Mills et al v. Capital One, N.A.
Filing
52
OPINION AND ORDER re: 37 MOTION for Settlement Plaintiffs' Motion for Approval of Service Awards. filed by Laurel Martin, Kristen Smith, Rhonda Jones, Veronica Sandoval-Wang, Jean Alonge, William Scott-Selgado, Patricia Mil ls, Brad Salazar, 33 MOTION for Settlement Plaintiffs' Motion for Certification of the Settlement Class, Final Approval of Class Action Settlement, and Approval of the FLSA Settlement. filed by Laurel Martin, Kristen Smith, Rhond a Jones, Jean Alonge, Veronica Sandoval-Wang, William Scott-Selgado, Patricia Mills, Brad Salazar, 35 MOTION for Attorney Fees and Reimbursement of Expenses. filed by Laurel Martin, Kristen Smith, Rhonda Jones, Jean Alonge, Ver onica Sandoval-Wang, William Scott-Selgado, Patricia Mills, Brad Salazar. Accordingly, for all the foregoing reasons, plaintiffs' motions (Docket Items 33, 35, 37) are granted in part and denied in part as follows: 1. Pursuant to Fed.R.Civ.P . 23(a) and (b)(3), the following sub-classes are certified for settlement purposes: New York Class Members consist of all individuals who were employed as ABMs by Defendant in the State of New York from March 7, 2008 through July 7, 2014; New Jersey Class Members consist of all individuals who were employed as ABMs by Defendant in the State of New Jersey from March 7, 2012 through July 7, 2014; and Maryland Class Members consist of all individuals who were employed as ABMs by Defendant in the State of Maryland from March 7, 2011 through July 7, 2014; 2. The Settlement Agreement is unconditionally approved. 3. The "Effective Date" of the settlement shall be fourteen days following the last date this Final Approval Order approving this Agreement is appealable (30 days after the entry of Judgment), if no appeal is filed. If an appeal is taken, Section 1.10 of the Settlement Agreement governs. 4. In accordance with the terms of the Settlement Agreement and after the Effectiv e Date of this Order, the claims administrator shall distribute the funds in the settlement account by making the following payments: Paying the claims administrator fee of $23,000.00; Paying $517,037.51 to class counsel as reimbursement f or litigation costs and payment of attorneys' fees; and Paying service awards of $6,000.00 to each of the named plaintiffs and service fees of $3,000.00 to each of the three opt-in plaintiffs, for a total award of $57,000.00 in s ervice fees. 5. Following the disbursement set forth above, the claims administrator shall distribute the remaining funds in the settlement account to collective and class members in accordance with the allocation plan described in the Settlement Ag reement. 6. I shall retain jurisdiction over this action for the purpose of enforcing the Settlement Agreement and overseeing the distribution of settlement funds. The parties shall abide by all terms of the Settlement Agreement, which are incorpor ated by reference herein, and this Order. 7. Upon the Effective Date of this Order, this litigation shall be dismissed with prejudice, and all Settlement Class members who have not excluded themselves from the settlement or who have opted in to the l awsuit shall be permanently enjoined from pursuing and/or seeking to reopen claims that have been released pursuant to the Settlement Agreement. 8. The Clerk of the Court is directed to mark Docket Items 33, 35 and 37 closed. (As further set forth in this Order) (Signed by Magistrate Judge Henry B. Pitman on 9/30/2015) Copies Sent By Chambers. (lmb)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-----------------------------------X
PATRICIA MILLS, RHONDA JONES,
LAUREL MARTIN, WILLIAM SCOTTSELGADO, KRISTEN SMITH, BRAD
SALAZAR, VERONICA SANDOVAL-WANG,
and JEAN ALONGE, on behalf of
themselves and others similarly
situated,
Plaintiffs,
-against-
:
:
14 Civ. 1937 (HBP)
:
OPINION
AND ORDER
:
:
:
CAPITAL ONE, N.A.,
:
Defendant.
:
-----------------------------------X
PITMAN, United States Magistrate Judge:
I.
Introduction
Patricia Mills, Rhonda Jones, Laurel Martin, William
Scott-Selgado, Kristen Smith, Brad Salazar, Veronica SandovalWang, and Jean Alonge, on behalf of themselves and others
similarly situated, commenced this action against defendant
Capital One, N.A. pursuant to the Fair Labor Standards Act
("FLSA"), 29 U.S.C. §§ 201 et seq., New York Labor Law ("NYLL")
Article 19, §§ 650 et seq., New Jersey Wage and Hour Law
("NJWHL"), N.J. Stat. Ann, §§ 34:11-56a, et seq., Maryland Wage
and Hour Law, Md. Lab. & Emply. §§ 3-401, et seq. and the
Maryland Wage Payment and Collection Law, Md. Lab. & Emply. §§
3-501 et seq., (collectively, the "Maryland Wage Laws") to
recover, among other things, unpaid overtime, liquidated damages
under the FLSA, and attorneys' fees and costs.
Plaintiffs
commenced this action as a collective action under 29 U.S.C.
§ 216(b) and as a putative class action under Fed.R.Civ.P. 23
with respect to the state law claims.
All parties have consented to my exercising plenary
jurisdiction pursuant to 18 U.S.C. § 636(c) (Docket Item 48).
By notice of motions dated October 31, 2014 (Docket
Items 33, 35, 37), plaintiffs have moved for an Order (1)
certifying the final settlement class (the "Settlement Class"),
(2) approving the class action settlement and FLSA settlement,
and (3) awarding fees and costs to class counsel, service awards
to the named plaintiffs and opt-in plaintiffs, and fees to the
claims administrator.1
1
Plaintiffs filed the following documents in support of
their motions: (1) Memorandum of Law in Support of Plaintiffs'
Motion for Certification of the Settlement Class, Final Approval
of Class Action Settlement, and Approval of the FLSA Settlement
(Docket Item 34), (2) Memorandum of Law in Support of Plaintiffs'
Motion for Approval of Attorneys' Fees and Reimbursement of
Expenses (Docket Item 36) ("Pls. Fees Mem."), (3) Memorandum of
Law in Support of Plaintiffs' Motion for Approval of Service
Awards (Docket Item 38), (4) Declaration of Justin M. Swartz,
Esq., with supporting exhibits (Docket Item 39) ("Swartz Decl."),
(5) Declaration of Gregg I. Shavitz, Esq., with supporting
(continued...)
2
For the reasons set forth below, plaintiffs' motions
are granted in part and denied in part.
II.
Factual and
Procedural Background
The complaint alleges that plaintiffs, and members of
the FLSA collective and putative New York, New Jersey, and
Maryland classes, are or were employed by defendant as assistant
branch managers ("ABMs") (Compl. ¶¶ 1, 10-55).
Plaintiffs allege
that because defendant's "branches are structurally understaffed
with hourly employees, ABMs spend the vast majority of their
working time performing the same sales and customer service
duties as non-exempt, hourly tellers and personal bankers"
(Compl. ¶ 4).
Plaintiffs allege that although defendant
1
(...continued)
exhibits (Docket Item 40) ("Shavitz Decl."). Plaintiffs
thereafter submitted the following supplemental documents in
further support of their motions: (1) Supplemental Memorandum of
Law in Support of Plaintiffs' Motion for Approval of Attorneys'
Fees and Reimbursement of Expenses, dated Nov. 25, 2014 (Docket
Item 41)(?Pls. Suppl. Fees Mem."), (2) Supplemental Declaration
of Justin M. Swartz, with supporting exhibits, dated Nov. 25,
2014, (Docket Item 43) ("Swartz Suppl. Decl."), (3) Declaration
of Wayne N. Outten, dated Nov. 25, 2014 (Docket Item 42), (4)
Letter re: Supplemental Authority for Motion for Attorneys' Fees,
Expenses, and Services Awards, dated August 4, 2015 (Docket Item
49), (5) Declaration of Michael N. Litrownik, dated Sept. 9, 2015
(Docket Number 50) ("Litrownik Decl."), and (6)Second
Supplemental Declaration of Justin M. Swartz, dated September 10,
2015 (Docket Item 51) ("Swartz Second Suppl. Decl.").
3
regularly requires ABMs to work in excess of 40 hours per week,
defendant does not pay ABMs premium overtime wages, i.e. "time
and a half," pursuant to a nationwide policy of uniformly
classifying ABMs as exempt from federal and state overtime
provisions (Compl. ¶¶ 5, 8).
Before the complaint was filed, plaintiffs' counsel
researched the potential claims against defendant by, among other
things, conducting in-depth interviews with and obtaining
documentation from the eight plaintiffs and three opt-in
plaintiffs (Swartz Decl., ¶¶ 30-32).
In July 2013, plaintiffs'
counsel sent defendant a letter in which they summarized their
clients' potential claims and invited Defendant to engage in prelitigation settlement discussions (Swartz Decl., ¶ 33).
The
parties entered into a confidentiality agreement and exchanged
documents and data to assess the claims and calculate damages.
Following the exchange of further written correspondence,
conference calls, and a full day mediation session before a
mediator experienced in wage and hour law, the parties reached a
settlement which was memorialized in a formal settlement
agreement executed by the parties on or about July 29, 2014
(Swartz Decl., ¶¶ 33-38).
Thus, the settlement agreement was
executed just over four months after the filing of the Complaint.
4
Pursuant to the settlement agreement, defendant,
without conceding the validity of plaintiffs' claims and without
admitting liability, will establish a common fund of
$3,000,000.00, to cover class members' awards, service payments,
attorneys' fees and costs, and the settlement administrator's
fees and costs (Swartz Decl., Ex. A (?Settlement Agreement") at
§§ 3.1(A), 3.2-3.4, 4.3).
From the fund, the eight named
plaintiffs will each receive service awards of $6,000.00, three
opt-in plaintiffs will each receive service awards of $3,000.00,
the claims administrator will receive an estimated $23,000.00 to
set up and distribute the fund and counsel for plaintiffs will
receive attorneys' fees and costs, subject to the court's
approval, and not to exceed $1,000,000.00 (Settlement Agreement,
§§ 1.18, 3.3(A); Swartz Decl., Ex. E (Declaration of Stacy Roe,
Oct. 30, 2014 ("Roe Decl."), ¶ 14)).
The Settlement Agreement provides that the remainder of
the settlement fund will be distributed pursuant to an allocation
formula based on the number of weeks for which they were employed
during the relevant limitations periods and whether they signed a
prior release of state law overtime claims.
For each workweek
within the relevant liability period, each class member who is
not subject to a prior release of state law overtime claims shall
be assigned three points and each class member who is subject to
5
a prior release of state law overtime claims shall be assigned
one point (Swartz Decl., ¶ 65; Settlement Agreement,
§ 3.4(B)(1)-(3)).
Class members will then be allocated an
initial pro-rata share of the settlement based on the number of
points assigned to them (Settlement Agreement,
§ 3.4(B)(4)(a)-(c)).
Any class member who would, under this
initial calculation, receive less than $50.00 will, instead, be
awarded $50.00 (Settlement Agreement, § 3.4(B)(4)(c)).
The
remaining funds will be distributed to the remaining Class
members on a pro-rata basis (Settlement Agreement,
§ 3.4(B)(4)(c)-(f)).
If a Class member does not sign and cash a
settlement check within 90 days of receiving it, the check will
be void and the amount of the uncashed check will revert to
defendant 180 days after the check's issuance. (Settlement
Agreement, § 3.1(C))).
By counsel's estimation, class members will each
receive an average net settlement payment (net of attorneys’ fees
and costs, service awards, and claims administration fees) of
approximately $1,387.00 (Swartz Decl., ¶ 64).
The Settlement
Agreement provides that all Rule 23 class members who do not
timely opt out of the settlement release their state wage and
hour law claims (Settlement Agreement, §§ 1.29, 4.1(A)). Rule 23
class members and FLSA class members who negotiate the settlement
6
check release their state wage and hour law claims and FLSA
claims (Settlement Agreement, §§ 1.28-1.29, 4.1(B)).
By order dated August 1, 2014, I preliminarily approved
the settlement on behalf of the class set forth therein,
conditionally certified the Settlement Class, appointed Outten &
Golden LLP ("Outten & Golden" or "O&G") and Shavitz Law Group,
P.A ("Shavitz Law Group" or "SLG") as class counsel, and
authorized notice to all class members (Order, dated Aug. 1,
2014, (Docket Item 28) ("Preliminary Approval Order")).
Pursuant to the Preliminary Approval Order, the claims
administrator sent the approved notices to all class members,
informing them of (1) their rights under the settlement
(including the right to opt out of or object to the settlement);
(2) class counsel's intention to seek one-third of the settlement
fund for attorneys' fees and up to $20,000.00 in costs; (3) the
request for service awards of $6,000.00 for each named plaintiff
and $3,000.00 each for three opt-in plaintiffs; and (4) the
claims administrator's fees and (5) the manner in which the
remainder of the fund would be distributed (Roe Decl., ¶ 9;
Swartz Decl., Ex. F (Rule 23 Notice), Ex. G (FLSA Notice).
No
class members objected to the settlement, and three class members
opted out (Roe Decl., ¶¶ 12-13).
7
Defendant takes no position with respect to the pending
motion.
I held a fairness hearing on November 14, 2014.
No
class member appeared at the hearing or made a written submission
concerning the settlement (Docket Item 44).
III.
Analysis
A.
Final Certification
of the Settlement Class
In the Preliminary Approval Order, familiarity with
which is assumed, I concluded that the Settlement Class satisfied
the requirements of numerosity, commonality, typicality,
adequacy, ascertainability and maintainability under Rule 23(a)
and (b)(3), and preliminarily granted conditional certification
of the Settlement Class, consisting of the following sub-classes:
(1) a New York class consisting of all individuals who were
employed by defendant in New York State from March 7, 2008
through July 7, 2014 in one of the following job titles:
Assistant Branch Manager, Assistant Branch Manager I, Assistant
Branch Manager II, Assistant Branch Manager III, Assistant Branch
Operations Manager, or Assistant Branch Sales Manager
(collectively "ABMs"); (2) a New Jersey Class consisting of all
individuals who were employed by defendant in New Jersey from
March 7, 2012 through July 7, 2014 as ABMs; (3) a Maryland Class
8
consisting of all individuals who were employed by defendant in
Maryland from March 7, 2011 through July 7, 2014 as ABMs
(Preliminary Approval Order at 3).2
To date, no facts have been presented to me to indicate
that my preliminary determination was incorrect nor has any party
claimed that my preliminary determination was erroneous.
Thus,
for the reasons stated in the Preliminary Approval Order, I
conclude that final certification of the Settlement Class is
proper.
B.
Approval of
Settlement Agreement
Pursuant to Fed.R.Civ.P. 23(e), the settlement of a
class action is not effective until judicially approved.
Although there is a general policy favoring settlements, the
court may approve a class action settlement only if it "is fair,
2
Since the issuance of the Preliminary Approval Order,
plaintiffs' counsel submitted a declaration that estimates that
there are approximately 784 Rule 23 class members with 541 in the
New York Class, 66 in the New Jersey Class, and 177 in the
Maryland Class (Litrownik Decl., ¶¶ 4-6). These numbers easily
meet the numerosity requirement for each sub-class. Pa. Pub.
Sch. Emps.' Ret. Sys. v. Morgan Stanley & Co., 772 F.3d 111, 120
(2d Cir. 2014) ("Numerosity is presumed for classes larger than
forty members."), citing Consol. Rail Corp. v. Town of Hyde Park,
47 F.3d 473, 483 (2d Cir. 1995); Burka v. New York City Transit
Auth., 110 F.R.D. 595, 601 (S.D.N.Y. 1986) (Goettel, D.J.) ("each
subclass must satisfy all of the requirements of Rule 23(a)")).
9
adequate, and reasonable, and not a product of collusion."
A. v. Giuliani, 218 F.3d 132, 138 (2d Cir. 2000).
Joel
This requires
consideration of both procedural and substantive fairness.
Wal-
Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 116 (2d Cir.
2005), citing D'Amato v. Deutsche Bank, 236 F.3d 78, 85 (2d Cir.
2001) ("A court determines a settlement's fairness by looking at
both the settlement's terms and the negotiating process leading
to settlement.").
1.
Procedural Fairness
In assessing procedural fairness, there is "a
presumption of fairness, reasonableness, and adequacy as to the
settlement where 'a class settlement [is] reached in arm's-length
negotiations between experienced, capable counsel after
meaningful discovery.'"
McReynolds v. Richards-Cantave, 588 F.3d
790, 803 (2d Cir. 2009) (alteration in original), quoting WalMart Stores, Inc. v. Visa U.S.A., Inc., supra, 396 F.3d at 116.
"In addition, courts encourage early settlement of
class actions, when warranted, because early settlement allows
class members to recover without unnecessary delay and allows the
judicial system to focus resources elsewhere."
Beckman v.
KeyBank, N.A., 293 F.R.D. 467, 474 (S.D.N.Y. 2013) (Ellis, M.J.),
citing Hernandez v. Merrill Lynch & Co., Inc., 11 Civ. 8472
10
(KBF)(DCF), 2012 WL 5862749 at *2 (S.D.N.Y. Nov. 15, 2012)
(Freeman, M.J.); Castagna v. Madison Square Garden, L.P., 09 Civ.
10211 (LTS)(HP), 2011 WL 2208614 at *6 (S.D.N.Y. June 7, 2011)
(Swain, D.J.); Diaz v. E. Locating Serv. Inc., 10 Civ. 4082
(JCF), 2010 WL 5507912 at *3 (S.D.N.Y. Nov. 29, 2010) (Francis,
M.J.).
Here, the parties engaged in responsible, arm's-length
negotiations before and after the filing of the lawsuit to reach
an early settlement.
The parties exchanged information and
documents that enabled both sides to assess plaintiffs' claims
and calculate potential damages (Swartz Decl., ¶¶ 33-38).
On
March 7, 2014, the parties participated in a day long mediation
session in New York with Michael E. Dickstein, Esq., an
experienced mediator in wage and hour law, at which the parties
reached agreement on the settlement amount and several other key
terms (Swartz Decl., ¶ 37).
Following the filing of the
Complaint, the parties reached a final agreement that was
memorialized on or about July 29, 2014 (Swartz Decl., ¶ 38;
Settlement Agreement).
Thus, I conclude that the settlement is procedurally
fair pursuant to Rule 23(e).
11
2.
Substantive Fairness
In assessing whether a settlement is substantively
fair, the district court must consider the nine Grinnell factors:
(1) the complexity, expense and likely duration of the
litigation; (2) the reaction of the class to the
settlement; (3) the stage of the proceedings and the
amount of discovery completed; (4) the risks of
establishing liability; (5) the risks of establishing
damages; (6) the risks of maintaining the class action
through the trial; (7) the 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; (9) the range of reasonableness
of the settlement fund to a possible recovery in light
of all the attendant risks of litigation.
McReynolds v. Richards-Cantave, supra, 588 F.3d at 804, quoting
City of Detroit v. Grinnell Corp., 495 F.2d 448, 463 (2d Cir.
1974), abrogated on other grounds by Goldberger v. Integrated
Res., Inc., 209 F.3d 43 (2d Cir. 2000); accord Charron v. Wiener,
731 F.3d 241, 247 (2d Cir. 2013).
All the Grinnell factors weigh
in favor of final approval.
The first Grinnell factor supports final approval
because litigation through trial would be complex, expensive and
long.
The second Grinnell factor weighs in favor of final
approval because the class's reaction to the settlement was very
positive.
The notices informed class members of their rights
under the settlement and all the material terms of the
12
settlement.
No class member objected to the settlement and only
three opted out; this positive response to the settlement is
evidence of its fairness.
See Wright v. Stern, 553 F. Supp. 2d
337, 345 (S.D.N.Y. 2008) (Chin, D.J.) ("The fact that the vast
majority of class members neither objected nor opted out is a
strong indication that the proposed settlement is fair,
reasonable, and adequate."); see also Beckman v. KeyBank, N.A.,
supra, 293 F.R.D. at 475 (concluding class reaction was positive
where none objected and eight of 1,735 members opted out); Flores
v. Anjost Corp., 11 Civ. 1531 (AT), 2014 WL 321831 at *5
(S.D.N.Y. Jan. 29, 2014) (Torres, D.J.) (approving settlement
where no class member objected or opted out); Guaman v. Ajna-Bar
NYC, 12 Civ. 2987 (DF), 2013 WL 445896 at *5 (S.D.N.Y. Feb. 5,
2013) (Freeman, M.J.) (finding fairness where there were no
objections or requests for exclusion).
The third Grinnell factor also weighs in favor of final
approval. When evaluating the level of discovery completed,
"[t]he pertinent question is whether counsel had an adequate
appreciation of the merits of the case before negotiating."
Prasker v. Asia Five Eight LLC, 08 Civ. 5811 (MGC), 2010 WL
476009 at *5 (S.D.N.Y. Jan. 6, 2010) (Cedarbaum, D.J.) (citation
omitted).
Here, plaintiffs' counsel conducted independent
factual and legal research before conducting settlement
13
negotiations.
Specifically, counsel interviewed the eight
plaintiffs and three opt-in plaintiffs, obtained and reviewed
documents from plaintiffs related to their employment and
researched publicly available information concerning defendant.
The parties thereafter exchanged data to weigh the strengths and
weaknesses of their claims, including through defendant's
production of personnel documents relating to several of the
plaintiffs and opt-in plaintiffs (Swartz Decl., ¶¶ 30-32, 35-36).
The fourth and fifth Grinnell factors support final
approval. "Litigation inherently involves risks," both in
establishing liability and damages.
In re PaineWebber Ltd.
P'ships Litig., 171 F.R.D. 104, 126 (S.D.N.Y. 1997) (Stein,
D.J.), aff'd, 117 F.3d 721 (2d Cir. 1997); see also In re Ira
Haupt & Co., 304 F. Supp. 917, 934 (S.D.N.Y. 1969) (Motley, D.J.)
("If settlement has any purpose at all, it is to avoid a trial on
the merits because of the uncertainty of the outcome.").
Here,
the claims and defenses are fact-intensive and present risks,
including the potential inability to prove unpaid wages and
overcoming the argument that plaintiffs are, in fact, exempt from
the federal and state overtime provisions.
Plaintiffs would need
to present evidence regarding the nature of the responsibilities
of the class members in order to prove that plaintiffs were
misclassified as well as the hours worked by each employee.
14
In
addition to the legal risk of proving liability at trial, a
substantial number of class members signed releases of their
state law claims and class/collective action waivers (Swartz
Decl., ¶ 65).
Settlement eliminates these uncertainties and the
risks resulting from the releases and waivers.
The sixth Grinnell factor, the risk of maintaining
collective and class certification throughout trial, also weighs
in favor of final approval.
A contested motion for certification
would likely require extensive discovery and briefing, and, if
granted, could potentially result in an interlocutory appeal
pursuant to Fed.R.Civ.P. 23(f) or a motion to decertify by
defendant, requiring additional briefing.
In addition, here, the
class members work in defendant's branches across the country and
are subject to different state labor laws, making a showing of
similarity more difficult than the typical wage and hour case.
See Sukhnandan v. Royal Health Care of Long Island LLC, 12 Civ.
4216 (RLE), 2014 WL 3778173 at *7 (S.D.N.Y. July 31, 2014)
(Ellis, M.J.) (settlement "eliminates the risk, expense, and
delay inherent in the litigation process").
With respect to the seventh Grinnell factor, there is
no evidence that defendant could not pay a judgment greater than
the settlement amount.
However, "[e]ven if [they] could have
withstood a greater judgment, a 'defendant's ability to withstand
15
a greater judgment, standing alone, does not suggest that the
settlement is unfair.'"
Beckman v. KeyBank, N.A., supra, 293
F.R.D. at 476, quoting Frank v. Eastman Kodak Co., 228 F.R.D.
174, 186 (W.D.N.Y. 2005) (citation omitted).
Thus, the seventh
factor is neutral and does not preclude final settlement
approval.
Finally, the eighth and ninth Grinnell factors weigh in
favor of final approval. "'[T]here is a range of reasonableness
with respect to a settlement -- a range which recognizes the
uncertainties of law and fact in any particular case and the
concomitant risks and costs necessarily inherent in taking any
litigation to completion.'"
Frank v. Eastman Kodak Co., supra,
228 F.R.D. at 186, quoting Newman v. Stein, 464 F.2d 689, 693 (2d
Cir. 1972).
Here, the three million dollar settlement falls
within the range of reasonableness.
Class counsel estimate that,
if defendant prevailed on a fluctuating workweek argument, the
settlement amount represents approximately 49% of the class’s
lost wages over the liability period, assuming that class members
worked overtime in 85% of total workweeks, and averaged 5
overtime hours per week (Swartz Decl., ¶ 63).
In light of the
best possible recovery and the attendant risks of litigation,
this settlement provides the class a fair recovery.
16
Because all the relevant factors weigh in favor of the
settlement, I hereby grant the motion for final approval and
unconditionally approve the settlement as set forth in the
Settlement Agreement.
C.
Approval of the
FLSA Settlement
A settlement in an FLSA collective action is not
effective unless it is approved by either a district court or the
United States Department of Labor.
Cheeks v. Freeport Pancake
House, Inc., 796 F.3d 199 (2d Cir. 2015).
However, settlement of
a collective action does not implicate the same due process
concerns as the settlement of a class action because, unlike in
Rule 23 class actions, the failure to opt in to an FLSA
collective action does not prevent a plaintiff from bringing suit
at a later date.
See Romero v. La Revise Assocs., 58 F. Supp.3d
411, 421 (S.D.N.Y. 2014) (Gorenstein, M.J.); Beckman v. KeyBank,
N.A., supra, 293 F.R.D. at 476.
Accordingly, an FLSA settlement
is examined with less scrutiny than a class action settlement;
the court simply asks whether the settlement reflects a fair and
reasonable compromise of disputed issues that was reached as a
result of contested litigation.
Wolinsky v. Scholastic Inc., 900
F. Supp. 2d 332, 335 (S.D.N.Y. 2012) (Furman, D.J.).
17
Here, the settlement resulted from arm's-length
negotiations resolving disputed issues.
During pre-litigation
and post-Complaint negotiations, the parties were represented by
competent counsel with extensive experience in wage and hour law,
and there is no evidence that even suggests any collusion.
Accordingly, the settlement meets the standard for approval.
D.
Dissemination
of Notices to Class
Pursuant to the Preliminary Approval Order, Rust
Consulting, Inc., the claims administrator, mailed the notices to
all 1,372 known class members at his or her last known address
(with remailing of returned notices) (Roe Decl., ¶¶ 9-11).
I
conclude that the notices fairly and adequately advised class
members of the terms of the settlement, as well as the right of
members of the class to opt in to the collective action, to
object to the settlement and to appear at the fairness hearing
conducted on November 14, 2014.
Pursuant to Rule 23(c)(2)(B),
class members were provided with "the best notice that [was]
practicable under the circumstances."
Further, I conclude that
the notices and the process by which they were distributed
comported with all constitutional requirements, including those
18
of due process.
I confirm Rust Consulting, Inc. as the claims
administrator.
E.
Award of Fees and
Costs to Class Counsel
The FLSA, NYLL, NJWHL, and Maryland Wage Laws each
provide that a successful plaintiff can recover his or her
reasonable attorneys' fees and costs.
See 29 U.S.C. § 216(b);
N.Y. Labor L. §§ 198, 663(1); N.J. Stat. Ann. § 34:11-56a25; Md.
Lab. & Emply. § 3–427(d).
Even where the plaintiff agrees to a
settlement, counsel is still entitled to his or her fees under
the law.
Kahlil v. Original Old Homestead Rest., Inc., 657 F.
Supp. 2d 470, 474 (S.D.N.Y. 2009) (Holwell, D.J.).
An application for attorneys' fees must be supported by
"contemporaneous time records" that "specify, for each attorney,
the date, the hours expended, and the nature of the work done."
New York State Ass'n for Retarded Children, Inc. v. Carey, 711
F.2d 1136, 1148 (2d Cir. 1983).
"Carey establishes what is
essentially a hard-and-fast rule 'from which attorneys may
deviate only in the rarest of cases' . . . ."
Scott v. City of
New York, 643 F.3d 56, 57 (2d Cir. 2011), quoting Scott v. City
of New York, 626 F.3d 130, 133 (2d Cir. 2010).
Not even a
District Judge's personal observations of an attorney's work can
19
substitute for the required contemporaneous time records.
v. City of New York, supra, 643 F.3d at 58.
Scott
The burden is on the
attorney requesting fees to provide sufficient evidence,
including production of contemporaneous time records or
sufficient explanation for their absence.
Lewis v. Coughlin, 801
F.2d 570, 577 (2d Cir. 1986), citing New York State Ass'n for
Retarded Children, Inc. v. Carey, supra, 711 F.2d at 1148, 1154.
In addition, in order for me to make a determination as
to the reasonableness of the award sought, plaintiffs must
provide sufficient information regarding the qualifications of
the attorneys and the paralegals for whom fees are sought.
See,
e.g., Yea Kim v. 167 Nail Plaza, Inc., 05 Civ. 8560(GBD)(GWG),
2009 WL 77876 at *2, *9 (S.D.N.Y. Jan. 12, 2009) (Daniels, D.J.)
(reducing attorney and paralegal rates where no information was
provided to the court regarding their backgrounds) (adopting
Report and Recommendation of Gorenstein, M.J.); Tlacoapa v.
Carregal, 386 F. Supp. 2d 362, 370 (S.D.N.Y. 2005) (Robinson,
D.J.) (reducing paralegal rate where limited information was
provided regarding paralegals' qualifications and the nature of
their work).
20
1.
Attorneys' Fees Requested
Plaintiffs are represented by attorneys at the firms of
Outten & Golden and Shavitz Law Group.
Class counsel have
represented plaintiffs without compensation under a contingent
fee arrangement (Swartz Decl., ¶ 52).
Class counsel seek one-
third of the $3,000,000.00 settlement fund, or $1,000,000.00, as
attorneys' fees and costs in the amount of $17,037.51.
Furthermore, counsel have submitted time records reflecting
$267,091.00 in attorney and staff fees (Swartz Decl., Ex. B, C;
Shavitz Decl., Ex. A, B; Swartz Suppl. Decl., Ex. A, B).
Plaintiffs' counsel contend that fees should be calculated using
the percentage method rather than the lodestar method.
Plaintiffs' counsel argue that awarding one third of the
settlement fund is preferable as a matter of practice because it
incentivizes attorneys to litigate cases efficiently and with the
highest settlement amount, it promotes early resolution, and it
preserves judicial resources because it relieves the court of the
obligation of evaluating fee petitions
(Pls. Fees Mem. at 4-6).
Counsel also argue that their requested fee is warranted because
they took a substantial risk in prosecuting this case in the face
of contrary legal precedent and obtained a favorable result (Pls.
Suppl. Fees Mem.).
21
There have been no objections to the attorneys' fees
as described in the notices (Roe Decl., ¶ 13).
Whether an attorneys' fee award is reasonable is within
the discretion of the court.
Black v. Nunwood, Inc., 13 Civ.
7207 (GHW), 2015 WL 1958917 at *4 (S.D.N.Y. Apr. 30, 2015)
(Woods, D.J.) (collecting cases).
In Goldberger v. Integrated
Res., Inc., supra, 209 F.3d at 52-53, the Second Circuit noted
that, in common fund cases, "fixing a reasonable fee becomes even
more difficult because the adversary system is typically diluted
-- indeed, suspended -- during fee proceedings" since the
defendants "have little interest in how [the fund] is distributed
and thus no incentive to oppose the fee" and "class members -the intended beneficiaries of the suit -- rarely object."
Thus,
in common fund cases, the district court must assess a fee award
"based on scrutiny of the unique circumstances of each case, and
a jealous regard to the rights of those who are interested in the
fund."
Goldberger v. Integrated Res., Inc., supra, 209 F.3d at
53 (internal quotation marks and citation omitted).
"Although [the Second Circuit] ha[s] acknowledged that
'the trend in this Circuit is toward [awarding fees on] the
percentage [of the fund] method,' it remains the law in this
Circuit that courts 'may award attorneys' fees in common fund
cases under either the "lodestar" method or the "percentage of
22
the fund" method.'"
McDaniel v. Cty. of Schenectady, 595 F.3d
411, 417 (2d Cir. 2010) (collecting cases), quoting Wal-Mart
Stores, Inc. v. Visa U.S.A., Inc., supra, 396 F.3d at 121.
Under
the percentage-of-the-fund method, the attorneys are awarded a
reasonable percentage of the common fund.
Schenectady, supra, 595 F.3d at 418.
McDaniel v. Cty. of
Under the lodestar method,
the "lodestar" is calculated as the product of a reasonable
hourly rate and the reasonable number of hours required by the
case, creating a presumptively reasonable fee.
Perez v. AC
Roosevelt Food Corp., 744 F.3d 39, 44 (2d Cir. 2013).
While
"there is a 'strong presumption' that the lodestar figure is
reasonable," it may be adjusted by a multiplier when it "does not
adequately take into account a factor that may properly be
considered in determining a reasonable fee."
Perdue v. Kenny A.
ex rel. Winn, 559 U.S. 542, 554 (2010).
"[N]either the lodestar nor the percentage-of-fund
approach to awarding attorneys' fees in common fund cases is
without problems."
McDaniel v. Cty. of Schenectady, supra, 595
F.3d at 418-19 (describing the problems with and benefits of both
methods).
Ultimately, common fund fee awards must be "made with
moderation" and the court must "act as a fiduciary who must serve
as a guardian of the rights of absent class members."
Goldberger
v. Integrated Res., Inc., supra, 209 F.3d at 52 (internal
23
quotation marks and citations omitted).
Accordingly, in this
Circuit, both the lodestar and the percentage of the fund methods
are
guided by the traditional criteria in determining a
reasonable common fund fee, including: (1) the time
and labor expended by counsel; (2) the magnitude and
complexities of the litigation; (3) the risk of the
litigation . . . ; (4) the quality of representation;
(5) the requested fee in relation to the settlement;
and (6) public policy considerations.
Goldberger v. Integrated Res., Inc., supra, 209 F.3d at 50
(internal quotation marks and citation omitted, alteration in
original).
Where the percentage-of-the-fund method is used, the
Second Circuit, "encourage[s] the practice of requiring
documentation of hours as a 'cross check' on the reasonableness
of the requested percentage," Goldberger v. Integrated Res.,
Inc., supra, 209 F.3d at 50.
See also Cassese v. Williams, 503
F. App'x 55, 59 (2d Cir. 2012) (summary order); Masters v.
Wilhelmina Model Agency, Inc., 473 F.3d 423, 436 (2d Cir. 2007).
I addressed the recent case law in this Circuit
regarding the frequent award of one-third of the common fund as
fees in FLSA cases in Lizondro-Garcia v. Kefi LLC, No. 12 Civ.
1906 (HBP), 2015 WL 4006896 (S.D.N.Y. July 1, 2015).
There, I
agreed with the decision of the Honorable William H. Pauley, III,
United States District Judge, in Fujiwara v. Sushi Yasuda Ltd.,
58 F. Supp. 3d 424, 436 (S.D.N.Y. 2014) (Pauley, D.J.) that there
24
are reasons to be "wary" of the percentage-of-fund method in FLSA
cases and chose to analyze the reasonableness of class counsels'
fee application pursuant to the lodestar method and the
Goldberger criteria.
Lizondro-Garcia v. Kefi LLC, supra, 2015 WL
4006896, at *4; accord Gonzalez v. Scalinatella, Inc., 13 Civ.
3629 (PKC)(MHD), 2015 WL 3757069 at *18-*19 (S.D.N.Y. June 12,
2015) (Dolinger, M.J.); Flores v. Mamma Lombardi's of Holbrook,
Inc., --- F. Supp. 3d ---, 12 Civ. 3532 (GRB), 2015 WL 2374515 at
*12-*13 (E.D.N.Y. May 18, 2015); Ortiz v. Chop't Creative Salad
Co., 13 Civ. 2541 (KNF), 2015 WL 778072 at *19 (S.D.N.Y. Jan. 16,
2015) (Fox, M.J.).
Plaintiffs' counsel seek to distinguish Fujiwara
because this case involved more complex issues that posed
substantial risks to recovery should the case have gone to trial.
Unlike Fujiwara, which involved only factual issues concerning
the hours plaintiff worked, the wages they were paid and whether
defendant was entitled to the tip credit, this is a
misclassification case in which plaintiffs sought to represent
more than 1,350 ABMs across the country and which involved
substantially more difficult factual and legal issues.
The risks
in this case include the lack of clear precedent in favor of
class certification, arbitration agreements that threatened to
delay or derail the litigation for certain class members, and the
25
complexity of the liability question (Pls. Fees Mem. at 9-13;
Pls. Suppl. Fees Mem. at 1-8; Swartz Decl. ¶ 65).
Plaintiffs'
counsel also cite cases in this Circuit that have granted onethird of a settlement fund as a reasonable fee in wage and hour
class action settlements (Pls. Suppl. Fees Mem. at 10-11 fn. 12).
Finally, counsel claim that one-third of the settlement fund is
the "market rate" (Pls. Suppl. Fees Mem. at
at 11, citing Henry
v. Little Mint, Inc., 12 Civ. 3996 (CM), 2014 WL 2199427 at *15
(S.D.N.Y. May 23, 2014) (McMahon, D.J.)).
A key concern in the recent caselaw regarding fee
application analysis in FLSA settlements is the need for robust
judicial analysis rather than the ultimate size of the award.
See Fujiwara v. Sushi Yasuda Ltd., supra, 58 F. Supp. 3d at 436
("Approval of class action settlements and fee applications is
precisely where judicial scrutiny, not judicial deference, is
most needed.").
In cases similar to this one, I have awarded
less than one-third of the settlement fund to provide counsel
with reasonable compensation for both their efforts in a complex
case and the risk of contingent fee litigation.
See, e.g.,
Ballinger v. Advance Magazine Publishers, Inc., No. 13 Civ. 4036
(HBP) (S.D.N.Y. Aug. 11, 2015) (awarding counsel their requested
fee of 11.11% of a $5,850,000.00 settlement fund).
Therefore,
consistent with my obligation to approach fee applications with
26
"a jealous regard to the rights of those who are interested in
the fund," Goldberger v. Integrated Res., Inc., supra, 209 F.3d
at 53 (internal quotation marks and citation omitted) I shall
apply the lodestar method here and consider counsel's arguments
in determining the appropriate multiplier.
As demonstrated
below, the lodestar and multiplier analysis yields an award to
plaintiffs' counsel of $500,000.00 or 16.67% of the settlement
fund.
2.
The Lodestar
Counsel argue that the lodestar and muliplier
calculation also supports their request for a $1,000,000.00 fee
or one-third of the settlement fund.
Plaintiffs' counsel claim
that both their rates and the number of hours they expended are
reasonable.
They also argue that the 3.9 multiplier that they
seek is within the range of multipliers regularly awarded in this
district and is reasonable in light of the complexity of the
litigation, the contingent nature of the case, counsel's skill,
and the additional time they will expend implementing, monitoring
and enforcing the settlement.
27
Class counsel spent the following hours3 on this matter
and seek the rates set forth below:
O&G
Justin M. Swartz, Esq.
Partner - 16 years experience
49.3 hours @ $725/hour
35,742.50
Jahan C. Sagafi, Esq.
Partner - 13 years experience
00.5 hours @ 590/hour
295.00
3
In support of their application for fees, plaintiffs'
counsel have submitted computerized compilations of
contemporaneous time records describing how they spent the hours
for which fees are sought (Swartz Decl., Ex. C; Shavitz Decl.,
Ex. B; Swartz Suppl. Decl., Ex. A). Such transcriptions of
contemporaneous time records have been found to satisfy the
requirements set forth above. See, e.g., Cruz v. Local Union No.
3 of Int'l Bhd. Of Elec. Workers, 34 F.3d 1148, 1160 (2d Cir.
1994) (accepting a "typed listing of [attorneys'] hours from
their computer records," in lieu of contemporaneous records,
where the record showed that the attorneys "made contemporaneous
entries as the work was completed, and that their billing was
based on these contemporaneous records"); Tri-Star Pictures, Inc.
v. Unger, 42 F. Supp. 2d 296, 302-03 (S.D.N.Y. 1999) (Edelstein,
D.J.) ("The actual original time sheets are not necessary;
submitting an affidavit and attaching a computer printout of the
pertinent contemporaneous time records is acceptable."); Lenihan
v. City of New York, 640 F. Supp. 822, 824 (S.D.N.Y. 1986)
(Conner, D.J.) ("The Court routinely receives computerized
transcriptions of contemporaneous time records from firms whose
billing records are maintained in computers" as "a form
convenient for the Court.").
28
June E. Turner, Esq.4
Associate/Partner - 8 years experience
00.5 hours @ $475/hour
237.50
Naomi Sunshine, Esq.
Staff Attorney - 9 years experience
01.8 hours @ $475/hour
855.00
Jennifer L. Liu, Esq.
Associate - 6 years experience
97.2 hours @ $400/hour
38,880.00
Amber C. Trzinski, Esq.
Associate - 5 years experience
03.1 hours @ $360/hour
1,116.00
Sally J. Abrahamson, Esq.
Associate - 5 years experience
00.1 hours @ $360/hour
36.00
Michael J. Scimone, Esq.
Associate - 5 years experience
00.6 hours @ $360/hour
216.00
Michael Litrownik, Esq.
Associate - 4 years experience
86.1 hours @ $325/hour
27,982.50
4
Mr. Swartz's initial declaration lists Ms. Turner's hours
as that of an associate and his second supplemental declaration
refers to her as a partner (Swartz Decl., Ex. B; Swartz Second
Suppl. Decl., ¶ 5). Given the lack of explanation, my analysis
follows the time sheet, which lists Ms. Turner's work on this
matter as that of an associate.
29
Deirdre A. Aaron, Esq.
Associate - 4 years experience
01.2 hours @ $325/hour
390.00
Christopher M. McNerney, Esq.
Associate - 2 years experience
00.2 hours @ $270/hour
54.00
Monique E. Chase, Esq.
Associate - 2 years experience
02.5 hours @ $270/hour
675.00
Julia Rabinovich, Esq.
Associate - 2 years experience
03.5 hours @ $270/hour
945.00
Chauniqua D. Young, Esq.
Associate - 2 years experience
4.00 hours @ $270/hour
1,080.00
Alex Bonilla, Esq.
Contract Attorney - 2 years experience
23.7 hours @ $270/hour
6,399.00
Olivia J. Quinto, Esq.
Associate - 1 year experience
2.00 hours @ $250/hour
500.00
SLG
Gregg I. Shavitz, Esq.
Partner - 20 years experience
121.2 hours @ $550/hour
66,660.00
30
Susan H. Stern, Esq.
Counsel - 24 years experience
75.0 hours @ $500/hour
37,500.00
Christine Duignan, Esq.
Counsel - 23 years experience
14.4 hours @ $450/hour
6,480.00
Paolo Meireles, Esq.
Associate - 4 years experience
77.0 hours @ $300/hour
23,100.00
TOTAL
$249,143.50
Class counsel have also provided the qualifications of
each attorney for whom fees are sought (Swartz Decl., ¶¶ 4-28;
Shavitz Decl., ¶¶ 4-13; Swartz Second Suppl. Decl., ¶¶ 4-18).
Plaintiffs also seek compensation for the following
paralegal work:
01.7 hours @ $250/hour
425.00
40.7 hours @ $235/hour
9,564.50
18.4 hours @ $220/hour
4,048.00
39.1 hours @ $100/hour
3,910.00
TOTAL
$ 17,947.50
The foregoing work was performed by a total of 17 paralegals.
All of the paralegal for whom a rate of $100/hour is sought work
or worked for the Shavitz Law Group.
Counsel also provided a
description of the background and qualifications of each
31
paralegal for whom fees are sought except for two entries for
?part-time paralegal" listed in the fee application (Swartz
Decl., ¶¶ 15-28; Shavitz Decl., ¶¶ 14-15).
a.
Reasonable
Hourly Rates
The hourly rates requested by counsel, which range from
$250 to $725 for Outten & Golden's attorneys and $300 to $550 for
the Shavitz Law Firm's attorneys, are higher than the reasonable
hourly rates awarded in this district for lawyers with similar
experience.
The hourly rates used in making a fee award should
be "what a reasonable, paying client would be willing to pay."
Arbor Hill Concerned Citizens Neighborhood Ass'n v. Cty. of
Albany, 522 F.3d 182, 184 (2d Cir. 2007).
This rate should be
"in line with those [rates] prevailing in the community for
similar services by lawyers of reasonably comparable skill,
experience and reputation."
Blum v. Stenson, 465 U.S. 886, 895
n.11 (1984); accord Reiter v. MTA N.Y.C. Transit Auth., 457 F.3d
224, 232 (2d Cir. 2006).
In determining reasonable hourly rates,
a court should first examine the attorneys' experience.
Kahlil
v. Original Old Homestead Rest., Inc., supra, 657 F. Supp. 2d at
475.
In determining a reasonable hourly rate, the court should
not only consider the rates approved in other cases in the
32
District, but should also consider any evidence offered by the
parties.
2005).
Farbotko v. Clinton Cty., 433 F.3d 204, 208-09 (2d Cir.
The Court is also free to rely on its own familiarity
with prevailing rates in the District.
A.R. ex rel. R.V. v.
N.Y.C. Dep't of Educ., 407 F.3d 65, 82 n.16 (2d Cir. 2005); Miele
v. New York State Teamsters Conference Pension & Ret. Fund, 831
F.2d 407, 409 (2d Cir. 1987).
Counsel for plaintiffs are experienced in FLSA actions.
Mr. Swartz's declaration describes the Outten & Golden firm as a
?40+ attorney firm based in New York City that focuses on
representing plaintiffs in a wide variety of employment matters,
including individual and class action litigation involving wage
and hour, discrimination, and harassment claims, as well as
contract and severance negotiations." (Swartz Decl., ¶ 1).
Outten & Golden regularly represents plaintiffs in this Court in
employment related litigation and have an excellent and welldeserved reputation.
at 473.
Beckman v. KeyBank, N.A., supra, 293 F.R.D.
Mr. Shavitz's declaration describes the Shavitz Law
Group as ?a 6-attorney firm based in Boca Raton, Florida, that
focuses on representing workers as plaintiffs in employmentrelated matters, including claims based upon individual and
class-wide violations of state and federal wage and hour laws."
(Shavitz Decl., ¶ 1).
The firms regularly act as class counsel
33
in wage and hour collective and class actions in this district
(Swartz Decl., ¶ 8; Shavitz Decl., ¶¶ 6, 21).
Plaintiffs'
counsel's declarations also describe the experience and
qualifications of each attorney who billed time to the
litigation.
These include the attorneys' law school graduation
dates, bar admissions, years of practice, experience in
employment litigation, and relevant information regarding the
attorneys' speaking engagements and publications in the field
(Swartz Decl., ¶¶ 1-14; Shavitz Decl., ¶¶ 7-13; Swartz Second
Suppl. Decl., ¶¶ 4-15).
Although courts in this district have occasionally
awarded hourly rates of $550 and $600 to experienced senior
litigators, FLSA litigators are rarely awarded over $450 per
hour.
See Gonzalez v. Scalinatella, Inc., supra, 2015 WL 3757069
at *20-*22; Kim v. Kum Gang, Inc., 12 Civ. 6344 (MHD), 2015 WL
3536593 at *2 n.16 (S.D.N.Y. June 5, 2015) (Dolinger, M.J.).5
5
Accord Watkins v. Smith, 12 Civ. 4635 (DLC), 2015 WL
476867 at *3 (S.D.N.Y. Feb. 5, 2015) (Cote, D.J.); Easterly v.
Tri-Star Transport Corp., 11 Civ. 6365 (VB), 2015 WL 337565 at
*10 (S.D.N.Y. Jan. 23, 2015) (Briccetti, D.J.) (adopting Report
and Recommendation of Davison, M.J.); Farmer v. Hyde Your Eyes
Optical, Inc., 13 Civ. 6653 (GBD)(JLC), 2015 WL 2250592 at *14
(S.D.N.Y. May 13, 2015) (Cott, M.J.); Black v. Nunwood, Inc.,
supra, 2015 WL 1958917 at *5-*6; Patino v. Brady Parking, Inc.,
11 Civ. 3080 (AT)(DF), 2015 WL 2069743 at *2-*3 (S.D.N.Y. Apr.
30, 2015) (Freeman, M.J.); Rosendo v. Everbrighten Inc., 13 Civ.
7256 (JGK)(FM), 2015 WL 1600057, at *8-*9 (S.D.N.Y. Apr. 7, 2015)
(continued...)
34
Indeed, plaintiffs cite no cases in support of the rates
requested.6
Nonetheless, I note that in 2012 a court in this
district approved slightly higher rates for the Outten & Golden
firm.
See Torres v. Gristede's Operating Corp., 04 Civ. 3316
(PAC), 2012 WL 3878144 at *3-*4 (S.D.N.Y. Aug. 6, 2012) (Crotty,
D.J.), aff'd, 519 F. App'x 1, 3-4 (2d Cir. 2013) (summary order)
(awarding rates of up to $550 per hour).
Consistent with this
recent decision and the other authorities cited above, and
considering counsel's experience, skills and level of
contribution to the work, I conclude that the rates they seek are
too high and that the hourly rates set forth below are
reasonable.
The rates I am awarding are higher than the rates
typically awarded in this district and are meant to compensate
counsel for their experience and their efforts in successfully
litigating and settling this case at an early stage:
5
(...continued)
(Maas, M.J.) (Report and Recommendation), adopted by, 2015 WL
4557147 (S.D.N.Y. July 28, 2015) (Koeltl, D.J.); Fujiwara v.
Sushi Yasuda Ltd., supra, 58 F. Supp. 3d at 437.
6
In support of their requested rates, Mr. Shavitz's
declaration cites to cases in this district that awarded the
Shavitz Law Firm and Outten & Golden the requested one-third of
the settlement fund (Shavitz Decl., ¶ 21). These decisions do
not address the reasonableness of the hourly rates requested.
35
Name
Firm
Hours
Hourly Rate
Awarded
Justin M. Swartz
O&G
49.3
550
27,115.00
Jahan C. Sagafi
O&G
00.5
500
250.00
June E. Turner
O&G
00.5
350
175.00
Naomi Sunshine
O&G
01.8
400
720.00
Jennifer L. Liu
O&G
97.2
325
31,590.00
Amber C. Trzinski
O&G
03.1
300
930.00
Sally J. Abrahamson
O&G
00.1
300
30.00
Michael J. Scimone
O&G
00.6
300
180.00
Michael Litrownik
O&G
86.1
275
23,677.50
Deirdre A. Aaron
O&G
01.2
275
330.00
Christopher M.
McNerney
O&G
00.2
250
50.00
Monique E. Chase
O&G
02.5
250
625.00
Julia Rabinovich
O&G
03.5
250
875.00
Chaniqua D. Young
O&G
4.00
250
1,000.00
Alex Bonilla
O&G
23.7
250
5,925.00
Olivia J. Quinto
O&G
2.00
200
400.00
Gregg I. Shavitz
SLG
121.2
500
60,600.00
Susan H. Stern
SLG
75.0
475
35,625.00
Christine Duignan
SLG
14.4
425
6,120.00
Paolo Meireles
SLG
77.0
275
21,175.00
TOTAL:
563.9
Preliminary
Lodestar
$217,392.50
As to the requested fees for paralegal work, in recent
FLSA actions, hourly rates between $100 and $125 for paralegal
36
work have been found to be reasonable.
See, e.g., Gonzalez v.
Scalinatella, Inc., supra, 2015 WL 3757069 at *22 (awarding
paralegals hourly rates of $100 to $105); Guallpa v. N.Y. Pro
Signs Inc., 11 Civ. 3133 (LGS)(FM), 2014 WL 2200393 at *10
(S.D.N.Y. May 27, 2014) (Maas, M.J.) (reducing paralegal hourly
rate to $125) (Report and Recommendation), adopted by 2014 WL
4105948 (S.D.N.Y., Aug. 18, 2014) (Schofield, D.J.); Viafara v.
MCIZ Corp., 12 Civ. 7452 (RLE), 2014 WL 1777438 at *14 (S.D.N.Y.
Apr. 30, 2014) (awarding an hourly rate of $125 to paralegal).
Accordingly, I find that a reasonable hourly rate for the Outten
& Golden paralegals for whom background information was provided
to be $125 and the requested $100 per hour for the Shavitz Law
Group paralegals.
Applying these rates to the work of the 16
paralegals for whom background information was provided yields a
product of $9,210.00.
b.
Reasonable
Number of Hours
The party seeking attorneys' fees also bears the burden
of establishing that the number of hours for which compensation
is sought is reasonable.
Cruz v. Local Union No. 3 of Int'l Bhd.
of Elec. Workers, supra, 34 F.3d at 1160, citing Hensley v.
Eckerhart, 461 U.S. 424, 437 (1983); Wong v. Hunda Glass Corp.,
37
09 Civ. 4402 (RLE), 2010 WL 3452417, at *3 (S.D.N.Y. Sept. 1,
2010) (Ellis, M.J.).
Courts "should exclude . . . hours that
were not reasonably expended," such as where there is
overstaffing or the hours are "excessive, redundant, or otherwise
unnecessary."
Hensley v. Eckerhart, supra, 461 U.S. at 434
(internal quotation marks omitted).
The hours billed by plaintiffs' counsel to this matter
are reasonable.
Although the time records reflect that a large
number of attorneys were assigned to and billed to the matter,
the vast majority of the work, totaling 529.50 hours, was done by
a group of 7 attorneys, four at Outten & Golden (Swartz, Liu,
Litrownik, and Bonilla) and three at the Shavitz Law Group
(Shavitz, Stern, and Meireles). The attorneys outside of this
group billed less than 50 hours; these hours are not excessive or
redundant and the descriptions of the services provided are
specific.
These hours are, therefore, reasonable.
I note that
there are dozens of entries reflecting over 15 hours of paralegal
time billed by the Shavitz Law Group using the phrase
?Communication with witness regarding information."
This and
similar entries are vague and do not by themselves provide enough
information to assess the reasonableness of the hours billed.
However, Mr. Shavitz's declaration states that the paralegals
were involved in interviewing clients and preparing their
38
declarations (Shavitz Decl., ¶¶ 14-15).
Therefore, this time,
which was directed to the gathering of information from the
potential plaintiffs that contributed to the successful
settlement, is reasonable and compensable.
I also find that 81.5 hours of paralegal time for which
plaintiffs' counsel seek compensation are reasonable.
Applying the reduced rates set forth above to the hours
for which counsel seeks compensation yields a total lodestar of
$226,602.50.
c.
Application of
a Multiplier
Under the lodestar method, as applied in common fund
cases, the Goldberger criteria7 "indicate whether a multiplier
should be applied to the lodestar."
Schenectady, supra, 595 F.3d at 423.
McDaniel v. Cty. of
A $1,000,000.00 fee award
would represent a 4.41 multiplier of my adjusted lodestar figure.
Plaintiffs' counsel cite cases in this district awarding
multipliers of up to eight times the lodestar (Pls. Fees Mem. at
7
The Goldberger criteria are similar to those in Arbor Hill
Concerned Citizens Neighborhood Ass'n v. Cty. of Albany, supra,
522 F.3d at 184 and are applied in common fund cases. See
McDaniel v. Cty. of Schenectady, supra, 595 F.3d at 419-23
(discussing the applicability of the criteria in Arbor Hill and
Goldberger to statutory fee-shifting and common fund cases,
respectively).
39
18-19).
In Fujiwara, Judge Pauley determined that "[t]here is
little consensus in this district on the appropriate range for
lodestar multipliers," and concluded that "a multiplier near 2
should, in most cases, be sufficient compensation for the risk
associated with contingent fees in FLSA cases."
Fujiwara v.
Sushi Yasuda Ltd., supra, 58 F. Supp. 3d at 438-39.
As discussed
above, this case is more complex than the average FLSA case, and,
for the reasons discussed below, I conclude a multiplier of 2.21
to the lodestar is warranted and is supported by the Goldberger
analysis.
i.
Counsel's
Time and Labor
Plaintiffs' counsel's efficient and effective
representation of plaintiffs in bringing this action and securing
the settlement warrant an increase in the lodestar figure.
Plaintiffs' counsel reasonably expended approximately 560
attorney hours and 80 legal staff hours over almost 2 years to
secure the settlement and reach the point of final approval.
During this time, plaintiffs' counsel conducted an investigation
into plaintiffs' claims and defendant's business practices,
interviewed the named and opt-in plaintiffs, communicated with
plaintiffs to keep them apprised of the status of the case,
40
represented plaintiffs at a mediation, successfully negotiated a
settlement with defendant, and proceeded efficiently through the
litigation.
Plaintiffs' counsel will also spend additional hours
to administer the settlement.
ii.
The Litigation's
Magnitude and Complexity
Plaintiffs' counsel also correctly note that this case
is larger and more complex than the typical FLSA collective
action.
"The size and difficulty of the issues in a case are
significant factors to be considered in making a fee award."
Sukhnandan v. Royal Health Care of Long Island LLC, supra, 2014
WL 3778173 at *10.
"Among FLSA cases, the most complex type is
the 'hybrid' action brought here, where state wage and hour
violations are brought as an 'opt out' class action pursuant to
Rule 23 in the same action as the FLSA 'opt in' collective action
pursuant to 29 U.S.C. § 216(b)."
Siler v. Landry's Seafood
House-North Carolina, Inc., 13 Civ. 587 (RLE), 2014 WL 2945796 at
*9 (S.D.N.Y. June 30, 2014) (Ellis, M.J.); see also Henry v.
Little Mint, Inc., supra, 2014 WL 2199427 at *13.
Here, the FLSA
settlement resolves the claims of 588 FLSA class members and 781
Rule 23 class members from three different states. There is
overlap between the classes and the settlement negotiated by
41
counsel took into account the various circumstances presented.
Therefore, this factor also favors the multiplier.
iii. The Risk
of Litigation
Plaintiffs' counsel faced risk because they represented
plaintiffs on a contingent basis and have received no fee
payments for their work since the commencement of work on this
action in 2013.
"Uncertainty that an ultimate recovery will be
obtained is highly relevant in determining the reasonableness of
an award."
Febus v. Guardian First Funding Grp., LLC, 870 F.
Supp. 2d 337, 340 (S.D.N.Y. 2012) (Stein, D.J.) (quotation marks
and citation omitted); accord Henry v. Little Mint, Inc., supra,
2014 WL 2199427 at *14.
"Risk falls along a spectrum, and should
be accounted for accordingly."
Inc., supra, 209 F.3d at 54.
Goldberger v. Integrated Res.,
In addition, victory in a contested
suit would have been far from clear as there was case law
contrary to plaintiffs' position (see Pls. Fees Mem. at 12-13
(citing cases)).
Accordingly, the third Goldberger criterion
also supports a reasonable multiplier.
42
iv.
The Quality
of Representation
The quality of class counsel and their representation
of plaintiffs also supports the application of a multiplier.
"To
determine the 'quality of the representation,' courts review,
among other things, the recovery obtained and the backgrounds of
the lawyers involved in the lawsuit."
Taft v. Ackermans, 02 Civ.
7951 (PKL), 2007 WL 414493 at *10 (S.D.N.Y. Jan. 31, 2007)
(Leisure, D.J.); See also Whitehorn v. Wolfgang's Steakhouse,
Inc., 275 F.R.D. 193, 200 (S.D.N.Y. 2011) (Sand, D.J.) ("There is
no dispute that Plaintiffs' counsel are qualified and experienced
in class action law and wage and employment litigation in New
York.").
Both Outten & Golden and the Shavitz Law Group have
significant experience representing employees in wage and hour
class and collective actions in this district (Swartz Decl., ¶ 8
(listing cases), ¶ 42; Shavitz Decl., ¶ 16).
As noted above, the
Outten & Golden firm has been recognized for having an excellent
reputation in this district in the field of employment
litigation.
See Beckman v. KeyBank, N.A., supra, 293 F.R.D. at
473; Torres v. Gristede's Operating Corp., supra, 2012 WL 3878144
at *3-*4.
Class counsel conducted a thorough investigation of
plaintiffs' claims through in-depth interviews with plaintiffs
and three opt-in plaintiffs, review of documents obtained from
43
plaintiffs and defendant, background research on defendant, and
through legal research on the factual and legal issues unique to
this group of plaintiffs (See Swartz Decl. ¶¶ 29-32, 65; Pls.
Fees Mem. at 11-12; Pls. Suppl. Fees Mem. at 2-7).
Class
counsel's work on plaintiffs' behalf, aided by their experience,
ultimately aided plaintiffs in the progress of the litigation and
in reaching a fair settlement.
I conclude that the fourth
criterion also weighs in favor of the 2.21 multiplier.
v.
Relationship of
the Fees to the Settlement
Under Goldberger, "[c]ourts consider the size of a
settlement to ensure that the [fees] awarded do[] not constitute
a windfall."
Sukhnandan v. Royal Health Care of Long Island LLC,
supra, 2014 WL 3778173 at *13.
"Where the size of the fund is
relatively small, courts typically find that requests for a
greater percentage of the fund are reasonable."
Sukhnandan v.
Royal Health Care of Long Island LLC, supra, 2014 WL 3778173 at
*13, citing In re Gilat Satellite Networks, Ltd., 02 Civ. 1510
(CPS)(SMG), 2007 WL 2743675, *16 n. 41 (E.D.N.Y. Sept. 18, 2007).
Plaintiffs' counsel estimate plaintiffs' lost wages to be
approximately $6,122,448.98 (Swartz Decl., ¶ 63).
In this light,
an award of $500,000.00 is not a windfall considering that it
44
represents 16.67% of the $3,000,000.00 settlement fund and
compensates counsel for the approximately 640 of attorney and
paralegal hours spent securing a favorable settlement for
plaintiffs.
Even after attorneys' fees, costs, service awards
and claims administrator fees are distributed from the fund,
plaintiffs will still recover a significant amount of their
estimated actual damages.
Thus, this criterion also weighs in
favor of the fee award.
vi.
Public Policy
Considerations
Finally, "[w]hen determining whether a fee award is
reasonable, courts consider the social and economic value of the
class action, 'and the need to encourage experienced and able
counsel to undertake such litigation.'"
Siler v. Landry's
Seafood House-North Carolina, Inc., supra, 2014 WL 2945796 at
*11, quoting In re Sumitomo Copper Litig., 74 F. Supp. 2d 393,
399 (S.D.N.Y. 1999) (Pollack, D.J.).
"Adequate compensation for
attorneys who protect wage and hour rights furthers the remedial
purposes of the FLSA and [state wage and hour laws]."
Henry v.
Little Mint, Inc., supra, 2014 WL 2199427 at *15 (internal
quotation marks and citation omitted, alteration in original).
However, these public policies must be balanced against the need
45
to award fees "with an eye to moderation," particularly when the
fee application is unopposed and there is little incentive for
plaintiffs to object when the impact on their individual
potential recovery of any increase or decrease in the fee award
is incremental.
Goldberger v. Integrated Res., Inc., supra, 209
F.3d at 53 (internal quotation marks and citation omitted).
Public policy also favors consistency with respect to
fee awards; in the absence of countervailing factors such as
differences in the qualifications of counsel or the complexity of
the issues, there should not be wide disparities in the fee
awards to the same firm (or attorneys with similar
qualifications) in different litigations involving similar legal
and factual issues.
See generally Wells Fargo Bank N.A. v.
Walls, 1:12-cv-664 (LMB/IDD), 2013 WL 869902 at *3 (E.D. Va. Mar.
4, 2013), aff'd, 543 F. App'x 350 (4th Cir. 2013) (approving
hourly rates because they were consistent with the rates
previously awarded to the same attorneys).
I recently participated in the settlement of another
mis-classification case entitled Ballinger v. Advanced Magazine
Publishers, Inc., supra, 13 Civ. 4036 (HBP) (S.D.N.Y.).8
8
The
All of the information set forth herein concerning the
Ballinger case is disclosed in the publicly available filings in
that matter.
46
principal issue in that case was whether student interns who
worked at a number of national magazines were entitled to the
protection of the FLSA and the New York State Labor Law.
Like
this action, Ballinger was brought as collective action with
respect to the FLSA claims and as a class action with respect to
parallel state law claims.
Ballinger was commenced before the
Court of Appeals' decision in Glatt v. Fox Searchlight Pictures,
Inc., 791 F.3d 376 (2d Cir. 2015), and the outcome at the time
the action was commenced was far from certain.
O&G represented
plaintiffs in Ballinger and successfully negotiated a class-wide
settlement to be funded with a contribution of $5.85 million from
defendants.
In Ballinger, O&G sought and received a fee award of
$650,000 or approximately 11.11 % of the settlement fund.
The
fee award represented compensation for approximately 920 hours of
attorney time.
Counsel's lodestar in Ballinger was approximately
$368,000; the fee award was approximately 1.76 times the
lodestar.
In contrast the fee sought here -- $1,000,000 -- is
1/3 of the settlement amount and more than four times counsel's
lodestar after the reduction of counsel's hourly rates.
There can be no question that lawsuits are not fungible
goods, and any experienced litigator will attest that the time
and effort necessary to litigate a claim successfully is not
necessarily proportional to the amount in issue.
47
Nevertheless,
the fact that every lawsuit is unique does not preclude lawsuits
from being similar, and the claims in Ballinger and this action
exhibit many similarities.
Both involve claims concerning the
scope of the coverage afforded by the FLSA and parallel state
laws.
Ballinger involved only the FLSA and the New York Labor
Law.
In contrast, this action involves the FLSA and the labor
laws of three different states.
However, counsel were able to
settle this matter in approximately 60% of the hours it took to
settle Ballinger.
Given the size of the award in Ballinger and the
similarities and differences between that action and this one, I
conclude that the multiplier applied here must be set to yield a
product that is substantially less than the fee awarded in
Ballinger.
In doing so, I am not suggesting that Ballinger sets
some immutable benchmark against which all other fee awards to
O&G, or counsel of similar repute, must be measured.
Counsel
gain experience over time which ordinarily enhances the value of
their services.
Some cases are unusually complex or present
novel questions.
The conduct of an adversary can result in
increased expenditures of time and effort.
can vary from lawsuit to law suit.
value of a dollar over time.
The degree of success
And inflation can erode the
Nevertheless, in the absence of
some basis to distinguish on which to distinguish this case from
48
Ballinger (and none has been suggested), it is impossible to
justify a higher fee award in this case, given that this case was
of similar complexity, required fewer hours and resulted in a
smaller settlement, than Ballinger.
vii.
Summary
In light of the foregoing, I conclude that a reasonable
Goldberger multiplier is 2.21, yielding a fee award of $500,000.
F.
Costs
Class counsel also seek reimbursement of costs of
$17,037.51 in connection with their representation of plaintiffs
(Pls. Fees Mem. at 20-21).
"Attorneys may be compensated for
reasonable out-of-pocket expenses incurred and customarily
charged to their clients, as long as they 'were incidental and
necessary to the representation' of those clients."
Miltland
Raleigh-Durham v. Myers, 840 F. Supp. 235, 239 (S.D.N.Y. 1993)
(Motley, D.J.), quoting Reichman v. Bonsignore, Brignati &
Mazzotta, P.C., 818 F.2d 278, 283 (2d Cir. 1987).
Here, class
counsel's expenses, including filing fees, travel expenses,
postage charges and plaintiffs' share of the mediator fees, are
reasonable and were incidental and necessary to the
representation of the class.
I award class counsel reimbursement
49
of their requested litigation expenses in the amount of
$17,037.51.
G.
Named Plaintiffs'
Service Awards
The plaintiffs also request that the eight named
plaintiffs each receive service awards of $6,000.00 each and that
three opt-in plaintiffs receive service awards of $3,000.00 each.
Service awards, also called enhancement or incentive awards, are
common in class actions.
They "serve the dual functions of
recognizing the risks incurred by named plaintiffs and
compensating them for their additional efforts."
Parker v.
Jekyll & Hyde Entm't Holdings, LLC, 08 Civ. 7670 (BSJ)(JCF), 2010
WL 532960 at *1 (S.D.N.Y. Feb. 9, 2010) (Francis, M.J.); accord
Beckman v. KeyBank, N.A., supra, 293 F.R.D. at 483.
Here, the named plaintiffs and opt-in plaintiffs
initiated this action, assisted counsel's investigation and
prosecution of the claims by providing detailed factual
information and documents regarding their job duties and those of
other class members, the wages they were paid, the hours that
they worked and other relevant information, regularly made
themselves available to counsel, and seven of the plaintiffs and
50
opt-in plaintiffs provided detailed declarations in advance of
the parties' mediation (Swartz Decl., ¶¶ 56-58).
The $57,000.00 total in service awards represents
approximately .52% of the settlement fund.
This is well within
the range of service awards recently approved in the Southern
District of New York.
See, e.g., Beckman v. Keybank, N.A.,
supra, 293 F.R.D. at 483 (awarding incentive payments totaling
1.7% of $4,900,000.00 FLSA settlement); Johnson v. Brennan, 10
Civ. 4712 (CM), 2011 WL 4357376 at *2, 21 (S.D.N.Y. Sept. 16,
2011) (McMahon, D.J.) (awarding incentive payments totaling 9.1%
of $440,000.00 FLSA/NYLL settlement); deMunecas v. Bold Food,
LLC, 09 Civ. 0440 (DAB), 2010 WL 3322580 at *1, *11 (S.D.N.Y.
Aug. 23, 2010) (Batts, D.J.) (awarding incentive payments
totaling 3.1% of $800,000.00 FLSA/NYLL settlement).
Accordingly, I grant the requested service awards.
H.
Administrator Fees
Pursuant to the Settlement Agreement, plaintiffs
retained Rust Consulting, Inc. as the claims administrator.
class member objected to the fee as detailed in the notices.
fee sought by the claims administrator of $23,000.00 is
reasonable and is approved.
51
No
The
IV.
Conclusion
Accordingly, for all the foregoing reasons, plaintiffs'
motions (Docket Items 33, 35, 37) are granted in part and denied
in part as follows:
1.
Pursuant to Fed.R.Civ.P. 23(a) and (b)(3), the
following sub-classes are certified for settlement purposes:
•
New York Class Members consist of all individuals
who were employed as ABMs by Defendant in the
State of New York from March 7, 2008 through July
7, 2014;
•
New Jersey Class Members consist of all
individuals who were employed as ABMs by Defendant
in the State of New Jersey from March 7, 2012
through July 7, 2014; and
•
Maryland Class Members consist of all individuals
who were employed as ABMs by Defendant in the
State of Maryland from March 7, 2011 through July
7, 2014;
2.
The Settlement Agreement is unconditionally
approved.
3.
The "Effective Date" of the settlement shall be
fourteen days following the last date this Final Approval
52
Order approving this Agreement is appealable (30 days after
the entry of Judgment), if no appeal is filed.
If an appeal
is taken, Section 1.10 of the Settlement Agreement governs.
4.
In accordance with the terms of the Settlement
Agreement and after the Effective Date of this Order, the
claims administrator shall distribute the funds in the
settlement account by making the following payments:
•
Paying the claims administrator fee of $23,000.00;
•
Paying $517,037.51 to class counsel as
reimbursement for litigation costs and payment of
attorneys' fees; and
•
Paying service awards of $6,000.00 to each of the
named plaintiffs and service fees of $3,000.00 to
each of the three opt-in plaintiffs, for a total
award of $57,000.00 in service fees.
5.
Following the disbursement set forth above, the
claims administrator shall distribute the remaining funds in
the settlement account to collective and class members in
accordance with the allocation plan described in the
Settlement Agreement.
6.
I shall retain jurisdiction over this action for
the purpose of enforcing the Settlement Agreement and
overseeing the distribution of settlement funds.
53
The
parties shall abide by all terms of the Settlement
Agreement, which are incorporated by reference herein, and
this Order.
7.
Upon the Effective Date of this Order, this
litigation shall be dismissed with prejudice, and all
Settlement Class members who have not excluded themselves
from the settlement or who have opted in to the lawsuit
shall be permanently enjoined from pursuing and/or seeking
to reopen claims that have been released pursuant to the
Settlement Agreement.
8.
The Clerk of the Court is directed to mark Docket
Items 33, 35 and 37 closed.
Dated:
New York, New York
September 30, 2015
SO ORDERED
HENRY PITMAN
United States Magistrate Judge
Copies transmitted to:
Justin M. Swartz, Esq.
Michael N. Litrownik, Esq.
Outten & Golden LLP
29th Floor
3 Park Avenue
New York, New York 10016
54
Gregg I. Shavitz, Esq.
Susan H. Stern, Esq.
Paolo C. Meireles, Esq.
Shavitz Law Group, P.A.
Suite 404
1515 South Federal Highway
Boca Raton, Florida 33432
Thomas A. Linthorst, Esq.
Morgan, Lewis & Beckius LLP
502 Carnegie Center
Princeton, New Jersey 08540
55