Hill et al v. Hill Brothers Construction Company, Inc. et al

Filing 289

FINAL JUDGMENT AND ORDER granting 275 Motion for Final Approval of Class Action Settlement and Certification of Settlement Class. Signed by District Judge Sharion Aycock on 1/3/2018. (adm)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF MISSISSIPPI
OXFORD DIVISION
ROBERT K. HILL, et al.
V.

PLAINTIFFS
CIVIL ACTION NO.: 3:14-CV-213-SA-RP

HILL BROTHERS CONSTRUCTION
COMPANY, INC, et al.
FINAL JUDGMENT AND ORDER
APPROVING THE CLASS SETTLEMENT

DEFENDANT

This matter arises on Plaintiffs’ Unopposed Motion for Final Approval of Class Action
Settlement and Certification of the Settlement Class [275]. Having considered the Settlement
Agreement, Plaintiffs’ Unopposed Motion and Memorandum in Support of Final Approval of
Class Action Settlement and Certification of Settlement Class and all other evidence submitted,
the Court finds as follows.
Facts and Procedural History
Plaintiffs originally filed a two-count complaint on September 29, 2014 for Plan-wide relief
pursuant to Section 502(a) of the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C.
§1132(a), on behalf of a class consisting of all current and former participants in the ESOP Plan.
In Plaintiffs’ Count I, the Plaintiffs alleged that Defendants negligently breached their fiduciary
duties to Plaintiffs by failing to manage prudently and loyally the Plan’s investments in HBC’s
securities and by failing to provide complete and accurate records and information to Plan
participants regarding the Company’s financial condition and the prudence of investing in
Company stock. In Count II, the Plaintiffs alleged that Defendants breached their fiduciary duties
to Plaintiffs, the Plan, and the putative class, by failing to monitor adequately other persons to
whom management/administration of Plan assets was delegated. On July 15, 2015, the Plaintiffs
filed their Third Amended Complaint, adding Count III, and alleging that Defendants breached

their fiduciary duties to the Plaintiffs, the Plan, and the putative class, by theft of corporate
opportunity - specifically with regard to the Defendants’ relationships with Hill Brothers Leasing
and Xcavators, Inc.
After extensive discovery and motion practice, the Parties mediated this matter. The Parties
finalized an agreement, which culminated in the Memorandum of Settlement Agreement on
August 8, 2016, followed by the execution of a Settlement Agreement on March 23, 2017.
On May 3, 2017, the Parties attended a hearing for preliminary approval of the proposed
settlement and class certification. On May 9, 2017, this Court entered an order [269] granting
preliminary approval (the “Preliminary Approval Order”) of the settlement between the parties.
The Court further approved the class notice.
Notice was then sent to all class members with additional mailings to members whose mail
was returned. No objections were filed by any class member from the time Notice commenced to
the date of this order, and only one individual class member chose to opt out. On July 26, 2017,
counsel for the Class, Diandra S. Debrosse Zimmermann, filed an affidavit detailing Class
counsel’s efforts in locating and notifying all class members [274], in Exhibit 3.
Thereafter, Plaintiffs filed their unopposed Motion for Final Approval of Class Action
Settlement and Certification of the Settlement Class. On August 15, 2017, the Court held a fairness
hearing (the “Fairness Hearing”), for which members of the Settlement Class had been given
appropriate notice and were invited, including those with any objections. An opportunity to be
heard was given to all persons requesting to be heard in accordance with the Preliminary Approval
Order. No persons other than the Parties appeared in Court seeking to address the settlement
pursuant to the Settlement Agreement. Therefore, the Court grants the Motion for Final Approval
of Class Action Settlement and Certification of the Settlement Class for the reasons that follow.
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Standard
Regarding the class-action settlement approval, a district court has discretion to approve
such a settlement under Rule 23(e) if the settlement is fair, adequate, and reasonable. Ayers v.
Thompson, 358 F.3d 356, 368 (5th Cir. 2004) (citing Parker v. Anderson, 667 F.2d 1204, 1209
(5th Cir. 1982)). In assessing whether the settlement is reasonable, the Fifth Circuit has set forth
six key points, or “Reed factors,” which should be considered. These factors are: (1) the existence
of fraud or collusion behind the settlement; (2) the complexity, expense, and likely duration of the
litigation; (3) the stage of the proceedings and the amount of discovery completed; (4) the
probability of plaintiffs’ success on the merits; (5) the range of possible recovery; and (6) the
opinions of class counsel, class representatives and absent class members.” Reed v. General
Motors Corp., 703 F.2d 170, 172 (5th Cir. 1983).
As to the final certification of the class, Federal Rule of Civil Procedure 23 generally
applies with full force even when certification is solely for settlement purposes. See Amchem
Prods. Inc. v. Windsor, 521 U.S. 591, 117 S. Ct. 2231, 138 L. Ed. 2d 689 (1997). Of course, in the
settlement context the district court need not consider “whether the case, if tried, would present
intractable management problems, for the proposal is that there be no trial.” Id. at 620, 117 S. Ct.
2213. However, the court’s consideration of the other factors in Rule 23 is of “vital importance,”
and demands “undiluted, even heightened” attention in the settlement context. Amchem Prods.,
Inc., 521 U.S. at 620, 117 S. Ct. 2231. The familiar Rule 23 requirements are numerosity,
commonality, typicality, and adequacy of representation.
Analysis
I.

Class Action Settlement Approval

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In order to approve the settlement the Court must ensure that all pertinent Rule 23 requirements
have been met. Generally, courts use the aforementioned Reed factors to ensure that the settlement
is fair, adequate and reasonable. Furthermore, the Court must also direct notice in a reasonable
manner to all class members who would be bound by the settlement.
a. The Reed Factors
An analysis of the Reed factors establishes that this settlement is fair, reasonable, and adequate.
First, there are no allegations involving fraud or collusion in the settlement of this action. A court
may presume that no fraud or collusion occurred between counsel, in the absence of any evidence
to the contrary. Ayers, 358 F.3d at 369; Liger v. New Orleans Hornets NBA L.P., No. 05-1969,
2009 U.S. Dist. LEXIS 85733, at *10 (E.D. La. Aug. 27, 2009); 4 NEWBERG ON CLASS ACTIONS
§ 11.51 (4th ed.). Additionally, the Parties have vigorously prosecuted this action, and settled after
two negotiation and mediation efforts. The Parties mediated the matter with the Honorable William
Larry Latham, an experienced trial attorney and well-respected mediator. In addition, during the
mediation, more than ten (10) representatives of the Class were present, and were involved in every
aspect of the settlement negotiations.
Second, there is no question that this matter is complex. Counts I and II of Plaintiffs’ Third
Amended Complaint were dismissed in this matter, but the remaining claim involving usurpation
of corporate opportunity involves a detailed and complex assessment of various business and
individual ties, and two external companies to this litigation. According to class Counsel, Class
representatives and Defendants have dedicated dozens of hours to this litigation. Furthermore,
Class Counsel attests that it has collectively expended more than 1,500 hours in litigating this
matter, and more than $30,000 in costs.

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Third, this matter has progressed extensively, with each party participating in discovery.
Furthermore, all of the parties agree that Class Counsel is more than able to determine the
settlement’s adequacy in relation to the probability of success on the merits were this litigation to
continue, given the dismissal of Plaintiffs’ first two counts, as well as discovery related to the
remaining count. See Ayers, supra., 358 F.3d at 369 (upholding settlement where “the parties and
the district court possess ample information with which to evaluate the merits of the competing
positions”). Thus, examination of the state of the proceedings weighs in favor of upholding the
settlement.
The fourth Reed factor, the probability of success on the merits, is telling in this case. Should
this case proceed to trial, Plaintiffs would have to establish a usurpation of corporate opportunity
by Defendants, by and through their relationships with Xcavators, Inc. Establishing this claim
would require an in depth analysis of financial entanglements between the parties. Considering the
Court’s dismissal of Plaintiffs’ two other claims, Plaintiffs would run the risk of being unable to
establish said usurpation, potentially resulting in zero award to the Plaintiffs. In light of this
significant risk, the Court finds that the fourth factor weighs in favor of settlement.
Fifth, Plaintiffs’ range of possible recovery is difficult to ascertain, even after discovery and
extensive settlement conferences presided over by the magistrate judge. However, the parties agree
that the settlement amount is fairly within the range of possible recovery. Had trial or further
motions practice resulted in a loss for Plaintiffs, they would have recovered nothing.
Finally, the opinions of class counsel, class representatives and absent class members must be
considered in the analysis of whether this proposed settlement is fair, reasonable and adequate. In
the case at bar, all parties agree that the settlement is fair, adequate, and reasonable. The trial court
is entitled to rely upon the judgment of experienced counsel for the parties. Cotton, 559 F.2d at
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1330 (citing Flinn v. FMC Corporation, 528 F.2d 1169 (4th Cir. 1975). “Indeed, the trial judge,
absent fraud, collusion, or the like, should be hesitant to substitute its own judgment for that of
counsel.” Id.
The Court notes that Plaintiffs are represented by counsel experienced in complex class action
litigation, complex litigation, and in class actions relating to ERISA specifically, as set forth in
their declarations and attached as exhibits to their motion, and all agree that the resolution of this
case in this manner is fair and reasonable. Additionally, all of the Named Plaintiffs representing
the Class are in favor of approval of the Settlement. Considering the foregoing Reed factors, the
Court approves this Class Action Settlement.
b. Sufficiency of Class Notice
The class notice fully complied with the requirements of Federal Rule of Civil Procedure
23(c)(2)(B) and due process, constituted the best notice practicable under the circumstances, and
was due and sufficient notice to all persons entitled to notice of the settlement of the Litigation.
The Court has approved the forms of notice to the Settlement Class. Furthermore, counselor
William B. Raiford has affirmed to the Court that Notice intended to comply with the Class Action
Fairness Act (CAFA), 28 U.S.C. Section 1711, et seq. was sent to the appropriate officials over
ninety days before this order of approval. Therefore, the Court may finally approve the settlement
in accordance with CAFA after briefly addressing the procedure used for notifying potential
plaintiffs, as taken from the record.
c. Adequacy of Notice Procedure
On May 26, 2017, the ERISA Administrators for the Hill ESOP, Paul Benefits Law
Corporation (“Plan Administrators”) gave Settlement Class counsel an account balance statement
in PDF format with the names of the potential Settlement Class members and a separate Excel
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format document with the addresses of the potential Settlement Class members. Settlement Class
counsel ultimately created one (1) Excel format document with all of the names and addresses of
the potential Settlement Class members, which totaled 750 people. Thereafter, the Excel format
document with all of the names and addresses of the potential Settlement Class members, which
totaled 750 people, was sent to TransAmerica.
Counselors attest that on June 8, 2017, TransAmerica printed and mailed the Notice to all
750 members of the Settlement Class. On that same day, Settlement Class counsel facilitated a
website for members of the Settlement Class. The website contains all information required by the
preliminary approval order, including a homepage with the legal rights and options of the members
of the Settlement Class; a Court documents page; a notice page which contains a downloadable
version of the Long Form Notice; a change of address page; and a “Contact Us” page.
According to the record, Settlement Class counsel swore that it also caused the Short Form
Notice of Class Action Settlement to be published in the Southern Sentinel, a weekly newspaper
in Ripley, Tippah County, Mississippi. This newspaper was the only newspaper in the County in
which the Defendants’ company was located, and where a large portion of the members of the
Settlement Class reside/resided. Notice ran in the Southern Sentinel on June 7, 14, and 21, 2017.
Settlement Class counsel also created a toll free number, 1-800-345-0837, available to putative
members of the Settlement Class who could call concerning their questions.
The Court finds the Notice distribution and procedure to be adequate.
d. Notice Success
As of July 26, 2017, one hundred and fifty-eight (158) Notices (of the 750 originally mailed) were
returned by the United States Postal Service (“USPS”) as undeliverable. From June 13, 2017
through July 26, 2017, Settlement Class counsel searched LexisAdvance, found new addresses for
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the returned mail, and re-sent Notices to one hundred and forty-two (142) members of the
Settlement Class whose original Notices had been returned by the USPS. Settlement Class counsel
was unable to re-send notices to sixteen (16) of the one hundred and fifty-eight (158) returned
letters as a result of the following circumstances: five (5) members of the Settlement Class are
deceased, and eleven (11) members of the Settlement Class have multiple names linked to their
identified social security numbers. Settlement Class counsel received eighteen (18) letters that
were returned twice by USPS as undeliverable. Settlement Class counsel was able to re-send the
Notice a third time to eight (8) of these eighteen (18) members of the Settlement Class. The
remaining ten (10) individuals had no additional contact information listed on LexisAdvance (i.e.,
phone numbers, email addresses, etc.).
These forms of class notice fully comply with the requirements of Rule 23(c)(2)(B) and
due process, constitute the best notice practicable under the circumstances, and are due and
sufficient notice to all persons entitled to notice of the settlement of this lawsuit. After completion
of the notice period, Settlement Class Members filed no objections. Only one individual validly
requested exclusion from the Settlement Class and is hereby excluded from the Settlement Class
[274].
II.

Class Certification
The Court previously addressed the commonality, typicality and adequacy of class

representation in its Order on Plaintiffs’ Unopposed Preliminary Motion for Approval of Class
Action Settlement and Preliminary Certification of Settlement Class [269]. See FED. R. CIV. P.
23(a). However, the Court now grants final certification of the class for settlement purposes, and
reviews its decision for doing so as follows.

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This case was originally filed by Plaintiffs on September 29, 2014 for Plan-wide relief
pursuant to Section 502(a) of the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C.
§1132(a), on behalf of a class consisting of all current and former participants in the Hill Brothers
Construction Company Inc. Employee Stock Ownership and 401(K) Plan (the “Plan”). The Court
finds that certification of the Settlement Class solely for purposes of this Settlement is appropriate
in that (a) the Settlement Class is so numerous that joinder of all members is impracticable; (b)
there are questions of law and fact common to the Settlement Class that predominate over any
questions affecting only individual Settlement Class Members; (c) Plaintiffs’ claims are typical of
the claims of the Settlement Class; (d) Plaintiffs will fairly and adequately protect the interests of
the Settlement Class; (e) Matthew Y. Harris, Diandra Debrosse Zimmermann, Edgar C. Gentle,
III, L.N. Chandler Rogers and Sterling DeRamus, (collectively referred to herein as “Class
Counsel”) are adequate Settlement Class counsel; and (f) a class action is the superior method for
the fair and efficient adjudication of this controversy.
Therefore, as the pertinent Rule 23 requirements have been met, the previously certified
class set forth below is now finally certified, solely for purposes of this Settlement, pursuant to
Federal Rule of Civil Procedure 23(a) and (b)(3):
All participants, beneficiaries, and alternate payees of the ESOP reflected on the
records of the ESOP as of August 15, 2013.
Furthermore, Robert K. Hill, Donald Byther, Sandy Byther, Keith Clark, Samuel Copeland,
B.T. Erve, Percy Evans, George Flakes, Scott Goolsby, Sheila Kelly, Paul Leonard, Fred Smith,
Dewayne Toliver, Ulysses Wiley, and Warlfoyd Winters are designated as representatives of the
Settlement Class (the “Class Representatives”). Matthew Y. Harris, Diandra Debrosse
Zimmermann, Edgar C. Gentle, III, L.N. Chandler Rogers and Sterling DeRamus and their
respective law firms are appointed as Settlement Class counsel.
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III.

Class Compensation

In accordance with the terms of the Settlement Agreement, Defendants shall pay $850,000.00
for the Settlement Amount. This tender by the Defendants is inclusive of all claims, including
payment of notice costs, attorneys’ fees, costs and expenses, incentive awards, and all other items
of liability. This is a full-distribution non-reversionary settlement to be paid into the Plan after the
payment of notice costs, attorneys’ fees, costs and expenses. No sums will revert to Defendants,
and no Defendants will benefit from this settlement.
Members of the Settlement Class shall benefit immediately from the resolution of this matter,
as the remaining portion of the Settlement Amount, after attorneys’ fees, costs, expenses, and costs
of notice shall be paid into the Plan. Upon payment into the Plan, the share of the Settlement
Amount, after attorneys’ fees, costs, and expenses, to which a member of the Class is entitled will
be based upon the records and terms of the Plan as of August 15, 2013. Finally, the Settlement
Amount shall be distributed in accordance with the parties’ Agreement, this Order, and any further
order of the Court.
Furthermore, in accordance with the Court’s Order Granting Attorneys’ Fees, Expenses and
Incentive Payments, the Court grants Settlement Class counsel’s request for an incentive award to
the Class Representatives and awards $2,500.00 to each class representative, to include Robert K.
Hill, Donald Byther, Sandy Byther, Keith Clark, Samuel Copeland, B.T. Erve, Percy Evans,
George Flakes, Scott Goolsby, Sheila Kelly, Paul Leonard, Fred Smith, Dewayne Toliver, Ulysses
Wiley, and Warlfoyd Winters. The Court finds that this payment is justified by the Class
Representatives’ service to the Settlement Class. This payment shall be made from the Settlement
Amount thirty (30) days after the “Effective Date,” as defined by the Settlement Agreement (within
thirty-five (35) days of the date of final judgment). The Defendants are ordered to deduct this
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award of incentives to the Class Representatives from the Settlement Amount and pay said sum to
the law firm of Zarzaur Mujumdar & Debrosse – Trial Lawyers.
Defendants’ counsel shall provide to Settlement Class counsel a final accounting detailing the
distribution of the Settlement Amount by the Plan Administrators by September 3rd, 2018, and
Settlement Counsel shall file a copy of the same with the Court by September 10, 2018. The Plan
Administrators shall make all distributions to the Settlement Class Members pursuant to the terms
of the Settlement Agreement and this Court’s orders.
This action is hereby dismissed with prejudice pursuant to Fed. R. Civ. P. 41. However, with
the consent of the Parties, the Court retains jurisdiction solely for the purpose of enforcing the
terms of the Settlement and of this Final Judgment and Order.
Conclusion
Pursuant to Federal Rule of Civil Procedure 23(a) and (b)(3), this class is finally certified
solely for purposes of this Settlement as the following:
All participants, beneficiaries, and alternate payees of the ESOP reflected on the
records of the ESOP as of August 15, 2013.
Furthermore, this Court grants final approval of the Settlement Agreement, including but not
limited to, the Releases in the Settlement Agreement, and finds that it is in all respects fair,
reasonable, and in the best interest of the Settlement Class. Therefore, all members of the
Settlement Class who have not opted out are bound by this Order Finally Approving the
Settlement and the Settlement Agreement. Thus, the Plaintiffs’ Motion [275] is GRANTED.
SO ORDERED this the 3rd day of January, 2018.
/s/ Sharion Aycock
UNITED STATES DISTRICT JUDGE

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