

procedures described in Section VII of the Notice, and Class Members who wish to exclude
themselves from the Rule 23 Class must follow the procedures described in Section VIII of the
Notice;
11.

Pursuant to Federal Rule of Civil Procedure 23(e), a Final Fairness Hearing

addressing final approval of the Settlement Agreement – which shall include an assessment of
Class Counsel’s requested attorney’s fees and expenses and of the incentive fees requested on

7

behalf of the Class Representatives – shall be held before the undersigned on August 4, 2016 at
10:00 a.m. at the United States District Courthouse, 101 West Lombard Street, Baltimore,
Maryland 21201;
12.

Defendants are ordered to comply with the notice requirements of the Class

Action Fairness Act of 2005, set forth in 28 U.S.C. § 1715(b);
13.

At least fourteen days prior to the Final Fairness Hearing, Class Counsel shall file

all papers in support of (a) final approval of the Settlement Agreement as fair, reasonable and
adequate within the meaning of Federal Rule of Civil Procedure 23(e); (b) final approval of the
Settlement Agreement as a reasonable and fair compromise of a bona fide dispute between the
parties under the FLSA; (c) final certification of the Rule 23 Class; (d) final certification of the
Collective Class; (e) the attorney’s fees and expenses requested by Class Counsel; and (f) the
incentive fees requested on behalf of the Class Representatives;
14.

All proceedings in this action are hereby stayed pending the Final Fairness

Hearing; and
15.

The Clerk will transmit copies of this Memorandum and Order to counsel for the

parties.

Dated April 25, 2016

/s/
J. Mark Coulson
United States Magistrate Judge

8