Matthews et al v. Cloud 10 Corp

Filing 31

ORDER and NOTICE OF HEARING ( Oral Argument set for 11/17/2015 09:00 AM in Courtroom 1-1, 401 W Trade St, Charlotte, NC 28202 before Chief Judge Frank D. Whitney.). Signed by Chief Judge Frank D. Whitney on 8/27/2015. (eef)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
DOCKET NO. 3:14-cv-00646-FDW-DSC
CARLA MATTHEWS and LASERE REID- )
SMITH, individually and on behalf of others )
similarly situated,
)
)
Plaintiffs,
)
)
vs.
)
)
CLOUD 10 CORP., a Delaware corporation, )
)
Defendant.
)
)

ORDER and
NOTICE OF HEARING

THIS MATTER is before the Court on Plaintiffs’ Motion for Leave to File Excess Pages
(Doc. No. 29) and on the Unopposed Motion for Preliminary Approval of Class Action Settlement,
Certifying Class for Purpose of Settlement, Directing Notice to the Class, and Scheduling Fairness
Hearing (Doc. No. 30). For the reasons stated in the two unopposed motions, both motions are
hereby GRANTED.
This matter came before the Court pursuant to the Plaintiffs’ Unopposed Motion for
Preliminary Approval of Class Action Settlement, which explained that a proposed settlement has
been reached that represents a resolution of all class members’ claims under the Fair Labor
Standards Act, 29 U.S.C. §201, et seq. (“FLSA”) and state and common law wage and hour claims,
and their request to the Court, for settlement purposes only, that it: (1) preliminarily approve the
proposed settlement agreement pursuant to Fed. R. Civ. P. 23 (c) and (e) and §216(b) of the Fair
Labor Standards Act; (3) preliminarily certify a class action (collectively, the Court will refer to
the Rule 23 class and the collective claims pursuant to Section 216(b) of the FLSA as the term
“Class”); and (4) schedule a Fairness Hearing to consider final approval of the proposed settlement.

WHEREAS, the Parties have reached a settlement of the above-captioned matter; and
WHEREAS, Plaintiffs approved the terms of the settlement; and
WHEREAS, although Defendant asserts a variety of defenses and denies any wrongdoing
or legal liability with regard to any and all of the claims asserted in this litigation or in the
Complaint, Defendant nevertheless desires to settle the asserted Class action claims on the terms
and conditions memorialized in the Settlement Agreement for the purpose of avoiding the burden,
expense, and uncertainty of trial, and for the purpose of putting to rest the controversies that could
be advanced by this litigation; and
WHEREAS, the parties waived an informal preliminary approval hearing, and the Court,
after reviewing the pleadings, finds that no preliminary approval hearing is necessary, and is
otherwise fully advised of the facts and circumstances of the proposed settlement;
WHEREFORE, IT IS HEREBY ORDERED AS FOLLOWS:
Preliminary Approval of the Class Settlement Agreement
1.

The standards for preliminary approval of a class settlement under Fed. R. Civ. P.

23(e) involves a two-step process:
(a)

Preliminary approval of the proposed settlement at an informal hearing and
dissemination of mailed and/or published notice of the settlement to all
affected Class Members; and

(b)

A formal fairness hearing or final approval hearing, at which Class
Members may be heard regarding the settlement, and at which evidence and
argument concerning the fairness, adequacy, and reasonableness of the
settlement is presented.

See Beaulieu v. EQ Indus. Servs., 2009 U.S. Dist. LEXIS 133023, *69 (E.D.N.C. Apr. 20, 2009)
(citing Horton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 855 F. Supp. 825, 827 (E.D.N.C.
1994); MANUAL FOR COMPLEX LITIGATION §§ 21.632, 30.41 (5th ed. 2004)). This procedure,
commonly employed by federal courts, serves the dual function of safeguarding class members’

procedural due process rights, and enabling the Court to fulfill its role as the guardian of the
interests of the class. Specifically, at this preliminary stage of settlement proceedings, the Court
is not required to undertake an in-depth consideration of the relevant factors for final approval.
Instead, the “judge must make a preliminary determination on the fairness, reasonableness, and
adequacy of the settlement terms and must direct the preparation of notice of the certification,
proposed settlement, and date of the final fairness hearing.” Domonoske v. Bank of Am., N.A., 2010
U.S. Dist. LEXIS 7242 at *48-49 (W.D. Va. Jan. 27, 2010) (quoting Manual for Complex
Litigation (Fourth) § 21.632 (2004)).
2.

The Court was advised by all counsel of the material terms of the Settlement

Agreement, which are summarized below:
(a)

Defendant will allocate One Million Ninety Thousand Two Hundred Fifty-Three
Dollars and Thirty-Seven Cents ($1,090,253.37) (the Maximum Settlement
Amount) to pay: (a) the proper and timely claims of Claimants; (b) Settlement
administration costs; (c) Class Counsel’s fees and litigation costs; and (d)
Enhancement awards to the Class Representatives.

(b)

Class Counsel will make an application to the Court for attorneys’ fees in the
amount of Three Hundred Fifty-Nine Thousand Seven Hundred Eighty-Three
Dollars and Sixty-One Cents ($359,783.61) and costs in the amount of Seven
Thousand Five Hundred Dollars and Zero Cents ($7,500.0).

(c)

The Class Representatives will each make an application to the Court for
Enhancement awards in recognition of their service to the Class members in the
amount of Seven Thousand Five Hundred Dollars and Zero Cents ($7,500.00) per
Class Representative.

(d)

After deduction from the Maximum Settlement Amount for Settlement
administration claims, Class Counsel’s fees and costs, and Enhancement awards,
Defendant will use the net amount to pay each Potential Claimant who submits a
valid, timely Claim Form and IRS Forms W-4 and W-9 an amount based on a
formula that adds 20 minutes to each Potential Claimant’s time records for each
day worked during the time that the Potential Claimant worked for Defendant as a
Home-Based Customer Service Representative during the Settlement Period. This
sum will be multiplied by 1.62 pursuant to the liquidated damages provision of the
Fair Labor Standards Act, 29 U.S.C. § 201, et seq. The Potential Claimant’s
individualized Settlement Payment is based on an agreed upon rate of $9.94 for

regular pay (under 39 hours) and corresponding rate of $14.94 for overtime pay
(over 39 hours) for the applicable workweeks in which the Potential Claimant
worked for Defendant during the Settlement Period.
(e)

Potential Claimants who submit timely and valid Claim Forms and Releases will
receive a one-time payment based upon the formula. Each Claimant’s actual
payment will be based on the total number of Claimants participating in the
Settlement. In other words, the fewer number of Claimants who participate, the
larger each Claimant’s actual payment will be.

(f)

Each Potential Claimant who participates in the Settlement must sign the Claim
Form and Release, and by receiving payment from the Settlement shall be deemed
to release and discharge Defendant for all claims, liabilities, and causes of action
of every nature and description whatsoever by the Potential Claimant related to any
claim for unpaid wages, overtime wages, minimum wages and/or liquidated
damages, interest, attorneys’ fees, and litigation costs under the Fair Labor
Standards Act, 29 U.S.C. § 201, et seq. and any state or common law that accrued
from November 19, 2011 through the date of the Potential Claimant’s signing of
the Claim Form which includes the period they were employed by Defendant as a
Home-Based Customer Service Representative, including without limitation,
claims for wages, premium pay, overtime pay, penalties, liquidated damages,
punitive damages, interest, attorneys’ fees, and litigation costs.

(g)

Any person who is a Potential Claimant, but who desires to opt-out, may do so by
personally signing and timely filing an Opt-Out Form and submitting that form
pursuant to the terms of the Settlement Agreement.

(h)

Any person who is a Potential Claimant, but who desires to object to the Settlement,
may do so by submitting a Claim Form and Release and filing a written objection
with the Court.

3.

The Court is well aware of the many factual and legal issues that remain in dispute

between the Parties and that the Parties understand that they each face significant yet unknown
consequences relative to the Court’s potential rulings, and then trial.
4.

The Parties have spent much of the past five months in focused settlement efforts.

5.

The Court has reviewed the Settlement Agreement, and the documents that

comprise its various exhibits (which include Class Notice, Claim Form and Release, and Opt Out
Form), and a proposed timetable of events, for purposes of approval under Rule 23(g) and §216(b)
of the FLSA, and preliminarily finds that the Settlement Agreement constitutes a fair result given

the totality of the circumstances facing Plaintiffs and the Class. The benefits of settlement are great
in class actions and other complex cases where substantial resources can be conserved by avoiding
the time, cost and rigors of prolonged litigation. “There is a strong judicial policy in favor of
settlements, particularly in the class action context.” Case v. Plantation Title Co., 2015 U.S. Dist.
LEXIS 33580, *22 (D.S.C. Mar. 5, 2015) (quoting In re PaineWebber Ltd. P'ships Litig., 147 F.3d
132, 138 (2d Cir. 1998). As the Court is aware, the present Class Action Settlement was reached
after prolonged arms-length negotiations by experienced counsel on both sides. The terms of this
Settlement as outlined above and as set forth in greater detail in the Settlement Agreement
represent, in this Court’s opinion, an excellent result achieved by experienced counsel for Plaintiffs
and Defendant.
Upon review of the materials submitted by the Parties in furtherance of the entry of this
Order, the Court hereby grants preliminary approval of the Parties’ Settlement Agreement pursuant
to Rule 23(c) and (e) of the Federal Rules of Civil Procedure and §216(b) of the FLSA as agreed
to and by the Parties. Approval is based upon: (a) the relative strength of the Plaintiffs’ case on
the merits; (b) the existence of any difficulties of proof or strong defenses the Plaintiffs are likely
to encounter if the case goes to trial; (c) the anticipated duration and expense of litigation; (d) the
amount of informal discovery completed and the character of the evidence uncovered by the
Parties; (e) the fairness of the Settlement, as set forth on the record by counsel, to the Class
Members; (f) the fact that the Settlement is the product of extensive arms-length negotiations
between the Parties; (g) the fact that any proposed Class Member who disagrees with the
Settlement may opt out by personally signing the Opt Out Form and submitting it pursuant to the
procedures set forth in the Settlement Agreement; and (h) the fact that this Settlement is consistent
with the public interest.

Preliminary Approval of Class
6.

Pursuant to Rule 23, the proposed Settlement of the state and common law claims

in this action, as embodied in the terms of the Settlement Agreement, is hereby preliminarily
approved as a fair, reasonable, and adequate settlement of this case in the best interests of the
Settlement Class (as defined in the Settlement Agreement), in light of the factual, legal, practical,
and procedural considerations raised by this case.
7.

Solely for the purpose of Settlement, and pursuant to Rule 23, the Court hereby

preliminarily certifies the following Rule 23 class:
All current and former hourly home-based customer service representatives who worked for
Defendant at any time in the United States from November 19, 2011 to August 17, 2014.
8.

Solely for the purpose of Settlement, and pursuant to the collective action

procedures of Section 216(b) of the FLSA, the Court certifies the following settlement class:
All current and former hourly home-based customer service representatives who
were employed by Defendant at any time from November 19, 2011 to August 17,
2014.
9.

The Court orders that the Settlement Class is preliminarily certified for settlement

purposes only. If the Settlement does not become final for any reason, the fact that the Parties
were willing to stipulate to class/collective action certification for settlement purposes shall have
no bearing on, and will not be admissible in connection with, the issue of whether a class/collective
action is properly certified in a non-settlement context. The Court’s findings are for purposes of
conditionally certifying Settlement Classes and will not have any claim, issue, or evidentiary
preclusion or estoppel effect in any other action against the Defendant or in this litigation if the
Settlement is not finally approved.
10.

The Court finds that certification of the Rule 23 classes, solely for purposes of

Settlement, is appropriate in that: (a) the Settlement Class Members are so numerous that joinder

of all Settlement Class Members is impracticable; (b) there are questions of law and fact common
to the Settlement Class which predominate over any individual questions; (c) claims of the Class
Representatives are typical of the claims of the Settlement Class; (d) the Class Representatives and
Plaintiffs’ Counsel have fairly and adequately represented and protected the interests of the
Settlement Class; and (e) a class action settlement is superior to other available methods for the
fair and efficient adjudication of the controversy.
11.

The Court hereby preliminarily appoints Plaintiffs Carla Matthews and LaSere

Reid-Smith as Representatives of each of their respective Rule 23 state law classes and finds that
they meet the requirements of Rule 23(a)(4).
12.

The Court finds that the plan for Class Notice is the best notice practicable under

the circumstances and satisfies the requirements of due process and Rule 23. That plan is approved
and adopted. This Court further finds that the Class Notice complies with Rule 23(c)(2) and Rule
23(e), and are appropriate as part of the plan for issuing notice set forth in the Settlement
Agreement are approved and adopted.
13.

The Court finds and orders that no other notice is necessary.

14.

The Court orders that pending final determination as to whether the Settlement

should be approved, the Class Representatives and other Class Members, whether or not such
persons have appeared in this action, shall not institute or prosecute any claims or actions against
the Defendant that fall within the definition of the claims being released under the terms of the
Settlement Agreement, and any other pending actions, including any pending class or collective
actions brought pursuant to either Rule 23 of the Federal Rules of Civil Procedure or 29 U.S.C. §
216(b), by Class Members against the Defendant, whether in court, arbitration, or pending before

any state or federal governmental administrative agency, are stayed on an interim basis as to any
claims that fall within the definition of the released claims for the Settlement Period.
15.

If this Settlement is terminated for any reason or is not consummated for any reason,

the certification of the Class shall be void and the Court will vacate the certification, and Plaintiffs
and Defendant shall be deemed to have reserved all of their rights to propose or oppose any and
all certification and/or decertification issues.
16.

The Court further preliminarily finds that Plaintiffs’ Counsel, Sommers Schwartz,

P.C. and Johnson Becker, PLLC will fairly and adequately represent the interests of the Class, and
hereby appoints them pursuant to Fed. R. Civ. P. 23(a)(4) and 23(g) as Class Counsel for settlement
purposes only.
17.

Preliminary approval of a class action settlement includes setting deadlines for

providing notice; opting out of the settlement class; objecting to the Settlement Agreement or to
the proposed award of attorneys’ fees, costs, expenses and plaintiffs’ incentive awards; scheduling
a Fairness Hearing; and submitting claims.
18.

The Court sets the following dates for the Approval Process:
Proposed Timeline
EVENT

ANTICIPATED DATE

File Motion for Preliminary Approval Order; Settlement
Agreement with Exhibits, including Class Notice.

August 25, 2015

Entry of Preliminary Approval Order (Preliminary
Approval).

August 28, 2015

Defendant shall provide the Settlement Administrator
with addresses for Class Notice to be mailed.

Within 7 days after the
Preliminary Approval
Order.

EVENT

ANTICIPATED DATE

Deadline for the Settlement Administrator to mail Class
Notice, Claim Forms, and Opt-Out Forms (Mailing
Date).

Within 21 days after
Preliminary Approval.

Deadline for Potential Claimants to post-mark Claim
Forms, Opt-Out Forms, and Objections (Claim
Deadline).

Within 30 days after the
Mailing Date

Deadline for Parties to file response to objections.

Within 10 days after
Claim Deadline.

Deadline for Class Representatives to file Motion for
Final Approval, Enhancement Awards, and Attorneys’
Fees and Costs.

Within 14 calendar days
after the Claim Deadline.

Final Fairness Hearing.

November 17, 20151

Effective Date

31 days after entry of
Final Approval Order.

Deadline for Defendant to mail individual payments to
each Participant Claimant.

Within 3 calendar days
after the Effective Date.

19.

Any Claimant may object to the Settlement Agreement and/or appear at the

Fairness Hearing to object to the Settlement Agreement. A Claimant wishing to object must timely
file with this Honorable Court and serve on Class Counsel and counsel for Defendant a written
statement clearly describing why he or she believes the Settlement is not fair or reasonable.
Claimants who fail to comply with this provision shall be deemed to have waived any objections,
and shall be foreclosed from making any objection, whether by appeal or otherwise, to the
Settlement.
20.

All proceedings in this Action not related to Settlement shall be stayed pending the

Fairness Hearing pursuant to Fed. R. Civ. P. 23(e), to determine the fairness, reasonableness, and

The Court is unable to accommodate the parties’ request to hold the hearing during the weeks of November 2 or
November 9, 2015.
1

adequacy of the proposed Settlement and whether it should be finally approved. Further, all Class
Members who did not personally sign and file a timely notice of their intent to opt out, or who
filed a timely claim under § 216(b) of the Fair Labor Standards Act, shall be enjoined from
commencing or taking any other action based upon the claims at issue in the Complaint.
21.

The Court expressly reserves the right to adjourn the Fairness Hearing from time to

time without further notice and to approve the Settlement Agreement at or after the Fairness
Hearing, scheduled for Monday, November 17, 2015, at 9:00 am in Courtroom #1-1 of the
Charles R. Jonas Federal Building, 401 W. Trade Street, Charlotte, NC 28202.
IT IS SO ORDERED.

Signed: August 27, 2015