GRAUDINS v. KOP KILT, LLC et al

Filing 28

MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE R. BARCLAY SURRICK ON 2/24/2017. 2/24/2017 ENTERED AND COPIES E-MAILED AND FAXED BY CHAMBERS.(sg, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

VICTORIA GRAUDINS
v.
KOP KILT, LLC,
d/b/a THE TILTED KILT PUB, ET AL.

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CIVIL ACTION
NO. 14-2589

MEMORANDUM
SURRICK, J.

FEBRUARY 24 , 2017

Presently before the Court is Plaintiff’s Motion for Final Approval of Class and
Collective Action Settlement, Certification of Settlement Class, Award of Attorneys’ Fees and
Reimbursement of Expenses and Service Payment to Plaintiff. (ECF No. 23.) For the following
reasons, Plaintiff’s Motion will be granted.
I.

BACKGROUND
Between April 2012 and July 2013, Representative Plaintiff Victoria Graudins worked as

a server at Defendants’ restaurant, The Tilted Kilt Pub. On May 5, 2014, Plaintiff filed the
instant class/collective action against Defendants, alleging various wage- and tip-related
violations of the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. (“FLSA”), the Pennsylvania
Minimum Wage Act, 43 Pa. Cons. Stat. § 333.101 et seq. (“PMWA”), the Pennsylvania Wage
Payment and Collection Law, 43 Pa. Cons. Stat. § 260.1 et seq. (“PWPCL”), and common law.
(Compl., ECF No. 1.) Specifically, the Complaint alleges:
Defendants violated the aforementioned laws by failing to satisfy the notice
requirements of the tip credit provisions of the FLSA and PMWA; failing to
ensure that Tipped Employees earn the mandated minimum wage when taking
the tip credit; and requiring Tipped Employees to use their tips to reimburse
Tilted Kilt for cash shortages and customer walkouts . . . .

(Compl. ¶ 4.) In addition, Plaintiff alleges that Defendants failed to pay tipped employees for all
of their compensable time and required them to purchase employer-mandated uniforms, in
violation of the FLSA and PMWA. (Id. at ¶¶ 5-6.) Plaintiff brought this action on behalf of
herself and all tipped employees working for Defendant between March 28, 2012 and July 2,
2015. (Id. at ¶¶ 13, 18.)
On June 30, 2014, Defendants filed an Answer that generally denied Plaintiff’s
allegations. (ECF No. 5.) On August 19, 2015, the parties stipulated to stay the litigation and
notified the Court that they were entering mediation in an attempt to settle Plaintiff’s claims.
(ECF No. 18.) On February 12, 2016, Plaintiff notified the Court that a settlement agreement
had been reached, and filed an Unopposed Motion for Preliminary Approval of Class and
Collective Action Settlement, Certification of Settlement Class, Appointment of Class Counsel,
Approval of Proposed Class Notice, Dismissal of Additional Defendants, and Scheduling of a
Final Approval Hearing. (ECF No. 19.) On April 6, 2016, the Court granted the Motion. (ECF
No. 22.) The settlement provides for a maximum gross settlement amount of $300,000 inclusive
of Class Counsels’ fees and costs, and claims administration fees and the service payment.
Following preliminary approval, notice and claim forms were sent to 242 putative class
members. (Devery Decl. ¶ 4, ECF No. 25-1.) The claims administrator received a total of 82
claim forms from class members. (Id. at ¶ 12.) Only one class member requested exclusion
from the class. (Id. at ¶ 14.) There were no objections to the terms of the agreement. (Id.)
On June 21, 2016, Plaintiff filed the instant Motion. Plaintiff also filed supplemental
memoranda of law in support of the Motion. (Settlement Approval Mem., ECF No. 23-1; Fees
& Expenses Mem., ECF No. 23-2.) The Motion is unopposed. (1st Wells Decl. ¶ 159, ECF No.

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24.) On July 21, 2016, a Fairness Hearing was held with counsel for the parties present. (ECF
No. 26.)
II.

THE PROPOSED SETTLEMENT AGREEMENT
The terms of the Settlement Agreement are set forth in the Joint Stipulation of Settlement

and Release Agreement. (Settlement Agreement, ECF No. 24-1.) A summary of the Agreement
is outlined below.
The Settlement Class is defined as “Plaintiff and any Class Member who does not opt-out
within the specified period in accordance with the requirements of this Settlement Agreement.
Defendant represents and warrants that all members of the Settlement Class are Tipped
Employees.” (Settlement Agreement ¶ 2.29.) Taking into account the individual that elected to
opt-out of the proposed settlement agreement, the Settlement Class consists of 241 individuals.
(Hr’g Tr. 3, ECF No. 27.)
Participating Settlement Class Members is defined as:
Every Member of the Settlement Class who submits a valid and timely Claim
Form in accordance with the terms of this Settlement Agreement. In accordance
with the terms of this Settlement Agreement, only Participating Settlement Class
Members will release their FLSA claims and only Participating Settlement Class
Members will receive any money in connection with this Settlement.
(Settlement Agreement ¶ 2.20.) Of the 241 individuals comprising the Settlement Class, 82
individuals will release their FLSA claims and receive an apportioned amount of the monetary
payment of $300,000, less fees, expenses, and claims administration costs. (Hr’g Tr. 3-4.)
The Claims Administrator will calculate Settlement Payments for Participating
Settlement Class Members in four steps:
(1) The Claims Administrator will deduct from the Maximum Gross Settlement
Amount the following amounts as awarded or permitted by the Court: (i) Class
Counsel’s attorneys’ fees and expenses, (ii) the Service Payment, if any, to the
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Plaintiff, and (iii) the fees and expenses of the Claims Administrator. The
resulting number will be referred to as the Net Settlement Amount.
(2) For each Participating Settlement Class Member, the Claims Administrator
will multiply the difference between the full minimum wage ($7.25) and the
hourly rate actually paid by Defendant to that Participating Settlement Class
Member by the number of hours worked during the Class Period by that
individual (for example: $7.25 - $2.83 = $4.42 x 100 hours worked = $442.00).
This number will be referred to as the Participating Individual Damage Amount.
(3) The Participating Individual Damage Amount for all Participating Settlement
Class Members will then be added together by the Claims Administrator to
determine the Participating Settlement Class Members’ Total Damage Amount.
(4) The Net Settlement Amount will be divided by the Participating Settlement
Class Members’ Total Damage Amount.
(5) The resulting fractional amount will then be multiplied by a Participating
Individual Damage Amount to determine that Participating Settlement Class
Member’s Settlement Payment.
(6) To avoid a windfall to any individual Participating Settlement Class Member,
no Participating Settlement Class Member’s Settlement Payment will be higher
than five times that individual’s Estimated Settlement Payment. Should any
Participating Settlement Class Member’s Settlement Payment be higher than five
times his or her Estimated Settlement Payment, such amount will be reduced
accordingly and with such reduction reverting to Defendant.
(Settlement Agreement ¶ 4.7(B).)
Based upon the number of Participating Settlement Class Members, the average award is
expected to exceed $1,159.20, and the highest award is expected to exceed $6,392.85. (Devery
Decl. ¶ 15.) Within 14 days of the Court’s final approval order, final payments will be made to
all Participating Settlement Class Members. (Settlement Agreement ¶ 4.12(B).) Half of the
payout amount to each Participating Settlement Class Member “will be allocated to the claims
asserted in the Litigation for alleged unpaid wages and other alleged wage-related damages,”
thus subjecting such portion to statutory withholding taxes and other required deductions. (Id. at
¶ 4.12(C).) The other half “will be allocated to the claims asserted in the Litigation for alleged
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liquidated damages and other relief,” qualifying such payment as “non-wage” income. (Id.)
Participating Settlement Class Members will receive 100% of the $300,000 less fees, expenses,
and claims administration costs, unless any settlement check is not negotiated within 90 days of
payment. (Id. at ¶ 4.12(D); Hr’g Tr. 15.) Any payment not cashed within the 90-day period will
be returned to Defendants. (Settlement Agreement ¶ 4.12(E).)
III.

DISCUSSION
Plaintiff asks the Court to simultaneously certify a state law class and an FLSA

collective, as well as to approve the terms of the proposed settlement agreement. In addition,
Plaintiff seeks approval of a requested service payment, as well as an award for attorneys’ fees
and expenses.
A. Class Certification under Rule 23
To certify the class, the requirements of Federal Rules of Civil Procedure 23(a) and 23(b)
must be satisfied. Altnor v. Preferred Freezer Servs., Inc., No. 14-7043, 2016 WL 3878161, at
*4 (E.D. Pa. July 18, 2016). “The party seeking certification bears the burden of establishing
each element of Rule 23 by a preponderance of the evidence.” Marcus v. BMW of N. Am., LLC,
687 F.3d 583, 591 (3d Cir. 2012). Class certification is only appropriate after a “rigorous
analysis of the evidence” and resolution of all factual and legal disputes. Id. (citation omitted).
The prerequisites of Rule 23 must be strictly met. Id.; In re Hydrogen Peroxide Antitrust Litig.,
552 F.3d 305, 310 (3d Cir. 2008).
1. Rule 23(a) Factors
Under Rule 23(a), Plaintiff must demonstrate:
(1) the class is so numerous that joinder of all members is impracticable; (2) there
are questions of law or fact common to the class; (3) the claims or defenses of the

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representative parties are typical of the claims or defenses of the class; and (4) the
representative parties will fairly and adequately protect the interests of the class.
Fed. R. Civ. P. 23(a).
“First, ‘no minimum number of plaintiffs is required to maintain a suit as a class action,
but generally if the named plaintiff demonstrates that the potential number of plaintiffs exceeds
40, the first prong of Rule 23(a) has been met.’” Leap v. Yoshida, No. 14-3650, 2016 WL
1730693, at *4 (E.D. Pa. May 2, 2016) (quoting Stewart v. Abraham, 275 F.3d 220, 226-27 (3d
Cir. 2001)).
Here, the parties have confirmed that the Settlement Class consists of 241 individuals.
Rule 23(a)’s numerosity requirement is satisfied, as joinder of 241 individuals would be
impracticable.
Second, Plaintiff must assert a claim that shares “at least one question of fact or law with
the grievances of the prospective class.” Rodriguez v. Nat’l City Bank, 726 F.3d 372, 382 (3d
Cir. 2013) (citation omitted). The requirement that Plaintiff’s claims be highly interrelated with
class claims ensures “that the interests of the class members will be fairly and adequately
protected in their absence.” Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 158 n.13 (1982).
Here, the Class members have several questions of fact in common with the
Representative Plaintiff because they were all tipped employees who allegedly (1) never received
notice of Defendants’ tip credit practices, (2) did not earn minimum wage when paying the tip
credit, (3) paid Defendants for cash shortages, and (4) did not receive compensation for all of
their working hours. The questions of law common to the Class are whether the aforementioned
practices violated the PMWA and PWPCL. Because the Representative Plaintiff and class
members’ claims are so interrelated that the interests of the class members are fairly and

6

adequately protected, the commonality requirement is satisfied. See Altnor, 2016 WL 3878161,
at *4 (“[C]ases involving wage claims present perhaps the most perfect questions for class
treatment.” (citation and internal quotation marks omitted)).
Third, the claims or defenses of the Representative Plaintiff must be “typical of the
claims or defenses of the class.” Fed R. Civ P. 23(a)(3). “[C]ases challenging the same unlawful
conduct which affects both the named plaintiffs and the putative class usually satisfy the
typicality requirement irrespective of the varying fact patterns underlying the individual claims.”
Baby Neal v. Casey, 43 F.3d 48, 58 (3d Cir. 1994).
Here, the Representative Plaintiff challenges the conduct that Defendant allegedly
applied to every other identified class member—that tipped employees were never notified of
Defendants’ tip credit practices, and were not compensated at a statutory minimum rate for all of
their working time. The Representative Plaintiff’s interests are identical to the interests of every
class member. Therefore, Rule 23(a)(3)’s typicality requirement is satisfied.
Fourth and finally, the Representative Plaintiff must “fairly and adequately protect the
interests of the class.” Fed. R. Civ. P. 23(a)(4). “A representative plaintiff is adequate if (1) the
representative plaintiff’s counsel is competent to conduct a class action; and (2) the
representative plaintiff’s interests are not antagonistic to the class’s interests.” Barel v. Bank of
Am., 255 F.R.D. 393, 398 (E.D. Pa. 2009).
Class counsel, Gerald D. Wells, III and Eric Rayz have extensive experience litigating
wage-related employment matters in various district courts. (See 1st Wells Decl. ¶¶ 95-97.) A
number of courts in this district have found class counsel to be competent, experienced, and
well-qualified to prosecute class actions such as this one. (See id. at ¶ 98.) Moreover, class
counsel’s firms have been involved in numerous class action lawsuits within the Eastern District.
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(See id. at ¶ 98.) In addition, there are no identifiable conflicts of interest between the
Representative Plaintiff and the other class members. On the contrary, as reflected in the
discussion of the preceding factors, the Representative Plaintiff’s interests in this case are almost
identical to those of the other class members. Therefore, because class counsel is qualified to
conduct the litigation, and because the Representative Plaintiff’s interests are not antagonistic to
those of other class members, the adequacy requirement is satisfied.
2. Rule 23(b) Requirements
“In addition to satisfying Rule 23(a)’s prerequisites, parties seeking class certification
must show that the action is maintainable under Rule 23(b)(1), (2), or (3).” Amchem Prods., Inc.
v. Windsor, 521 U.S. 591, 614 (1997). Rule 23(b)(3), under which Plaintiff seeks final class
certification, requires the Court to find “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.” “[T]he focus of the predominance inquiry is on whether the defendant’s conduct
was common as to all of the class members, and whether all of the class members were harmed
by the defendant’s conduct.” Sullivan v. DB Investments, Inc., 667 F.3d 273, 298 (3d Cir. 2011).
The four factors pertinent to the superiority inquiry are:
(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.

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Fed. R. Civ. P. 23(b)(3).
With regard to predominance, Defendants allegedly instituted an unlawful wage system
in which all tipped employees did not receive notification of Defendants’ tip credit practices and
were not paid the statutory minimum wage for their working hours. Therefore, all class
members were harmed by Defendants’ conduct, and the common questions of law or fact
predominate over any questions affecting only individual members.
With regard to superiority, the individual class members are highly unlikely to have the
financial resources to pursue individual actions and would go uncompensated for Defendants’
alleged wrongdoing absent class certification. Even if individual class members had the
resources to pursue individual claims, the costs of pursuing such claims would likely exceed any
recovery. See Barel, 255 F.R.D. at 399-400 (“[A] class action is superior to individual lawsuits
by the class members because it provides an efficient alternative to individual claims, and
because individual class members are unlikely to bring individual actions given the likelihood
that their litigation expenses would exceed any potential recovery.”) (citation and internal
quotation marks omitted). As to the extent and nature of any litigation concerning the
controversy already begun by or against class members, we are not aware of any other lawsuits
that have been filed against Defendants stemming from the same conduct. Next, the allegedly
wrongful conduct occurred in King of Prussia, so this Court is a desirable forum for this
litigation. Finally, there would be no foreseeable difficulties in managing a class action here,
“for the proposal is that there be no trial.” Amchem, 521 U.S. at 620.
Clearly, this class meets all of the requirements of Rules 23(a) and 23(b)(3). Therefore,
we will certify the proposed class for the purposes of settlement approval.

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B. Collective Certification
Having conditionally certified the FLSA collective, we now must make “a conclusive
determination as to whether each plaintiff who has opted in to the collective action is in fact
similarly situated to the named plaintiff.” Camesi v. Univ. of Pittsburgh Med. Ctr., 729 F.3d
239, 243 (3d Cir. 2013) (citation and internal quotation marks omitted). In deciding whether the
proposed collective members 1 are in fact similarly situated, we should consider: “whether the
plaintiffs are employed in the same corporate department, division, and location; whether they
advance similar claims; whether they seek substantially the same form of relief; and whether
they have similar salaries and circumstances of employment.” Zavala v. Wal Mart Stores Inc.,
691 F.3d 527, 536-37 (3d Cir. 2012).
Here, the 82 individuals who opted into the FLSA collective action all worked for
Defendants as tipped employees at Defendants’ restaurant located in King of Prussia. In
addition, all members of the Collective advance the same claims—that they (1) never received
notice of Defendants’ tip credit practices, (2) did not earn minimum wage when paying the tip
credit, (3) paid Defendants for cash shortages, and (4) did not receive compensation for all time
worked. Moreover, each member of the Collective is effectively being compensated “as if they
were paid the full minimum wage” for their work hours during the statutory period. (Hr’g Tr. 4.)
Finally, because all Collective members were tipped employees, they had sufficiently similar
salaries and circumstances of employment. Consequently, the 82 individuals who opted into the
FLSA collective action are in fact similarly situated, and the collective will be certified.

1

The proposed collective members are synonymous with the Participating Settlement
Class Members as defined in the settlement agreement.
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C. Fairness of the Proposed Settlement
1. Class Action Settlement
Under Federal Rule of Civil Procedure 23(e), the “claims, issues, or defenses of a
certified class may be settled, voluntarily dismissed, or compromised only with the court’s
approval.” Final approval of a class-action settlement requires a finding by the Court that the
settlement is fair, reasonable, and adequate. Ehrheart v. Verizon Wireless, 609 F.3d 590, 592 (3d
Cir. 2010). 2
In Girsh v. Jepson, the Third Circuit articulated nine factors for district courts to consider
in deciding whether a class-action settlement is fair, reasonable, and adequate:
(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
2

Although the Third Circuit has reasoned that “where the parties simultaneously seek
certification and settlement approval,” courts examining the fairness of a proposed settlement
must be “even more scrupulous than usual,” In re Prudential Ins. Co. Am. Sales Practice Litig.
Agent Actions, 148 F.3d 283, 317 (3d Cir. 1998) (internal quotation marks and citation omitted),
it has also instructed that a presumption of fairness applies where: “(1) the negotiations occurred
at arms length; (2) there was sufficient discovery; (3) the proponents of the settlement are
experienced in similar litigation; and (4) only a small fraction of the class objected,” In re Nat’l
Football League Players Concussion Injury Litig., 821 F.3d 410, 436 (3d Cir. 2016) (internal
quotation marks and citation omitted); see also Altnor, 2016 WL 3878161, at *8 n.4 (discussing
the tension between a scrupulous examination and a presumption of fairness in ultimately
concluding that a presumption of fairness was warranted).
Here, the parties entered into mediation before retired U.S. Magistrate Judge Diane
Welsh. (Settlement Approval Mem. 6.) Class counsel conducted research and analysis of
Plaintiffs’ claims, depositions were conducted, and “thousands of pages of discovery were
produced.” (Hr’g Tr. 8.) In addition, as discussed above, class counsel is experienced in state
class action and FLSA collective action litigation in similar matters. Finally, no class members
have objected to the terms of the proposed settlement agreement, and only one person has opted
out. Therefore, a presumption of fairness attaches. We will nevertheless perform a thorough
examination in assessing the fairness, reasonableness, and adequacy of the proposed settlement
agreement.
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recovery; (9) the range of reasonableness of the settlement fund to a possible
recovery in light of all the attendant risks of litigation.
521 F.2d 153, 157 (3d Cir. 1975) (quoting City of Detroit v. Grinnell Corp., 495 F.2d 448, 463
(2d Cir. 1974) (alterations omitted)). 3 We must make findings regarding the Girsh factors where
appropriate. In re Pet Food Prods. Liab. Litig., 629 F.3d 333, 350 (3d Cir. 2010). However, we
cannot “substitute the parties’ assurances or conclusory statements for [our own] independent
analysis of the settlement terms.” Id. at 350-51.
i.

The complexity, expense, and likely duration of the litigation.

“The first factor captures the probable costs, in both time and money, of continued
litigation.” Barel v. Bank of Am., 255 F.R.D. 393, 400 (E.D. Pa. 2009) (citation and internal
quotation marks omitted). As counsel made clear at the hearing, if the proposed settlement
agreement is not approved by the Court, further discovery would need to be conducted, and
“hard-fought” summary judgment motions would be filed. (Hr’g Tr. 7.) In addition, Plaintiffs
3

Subsequently, the Third Circuit advised that in light of the “sea-change in the nature of
class actions,” it may be useful for courts to consider the following factors in addition to the
Girsh factors:
the maturity of the underlying substantive issues, as measured by experience in
adjudicating individual actions, the development of scientific knowledge, the
extent of discovery on the merits, and other factors that bear on the ability to
assess the probable outcome of a trial on the merits of liability and individual
damages; the existence and probable outcome of claims by other classes and
subclasses; the comparison between the results achieved by the settlement for
individual class or subclass members and the results achieved—or likely to be
achieved—for other claimants; whether class or subclass members are accorded
the right to opt out of the settlement; whether any provisions for attorneys’ fees
are reasonable; and whether the procedure for processing individual claims under
the settlement is fair and reasonable.
In re Prudential, 148 F.3d at 323. However, “[w]hile the Court must make findings as to the
Girsh factors, the Prudential factors are merely illustrative of additional factors that may be
useful.” Leap, 2016 WL 1730693, at *7.
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face several obstacles in establishing liability, including a determination of how long employees
actually took to don and doff uniforms, demonstrating that corrective actions taken by
Defendants were not sufficient, and establishing the extent of pre-shift work actually done offthe-clock. Such individual factual inquiries into the practices of Defendants and the numerous
employees involved would certainly add a degree of complexity to the case. “With complexity
comes expense and, too often, delay.” Leap, 2016 WL 1730693, at *8. Therefore, the first
factor weighs in favor of the proposed settlement agreement.
ii.

The reaction of the class to the settlement.

All 242 proposed class members were mailed notice of the proposed settlement
agreement at their last known address. In addition, the claims administrator maintained a case
specific website whereby proposed class members could update their address and ask case
specific questions. (Devery Decl. ¶ 5.) Finally, notice of the settlement agreement was posted in
areas of Defendants’ restaurant visible to all current tipped employees. (Hr’g Tr. 6.) Of the 242
proposed class members, only one opted out, and no one objected to the fairness or adequacy of
the proposed settlement agreement. These facts support approval of the proposed settlement
agreement. See Stoetzner v. U.S. Steel Corp., 897 F.2d 115, 118-19 (3d Cir. 1990) (holding that
“only” 29 objections in 281 member class “strongly favors settlement”).
iii.

The stage of the proceedings and the amount of the discovery
completed.

“This factor captures the degree of case development that class counsel have
accomplished prior to settlement. Through this lens, courts can determine whether counsel had
adequate appreciation of the merits of the case before negotiating.” In re Cendant Corp. Litig.,
264 F.3d 201, 235 (3d Cir. 2001) (citation and internal quotation marks omitted). Here, the

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parties represent that they have engaged in extensive discovery, including thousands of pages of
document production, production of payroll data, deposing Plaintiff, and deposing Defendants’
corporate designee. (Hr’g Tr. 8; Settlement Approval Mem. 15.) Considering the amount of
discovery already completed in this case, we are satisfied that class counsel adequately evaluated
the merits of the claims before engaging in settlement negotiations. This factor also weighs in
favor of approving the proposed settlement.
iv.

The risks of establishing liability.

“These inquiries ‘“survey the possible risks of litigation in order to balance the likelihood
of success and the potential damage award if the case were taken to trial against the benefits of
an immediate settlement.”’ In re Ikon Office Sols., Inc. Sec. Litig., 209 F.R.D. 94, 105 (E.D. Pa.
2002) (quoting In re Prudential Ins. Co. Am. Sales Practice Litig. Agent Actions, 148 F.3d 283,
319 (3d Cir. 1998). Here, throughout settlement negotiations, Defendants maintained that
employees were properly notified of tip credit procedures and were properly compensated in
accordance with the law. Moreover, Defendants provided class counsel with declarations from
current employees that support these assertions. (Hr’g Tr. 9.) It is possible that a fact-finder
could determine that Defendants made a good faith effort in notifying employees of their tip
credit practices, and that any wage losses were negligible. See Schaefer v. Walker Bros. Enters.,
829 F.3d 551, 555 (7th Cir. 2016) (affirming district court’s grant of summary judgment in
restaurant server’s tip notification FLSA and class action suit in which servers spent “negligible”
time performing duties for which they may not have been fully compensated). Furthermore,
should this matter proceed to trial, Defendants would likely contest class certification, arguing
that the circumstances of each employees’ compensation is something that must be reviewed on

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a case-by-case basis. The results of a trial here are not certain. Accordingly, we find that this
factor favors approval of the settlement agreement.
v.

The risks of establishing damages.

The parties anticipate that even if the Representative Plaintiff were to successfully
establish liability, determining damages would be difficult. “To go in and to determine exactly
how much individual work off the clock and how long it took for [tipped employees] to don and
doff the uniform would require significant expert discovery . . . as well as it would create an
issue with damage models.” (Hr’g Tr. 9.) Further complicating the calculation of damages is
that each individual employee’s time spent working off of the clock would likely vary from shift
to shift. We find that this factor favors approval of the settlement agreement.
vi.

The risks of maintaining the class action through trial.

There will always be a “risk” or possibility of decertification, and consequently the court
can always claim this factor weighs in favor of settlement. In re Prudential, 148 F.3d at 321.
Therefore, “the manageability inquiry in settlement-only class actions may not be significant.”
Id. Nevertheless, Defendants will certainly oppose certification of the Class and could also seek
to decertify the class prior to trial. This factor also weighs in favor of approval.
vii.

Defendants’ inability to withstand a greater judgment.

The parties submit that Defendants’ ability to pay was never an issue in the settlement,
and that therefore, this factor is neutral. (Hr’g Tr. 9.) Having nothing in the record establishing
Defendants’ ability to withstand greater judgment, we conclude that this factor neither favors nor
disfavors approval of the settlement agreement.

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viii.

The range of reasonableness of the settlement in light of the best
possible recovery and in light of all attendant risks of litigation.

The final two Girsh factors “require the Court to assess ‘whether the settlement
represents a good value for a weak case or a poor value for a strong case.’” Altnor, 2016 WL
3878161, at *10 (quoting In re Warfarin Sodium Antitrust Litig., 391 F.3d 516, 538 (3d Cir.
2004)). “[T]he ultimate test of the value of a settlement in the class context is who gets what and
how much.” Id. Here, approximately 34% of the class will receive a pro rata share of
approximately 50% of the total alleged damages. (Hr’g Tr. 9-10.) Therefore, each of the 82
Participating Settlement Class Members who have opted into this proposed settlement agreement
will likely be compensated in excess of their actual individual damages. Importantly, those class
members who have not opted into the settlement agreement have retained their right to pursue
FLSA claims and are free to pursue damages for wage-related violations at a later date. 4 As to
the risks of litigation, it is not clear which party is likely to succeed at trial, let alone the amount
of damages the class would receive if Representative Plaintiff prevails. This settlement provides
a degree of certainty for those class members who have opted into the agreement that litigation
would not. Therefore, the range of reasonableness of the settlement in the light of possible
recovery and the attendant risks of litigation weighs in favor of approving the settlement
agreement.
Having examined the settlement agreement in light of the Girsh factors, the Court finds
the settlement is “fair, reasonable, and adequate.” Girsh, 521 F.2d at 157.

4

Although Plaintiff asserted several state law class action claims in her Complaint, in
essence, the monetary award here is directed at the FSLA collective claim.
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2. Collective Action Settlement
“When evaluating a collective action settlement of FLSA claims, district courts must
determine [1.] whether the settlement is a fair and reasonable resolution of a bona fide dispute[,]”
Leap, 2016 WL 1730693, at *9 (citations and internal quotation marks omitted), and 2. whether
“the settlement furthers the FLSA’s implementation in the workplace,” Altnor, 2016 WL
3878161, at *11. “[W]hile factors for evaluating ‘fairness’ of a settlement in an FLSA collective
action have not been definitively set out by the Third Circuit, district courts in this Circuit have
utilized the Girsh factors for approving Rule 23 class action settlements.” Id. (citation and
internal quotation marks omitted).
As discussed in the preceding section, the Girsh factors favor approval of the proposed
settlement agreement. In addition, as also previously discussed, Defendants have denied
Plaintiff’s claims throughout these early stages of litigation. See id. (“A proposed settlement
resolves a bona fide dispute if its terms ‘reflect a reasonable compromise over issues, such as
back wages, that are actually in dispute.’”) (citation omitted). We are satisfied that the
settlement agreement is a fair and reasonable resolution of a bona fide dispute.
In addition, we find that the proposed settlement does not frustrate the implementation of
the FLSA in the workplace. The proposed agreement’s confidentiality provision does not seek to
seal the record or prohibit Plaintiff and class members from discussing this matter with anyone,
but only prohibits Plaintiff from “publicizing” the terms of this settlement agreement and making
public comment to the press and media. (Settlement Agreement ¶¶ 8.16-8.17.) “Such a
prohibition does not thwart the informational objective of the FLSA’s notice requirement by
silencing the employee who has vindicated a disputed FLSA right.” In re Chickie’s & Pete’s
Wage & Hour Litig., No. 12-6820, 2014 WL 911718, at *3 (E.D. Pa. Mar. 7, 2014). The
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proposed settlement agreement is publicly available to all as part of the public record, “and the
limited confidentiality provision is not unduly restrictive so as to frustrate the purpose of FLSA.”
Id. To the contrary, this suit and the proposed settlement agreement have furthered the purposes
of the FLSA—to inform tipped employees of their wage rights and to force employers to pay
employees for time worked. As previously discussed, since this lawsuit was filed, Defendants
have taken corrective action to help ensure that their tip notification procedure and minimum
wage structure is in compliance with statutory law. Furthermore, class members have been
notified of their rights under the FLSA, and those not opting into this collective action retain
their right to bring forth any FLSA claim against Defendant Kop Kilt, LLC. Therefore, we
conclude that the proposed settlement agreement furthers the FLSA’s implementation in the
workplace.
D. Award to Class Representative
A $7,500 Service Payment Award for Representative Plaintiff is requested. Although
$7,500 is on the higher end of awards to representative plaintiffs in cases with similar issues and
similar amounts at stake, it is not unreasonable. See, e.g., Leap, 2016 WL 1730693, at *10
(approving $5,000 service award to representative plaintiff where tip-related wage settlement
fund was $225,000); Reyes v. Altamarea Grp., LLC, No. 10-6451, 2011 WL 4599822, at *9
(S.D.N.Y. Aug. 16, 2011) (approving $15,000 service award to each of three representative
plaintiffs where tip-related wage settlement fund was $300,000); deMunecas v. Bold Food, LLC,
No. 09-00440, 2010 WL 3322580, at *10 (S.D.N.Y. Aug. 23, 2010) (approving $5,000 service
award to each of the five representative plaintiffs where tip-related wage settlement fund was
$800,000). Here, the Representative Plaintiff was thoroughly involved through each stage of this
litigation leading to settlement—she helped her counsel to understand the intricacies of
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Defendants’ wage-related practices, responded to various document requests and interrogatories,
sat for a deposition, and attended an all-day mediation. (Hr’g Tr. 16-17.) This is not the kind of
case wherein a plaintiff provided minimal, “run-of-the-mill” assistance. See Romero v. La
Revise Associates, L.L.C., 58 F. Supp. 3d 411, 422 (S.D.N.Y. 2014) (reducing representative
plaintiff’s request for $10,000 service award to $5,000 because there was no evidence that he had
been deposed or attended mediation). The Representative Plaintiff’s involvement here served
not only her own benefit, but also the benefit of the class. We are satisfied that a $7,500 award is
reasonable.
E. Attorneys’ Fees and Costs
Class counsel seeks attorneys’ fees in the amount of $100,000 and costs in the amount of
$6.865.70.
1. Percentage-of-recovery
In a case such as this, where class members recover from a single common fund, the
Third Circuit favors the percentage-of-recovery method in evaluating the fairness of attorneys’
fees. In re Prudential, 148 F.3d at 333 (“The percentage-of-recovery method is generally
favored in cases involving a common fund, and is designed to allow courts to award fees from
the fund in a manner that rewards counsel for success and penalizes it for failure.”) (citation and
internal quotation marks omitted). In evaluating the fairness of the requested fees utilizing this
method, we must weigh the following seven factors:
(1) the size of the fund created and the number of persons benefitted; (2) the
presence or absence of substantial objections by members of the class to the
settlement terms and/or the fees requested by counsel; (3) the skill and efficiency
of the attorneys involved; (4) the complexity and duration of the litigation; (5) the
risk of nonpayment; (6) the amount of time devoted to the case by counsel; and
(7) awards in similar cases.

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Leap, 2016 WL 1730693, at *9. “These fee award factors need not be applied in a formulaic
way and in certain cases, one factor may outweigh the rest.” In re Rite Aid Corp. Sec. Litig., 396
F.3d 294, 301 (3d Cir. 2005).
Regarding the first factor, the Settlement Fund is $300,000, and each of the 241 class
members has already received some benefit from the settlement agreement. As previously
discussed, each of the 82 Participating Settlement Class Members will likely be compensated at a
rate in excess of their individual damages, and the average award to such class members is
expected to be over $1,141. (Hr’g Tr. 10.) With regard to the remaining class members, they
have received information about their rights under both federal and Pennsylvania law regarding
tip notification procedures and mandatory minimum wage practices. They have retained their
rights to bring FLSA claims against Defendant Kop Kilt for any violations of those rights.
Furthermore, as a result of this settlement, those still working for Defendants have received the
benefit of changes in Defendants’ compensation structure and tip notification practices.
Therefore, this factor weighs in favor of approving the requested attorneys’ fees.
As to the second factor, there have been no objections to the settlement terms or the fees
requested. This factor also weighs in favor of approving the requested fees.
Third, as already noted, class counsel has substantial experience in complex class action
litigation, including litigation involving FLSA and other wage and hour claims. The result that
counsel has achieved here likely compensates Participating Settlement Class Members beyond
their actual damages and would not have been achieved without counsel’s skill and experience.
See In re Linerboard Antitrust Litig., No. 98-5055, 2004 WL 1221350, at *5 (E.D. Pa. June 2,
2004) (“The result achieved is the clearest reflection of petitioners’ skill and expertise.”).
Therefore, this factor also favors approval of the requested attorneys’ fees.
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Fourth, class counsel has spent in excess of 400 hours litigating this matter over the
course of approximately two years. (Hr’g Tr. 14.) In addition, addressing the various class and
FLSA claims involving Defendants’ tip notification and wage procedures requires a high degree
of specialized knowledge. See Leap, 2016 WL 1730693, at *10 (“[T]he case is admittedly
complex due to the combination of FLSA and class action claims.”). This factor weighs in favor
of approving the requested fees.
Fifth, there was a risk of nonpayment here because counsel took this case on a contingent
fee basis. (Hr’g Tr. 14.) As already noted, this case would have likely been fiercely contested,
and there was a possibility that some of Plaintiff’s claims may have been adversely ruled upon at
the summary judgment stage. (See id.) This factor also favors approval of the requested
attorneys’ fees.
Sixth, class counsel spent substantial time on this case—working in excess of 400 hours.
Moreover, class counsel will be responsible for continued work on this matter as it oversees the
settlement agreement’s administration, including the distribution of the settlement proceeds.
Therefore, this factor weighs in favor of approving the requested attorneys’ fees.
Regarding the seventh and final factor, the requested attorneys’ fees of one third of the
Settlement Fund are well within the range of fees awarded in similar cases. See, e.g., Altnor,
2016 WL 3878161, at *16 (“[A] benchmark of one-third of the settlement fund is often
appropriate to prevent a windfall to counsel.”); Leap, 2016 WL 1730693, at *10 (“[F]ee awards
in common fund cases within this district generally range between 19% and 45% of the fund.
Consequently, the 30% requested by Class Counsel in this case is reasonable . . . .”) (internal
citation omitted); Rouse v. Comcast Corp., No. 14-1115, 2015 WL 1725721, at *13 (E.D. Pa.
Apr. 15, 2015) (approving a fee of 35% of the common fund in a wage and hour class action
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involving FLSA and Pennsylvania minimum wage claims). This factor also weighs in favor of
awarding class counsel their requested fee.
2. Lodestar Multiplier Check
“The Third Circuit has stated that it is sensible for district courts to cross-check the
percentage fee award against the lodestar method.” Altnor, 2016 WL 3878161, at *14 (quoting
In re Rite Aid Corp., 396 F.3d at 305).
The lodestar award is calculated by multiplying the number of hours reasonably
worked on a client’s case by a reasonable hourly billing rate for such services
based on the given geographical area, the nature of the services provided, and the
experience of the attorneys. The multiplier is a device that attempts to account for
the contingent nature or risk involved in a particular case and the quality of the
attorneys’ work. The lodestar cross-check serves the purpose of alerting the trial
judge that when the multiplier is too great, the court should reconsider its
calculation under the percentage-of-recovery method, with an eye toward
reducing the award . . . . The district courts may rely on summaries submitted by
the attorneys and need not review actual billing records.
In re Rite Aid Corp., 396 F.3d at 305-07.
Here, class counsel represents that they have spent a total of 401.5 hours litigating this
matter. Counsel has submitted a proposed lodestar figure of $212,846.50, which represents an
hourly rate of approximately $530 per hour. (Fees & Expenses Mem. 12.) When calculated
against the requested fee of $100,000, the lodestar multiplier is 0.469—representing a fee of
approximately $250 per hour. The lodestar cross-check confirms the reasonableness of the
requested attorneys’ fees. See Altnor, 2016 WL 3878161, at *14 (‘“A lodestar multiplier of less
than one,”’ like the lodestar multiplier here, ‘“reveals that the fee request constitutes only a
fraction of the work that the attorneys billed’ and thus favors approval.”) (quoting Carroll v.
Stettler, No. 10-2262, 2011 WL 5008361, at *8 (E.D. Pa. Oct. 19, 2011)).

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We are satisfied with the reasonableness of the requested fee and we will approve class
counsels’ request for $100,000 in attorneys’ fees. In addition, class counsel is entitled to be
reimbursed for their litigation-related expenses in the amount of $6,865.70, the bulk of which is
associated with mediation and deposition-related fees. (See 1st Wells Decl. ¶ 144.)
IV.

CONCLUSION
For the foregoing reasons, Plaintiff’s Motion for Final Approval of Class and Collective

Action Settlement, Certification of Settlement Class, Award of Attorneys’ Fees and
Reimbursement of Expenses and Service Payment to Plaintiff will be granted.
An appropriate Order follows.

BY THE COURT:

______________________________
R. BARCLAY SURRICK, J.

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