ATIS v. FREEDOM MORTGAGE CORPORATION et al

Filing 81

OPINION. Signed by Judge Robert B. Kugler on 11/6/2018. (rss, )

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NOT FOR PUBLICATION
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
CAMDEN VICINAGE
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DAVID ATIS, et al., on behalf of himself and
those similarly situated
Plaintiffs,
v.
FREEDOM MORTGAGE CORPORATION.,
et al.,

Civil No. 15-03424 (RBK/JS)
OPINION

Defendants.
KUGLER, United States District Judge:
This matter is before the Court on Plaintiffs’ unopposed motion for Preliminary Approval
of Class Settlement and Provisional Certification of Settlement Class. (Doc. No. 79.) Plaintiffs
seek preliminary approval of the parties’ Joint Stipulation of Settlement and Release Agreement
(Doc. No. 79-3 at Ex. 1-A (“Agreement”)), settling wage and hour class claims under Federal
Rule of Civil Procedure 23 and the Fair Labor Standards Act (“FLSA”). Plaintiffs also seek
appointment of Class Representatives, Class Counsel, a Third Party Administrator, and
preliminary approval of certain fees and costs.

(Doc. No. 79-7.)

Plaintiffs’ motion is

GRANTED IN PART.
I.

BACKGROUND
A. Initial Suit and Litigation History
This matter began with the Complaint (Doc. Nos. 1, 14) of Named Plaintiff David Atis,

who filed a collective and class action lawsuit against Defendant Freedom Mortgage
Corporation, alleging that Defendant violated the FLSA and New Jersey law by failing to pay

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certain overtime. After three years of litigation and several Amended Complaints, the matter
now involves Atis, as well as Kathryn Hertzog and Joseph Koeberlein (collectively,
“Representative Plaintiffs”), who sue on behalf of themselves and others similarly situated.
(Doc. No. 76-1 (Third Am. Compl.)) Atis asserts claims on behalf of himself and New Jersey
plaintiffs; Hertzog on behalf of herself and Pennsylvania plaintiffs; and Koeberlein on behalf of
himself and Indiana plaintiffs. (Id. at ¶¶ 2–4.) Representative Plaintiffs allege that Defendant
violated the FLSA, the New Jersey Wage and Hour Law, the Pennsylvania Minimum Wage Act,
and the Indiana Minimum Wage Law by misclassifying Assistant Vice Presidents of Sales
(“AVPs”) as exempt employees and not paying them overtime for working more than forty hours
in a workweek between May 20, 2013 and June 30, 2016. (Id. at ¶¶ 1–4.)
During the three-year litigation, this Court granted Atis’ motion for conditional collective
action certification under the FLSA and conditionally certified the class on behalf of “[a]ll
persons who are or were employed by Freedom Mortgage Corporation as an Assistant Vice
President of Sales in any of its offices during the three years prior to the date of notice, classified
as exempt, and not paid overtime compensation for each hour worked beyond forty (40) hours in
a workweek.” Atis v. Freedom Mortg. Corp., No. 15-cv-3424, 2016 WL 7440465, at *5 (D.N.J.
Dec. 27, 2016). The Court also granted Atis’ motion for class action certification under Federal
Rule of Civil Procedure 23(b)(3) and certified the class on behalf of “[a]ll persons who are or
were employed by Freedom Mortgage Corporation as an Assistant Vice President of Sales in
New Jersey on or after May 15, 2013, classified as exempt, and not paid overtime compensation
for each hour worked beyond forty (40) hours in a workweek.” Id. at *8; (Doc. Nos. 40, 41, 48.)

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B. Proposed Settlement
On February 13, 2018, the parties reached a settlement during a mediation with Mark B.
Epstein, retired New Jersey Superior Court Judge. (Pls.’ Br. at 3.) Although Defendant denies
liability, Defendant agreed to pay $4,000,000, inclusive of Class Counsel’s fees and costs, any
service payments, payroll taxes, and the Claims Administrator’s fees and expenses, to settle all
claims in this action.

(Agreement at § 2.40.)

Under the Agreement, Defendant will pay

$4,000,000 into an escrow account controlled by the Claims Administrator, who the parties
propose should be Angeion Group, LLC. (Id. at § 3.4.) Angeion will then distribute payments to
members of the Rule 23 and FLSA collective action classes—which the parties now ask to be
provisionally certified for settlement purposes only. (Id. at §§ 4.2, 4.7.)
All settlement class members will receive a flat $1,000 payment plus an additional prorated amount for each week worked.

(Id. at § 4.7(A).)

Opt-in Plaintiffs will receive an

additional amount equal to this amount in liquidated damages. (Id.) Class Counsel’s requested
fee of thirty-three and one-third percent, Angeion’s fees, and service payments will be paid from
the settlement fund. (Id. at § 4.7(A)(1), 4.15(A).) Participating class members will then release
Defendant from “any and all state and federal law-based wage-and-hour claims from May 20,
2013, through the date of entry of the Court’s Preliminary Approval Order.” (Id. at § 5.1(A).)
As discussed below, the Agreement also contains limited confidentiality clauses regarding select
parties’ statements to the press and about settlement negotiations. (Id. at §§ 8.16, 8.17.)
II.

DISCUSSION
The Court must determine whether to (1) preliminarily approve the parties’ proposed

Settlement Agreement; and (2) provisionally certify the proposed settlement classes under

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Federal Rule of Civil Procedure 23 and the FLSA. The Court then addresses Plaintiffs’ other
requests regarding class and third-party appointments and preliminary approval of fees and costs.
Preliminary Approval of the Proposed Settlement Agreement
1. Preliminary Rule 23 Settlement Approval
Review of a proposed class action settlement is a two-step process: (1) preliminary
approval and (2) a subsequent fairness hearing. See Shapiro v. All. MMA, Inc., No. 17-cv-2583,
2018 WL 3158812, at *2 (D.N.J. June 28, 2018). At the first stage, the parties submit the
proposed settlement to the court, which makes a preliminary fairness evaluation. Id. If the
proposed settlement is preliminarily acceptable, the Court directs that notice be provided to all
class members who would be bound by the proposed settlement to afford them an opportunity to
be heard on, object to, and opt out of the settlement. Id.; Fed. R. Civ. P. 23(c)(2), (e)(1), (e)(5).1
“Preliminary approval is not binding, and it is granted unless a proposed settlement is
obviously deficient.” Shapiro, 2018 WL 3158812, at *2; see also Rudel Corp. v. Heartland
Payment Sys., Inc., No. 16-cv-2229, 2017 WL 4422416, at *2 (D.N.J. Oct. 4, 2017) (applying
“obviously deficient” standard to preliminary approval of class action settlement). Generally,
“[w]here the proposed settlement appears to be the product of serious, informed, non-collusive
negotiations, has no obvious deficiencies, does not improperly grant preferential treatment to
class representatives or segments of the class and falls within the range of possible approval,
preliminary approval is granted.” Shapiro, 2018 WL 3158812 (quoting In re Nasdaq Mkt.-

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At the second stage, after class members are notified of the settlement, the Court holds a formal
fairness hearing where class members may object to the settlement. See Shapiro, 2018 WL
3158812, at *3; Fed. R. Civ. P. 23(e). If the Court concludes that the settlement is “fair,
reasonable and adequate,” the settlement is given final approval. Fed. R. Civ. P. 23(e)(2). A
court considering final approval of a class action settlement must evaluate the settlement under
the factors set out in Girsh v. Jepson, 521 F.2d 153, 157 (3d Cir. 1975).

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Makers Antitrust Litig., 176 F.R.D. 99, 102 (S.D.N.Y. 1997)). “A settlement is presumed fair
when it results from “arm’s-length negotiations between experienced, capable counsel after
meaningful discovery.” Rudel Corp., 2017 WL 4422416, at *2 (citations omitted).
The preliminary approval standards are met here. The proposed Agreement appears to be
the result of an arm’s-length negotiation between experienced counsel, reached during mediation
with the Honorable Mark B. Epstein, retired New Jersey Superior Court Judge. See Alves v.
Main, No. 01-cv-789, 2012 WL 6043272, at *22 (D.N.J. Dec. 4, 2012) (“The participation of an
independent mediator in settlement negotiations virtually [e]nsures that the negotiations were
conducted at arm’s length and without collusion between the parties.”) aff’d, 559 F. App’x 151
(3d Cir. 2014).2 By then, the parties had also engaged in sufficient discovery, including the
exchange and expert assisted analysis of “thousands of documents and millions of data points.”
(Pls.’ Br. at 7.) Thus, the parties’ were armed with enough information to assess the strengths
and weaknesses of their case and strike a deal relative to the risks of prolonged litigation.
Moreover, the relief provided to each participating settlement class member includes a
flat payment of $1,000 plus an additional amount of money pro-rated for each week worked
during the Class Period. (Agreement at § 4.7(A).) Opt-in plaintiffs will receive additional
liquidated damages equal to this amount. (Id.) Defendant has agreed to pay up to $4,000,000,
inclusive of counsel fees and costs, any service payments, payroll taxes, and the Claim
Administrator’s fees and expenses. (Id. at § 2.40.) At the preliminary approval stage, the Court
cannot say that this distribution, negotiated at arm’s-length, is obviously deficient. Finally, no

Although “the independence of a mediator is not necessarily assumed when the parties bargain
before a hired mediator,” the Court finds that the sophisticated parties in this case engaged in
sincere negotiations after meaningful discovery. See Shapiro, 2018 WL 3158812, at *2.
2

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evidence suggests that the proposed settlement unreasonably favors Representative Plaintiffs or
any class segment.3 Thus, no “obvious deficiency” exists here.
2. Preliminary FLSA Settlement Approval
The FLSA establishes certain “federal minimum-wage, maximum-hour, and overtime
guarantees” to employees. Genesis Healthcare Corp. v. Symczyk, 569 U.S. 66, 69 (2013).
Employees may bring FLSA claims as collective actions, but unlike a class action under Federal
Rule of Civil Procedure 23, FLSA collective action plaintiffs must opt-in, or consent in writing
filed with the court, to be a party to the action and to be bound by the judgment. See Davis v.
Essex Cty., No. 14-cv-1122, 2015 WL 7761062, at *1 (D.N.J. Dec. 1, 2015). Parties may settle
such claims by seeking district court approval. See Singleton v. First Student Mgmt. LLC, 13-cv1744, 2014 WL 3865853, at *7–8 (D.N.J. Aug. 6, 2014).
Settlement approval has three steps. See Davis, 2015 WL 7761062, at *2; see also
Bredbenner v. Liberty Travel, Inc., No. 09-cv-1248, 2011 WL 1344745, at *18 (D.N.J. Apr. 8,
2011) (noting that a court’s obligation in approving FLSA settlements is “not to act as caretaker
but as gatekeeper” (citation omitted)). First, the Court assesses if the settlement concerns a
“bona fide dispute.” See Davis, 2015 WL 7761062, at *2. Second, the Court assesses if the
settlement is fair and reasonable to the Plaintiff-employees, id, generally by applying the Girsh
factors referenced above. See Dominguez v. Galaxy Recycling Inc., No. 12-cv-7521, 2017 WL
2495406, at *6 (D.N.J. June 9, 2017); Singleton, 2014 WL 3865853, at *8; Brumley v. Camin
Cargo Control, No. 08-cv-1798, 2012 WL 1019337, at *4–5 (D.N.J. Mar. 26, 2012). Finally, the

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The Court emphasizes that any reasonable payments to Representative Plaintiffs and Class
Counsel are subject to approval. See Bernhard v. TD Bank, N.A., No. 08-cv-4392, 2009 WL
3233541, at *2 (D.N.J. Oct. 5, 2009).
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Court must ensure that the settlement does not frustrate the FLSA’s purposes. See Davis, 2015
WL 7761062, at *2. All three requirements are met here.
First, the Agreement resolves a “bona fide dispute” because the parties instituted federal
litigation and engaged in assorted motion practice to prosecute and defend this dispute about
whether Defendant violated wage and hour laws and owed AVPs overtime compensation. See
Bredbenner, 2011 WL 1344745, at *18 (stating that disagreements over “hours worked or
compensation due clearly establishes a bona fide dispute” (citation omitted)); see also id. (“The
institution of a federal court litigation followed [by] aggressive prosecution and strenuous
defense demonstrates the palpable bona fides of this dispute.”).
Second, the Agreement resolves this bona fide dispute in a preliminarily fair and
reasonable manner given the Girsh factors analysis.4 Under Girsh, courts evaluate:
(1) the complexity, expense and likely duration of the litigation; (2) the reaction
of the class to the settlement; (3) stage of the proceedings and the amount of
discovery completed; (4) risks of establishing liability; (5) risks of establishing
damages; (6) risks of maintaining the class action through the trial; (7) ability of
the defendants to withstand a greater judgment; (8) the range of reasonableness of
the settlement fund in light of the best possible recovery; and (9) the range of
reasonableness of the settlement fund to a possible recovery in light of all the
attendant risks of litigation.
Girsh, 521 F.2d at 157. Here, the first Girsh factor supports preliminarily approving the FLSA
collective action settlement because the potential costs of trial, in terms of time, money, and
effort, could be significant absent settlement. However, the second factor—the class’s reaction
to the settlement—is not yet certain, so it is neutral. Still, the third factor supports preliminary
4

While the issue of final settlement approval under Rule 23—to which the Girsh factors also
apply—is not presently before the Court, the Court’s application of the Girsh factors to the
preliminary approval of the parties’ FLSA settlement also supports preliminary approval of the
parties’ class action settlement under Rule 23. See Shapiro, 2018 WL 3158812, at *3 (citing
Singleton, 2014 WL 3865853, at *5 (“While the issue of final settlement approval [under Rule
23] is not presently before the Court, it is important to consider the final approval factors during
this stage so as to identify any potential issues that could impede the offer’s completion.”)).
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approval. As Plaintiff puts it, the parties have engaged in significant litigation efforts for around
three years, reviewed and analyzed “thousands of documents and millions of data points,
engaged expert witnesses to assist with the same, deposed six witnesses, and engaged in
significant motion practice,” including motions for class certification. (Pls.’ Br. at 2.)
The fourth, fifth, and sixth Girsh factors also support preliminary approval. All litigation
has risk, and the parties appear to have considered, before mediation, calculations about
Defendant’s potential litigation exposure and assessed their respective views of the facts and
applicable law. (Pls.’ Br. at 2.) Although the seventh factor—Defendant’s ability to withstand a
greater judgment—is not entirely clear, the eighth and ninth Girsh factors support preliminary
approval. As explained above, the Court cannot say at this preliminary stage that the parties’
$4,000,000 distribution negotiated at arm’s-length is outside the range of reasonableness,
particularly when a litigation loss could result in zero recovery for class members. On balance,
the Girsh factors thus support preliminarily approving the proposed settlement.
Finally, the Agreement does not appear to frustrate the FLSA’s purposes despite its
confidentiality and release of claims provisions. See Brumley, 2012 WL 300583, at *3 (noting
the “broad consensus” that FLSA settlement agreements should not be confidential); Singleton,
2014 WL 3865853, at *8 (stating that “a pervasive release in an FLSA settlement [that] confers
an uncompensated, unevaluated, and unfair benefit on the employer should be examined closely”
(citation omitted)).
The Agreement’s confidentiality clause (Agreement at § 8.16) reads:
Plaintiff agrees that she will not publicize the negotiations with respect to the
Settlement Agreement. Nothing in this Settlement Agreement shall prohibit
Plaintiff from disclosing information concerning payments made to her to
members of her immediate family and tax advisors. Further, nothing in this
Settlement Agreement will prohibit or restrict such disclosure as is required by law
or as may be necessary for the prosecution of claims relating to the performance

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or enforcement of this Settlement Agreement, or prohibit or restrict Plaintiff from
responding to any inquiry about this Settlement or its underlying facts and
circumstances from any governmental agency.
This clause is narrowly drawn. “Plaintiff” is defined as “the named plaintiff in this
Action, David Atis.”

(Agreement at § 2.30.)

Thus, the clause restricts only Atis from

publicizing negotiations with respect to the settlement, and not, for example, Atis or others from
publicizing the fact or terms of the settlement to the public, including Defendant’s other
employees, consistent with the “informational objectives” of the FLSA. Brumley, 2012 WL
1019337, at *6–7. Confidentiality clauses that have frustrated the FLSA’s purposes have been
broader than the limited one here.5 To be sure, the Agreement contains a “press releases”
section, which states that “[n]either Party will issue any statements to the press, notify the press
of the settlement, or otherwise seek to publicize the fact or details of the Settlement in any way
outside the Court-approved Settlement notification process.” (Agreement at § 8.17.) But that
clause is similarly limited to the “parties,” so it applies only to Named Plaintiff Atis and
Defendant Freedom Mortgage (Agreement at §§ 2.12 2.29, 2.30). And it prevents them from
making statements to the press, which has been found permissible. See In re Chickie’s & Pete’s

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See, e.g., Mabry v. Hildebrandt, No. 14-cv-5525, 2015 WL 5025810, at *2–3 (E.D. Pa. Aug.
24, 2015) (denying approval of confidentiality provision that prohibited plaintiff from disclosing
“to others the fact or terms of this Agreement, except that [the plaintiff] may disclose such
information to his spouse, attorney, and/or accountant . . . ” on the grounds that such a provision
prevented the plaintiff from discussing the settlement with defendants’ employees in
contravention of the purposes of the FLSA); Altenbach v. Lube Ctr., Inc., No. 08-cv-02178, 2013
WL 74251, at *3 (M.D. Pa. Jan. 4, 2013) (declining to approve a settlement agreement
prohibiting the plaintiff and class counsel from disclosing “any specific information concerning
the Settlement with the Defendant, such as the settlement amount, to any person or
agency”); Brumley, 2012 WL 1019337, at *6–7 (holding that confidentiality provision
prohibiting plaintiffs from disclosing “the terms of the Agreement to any person or organization,
including but not limited to . . . employees and agents of [the defendant] . . . and other members
of the public” “thwarts the informational objective of the notice requirement [of the FLSA] by
silencing the employee who has vindicated a disputed FLSA right” and, if enforced, “empowers
an employer to retaliate against an employee for exercising FLSA rights” (citations omitted)).
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Wage & Hour Litig., No. 12-cv-6820, 2014 WL 911718, at *3 (E.D. Pa. Mar. 7, 2014) (holding
that “limited” confidentiality provision did not frustrate FLSA when provision did not “prohibit
Plaintiffs from discussing this matter with anyone, but only prohibit[ed] Plaintiffs from
disparaging Defendants or discussing the substance and negotiations of this matter with
the press and media”).
Nor does the Agreement’s release of claims provision frustrate the FLSA’s purposes.
That clause states that the releasing persons will release Defendant from “any and all state and
federal law-based wage-and-hour claims from May 20, 2013, through the date of entry of the
Court’s Preliminary Approval Order.” (Agreement at § 5.1(A).) Although broadly worded, the
release is limited to “wage-and-hour” claims. Thus, it does not release claims for harassment or
wrongful discharge under any statute or common law, including but not limited to under the
FLSA or any state wage and hour law, nor does it release any claims for lost wages due to claims
of unlawful termination, wrongful discharge, demotion, or similar adverse employment action.
(See Pls.’ Br. at n.4.)
At this stage, the Court finds the release sufficiently related to the wage and hour claims
alleged in this suit and not the kind of overbroad waiver of unrelated claims that has concerned
courts. See Simancas v. Pennsylvania Soup & Seafood House, No. 17-cv-1895, 2017 WL
7693355, at *1 (E.D. Pa. Nov. 21, 2017) (holding that, in contrast to over-broad releases,
proposed release of “any and all wage claims between the parties . . . including but not limited to
the Pennsylvania Wage Payment Collection Law and the Pennsylvania Minimum Wage Act . . .
and any federal, state and local statute or law relating to hours and wages, and the Fair Labor

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Standards Act” was permissible because it “only applies to Plaintiff’s wage-related claims” as
brought in the complaint).6
The release is also limited in time—from May 20, 2013 through the date of the Court’s
Preliminary Approval Order—and does not release prospective claims arising thereafter. See
Singleton, 2014 WL 3865853, at *9 (finding release permissible when “written to limit any and
all future claims related to the specific litigation, and does not incorporate any FLSA claims or
other wage issues the Plaintiffs may allege subsequent to the final approval of a settlement”);
Brumley, 2012 WL 1019337, at *8 (“The Court finds the release provision to be pervasive to the
extent that it incorporates any and all FLSA claims the Plaintiffs may allege regarding violations
that Defendants might commit subsequent to the final approval of a settlement in the abovecaptioned actions by this Court.”). Thus, the FLSA settlement is preliminarily acceptable.
Certification of Settlement Classes
Having preliminarily approved the parties’ Agreement settling the Rule 23 class claims
and the FLSA collective action claims, the Court next considers whether to certify the settlement
classes for settlement purposes only. The Court will do so.

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Compare Kraus v. PA Fit II, LLC, 155 F. Supp. 3d 516, 532–33 (E.D. Pa. 2016) (finding
release overly broad because it precluded plaintiff from raising “any and all” claims she might
have against defendants “arising from a laundry list of charges,” including but not limited to,
“back pay, discrimination, retaliation, harassment,” “any and all tort Claims or contract Claims,”
as well as violations of “any federal, state, or local fair employment practices or civil rights laws
or ordinances” (emphasis in original)); Bettger v. Crossmark, Inc., No. 13-cv-2030, 2015 WL
279754, at *9 (M.D. Pa. Jan. 22, 2015) (finding release provisions “inappropriately
comprehensive” because they precluded “raising any and all claims [plaintiff] may have against
Crossmark arising prior to the execution date of the agreement and require her to dismiss any
charges of discrimination, harassment, or retaliation currently pending with any government
agency,” “far beyond the pale of the FLSA claim sub judice” (emphasis in original)).
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1. Rule 23 Certification of Settlement Classes
“Rule 23 of the Federal Rules of Civil Procedure allows this Court to certify a class for
settlement purposes only.” Chemi v. Champion Mortg., No. 05-cv-1238, 2009 WL 1470429, at
*6 (D.N.J. May 26, 2009). Here, Plaintiffs seek an order provisionally certifying a settlement
class “consisting of all persons who worked in New Jersey, Pennsylvania, and Indiana as an
Assistant Vice President of Sales for Freedom Mortgage Corporation from May 20, 2013
through June 30, 2016.” (Doc. No. 79-7.) To certify a class for settlement purposes, a district
court must determine that the requirements for class certification under Rule 23(a) and (b) are
met. See In re Pet Food Products Liability Litigation, 629 F.3d 333, 341 (3d Cir. 2010). Under
Rule 23(a), the parties must demonstrate:
(1) numerosity (a “class so large that joinder of all members is impracticable”);
(2) commonality (“questions of law or fact common to the class”);
(3) typicality (named parties’ claims and defenses “are typical . . . of the class”);
and
(4) adequacy of representation (representatives “will fairly and adequately protect
the interests of the class”).
Id. at 341 n.14 (quoting Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 613 (1997)) (alterations
omitted). Under Rule 23(b)(3), certification is proper if “the court finds that the questions of law
or fact common to class members predominate over any questions affecting only individual
members, and that a class action is superior to other available methods for fairly and efficiently
adjudicating the controversy.”

A plaintiff bears the burden of demonstrating that these

requirements are met by a preponderance of the evidence, and the district court “must make
whatever factual and legal inquiries are necessary and must consider all relevant evidence and
arguments presented by the parties.” In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305,
306 (3d Cir. 2008). Thus, a district court should certify a class “only if the court is ‘satisfied,
after a rigorous analysis, that the prerequisites of Rule 23(a) have been satisfied.’” Beck v.

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Maximus, Inc., 457 F.3d 291, 297 (3d Cir. 2006) (quoting Gen. Tel. Co. of the Sw. v. Falcon, 457
U.S. 147, 161 (1982)).
a. Rule 23(a)
i.

Numerosity

Numerosity is satisfied here, as it is presumed “if the named plaintiff demonstrates that
the potential number of plaintiffs exceeds 40.” Stewart v. Abraham, 275 F.3d 220, 226–27 (3d
Cir. 2001).

This Court previously certified a New Jersey class involving “around 135”

settlement members. See Atis v. Freedom Mortg. Corp., No. 15-cv-3424, 2016 WL 7440465, at
*6 (D.N.J. Dec. 27, 2016). Plaintiffs also cite to evidence that fifty putative settlement class
members exist under Indiana law and sixty-one exist under Pennsylvania law. (Pls.’ Br. at 10.)
ii.

Commonality/Predominance

When, as here, an action is brought under Rule 23(b)(3), the commonality requirement of
Rule 23(a) “is subsumed by the predominance requirement” of Rule 23(b)(3). Danvers Motor
Co. v. Ford Motor Co., 543 F.3d 141, 148 (3d Cir. 2008) (quoting Amchem Prods., 521 U.S. at
627). To certify a class under Rule 23(b)(3), “questions of law or fact common to class
members” must “predominate over any questions affecting only individual members.” This
requirement is “far more demanding” than the commonality requirement set forth in Rule 23(a).
Amchem Prods., 521 U.S. at 623–24. “[W]here individual stakes are high and disparities among
class members [are] great,” courts should be hesitant to find that predominance exists. Id. at 625.
Common questions predominate over individual ones here, including whether Defendant
violated wage and hour laws by misclassifying AVPs as exempt employees under New Jersey,
Indiana, and Pennsylvania law, and whether Defendant failed to pay overtime compensation to
these employees for working more than forty hour weeks. The Court’s analysis from its decision

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certifying the New Jersey class is applicable again here, as no evidence suggests that
Defendant’s policies differ across locations—and Plaintiffs affirmatively note that the policies
are uniform (Pls.’ Br. at 11). As the Court held, “Plaintiff has shown that AVPs hold the same
job title and have overwhelmingly the same the job responsibilities.

Thus, proving

misclassification will require evidence that is common to the class, not individualized proofs.”
Atis, 2016 WL 7440465, at *6. Moreover, “at least some AVPs appear to have ‘Time &
Attendance’ reports that list the times they worked on a daily basis.” Id. Thus, the Court is
satisfied that common questions predominate over individual ones, even if class members’
damages vary. See Bogosian v. Gulf Oil Corp., 561 F.2d 434, 456 (3d Cir. 1977) (stating that
“the necessity for calculation of damages on an individual basis should not preclude class
determination when the common issues which determine liability predominate”); Mesa v.
Avalonbay Comm. Inc., No. 15-cv-2740, 2018 WL 5278702, at *9 (D.N.J. Oct. 24, 2018)
(“Courts routinely certify classes where individual damages inquiries may be necessary
following a finding of liability.”).
iii.

Typicality

The typicality requirement is satisfied when each class members’ claims “arise from the
same course of events and each class member makes similar legal arguments to prove the
defendant’s liability.” Atis, 2016 WL 7440465, at *7 (citing Robinson v. Metro-North Commuter
R.R. Co., 267 F.3d 147, 155 (2d Cir. 2001)). The typicality requirement precludes certification
of classes where the legal theory of the named plaintiff potentially conflicts with the legal theory
of the unnamed class members. See Atis, 2016 WL 7440465, at *7 (citing Baby Neal for and by
Kanter v. Casey, 43 F.3d 48, 57 (3d Cir. 1994)).

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Here, as the Court has previously held, Named Plaintiff Atis, “brings claims typical of
those of the class: the claims arise from Defendant’s alleged misclassification of AVPs as
exempt employees, and all class members will prove liability using the same arguments, that the
nature of their job renders the administrative exemption inapplicable. In addition, there is no
reason to suggest Atis’s legal theory will conflict with that of other class members.” Atis, 2016
WL 7440465, at *7. Although the Court’s previous analysis assessed typicality between Named
Plaintiff Atis and New Jersey class members, the factual and legal bases underlying the Indiana
and Pennsylvania state law classes and their Representative Plaintiffs appear the same as those of
Atis and the New Jersey class. Thus, the “typicality” requirement is met here.
iv.

Adequacy

The fourth requirement of Rule 23(a) requires a plaintiff to show that as class
representative he “will fairly and adequately protect the interests of the class.” Fed. R. Civ. P.
23(a)(4). This “adequacy” requirement has two components: (1) whether Plaintiffs’ counsel is
qualified, experienced, and able to conduct the litigation; and (2) whether any conflicts of
interest exist between the named parties and the class they seek to represent.

See In re

Prudential Ins. Co. Am. Sales Practice Litig. Agent Actions, 148 F.3d 283, 312 (3d Cir. 1998).
No adequacy issues exist here.

As the Court previously held, “Plaintiff’s counsel

describes its experience litigating class actions and thus shows it is qualified, experienced, and
able to conduct the litigation.” Atis, 2016 WL 7440465, at *7. Nor is there evidence of any
conflicts of interest between Atis or the other Representative Plaintiffs and the potential classes.
b. Rule 23(b)(3)
As the proposed classes meet the requirements of Rule 23(a), the Court now turns to Rule
23(b), which imposes two additional requirements: “predominance” and “superiority. See Fed.

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R. Civ. P. 23(b)(3); see also Rudel Corp., 2017 WL 4422416, at *3. As discussed above,
predominance is satisfied here. As to superiority, Rule 23(b)(3) provides a four-factor list that a
court may use to assess whether class adjudication is superior to other forms of adjudication:
(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.
All four factors support class adjudication. Where individual claims are modest, class
members’ interest in bringing individual actions is low. See Jones v. Commerce Bancorp, Inc.,
No. 05-cv-5600, 2007 WL 2085357, at *4 (D.N.J. July 16, 2007). That is the case here, where
individual claims of class members are relatively small in monetary value. See Atis, 2016 WL
7440465, at *8. Nor is the Court aware of other litigations concerning this controversy, which is
appropriately concentrated in New Jersey, where Defendant is headquartered.

Id. Lastly,

management difficulties are less likely when, as here, common questions predominate regarding
the claims under New Jersey, Pennsylvania, and Indiana law. See id. Having satisfied the
superiority requirement, this case meets all the requirements of Rule 23(a) and Rule 23(b)(3).
2. Final Certification of FLSA Collective Action Settlement Class
Next, Plaintiffs seek to finally certify an FLSA collective action settlement class under 29
U.S.C. § 216(b), also on a provisional basis for settlement purposes only. (Pls.’ Br. at 1.) Courts
employ a two-step process for approving FLSA classes, an initial “conditional” certification and
a later “reconsideration” phase. See Atis, 2016 WL 7440465, at *3. The Court has already
conditionally certified the FLSA collective action in this case, id., and Plaintiffs seek an
unopposed order finally certifying that same class. (Doc. No. 79-7.) The Court previously
defined the class as: “All persons who are or were employed by Freedom Mortgage Corporation
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as an Assistant Vice President of Sales in any of its offices during the three years prior to the
date of notice, classified as exempt, and not paid overtime compensation for each hour worked
beyond forty (40) hours in a workweek.” Atis, 2016 WL 7440465, at *5; (Doc. Nos. 41, 48.)
To certify a case as a collective action under the FLSA, the Court must determine that
employees in the class are “similarly situated,” within the meaning of § 16(b) of the Act. See
Matson v. SCO, Silver Care Operations, LLC, No. 17-cv-1918, 2018 WL 1027448, at *4 (D.N.J.
Feb. 23, 2018) (citing Bredbenner v. Liberty Travel, Inc., No. 09-cv-1248, 2011 WL 1344745, at
*17 (D.N.J. Apr. 8, 2011)). The “factors to reach a final determination on class certification
under the FLSA . . . include ‘(1) the disparate factual and employment settings of the individual
plaintiffs; (2) the various defenses available to [defendants] which appear to be individual to
each plaintiff, [and] (3) fairness and procedural considerations.’” Bredbenner, 2011 WL
1344745, at *17 (alterations in original) (quoting Lusardi v. Xerox Corp., 118 F.R.D. 351, 359
(D.N.J. 1987)). The analysis for final certification “largely overlap[s] with class certification
under Federal Rule of Civil Procedure 23(a).” Matson, 2018 WL 1027448, at *4 (quoting
Bredbenner, 2011 WL 1344745, at *17)). Thus, the Court need only address the above factors
“in passing.” Bredbenner, 2011 WL 1344745, at *17 (citation omitted).
For substantially the same reasons as the Rule 23 standards are met, the Court finds that
the FLSA collective action meets the standard to be finally certified on a provisional basis for
settlement purposes only. As explained, the issues are common to the class members and not
based on a disparate factual and employment setting. Defenses do not appear individual to each
plaintiff, and procedural or fairness issues are not apparent at this juncture. In light of the
general benefits of collective actions in lowering costs to plaintiffs and limiting the controversy

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to one proceeding, as well as the public interest in settling class action litigation,7 the Court will
finally certify the FLSA collective action for settlement purposes only.
Approval of Class Notice
In approving a class settlement, a district court must also “direct notice in a reasonable
manner to all class members who would be bound by the proposal.” Fed. R. Civ. P. 23(e)(1); see
also Shapiro v. All. MMA, Inc., No. 17-cv-2583, 2018 WL 3158812, at *7 (D.N.J. June 28,
2018). To satisfy the notice requirement, the party proposing settlement must comply with the
guidelines contained in Rule 23(c)(2) and 23(e)(2). Id. Rule 23(c)(2)(B) provides that in Rule
23(b)(3) class actions, the Court must direct to class members the best notice that is practicable
under the circumstances, including individual notice to all members who can be identified
through reasonable effort. See Shapiro, 2018 WL 3158812, at *7. The notice must clearly and
concisely state in plain, easily understood language:
i.
ii.
iii.
iv.
v.
vi.
vii.

the nature of the action;
the definition of the class certified;
the class claims, issues, or defenses;
that a class member may enter an appearance through an attorney if the
member so desires;
that the court will exclude from the class any member who requests
exclusion;
the time and manner for requesting exclusion; and
the binding effect of a class judgment on members under Rule 23(c)(3).

Fed. R. Civ. P. 23(c)(2).
The form of notice is committed to the district court’s discretion, “subject to due process
requirements.” Zimmer Paper Prods., Inc. v. Berger & Montague, 758 F.2d 86, 90 (3d Cir.
1985). Due process requires notification (1) of “the nature of the pending litigation”; (2) of “the
settlement’s general terms”; (3) “that complete information is available from the court files”; and
See Ehrheart v. Verizon Wireless, 609 F.3d 590, 595 (3d Cir. 2010) (“The strong judicial policy
in favor of class action settlement contemplates a circumscribed role for the district courts in
settlement review and approval proceedings.”).
7

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(4) “that any class member may appear and be heard at the Fairness Hearing.” In re Prudential
Ins. Co. of Am. Sales Practices Litig., 962 F. Supp. 450, 527 (D.N.J. 1997). Although the notice
“need not be unduly specific,” In re Diet Drugs, 226 F.R.D. at 518 (E.D. Pa. 2005), it must
“describe, in detail, the nature of the proposed settlement, the circumstances justifying it, and the
consequences of accepting and opting out of it.” Id. (citing In re Diet Drugs, 369 F.3d 293, 308–
10 (3d Cir. 2004)).
Here, the proposed notice and notice plan provides detailed information, in plain English,
about the rights of class members, including how to lodge objections; the nature of the class
action and its history; the proposed $4,000,000 settlement; the process for opting in, out, and
filing consent forms; a deadline of forty-five days to opt in, out, or object; a description of how
the claims will be processed; the fees and expenses that will be sought by Class Counsel from the
settlement fund; the services fees sought from the settlement fund; how to get more details about
the settlement from the contact information provided; the case name and number of the lawsuit;
and the date, time, and location of the final fairness hearing. (See Doc. No. 79 at Ex. 1-B.)
The notice, which must be sent via first class mail and emailed to the last known
addresses of potential members (Agreement at §§ 4.6, 4.8(A), 4.12(B)), also clearly instructs
potential objectors to contact both the Court and a yet-to-be-determined third party and explains
the rights class members give up. The forms “fairly, accurately, and neutrally describe the
claims and parties in the litigation as well as the terms of the proposed settlement and the identity
of persons entitled to participate in it.” See Shapiro, 2018 WL 3158812, at *7 (citing Foe v.
Cuomo, 700 F. Supp. 107, 113 (E.D.N.Y. 1988), aff’d, 892 F.2d 196 (2d Cir. 1989)). In short,
they are “reasonably calculated, under all the circumstances, to apprise interested parties of the
pendency of the action and afford them an opportunity to present their objections.” Id. (citing

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Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950)). Rule 23 and due
process are both satisfied by the notice forms here.
Additional Requests For Appointments and Fees and Costs
Plaintiffs also seeks several additional items (Doc. No. 79-7), including orders: (1)
appointing David Atis, Kathryn Hertzog, and Joseph Koeberlein as representatives of the
settlement class; (2) preliminarily approving of the service payments of $10,000 for Named
Plaintiff Atis, $5,000 each for Representative Plaintiffs Hertzog and Koeberlein, and $750 each
for Plaintiffs Steve Dewitt, Russel Mates, Shawn Menne, and Saul Walle, who all provided
written discovery responses and sat for depositions; (3) appointing Swartz Swidler, LLC as Class
Counsel; (4) preliminarily approving Class Counsel’s requested fee of thirty-three and a half
percent of the Settlement fund and Class Counsel’s reasonable costs; (5) appointing Angeion
Group, LLC as the Third Party Administrator of the Settlement and preliminarily approving their
reasonable fees and costs, to be paid from the settlement fund; and (6) setting a date for the final
fairness hearing and for Class Counsel to file a motion for final approval of the Agreement.
The Court will appoint Swartz Swidler as Class Counsel, Angeion as Third-Party
Administrator, and Atis, Hertzog, and Koeberlein as Representative Plaintiffs for the settlement
class. As noted above, the Court finds Swartz Swidler experienced in these matters, and that the
proposed Representative Plaintiffs would adequately fulfill representative duties. Angeion also
has experience administrating and distributing class settlements, including in the wage and hour
context. (Doc. No 79-6 at Ex. 2.)
The Court will also preliminarily approve Angeion to recover from the fund its
reasonable fees and costs incurred in distributing the settlement as provided in the Agreement.
(Agreement at § 4.5.) Angeion estimates that it will incur about $19,974 for its work distributing

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the settlement. (Doc. No. 79-5 at Ex. 1-C.) Although final recovery is subject to final approval
at the fairness hearing, the Court finds this amount preliminarily acceptable considering the
potential difficulties in administering the claims at issue. (Pls.’ Br. at 26–28.)
However, the Court declines to preliminarily approve any service payments to the
individuals listed and Class Counsel’s fees and costs.

These determinations are more

appropriately made at the final fairness hearing, which is scheduled for February 26, 2019 at
9:30 A.M. A motion for final approval of the Agreement should be filed by December 28, 2018.
III.

CONCLUSION
For the foregoing reasons, Plaintiffs’ motion is GRANTED IN PART.

Dated:

11/6/2018

/s Robert B. Kugler
ROBERT B. KUGLER
United States District Judge

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