Amador v. The Brickman Group, LTD, LLC
MEMORANDUM (Order to follow as separate docket entry) re 122 Unopposed MOTION for Settlement Plaintiffs' Unopposed Motion for Final Approval of the Settlement Agreement.Signed by Honorable Malachy E Mannion on 10/2/17. (bs)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF PENNSYLVANIA
JONATHAN AMADOR ACEVEDO, :
MITCHELL BRATTON, JEREMY
BUSSE, STEPHEN PULLUM, ERIC :
MIGDOL, and JOSE GONZALEZ,
CIVIL ACTION NO. 3:13-2529
individually and on behalf of all
others similarly situated,
BRIGHTVIEW LANDSCAPES, LLC,
(f/k/a/ THE BRICKMAN GROUP
Currently before the court are the named plaintiffs’ unopposed motion
for final approval of the parties amended settlement agreement, (Doc. 122),
and the named plaintiffs’ unopposed motion for attorneys’ fees, (Doc. 121).
Having reviewed and considered the named plaintiffs’ motions, both
memorandums in support of the motions, and having held a final fairness
hearing, the named plaintiffs’ motions will be granted and the parties amended
settlement agreement, (Doc. 118-3), will be finally approved.
This action is a putative class action against the defendant, BrightView
Landscapes, LLC (“Brightview”), formerly known as The Brickman LTD. LLC.,
under the Fair Labor Standards Act, 29 U.S.C. §201, et seq. (“FLSA”) and
state wage and hour laws across twenty-seven states, specifically, Colorado,
Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky,
Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Jersey, New
York, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, South
Carolina, Tennessee, Texas, Virginia, Washington, and Wisconsin. (Doc. 103
at 1–2). The defendant is a national landscaping and snow removal company.
The named plaintiffs were non-exempt, salaried landscape/crew/irrigation
supervisors working for the defendant in various locations across the country
who, on behalf of themselves and all others similarly situated, alleged that,
between October 8, 2010 and June 8, 2014, the defendant had a policy and
practice of failing to pay its employees who were paid on a half-time,
fluctuating workweek (“FWW”) basis all overtime compensation owed in
accordance with the FLSA and state wage and hour laws. (Doc. 103).
In particular, the named plaintiffs alleged in their amended complaint
that the defendant could not use the FWW method to compute overtime for
hours worked over 40 hours in a workweek under 29 C.F.R. §778.114
because the class members’ salaries were not fixed, a requirement for using
that method. The plaintiffs alleged this was the case based on the defendant’s
payment of nondiscretionary holiday and annual bonuses and different rates
of pay for any snow-related activities a class member might have performed
(“snow pay”). The plaintiffs alleged these forms of compensation were not
added to the overtime calculation and should have and that these additions
made the defendants usage of the FWW method improper.
On October 8, 2013, the initial named plaintiff, Jonathan Amador
Acevedo (“Amador”), filed the original class action complaint in this court
alleging violations of the FLSA and Pennsylvania wage and hour laws alone.
(Doc. 1). On February 14, 2014, the court granted the parties’ joint request to
stay discovery, (Doc. 35), allowing the parties to participate in three full-day
sessions of mediation in Philadelphia, Atlanta, and Los Angeles between July
2014 and February 2015 with the Honorable Joel B. Rosen (Ret.), retired
Magistrate Judge for the United States District Court of the District of New
Jersey, and Hunter Hughes, Esq., where the parties ultimately reached a
settlement. In order to reach an agreement, the parties engaged in extensive
informal discovery and the defendant voluntarily produced employee pay data.
The exchange of this information led to the discovery of additional named
plaintiffs and alleged violations in other states where the defendant employed
On May 29, 2015, the named plaintiffs filed an unopposed motion to
preliminarily approve their initial settlement agreement along with an amended
complaint which added the additional state law claims and the five additional
plaintiffs now named in this action. (Doc. 103; Doc. 104). After several
telephone conferences with the court to discuss the court’s concerns with the
initial settlement agreement, the plaintiffs filed a motion for preliminary
approval of an amended settlement agreement, the agreement now subject
to approval. (Doc. 118). On March 21, 2017, the court preliminarily approved
the parties’ amended agreement and class counsel and the court scheduled
a final approval hearing for July 21, 2017. (Doc. 119; Doc. 120). The court
also preliminarily approved the parties’ proposed settlement administrator,
Dahl Administration, LLC (“Dahl”), to set in motion the process of sending
notice, claim forms, objections, opt-in and opt-out forms, etc. for class
members. Prior to the final hearing, on May 8, 2017, the named plaintiffs filed
their current unopposed motion for attorneys’ fees. (Doc. 121). Also prior to
the final hearing, on July 11, 2017, the named plaintiffs formally motioned for
final approval of the amended settlement agreement, submitting their briefing
for the court’s review. (Doc. 122).
At the final approval hearing, class counsel reiterated in detail the
arguments set forth in the named plaintiffs’ briefing. The defendant’s counsel
supported these arguments in open court without objections. The court lauded
the parties for their extensive work in reaching a settlement the court deemed
fair and reasonable. No objectors were present at the final hearing. Class
counsel did inform the court that several class members had filed late claims
that the defendant had agreed to include in the final settlement. Accordingly,
on July 28, 2017, the named plaintiffs filed a declaration from Dahl detailing
the final amount of class members, the final amount to be included in the
settlement, the final sum for distribution, a list of calculated settlements to be
distributed to the class members following final approval, and a settlement
fund summary. (Doc. 125).
THE AMENDED SETTLEMENT AGREEMENT
Classes Included in the Amended Settlement Agreement
The parties’ amended settlement agreement contains two distinct
settlement classes, a class dedicated to the FLSA claims, the FLSA Collective
Group, and a class dedicated to the state law claims, the State Settlement
Class. On February 14, 2014, the court conditionally certified the FLSA
Collective Group under Section 16(b) of the FLSA, 29 U.S.C. § 216(b). (Doc.
35). The Collective Group was defined as follows:
All current and former employees in the United States
who have worked for The Brickman Group and who,
at any time between October 8, 2010 and the present,
were paid a salary, but only received “fluctuating
workweek”- type half-time overtime pay for hours
worked over 40 hours in a workweek (meaning at a
rate that decreased with each overtime hour worked,
rather than at time-and-a-half their hourly rate),
i n cl u d i n g b u t n o t l i m i te d to s a la r i e d
landscape/crew/irrigation Supervisors and those in
similarly titled positions.
After preliminary approval of the class, notice with an opt-in consent form was
then sent to 1,360 Collective Group members. Ultimately, 417 Collective
Group members filed opt-in consent forms to the FLSA action at the start of
the litigation. Now, an additional 345 members have opted in by submitting
On March 21, 2017, the court preliminarily certified the State Settlement
Class defined as follows:
all individuals who were paid by The Brickman Group
for work performed in Colorado, Connecticut,
Delaware, Florida, Georgia, Illinois, Indiana, Kansas,
Kentucky, Maryland, Massachusetts, Michigan,
Minnesota, Missouri, New Jersey, New York, North
Carolina, Ohio, Oregon, Pennsylvania, Rhode Island,
South Carolina, Tennessee, Texas, Virginia,
Washington, or Wisconsin and who, at any time
between October 8, 2010 and June 8, 2014, were
paid a salary, but worked under a pay plan in which
they were eligible to receive “fluctuating workweek”type half-time overtime pay for hours worked over 40
in a workweek (meaning at a rate that decreased with
each overtime hour worked, rather than at time-and-ahalf their hourly rate), including but not limited to
salaried landscape/crew/irrigation Supervisors and
those in similarly titled positions.
(Doc. 120). The State Settlement Class incorporated the additional state law
claims in the amended complaint.
Terms of the Amended Settlement Agreement
The amended settlement divided all of the class members and named
plaintiffs from the above two classes into two groups, Group 1 and Group 2.
Group 1 included all FLSA Collective Group members who originally filed an
opt-in form at the start of this litigation, including all the named plaintiffs, and
all Collective Group members who worked in Pennsylvania, regardless of their
original opt-in status. The parties estimated that there were approximately 476
Group 1 members. Group 2 included all remaining Collective Group members
who did not file an opt-in form and who did not work in Pennsylvania. Group
2 was designed as a catch-all for all of those putative plaintiffs in the
Collective Group who did not file an opt-in form at the start of the case, other
than those who worked in Pennsylvania. The parties initially estimated that
there were approximately 839 individuals in Group 2.
Dahl agreed to administer the entire settlement for these two groups for
fees not to exceed $17,470.00. The parties also agreed that the named
plaintiff in the original complaint, Amador, would receive a service award in
the amount of $5,000.00. The remaining named plaintiffs would each receive
a $1,000.00 service award. These amounts would be taken pro rata from the
Group 1 and Group 2 qualified fund.1
The gross fund was labeled a qualified fund after the defendant handed over
the agreed upon sums to Dahl. Upon receipt of the funds, Dahl was required
to satisfy all Internal Revenue Service (“IRS”) regulations needed to convert
the funds into a “Qualified Settlement Fund” as defined by IRS regulations.
Settlement treatment depended on inclusion within a certain group.
Group 1 members were guaranteed a minimum payment without further action
and would be excluded only if they expressly opted out of the settlement. The
defendant agreed to pay a gross maximum of $3.25 million for Group 1
claims. After deducting class counsel attorneys’ fees and costs, administrator
fees and costs, and service awards, each Group 1 member was initially
entitled to $150.00 as an award. After this initial set-aside award, the parties
agreed that Dahl would determine how to distribute the remaining funds to
Group 1 members by using a formulation that created a per dollar share,
taking into account the members’ actual overtime pay during weeks the
member was eligible to receive FWW pay for hours worked over forty in a
workweek. This calculation would be based on the defendant’s payroll and
timekeeping data. The remaining funds would then be divided pro rata among
Group 1 members based on their per dollar share figure.
The defendant agreed to pay a gross maximum of $3.7 million for Group
2 claims, but the parties negotiated a built in limitation to this gross amount.
The defendant’s actual gross payment for Group 2 claims would be based on
the percentage of Group 2 members who submitted a timely claim form—i.e.,
if thirty percent of individuals in Group 2 opted in, then only thirty percent of
the Group 2 maximum fund, or $1.11 million, would be the gross fund from
(Doc. 118-3, ¶28).
which a portion would be going to Group 2 members. The net fund would be
determined after deducting attorneys’ fees and costs, administrator fees and
costs, and service awards.
Unlike Group 1 members, only Group 2 members who submitted a
timely claim form would be eligible to participate in settlement. Like Group 1
members, however, eligible Group 2 members would receive a minimum
$150.00 set aside from the Group 2 net fund. Dahl would then determine a per
dollar share figure for eligible Group 2 members based on the defendant’s
previously produced payroll and timekeeping data. Dahl would then distribute
the remaining funds pro rata based on the net amount in the Group 2 fund and
each Group 2 member’s per dollar share figure.
Also unlike the Group 1 settlement, the Group 2 settlement was subject
to the defendant’s unilateral option to void the agreement if more than thirtyone percent of Group 2 members became eligible to receive a payment, i.e.,
if more than thirty-one percent of Group 2 members opted in. The void
provision did not effect the settlement of Group 1 members. The defendant’s
decision to void the agreement was optional, not mandatory. Thus, although
$3.7 million was agreed to as the maximum gross amount for Group 2 claims,
this amount was limited by the amount of Group 2 members who actually
opted in and, further, by the defendant’s option to void the agreement with
respect to Group 2 if more than thirty-one percent of Group 2 members did opt
Group 1 and Group 2 members had thirty days from the initial mailing
of settlement notices and claim forms to object to the settlement by providing
a written statement to Dahl. The forms would be in both English and Spanish
as many of the defendant’s employees were Spanish-speaking. A website
would also be established where members could submit a claim form via
electronic signature. Those in the State Settlement Class who wished to
exclude themselves from the claims based on state law were allowed to do so
by providing a written statement to Dahl on or before the thirty-day deadline.
Group 2 members were given sixty days to submit an executed claim form
needed to receive a settlement award, thereby opting into settlement.
The parties agreed that Group 1 and Group 2 members would have their
settlement award treated the same for tax purposes. Half of the award would
be treated as wages, with Dahl responsible for withholding federal and state
income and employment taxes. The remaining half would be treated as nonwage liquidated damages reported on an IRS Form 1099. Release language
for the FLSA claims and the state law claims would be included on all
settlement checks. Mailed checks would remain valid and negotiable for 180
days after issuance and would be automatically cancelled if not cashed within
that time. If administratively feasible, the parties agreed that funds from
uncashed checks would be redistributed to eligible Group 1 and Group 2
members. If that was not administratively feasible, uncashed check funds
would revert to a qualified settlement fund to be held by class counsel in a
trust account for the applicable state statutory period for contract claims. No
amount from the uncashed checks would revert to the defendant and class
counsel would update the court within a year regarding the status of any
After the court preliminarily approved the parties amended settlement
agreement, Dahl immediately began the settlement process. Based on the
defendant’s records, Dahl identified 1332 unique records that identified a
particular class member’s name, last known address, social security number,
and payroll information. (Doc. 135 ¶4). Of this list, 494 members were
classified as being in Group 1 and 838 members were classified as being in
Group 2. (Id. ¶5). On April 10, 2017, Dahl mailed notice packets in English
and Spanish to all 1332 class members. (Id. ¶7). Dahl also established a
settlement website. (Id. ¶8). Of the 1332 notices mailed, only 54 were returned
as undeliverable. (Id. ¶9). Dahl found updated addresses for eleven of these
individuals and remailed packets to those updated addresses, with none
returned as undeliverable. (Id. ¶¶9–10). The remaining 43 packets could not
be redelivered, resulting in a non-deliverable rate of only 3.2%. (See id.).
Dahl did not receive any objections to the settlement and, as the court
noted at the hearing, no objectors attended the final hearing. (Id. ¶12). Dahl
did not receive any requests for exclusion from any group members. (Id. ¶11).
Out of the 838 Group 2 members, 345 of these members submitted opt-in
forms, though eight of these forms were untimely. (Id. ¶13). The defendant
agreed to accept these untimely claim forms as part of the settlement,
bringing the final opt-in rate for Group 2 members to 41.16%. (Id.). Based on
the information gathered during administration, the average estimated, net
settlement award will be $4,153.72 for Group 1 members and $2,769.61 for
eligible Group 2 members who opted-in. (Id. ¶24). This average, of course,
does not take into account the great variation amongst the members based
on their individualized per dollar share figure. (See id. at Exs. B–C (listing the
estimated individual settlement award calculations for all members)). The
maximum estimated award for Group 1 members is $25,062.86 and
$19,388.46 for Group 2 members. (Id. ¶24).
Although the percentage of opt-in forms from Group 2 members
triggered the defendant’s unilateral option to void the settlement with respect
to Group 2, on June 22, 2017, the defendant advised Dahl that it would not
elect to exercise that provision. (Id. ¶21). Even after being advised of several
more late filings at the final hearing, the defendant’s counsel advised the court
that the defendant would continue with the settlement and would not exercise
the void provision. Thus, many of the court’s reservations with respect to the
void provision, reservations that the court expressed to the parties on multiple
occasions, did not come to fruition. Dahl’s administrative fees and costs for its
work to date totals $15,882.00, less than the $17,470.00 maximum the parties
FINAL CERTIFICATION OF THE SETTLEMENT CLASSES
This action is a hybrid FLSA and state law action. Due to the hybrid
nature of the action, the court must grant final certification of the opt-in FLSA
Collective Group under Section 16(b) of the FLSA, 29 U.S.C. § 216(b) for
settlement purposes. The court must also grant final certification to the State
Settlement Class under Federal Rule of Civil Procedure 23. The analytical
inquiries for these two types of class actions are distinct with some overlap.
The court finds that final certification is warranted with respect to both the
FLSA Collective Group and the State Settlement Class.
The State Settlement Class
Rule 23(a) requires that four threshold requirements be met in order for
a Rule 23 class to be certified: numerosity, commonality, typicality, and
adequate representation. See Amchem Prods., Inc. v. Windsor, 521 U.S. 591,
613 (1997); In re Warfarin Sodium Antitrust Litig., 391 F.3d 516, 527 (3d Cir.
2004). In addition, the class must satisfy one of the requirements of Rule
23(b). Here, the plaintiffs seek final certification under Rule 23(b)(3) which
permits a court to certify a class in cases where “questions of law or fact
common to class members predominate over any questions affecting
individual members” and the “class action is superior to other available
methods for fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P.
23(b)(3). These two requirements are commonly referred to as predominance
and superiority. See, e.g., In re Constar Int’l, Inc. Sec. Litig., 585 F.3d 774,
780 (3d Cir. 2009). A party that seeks to certify a settlement class must satisfy
the same requirements necessary to maintain a litigation class. In re Gen.
Motors, 55 F.3d at 778. However, the fact that the parties have reached an
agreement and the terms of that agreement may factor into the certification
analysis. See Amchem Prods., 521 U.S. at 619.
The court finds that each of the above requirements are met in this
case. Specifically, Rule 23(a)(1) requires that a class be so numerous that
joinder of all members is impracticable. Classes exceeding forty or more class
members are generally held to meet the numerosity requirement. See Stewart
v. Abraham, 275 F.3d 220, 226–27 (3d Cir. 2001). In addition, the court may
consider the geographic dispersion of the members. Bredbenner v. Liberty
Travel, Inc., Nos. 09-905 (MF), 09-1248 (MF), 09-4587 (MF), 2011 WL
1344745, at *5 (D.N.J. April 8, 2011).
The instant settlement class consists of 1332 persons, 494 are
automatically included in settlement by virtue of their inclusion in Group 1 and
another 345 members from the Group 2 pool are included as these members
have submitted valid claim forms. These class m
embers are found across the country. The large amount of class members
and the geographic dispersion of the members would make joinder
impracticable. Accordingly, the plaintiffs satisfy the numerosity requirement.
Rule 23(a)(2) requires that there are questions of law or fact common
to the class. If class members share at least one question of law or fact in
common, factual differences among the claims of the class members do not
defeat certification. In re Prudential Ins. Co. Am. Sales Practice Litig. Agent
Actions, 148 F.3d 283, 310 (3d Cir. 1998). Here, the class members share a
common claim of alleged violations of state law based on the defendant’s
usage of the half-time FWW method for overtime compensation that did not
include (and despite) payment of holiday bonuses, annual bonuses, and snow
pay. Cf. Rivet v. Office Depot, 207 F. Supp. 3d 417, 429 (D.N.J. 2016) (finding
commonality was satisfied in a hybrid FLSA/state settlement class under Rule
23 where state claims under four state regimes were based on the
defendant’s usage of the FWW method). The class claims will involve
common factual issues regarding: (1) entitlement to additional overtime
compensation; and (2) whether the defendant’s pay practices violated state
wage and hour laws. “Courts regularly find commonality in similar wage and
hour suits in which class certification is sought.” Bredbenner, 2011 WL
1344745, at *6 (collecting cases). Thus, the second prerequisite is met in this
Rule 23(a)(3) and Rule 23(a)(4) require that the claims or defenses of
the representative be typical of the claims or defenses of the class and that
the representative will fairly and adequately protect the interests of the class.
These two inquiries tend to merge because both evaluate the relation of the
claims and the potential conflicts between the class representative and the
class in general. Beck v. Maximus, Inc., 457 F.3d 291, 296 (3d Cir. 2006).
Typicality focuses on whether the interests of the class representative aligns
with the interests of the absent class members such that the representative
is working towards the benefit of the class as a whole. In re Prudential, 148
F.3d at 311. Three considerations are relevant to this inquiry: (1) whether the
claims of the class representative are generally the same as the class in terms
of the legal theory advanced and the facts; (2) whether the class
representative is entitled to a defense not applicable to the class and is likely
to be a focus of litigation; and (3) whether the interests and incentives of the
class representative align with the rest of the class. In re Schering Plough
Corp., ERISA Litig., 589 F.3d 585, 599 (3d Cir. 2009). The claims and facts
do not need to be identical, but there must be strong similarity. Bredbenner,
2011 WL 1344745, at *7. Adequacy is comprised of two inquiries. Id. (citing
Wetzel v. Liberty Mut. Ins. Co., 508 F.2d 239, 247 (3d Cir. 1975)). The first
inquiry looks to whether any significant antagonistic interests or conflicts exist
between the class representative and absent members. Id. The second
inquiry looks to the experience and expertise of class counsel in representing
the class. Id.
In this case, the named plaintiffs’ claims are typical of those held by the
class members as they are based on the same facts and the same legal
theories. All named plaintiffs were supervisory employees who worked for the
defendant in various locations across the country and received annual
bonuses, holiday bonuses, and/or snow pay but were paid using a half-time
FWW method of overtime compensation. There is no defense unique to the
named plaintiffs and their interests directly align with the members of the State
Settlement Class. The named plaintiffs also satisfy the adequacy requirement.
The named plaintiffs hold no interests that are antagonistic of the class
members’ interests, thus making them adequate class representatives.
Moreover, the class is represented by counsel who have experience and
success with collective and hybrid FLSA/Rule 23 class action litigation, an
inquiry that the court detailed in its preliminary approval of the amended
The court also finds that the action meets the predominance and
superiority requirements of Rule 23(b)(3). Rule 23(b)(3) allows certification of
a class if the questions of law or fact common to class members predominate
over any questions affecting only individual members and if a class action is
superior to other available methods for fairly and efficiently adjudicating the
controversy. Predominance merges with the concept of commonality, but has
a more exacting standard. Bredbenner, 2011 WL 1344745, at *8. The court
may consider four non-exhaustive factors listed in Rule 23(b)(3) to determine
whether superiority is met. Fed. R. Civ. P. 23(b)(3)(A)–(D). These include the
The class members’ interest in individually controlling the
prosecution or defense of separate actions;
The extent and nature of any litigation concerning the controversy
already begun by or against class members;
The desirability or undesirability of concentrating the litigation of
the claims in the a particular forum; and
The likely difficulties in managing a class action.
Id. Management problems, however, are not applicable when certifying a
settlement class. In re Warfarin, 391 F.3d at 529. Ultimately, the court should
attempt to “balance, in terms of fairness and efficiency, the merits of the class
action against those of alternative available methods of adjudication.”
Georgine v. Amchem Prods., Inc., 83 F.3d 610, 632 (3d Cir. 1996) (internal
quotation marks and citation omitted).
Here, the common factual and legal questions applicable to the class
members predominate over any individual claims. The class claims are based
upon a common course of alleged conduct, particularly, the defendant’s pay
policies and its usage of the FWW method for overtime compensation.
Similarly, class adjudication is the superior method of adjudication. Given the
lack of objections or exclusions, there appears to be no class member with a
controlling interest in the litigation. There are no other actions overlapping with
the current one. Given the defendant’s locations across the country with
employees across various states, a singular action would enhance recovery.
Moreover, the claims are fully matured as the defendant changed its method
of overtime compensation in June of 2014 as a result of this action. Cf.
Bredbenner, 2011 WL 1344745, at *9 (finding that the full maturation of the
claims weighed in favor of finding superiority).
Further, when certifying a settlement class, variations in state law do not
present an insurmountable obstacle to final certification because the court is
not concerned with the manageability of claims from a litigation perspective.
In re Warfarin, 391 F.3d at 529; see also Bredbenner, 2011 WL 1344745, at
*9 (same). These issues are irrelevant when certifying a settlement only class.
Id.; id. Thus, the court finds that the predominance and superiority
requirements of Rule 23(b)(3) are met for the State Settlement Class.
Accordingly, the court will grant final certification to this class for settlement
The FLSA Collective Group
The court will also grant final certification to the FLSA Collective Group
for settlement purposes. This class will include all Group 1 members2 and all
Group 2 members who submitted claim forms for settlement purposes. Courts
employ a two-step process for approving FLSA classes, an initial “conditional”
certification and a later “reconsideration” phase. Bredbenner, 2011 WL
1344745, at *16 n. 4. The court has already granted conditional certification
of the Collective Group, (Doc. 35), and need only reconsider that decision in
finally certifying the class for settlement purposes.
To certify a FLSA collective action the court must find that the
employees in the class are “similarly situated” within the meaning of the FLSA.
Bredbenner, 2011 WL 1344745, at *17 (citing Sperling v. Hoffman-La Roche,
Inc., 862 F.2d 439, 444 (3d Cir. 1888), aff’d, 439 U.S. 165 (1989)). The Third
Circuit Court of Appeals has endorsed the balancing of various factors set
forth in Plummer v. General Electric Co., 93 F.R.D. 311 (E.D. Pa. 1981) and
Group 1 members who did not opt-in originally but are included in Group 1
based on their Pennsylvania claims will, in essence, opt in by cashing their
Lusardi v. Xerox Corp., 118 F.R.D. 351 (D.N.J. 1987) to make this finding. Id.
(citing Lockhart v. Westinghouse Credit Corp., 879 F.2d 43 (3d Cir. 1989) and
Ruehl v. Viacom, Inc., 500 F.3d 375, 388 n. 17 (3d Cir. 2007)). The Lusardi
factors are typically used in granting final FLSA certification and they include:
“(1) the disparate factual and employment settings of the individual plaintiffs;
(2) the various defenses available to [defendants] which appear to be
individual to each plaintiff; [and] (3) fairness and procedural considerations.”
Id. (quoting Lusardi, 118 F.R.D. at 359) (alterations in original). These factors
are “neither exhaustive nor mandatory.” Id. Moreover, where the FLSA class
is joined with a Rule 23 class, the FLSA class inquiry largely overlaps with the
Rule 23 analysis. Id. In these instances, the court agrees that it “need only
address the Lusardi factors in passing.” Id. In addition, the concern with
individualized inquiries speaks directly to case management issues which is
not at issue when certifying a class for settlement purposes only. Id. (citing
Amchem, 521 U.S. at 620).
The court has already found that the employees should be certified for
Rule 23 settlement purposes and the court now finds that the FLSA Collective
Group members continue to be similarly situated, warranting final certification
of the FLSA Collective Group. They are all non-exempt supervisory
employees who were paid under the FLSA’s half-time FWW method of
overtime compensation between October 8, 2010 and June 8, 2014. The
named plaintiffs are representative of employees in this category. The alleged
harm is based on payments of holiday bonuses, annual bonuses, and snow
pay not included in the FWW method. Thus, the court finds that the
employees in the Collective Group and their claims are factually similar and
With respect to individualized defenses, the named plaintiffs did advise
the court in their motion for attorneys’ fees that the defendant’s planned to
seek decertification based on individualized defenses. (Doc. 121-1 at 19–20).
In particular, the defendant’s planned to assert an exemption defense for
those supervisory employees who drove trucks with trailers that exceeded a
combined 10,000 pounds in weight. Class counsel was then prepared to
argue a “mixed-fleet” exception to this exemption based on Third Circuit
precedent and federal statutory law. (Id. at 20 (citing McMaster v. Eastern
Armored Servs., 780 F.3d 167 (3d Cir. 2015)). This would present a defense
that might be individualized. Either a particular plaintiff did or didn’t drive
trucks with trailers over 10,000 pounds and, if a particular plaintiff did drive
trucks with trailers over 10,000 pounds, the court would need to determine if
any percentage of time was spent driving trucks with trailers under 10,000
pounds. This inquiry, however, would speak directly to case management
problems, problems that have little weight in the settlement context. Moreover,
it is not obvious that this defense would predominate and present an
insurmountable obstacle to certification. Accordingly, the court will finally
certify the FLSA Collective Group for settlement purposes.
FINAL APPROVAL OF THE AMENDED SETTLEMENT AGREEMENT
Rule 23 Final Settlement Approval
In order to approve a Rule 23 class settlement, the court must find that
the settlement is fair, reasonable, and adequate and in the best interests of the
class under Rule 23(e). In re Ins. Brokerage Antitrust Litig., 579 F.3d 241, 258
(3d Cir. 2009); In re Gen. Motors Corp. Pick-Up Truck Fuel Tank Prods. Liab.
Litig., 55 F.3d 768, 785 (3d Cir. 1995). In considering a Rule 23 class action
settlement, the court “plays the important role of protector of the [absent class
members’] interests, in a sort of fiduciary capacity.” In re Gen. Motors, 55 F.3d
at 786. “Before sending notice of the settlement to the class, the court will
usually approve the settlement preliminarily. This preliminary determination
establishes an initial presumption of fairness when the court finds that: (1) the
negotiations occurred at arm's 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.” Id. at 785-86 (citations omitted). “This
presumption may attach even where, as here, settlement negotiations precede
class certification.” Bredbenner, 2011 WL 1344745, at *10.
Here, the court has already preliminarily approved the parties amended
settlement agreement and found that the first three factors weighed in favor of
that preliminary approval. (Doc. 119; Doc. 120). Now that notices have been
sent to class members in Group 1 and Group 2, the court can address the
fourth factor, the amount of objectors. Here, there have been no objections,
further emphasizing the presumptive fairness of the parties amended
In Girsh v. Jepson, 521 F.2d 153 (3d Cir. 1975), the Third Circuit set forth
specific factors that the court should consider in determining whether a
settlement is fair, reasonable, and adequate. These factors include the
(1) the complexity, expense and likely duration of the
litigation; (2) the reaction of the class to the settlement;
(3) stage of the proceedings and the amount of
discovery completed; (4) risks of establishing liability;
(5) risks of establishing damages; (6) risk of
maintaining the class action through the trial; (7) ability
of the defendants to withstand a greater judgment; (8)
the range of reasonableness of the settlement fund in
light of the best possible recovery; and (9) the range of
reasonableness of the settlement fund to a possible
recovery in light of all the attendant risks of litigation.
Girsh, 521 F.2d at 157. “The proponents of the settlement bear the burden of
proving that these factors weigh in favor of approval.” In re Gen. Motors, 55
F.3d at 785-86 (citations omitted). “The findings required by the Girsh test are
factual, which will be upheld unless they are clearly erroneous.” Id.
The first Girsh factor, the complexity, expense and likely duration of the
litigation, favors final approval in this case. While the court cannot state that a
hybrid FLSA claim is somehow unique, the existence of state law claims under
twenty-seven state regimes joined with the FLSA action does make this case
relatively complex. Some of these states (including, Florida, Georgia, South
Caroline, Texas, and Virginia) do not have statutory wage and hour laws and
the state law claims in those instances would be based on a common law
theory of unjust enrichment alone. Each state regime has a distinct statute of
limitations period, which at this late stage has likely run because the defendant
changed its practice of using a FWW method of computing overtime in June
In addition, the parties decided to distinguish the Pennsylvania state law
claims from the claims under the remaining twenty-six states and the court
required the parties to justify this distinction. Adding to the complexity, the
plaintiffs explained the strong viability of the Pennsylvania claims under the
Pennsylvania Minimum Wage Act (“PMWA”), 43 Pa. Stat. §333.101, et seq.
These claims, in addition to unjust enrichment claims under Pennsylvania law,
were included in the original class action complaint and are, therefore, tolled
even if settlement is denied. It is also clearer under the PMWA that the
defendant’s previous method of computing overtime was improper in all
circumstances. See, e.g., Verderame v. RadioShack Corp., 31 F. Supp. 3d
702, 709 (E.D. Pa. 2014) (holding that the FWW method of computing overtime
is impermissible under the plain language of 34 Pa. Admin. Code
§231.43(d)(3), an implementing regulation of the PMWA).
In comparison, many of the state statutory regimes likely follow the FLSA
standards for overtime pay. The appropriateness of the defendant’s actions
under the FLSA is less clear. The U.S. Department of Labor (“DOL”) has
interpreted the FLSA to allow a FWW method of calculating overtime pay at a
half-time rate where there is “fixed amount” per week and a “clear mutual
understanding that the fixed salary is compensation (apart from overtime
premiums) for the hours worked each workweek, whatever their number, rather
than for working 40 hours or some other fixed weekly work period.” 29 C.F.R.
§778.114.3 The current action is based on the theory that the defendant could
not use the half-time, FWW method because the class members’ salaries were
not fixed. The plaintiffs believed this to be the case based on the defendant’s
payment of nondiscretionary holiday and annual bonuses and snow pay. The
plaintiffs alleged these added payment were not added to the overtime
calculation and should have and that these additions made the defendants
usage of the FWW method improper.
The ability of the plaintiffs to recover under the FLSA using the above
theory presents an issue that has not been directly addressed by the Supreme
See Mozingo v. Oil States Energy Servs., LLC, No. 16-529, 2017 WL
3219345, at *2 (W.D. Pa. July 28, 2017) (explaining that respect under
Skidmore v. Swift, 323 U.S. 134 (1944) is due to an agency’s informal
interpretations of an act only to the extent that interpretation has the power to
Court or the Third Circuit. The trend appears to be that courts distinguish
between performance-based and time-based bonuses with only time-based
bonuses violating the “fixed salary” requirement needed to use the FWW
method. See, e.g., Mozingo, 2017 WL 3219345, at *3 (concluding that only
time-based compensation would violate the fixed salary requirement); Lalli v.
Gen. Nutrition Ctrs., Inc., 814 F.3d 1, 4–6 (1st Cir. 2016) (same); Wills v.
RadioShack Corp., 981 F. Supp. 2d 245, 256–58 (S.D.N.Y. 2013) (same)
(collecting cases) (finding that this interpretation was consistent with the
Supreme Court’s interpretation of the FLSA in Overnight Motor Transp. Co. v.
Missel, 316 U.S. 572 (1942), partially superceded by statute as stated in Trans
World Airlines, Inc. v. Thurston, 469 U.S. 111, 128 n. 22 (1985)).
Here, the alleged violations are based on holiday bonuses, annual
bonuses, and snow pay. Had the court been required to weigh in on this issue
and followed the apparent trend, it is possible that not all of the violations
would have been deemed a violation of the FWW method, though this case
law is still developing. The distinctions between the types of additional
compensation and the fact that the court would need to weigh in on an
unsettled issues would naturally make litigation more complex. These
considerations would also likely lead to higher expenses if the plaintiffs were
required to litigate their claims to trial and a lengthier litigation timeline overall.
Thus, the first Girsh factor weighs in favor of approval of the parties’ amended
The second Girsh factor, the reaction of the class to settlement,
undoubtably favors settlement. There were no objections to the class and no
requests for exclusion from the State Settlement Class. (Doc. 125 ¶¶11–12).
No objectors attended the final hearing on July 21, 2017, as the court noted on
the record. Out of the 1332 class members, 494 Group 1 members will be
participating in the settlement, the full amount of Group 1 members, and 345
Group 2 members will be participating. The reaction of Group 2 members went
beyond even the parties’ expectations. Approximately 41.16% of Group 2
members will be participating in settlement, above the anticipated thirty-one
percent the parties negotiated as part of the void provision. Ultimately, 839
class members, out of a total of 1332 class members, have affirmatively
participated in the parties’ settlement, approximately sixty-three percent of the
class members. The court views this as an excellent result.
The third Girsh factor also favors final approval, the stage of the
proceedings and the amount of discovery completed. The court stayed
discovery in the action early on to allow the parties to engage in mediation.
(Doc. 35). At that point the defendant had already answered the original
complaint in this action. (Doc. 21). The parties did not engage in any formal
motions practice and the defendant has not answered the amended complaint,
which was filed on a stipulated basis contingent on the success of settlement.
Although the parties did not engage in formal discovery, during the
mediation process there was sufficient exchange of information and class
counsel uncovered violations in other states across the country. In particular,
the parties exchanged the following:
[A]n electronic spreadsheet setting forth the dates of employment in
which putative class members worked in the position at issue;
Employee Earnings Detail history Reports and weekly pay data for
each calendar year in which an employee worked in the position
at issue during the applicable time period;
[A]ll documents summarizing or describing the policies and
procedures for compensating putative class members in the form
of wages, bonuses, overtime compensation, and all other forms of
compensation during the applicable period;
[P]olicies or practices applicable to putative class members with
respect to time-keeping and compensation;
[J]ob descriptions for the putative class members;
Department of Labor audit, evaluations, and reports; and
[A] sample of personnel files.
This documentation was required in order to arrive at damages calculations,
calculations that the parties disputed during mediation. Thus, the court finds
that the second Girsh factor favors settlement given the sufficiency of informal
discovery and the amount of time spent by the parties attempting to reach a
The fourth, fifth, and sixth Girsh factors also strongly favor final approval
of the parties’ amended settlement agreement. These factors speak to the
risks the class would face with respect to establishing liability, establishing
damages, and maintaining the class action if litigation were to continue. Here,
these risks are high. The court has discussed in detail the risks of establishing
liability in its analysis of the first Girsh factor. Some potential liability issues
would include: (1) varying statutes of limitations; (2) finding liability in states
without statutory protection where a class member’s sole claim would be for
unjust enrichment; and (3) finding liability for all the defendant’s practices with
respect to holiday pay, annual pay, and snow pay in states with statutes that
closely track the FLSA FWW method.
In addition, given their disagreement with respect to liability, the parties
naturally disagreed over proper damage calculations. The parties disagreed
over the appropriate amount of damages for settlement purposes even after
exchanging employee records, including time-keeping records. As detailed in
a letter brief to the court, (Doc. 113), the parties used both a conservative
damage model favorable to the defendant and a damage model favorable to
the plaintiffs to arrive at the gross sum for Group 1 and Group 2. (Id. at 2–3).
These models attempted to take into account the attendant risks of
The two damages estimates for Group 1 members were $1,030,842.00
and $4,377,660.00. (Id. at 2) The resulting $3,250,00.00 set aside for Group
1 is, on its face, a compromise between these damages estimations. Group 2
members, those with only state law claims at that point in time because they
had not opted into the FLSA class, faced higher risks.4 (Id. at 3 n. 2). The two
damages estimates for Group 2 members were $224,540.00 and
$7,287,983.00. (Id. at 3). The parties’ divergent views on the ability to establish
liability for Group 2 members is clearly seen in the difference between those
two numbers. Like the final Group 1 amount, the $3,700,000.00 gross amount
set aside for these claims is a clear compromise over these divergent views.
The void provision and the defendant’s ability to walk away from the Group 2
settlement if more than thirty-one percent of Group 2 members opted in was
an added layer of protection for the defendant from these weaker claims. If the
plaintiffs were required to continue litigating this case, and particularly the
Group 2 claims, the risks of establishing damages would be inextricably tied
to the risks of establishing liability.
In addition, the plaintiffs face serious risks of trying to maintain the Rule
23 State Settlement Class. Here, the State Settlement Class consists of claims
under twenty-seven state law regimes, some of which do not have statutory
wage and hour protection. While the heart of this action is the FLSA action, if
faced with managing litigation the court would be wary of certifying such a
sprawling class. In the briefing to the court for the motion for attorneys’ fees,
the named plaintiffs explained that the defendants planned to oppose
Group 2 did not include Pennsylvania law claims but these claims faced little
to no risk because these claims had no statute of limitations issues. These
claims were tolled by the original complaint filing. Further, the defendant’s
actions were clearly improper under Pennsylvania law.
certification of the Rule 23 class and planned to motion to decertify the FLSA
class based on individuals defenses to the class claims. (Doc. 121-1 at 14–15).
Accordingly, the court finds that the class claims bore substantial liability,
damages, and class certification risks. These risks were assessed and
weighed in the damages calculations and the resulting settlement as seen by
the gross amounts set aside for Group 1 and Group 2 and the void provision.
As such, the Girsh risk factors weigh in favor of final approval.
The eight Girsh factor also weighs in favor of final approval, the ability of
the defendants to withstand a greater judgment. Here, the parties negotiated
a gross settlement amount of $6,950,000.00—$3,250,000.00 for Group 1 and
$3,700,000.00 for Group 2. The actual gross amount, now that Group 2
members have had an opportunity to opt-in will be $4,773,269.69—
$3,250,000.00 for Group 1 and $1,523,269.69 for Group 2—less than the
agreed upon gross amount. (Doc. 125, Ex. A). Thus, in theory the defendant
could withstand a greater judgment. However, although the gross amount set
aside was $6,950,000.00, the gross amount set aside before the defendant’s
unilateral option to void the Group 2 settlement could be exercised was
$4,397,000.00.5 The fact that the defendant chose not to exercise that option
when the opt-in rate for Group 2 reached 41.16% means that the defendant
The parties’ void provision anticipated a thirty-one percent opt-in rate for
Group 2 members lowering the anticipated Group 2 gross total to
$1,147,000.00. When added to the $3,250,000.00 set aside for Group 1 the
final estimated gross amount was $4,397,000.00.
will be withstanding a greater financial burden than it originally anticipated. The
court cannot state with any certainty that the defendant could somehow
withstand more, even if financially able, given the risks of litigation, the
resulting compromise, and the defendant’s later decision to compromise even
after more Group 2 members opted in than were originally anticipated.
Accordingly, this factor weighs in favor of approval.
The eight and ninth Girsh factors, the ranges of reasonableness of the
settlement fund in light of the best possible recovery (with and without
consideration of attendant risks), clearly favor final approval. The court has
explained the damages models used by the parties to reach a final sum, with
one model more favorable to the plaintiffs and the other more favorable to the
defendant. For Group 1 members these calculations amounted to
$1,030,842.00 and $4,377,660.00. For Group 2 members these calculations
amounted to $224,540.00 and $7,287,983.00. Thus, the range was between
$1,255,382.00 and $11,665,643.00. The gross amount of $6,950,000.00 set
aside for Group 1 and Group 2 is a near exact compromise over the parties’
damages calculations. While the actual gross amount will be lower,
$4,773,269.69 to be exact, the court finds this amount to be reasonable. It
amounts to approximately 40% of the damages model most favorable to the
plaintiff and approximately 380% of the damages model most favorable to the
defendant, almost four times more than those calculations. Moreover, the final
amount is a near perfect compromise over the claims when viewed in light of
the many risks of establishing liability and maintaining class claims at this
stage of the litigation. It is more than what the defendant anticipated paying
while still below the most favorable damages calculation for the class. Because
of this the court finds that the final two Girsh factors clearly favor approving the
settlement in this case. Thus, all of the Girsh factors favor approval.
Accordingly, the Rule 23 settlement will be finally approved.
FLSA Final Settlement Approval
The standard for final approval under the FLSA is distinct but intertwined
with the court’s Girsh analysis above. Under the FLSA, “[o]nce employees
present a proposed settlement agreement to the district court pursuant to
Section 216(b), the [c]ourt may enter a stipulated judgment if it determines that
the compromise ‘is a fair and reasonable resolution of a bona fide dispute over
FLSA provisions.’” Brown v. TrueBlue, Inc., No. 1:10-cv-00514, 2013 WL
5408575, *1 (M.D. Pa. Sept. 25, 2013) (citing Cuttic v. Crozer–Chester Med.
Ctr., 868 F. Supp. 2d 464, 466 (E.D. Pa. 2012); see also Adams v. Bayview
Asset Mgmt., LLC, 11 F. Supp.3 d 474, 476 (E.D. Pa. 2014) (DOL supervision
or court approval are the “only two ways that FLSA claims can be settled or
compromised by employees,” “[b]ecause of the public interest in FLSA rights”).
The role of the court in FLSA class actions is distinct because, unlike its role
in Rule 23 actions to serve as caretaker and protect absent class members,
the court in FLSA class actions serves as gatekeeper to “ensure that the
parties are not ‘negotiating around the clear FLSA requirements’ via
settlement.” Bredbenner, 2011 WL 1344745, at *18 (quoting Collins v.
Sanderson Farms, Inc., 568 F. Supp. 2d 714, 720 (E.D. La. 2008)). There are
no absent class members in an FLSA opt-in class.
The Third Circuit has not specifically addressed the factors that the
district court should consider when approving FLSA settlements. However,
district courts within this circuit have followed the Eleventh Circuit’s decision
in Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350, 1354 (11th
Cir.1982). See, e.g., Kraus v. PA Fit II, 155 F. Supp. 3d 516, 521 (E.D. Pa.
2016) (court applied the Lynn’s Food standard); Brown, 2013 WL 5408575, *1
(same). Under this standard, “[w]hen parties present to the district court a
proposed settlement, the district court may enter a stipulated judgment if it
determines that the compromise reached ‘is a fair and reasonable resolution
of a bona fide dispute over FLSA provisions.’” Cuttic, 868 F. Supp. 2d at 466
(quoting Lynn’s Food, 679 F.2d at 1354). Thus, application of the Lynn’s Food
standard for approval is a two part inquiry: (1) is the settlement fair and
reasonable and (2) does it resolve a bona fide dispute. Lastly, the court should
“proceed to determine whether [the settlement] furthers or frustrates the
implementation of the FLSA.” Brown, 2013 WL 5408575, *1
To determine whether an FLSA settlement agreement is fair and
reasonable, “district courts have relied on the factors set out by the Third
Circuit for approving class action settlements pursuant to Federal Rule of Civil
Procedure 23.” Id. at *2. Thus, the Girsh factors set forth by the Third Circuit
apply. The court has already concluded that all of the Girsh factors favor
settlement in this case.
The court also finds that the parties amended settlement agreement
resolves a bona fide dispute. A dispute is bona fide if it involves “factual issues
rather than legal issues such as the statute’s coverage and applicability and
when its settlement reflects a reasonable compromise of disputed issues
rather than a mere waiver of statutory rights brought about by an employer’s
overreaching.” Creed v. Benco Dental Supply Co., No. 3:12-CV-01571, 2013
WL 5276109, at *1 (M.D.Pa. Sept. 17, 2013) (internal citations and quotation
marks omitted). A bona fide dispute under the FLSA includes computation of
backwages and compensation due. Bredbenner, 2011 WL 1344745, at *18.
Similarly, issues over the proper calculation of overtime under the FWW
method present a bona fide dispute. Id. Here, the parties’ dispute revolves
around the proper computation of overtime pay and whether or not the FWW
method was available to the defendant. Cf. id. (concluding that whether or not
an employer’s FWW formula was proper under the FLSA presented a bona
The issues presented in this case present a bona fide dispute over the
back wages and overtime compensation. The defendant’s actions in reaching
settlement cannot be described as overreaching but an utmost compromise.
In reaching settlement the defendant’s have allowed FLSA class members to
join the FLSA Collective Group well after the original time for opting in, giving
these class members (Group 2) another opportunity to be compensated for
wrongs that may or may not be compensable given the developing state of
FLSA law on the issue of FWW overtime pay.
Finally, the court finds that the parties’ amended settlement agreement
furthers the FLSA. “In 1938, Congress enacted the FLSA to protect covered
workers from substandard wages and oppressive working hours.” Friedrich v.
U.S. Computer Servs., 974 F.2d 409, 412 (3d Cir. 1992) (citing Barrentine v.
Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 739 (1981). The FLSA
Except as otherwise provided in this section, no
employer shall employ any of his employees who in
any workweek is engaged in commerce or in the
production of goods for commerce, or is employed in
an enterprise engaged in commerce or in the
production of goods for commerce, for a workweek
longer than forty hours unless such employee receives
compensation for his employment in excess of the
hours above specified at a rate not less than one and
one-half times the regular rate at which he is
29 U.S.C. §207(a)(1). Thus, employers covered by the FLSA must pay
overtime compensation to employees who work for more than forty hours a
week “unless one or another of certain exemptions applies.” Packard v.
Pittsburgh Transp. Co., 418 F.3d 246, 250 (3d Cir. 2005). In this case, the
defendant used the half-time FWW method instead of the one and one-half
time method, which is an FLSA compliant method of overtime compensation
under 29 C.F.R. §778.114 in certain circumstances. If this method was not
appropriate, however, the one and one-half method was required.
The resulting settlement compensates the FLSA Collective Group for the
defendant’s potential wrongdoing while taking into account the attendant risks
of further litigation. The amount received by class members will reflect a pro
rata share of the sum of money set aside for claims. This share figure is based
on actual time-keeping records of hours worked on an individualized basis.
Moreover, the defendant changed its method of computing overtime
compensation in June of 2014. Thus, not only will those in the FLSA class be
fairly compensated for any potential wrongdoing, employees hired after the
defendant’s change in pay practices will likely benefit from this action. Thus,
the benefits reach beyond the settlement itself. This result clearly furthers the
purpose of the FLSA to protect workers and ensure they are paid
appropriately. Accordingly, the parties amended settlement agreement will be
finally approved with respect to the Collective Group’s FLSA claims.
Final Approval of Dahl and the Service Awards
The court will also finally approve Dahl as settlement administrator. The
court is aware of no issues with the handling of the settlement. The 3.2% nondeliverable rate for the mailing of notices is noteworthy. The documents
submitted by Dahl are clear and concise and allow the court to fully evaluate
the settlement distribution. The parties agreed to administration costs not to
exceed $17,470.00. Dahl’s costs total $15,882.00, less than the amount
agreed to. (Doc. 122-3 at 7). Accordingly, Dahl will be finally approved as
The named plaintiffs also seek final approval of their service awards.
“[C]ourts routinely approve incentive awards to compensate named plaintiffs
for services they provided and the risks they incurred during the course of the
class action litigation.” Cullen v. Whitman Med. Corp., 197 F.R.D. 136, 145
(E.D. Pa. 2000) (quoting In re S. Ohio Corr. Facility, 175 F.R.D. 270, 272 (S.D.
Ohio 1997)). They also reward the named plaintiff for the “public service that
they performed by contributing to the enforcement of mandatory laws.” Keller
v. TD Bank, N.A., No. 12-5054, 2014 WL 5591033, at *16 (E.D. Pa. Nov. 4,
Here, the named plaintiffs seek $5,000.00 for Amador and $1,000.00 for
the remaining five plaintiffs who were added to the amended complaint. These
awards will total $10,000.00 and will be taken from the common fund. The
$10,000.00 amount is less than one percent of the total claimed settlement
fund. The court finds that the amount request is justified and in line with
awards in this circuit. This is well within the range of acceptable amounts for
service awards. See, e.g., Sakalas v. Wilkes Barre Hosp. Co., No. 3:11-cv0546, 2014 WL 1871919, at *5 (M.D. Pa. May 8, 2014) (awarding service
award that amounted to 1.57% of the settlement fund and describing this
amount as within the “mainstream for class action service awards in the Third
Further, class counsel attested to the fact that the named plaintiffs
provided background and employment information for the class claims and
provided information about the defendant’s pay policies and practices. (Doc.
118-4 ¶14). They also risked their reputation in coming forward to participate
in the classes. (Id.). They performed a public service in bringing the
defendant’s pay practices to light. The defendant changed its practices in June
of 2014, leading to benefits for even those employees who are not included as
class members. Though Amador will be receiving a higher amount, this higher
is justified given his length of time as a named plaintiff in this action and the
strength of his Pennsylvania state law claim. Accordingly, the court will finally
approve the $10,000.00 amount in service awards to reward the named
plaintiffs for their contribution to this action.
ATTORNEYS’ FEES AND COSTS
The court will also approve the requested attorneys’ fees and costs for
class counsel. Originally, the parties agreed that class counsel would receive
attorneys’ fees in an amount not to exceed one-third (33.33%) of the Group 1
gross settlement amount from the Group 1 qualified fund, with a maximum
amount of $1,083,333.33. Class counsel would also receive no more than
one-third of the Group 2 calculated gross settlement fund from the Group 2
qualified fund, which was to be determined based on the amount of Group 2
members who opted in and became eligible to participate in settlement. Lastly,
the parties agreed that class counsel would receive reimbursement of their
out-of-pocket costs approved by the court in an amount not to exceed
$65,000.00, which would be paid pro rata from the Group 1 and Group 2
After discussions with the court regarding the percentage amount set
aside for attorneys’ fees, class counsel agreed to lower that amount. Currently,
the named plaintiffs’ request attorneys’ fees in the amount of 31.6667% of the
Group 1 fund and the claimed amounts from the Group 2 fund, which will result
in reallocation and correspondingly higher payments to the settlement
participants. This percentage amount is used in the settlement fund summary
provided by Dahl. (Doc. 125 Ex. A). The final amount requested in fees, based
on sums in Dahl’s Settlement Fund Summary, is $1,511,536.99.6 The named
plaintiffs have also requested $48,950.62 to reimburse class counsel’s out-ofpocket costs, less than the $65,000.00 maximum agreed to by the parties. The
court will approve the parties agreed upon percentage-of-recovery fee amount
for class counsel and allow for full reimbursement of costs.
The Settlement Fund Summary estimates that the final sum for Group 2
claims totals $1,523,269.69 leaving the amount of attorneys’ fees taken from
the Group 2 settlement at $482,369.24 ($1,523,269.69 x .316667). The
amount of attorneys’ fees taken from Group 1 is $1,029,167.75
($3,250,000.00 x .316667). The final sum for attorneys’ fees will therefore be
$1,511,536.99 ($482,369.24 + $1,029,167.75).
The FLSA provides that the court “shall, in addition to any judgment
awarded to the plaintiff . . . allow a reasonable attorney’s fee to be paid by the
defendant, and costs of the action.” 29 U.S.C. §216(b). Under Third Circuit law,
a court may evaluate the award of attorneys’ fees through two established
methods: (1) the lodestar approach; and (2) the percentage of recovery
approach. In re Diet Drugs Prod. Liab. Litig., 582 F.3d 524, 540 (3d Cir. 2009).
“Under the lodestar approach, a court determines the reasonable number of
hours expended on the litigation multiplied by a reasonable hourly rate.”
Hahnemann Univ. Hosp. v. All Shore, Inc., 514 F.3d 300, 310 (3d Cir. 2008).
Under the percentage of recovery method, the court awards counsel a
percentage of the total class recovery and uses a seven-factor test set forth in
Gunter v. Ridgewood Energy Corp., 223 F.3d 190, 195 n. 1 (3d Cir. 2000) to
approve that percentage. In re Cendant Corp. Sec. Litig., 404 F.3d 173, 188
(3d Cir. 2005) (“Cendant II”).
The percentage of recovery method is generally preferred under the
common fund doctrine. Keller, 2014 WL 5591033, at *14 (citing In re
Prudential, 148 F.3d at 333). Under the common fund doctrine, “a private
plaintiff, or plaintiff’s attorney, whose efforts create, discover, increase, or
preserve a fund to which others also have a claim, is entitled to recover from
the fund the costs of his litigation, including attorneys’ fees.” Cendant II, 404
F.3d at 187 (quoting In re Gen. Motors, 55 F.3d at 820 n. 20). “Further, the
percentage of recovery method is the prevailing methodology used by courts
in the Third Circuit for wage and hour cases.” Keller, 2014 WL 5591033, at *14;
see also DiClemente v. Adams Outdoor Adver., Inc., No. 3:15-0596, 2016 WL
3654462, *4 (M.D. Pa. July 8, 2016) (same). “[C]ourts have approved
attorneys’ fees in FLSA [collective and class action] settlement agreements
‘from roughly 20-45%’ of the settlement fund.”” Kraus, 155 F. Supp. 3d at 534
(quoting Mabry v. Hildebrant, No. 14-5525, 2015 WL 5025810, at *4 (E.D. Pa.
Aug. 24, 2014) (collecting cases)).
The Gunter factors the court considers under the percentage-of-recovery
method to evaluate an award of attorneys’ fees in common fund cases are:
(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 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 plaintiffs’ counsel; and (7) the awards in
Gunter, 223 F.3d at 195 n. 1 (citations omitted). These factors do not have to
be “applied in a formulaic way” and, “[e]ach case is different, and in certain
cases, one factor may outweigh the rest.” Id. In addition, the court should
consider three additional factors: (1) the value of benefits attributable to the
efforts of class counsel relative to the efforts of other groups, such as
government agencies conducting investigations; (2) the percentage fee that
would have been negotiated had the case been subject to a private contingent
fee arrangement at the time counsel was retained, and (3) any innovative
terms of settlement. In re Diet Drugs, 582 F.3d at 541 (citing In re Prudential,
148 F.3d at 338–40).
Lastly, Third Circuit “jurisprudence also urges a ‘lodestar cross-check’ to
ensure that the percentage approach does not lead to a fee that represents an
extraordinary lodestar multiple.” Cendant II, 404 F.3d at 188; see also Keller,
2014 WL 5591033, at *14 (same). The Third Circuit has noted that a factor
ranging between 1 and 4 is generally common. In re Prudential, 148 F.3d at
341. Here, nearly all of the Gunter and Prudential factors and the lodestar
cross-check support the plaintiffs’ attorneys’ fees request of 31.6667% of the
gross, claimed settlement fund.
The Gunter and Prudential Factors
The first Gunter factor, the size of the fund created and the number of
persons benefitted, supports the attorneys’ fees request. Generally, the
appropriate percentage awarded to class counsel decreases as the size of the
fund increases. Keller, 2014 WL 5591033, at *14. This idea is premised on the
belief that increases in recovery are usually the result of the size of the class
and not a result of the efforts of counsel. In re Prudential, 148 F.3d at 339.
Thus, this first factor leads to less fees in “mega-fund” cases. In re Cendant
Corp. Litig., 264 F.3d 201, 287 (3d Cir. 2001) (“Cendant I”). The named
plaintiffs posit and the court agrees that the basis for this mega-fund rule has
less application in FLSA opt-in actions. Unlike Rule 23 opt-out classes, counsel
for FLSA must spend time and effort locating and notifying possible plaintiffs,
who must then opt into the action to proceed. They are not absent class
members and counsel may be required to directly communicate, interview, and
work with these various opt-in plaintiffs.
Here, the action is a hybrid FLSA class action. Ultimately, the settlement
will result in benefits to 839 class members, including the named plaintiffs, or
about 63% of all possible plaintiffs (1,332 total). Of that percentage, almost half
are plaintiffs who opted into the FLSA action at the start of the case. The total
gross fund allocated to all class members amounts to $4,773,269.69, a
sizeable but not extraordinary amount given the maximum gross fund agreed
to by the parties. Thus, the court finds no indication that the parties’ amended
settlement agreement and the results of administrative have triggered a megafund warranting a reduction. As such, the court views the 31.6667% allocated
to attorneys’ fees as more than appropriate give the size of the fund, the
moderate number of participating members, and the two types of class
members included in the settlement.
The second Gunter factor, the presence or absence of substantial
objections, also supports the request for attorneys’ fees. As the court has
indicated in several instances, there have been no objections to the settlement
and no late objectors were present at the final hearing. This is yet another
indication that the resulting settlement is fair and an indication of the work
expended by counsel in reaching a fair settlement.
The third Gunter factor, the skill and efficiency of the attorneys, also
supports the request. As the court explained in its preliminary approval of the
settlement agreement, class counsel Shanon J. Carson with the law firm
Berger & Montague, P.C. previously provided a declaration to the court with
the firm’s resume attached as an exhibit. (Doc. 118-4). Attorney Carson
currently serves as lead or co-counsel in employment and collective actions
in federal courts around the country. (Id. ¶3). Berger & Montague, P.C. has
represented clients in major class action cases for over 40 years. (Id. ¶3). The
firm’s resume supported this finding. (Id. Ex. A). In addition, attached to the
motion for attorneys’ fees and costs was a declaration from co-lead counsel,
C. Andrew Head with the Head Law Firm, LLC. (Doc. 121-2). In it, Attorney
Head explains that he is the founding partner of the law firm, which has a
nationwide employment law practice. (Id. ¶3). Attorney Head provides a long
list of FLSA and state wage and hour lawsuits he has participated in
throughout the country. (Id.).
The court is confident that these attorneys are highly skilled in FLSA
collective and hybrid actions as seen by their dealings with the court and the
results achieved in both negotiating and handling the settlement to date. The
court has held several conferences with class counsel and has, in some
instances, requested briefing and explanation of various settlement terms. In
all instances, counsel has promptly provided the court with requested
documentation and justifications for the settlement and has shown the ability
to compromise, thereby reaching a settlement that is fair to all parties.
The fourth Gunter factor, the complexity and duration of the litigation,
also favors the attorneys’ fees request. This action was initiated in this court
on October 8, 2013. (Doc. 1). It is nearly four years later. This action began as
a collective FLSA action joined with claims under Pennsylvania law alone. As
a result of information gathered during the mediation process, the case
expanded to include claims under twenty-six other state wage and hour law
regimes. The plaintiffs admit that some of these regimes would pose
substantial difficulties if litigated to a trial. In addition, the defendant would
have, if no agreement was reach, sought decertification of the FLSA action and
would have opposed a Rule 23 certification motion. The defendant and the
plaintiffs also disagreed over liability issues, particularly, whether or not the
FWW overtime calculation used by the defendant was valid even if did not
strictly comply with 29 C.F.R. §778.114. These issues not only made the case
complex, they led to a great differences is original damages calculations. (Id.
at 1–2). Working through these issues required three full-day mediation
sessions. Thus, while the facts of this case have been relatively
straightforward, the issues presented were complex and class counsel
efficiently navigated these issues with the defendant to, ultimately, reach a fair
The court also finds that the fifth Gunter factor, the risk of nonpayment,
also favors the requested award. There is no indication that the defendant is
insolvent or close to insolvency and therefore would be unable to satisfy a
judgment. See In re Janney Montgomery Scott LLC Fin. Consultant Litig., No.
06-3202, 2009 WL 2137224, at *15 (E.D. Pa. July 16, 2009) (explaining that
this factor favors a fee application when the defendant cannot satisfy the
judgment). Class counsel does, however, have a 40% contingency agreement
in place with the original named plaintiff, Amador. See Keller, 2014 WL
5591033, at *15 (explaining the risk of nonpayment where a contingency
agreement is in place). Thus, the risk of nonpayment is partly determined
based on the risk of losing the case. Here, there were such risks, as fully
explained above. Had the plaintiffs litigated this case and lost, class counsel
would have been left with no reimbursement.
The sixth Gunter factor, the amount of time devoted to the case by class
counsel, also favors the requested award. Attached to their motion for
attorneys’ fees, the named plaintiffs provided the court with declarations from
Attorney Head and Attorney Carson, both serving as lead class counsel. (Doc.
121-2; Doc. 121-3). Collectively, these declarations indicate that class counsel,
along with their associates and support staff, engaged in a total of 2434.1
hours of work in this case. There is nothing to indicate that this amount of work
was somehow excessive. Although the parties did not engage in formal
discovery, they did participate in extensive informal discovery and spent an
ample amount of time engaging in mediation, three full-day sessions to be
exact. Class counsel held several discussions with the court after an initial
settlement agreement was reached and this initial settlement was revised and
amended based on those discussions. Additional briefing was also provided
to the court when requested. The result of all that work is clearly seen in the
parties final amended settlement agreement.
The court also finds that the seventh Gunter factor, the awards in similar
cases, favors the requested award. “[C]ourts have approved attorneys’ fees in
FLSA [collective and class action] settlement agreements ‘from roughly
20-45%’ of the settlement fund.” Kraus, 155 F. Supp. 3d at 534 (quoting
Mabry, 2015 WL 5025810, at *4 (collecting cases)). “[A]n award of one-third
of the settlement is consistent with similar settlements throughout the Third
Circuit.” Creed, 2013 WL 5276109, at *6 (citing Martin v. Foster Wheeler
Energy Corp., No. 3:06-CV-0878, 2008 WL 906472, at *5 (M.D. Pa. Mar. 31,
2008) (collecting cases)) (approving a one-third attorneys’ fee arrangement in
an FLSA overtime action); see also In re Janney, 2009 WL 2137224, at *16
(approving a 30% attorneys’ fee recovery rate in a hybrid FLSA action).
Accordingly, the court finds attorneys’ fees of 31.6667% of the claimed
settlement fund to be well within the range of acceptable fees in this action.
With respect to the additional Prudential factors, the court finds that the
first added factor is neutral as it bears little weight in this action. The first factor,
the value of benefits attributable to the efforts of class counsel relative to the
efforts of other groups such as government agencies conducting
investigations, In re Diet Drugs, 582 F.3d at 541, has no application. There is
no indication that the DOL was investigating the defendant’s overtime
compensation practices and, thus, there is nothing to compare. The court does
note, however, that the efforts of class counsel are clearly seen in the final
settlement as well as the added benefit from the defendant’s change to its
overtime compensation practices. Thus, as a result of the settlement process
not only are those included in the settlement benefitted but current and future
employees of the defendant will also receive benefits based on this litigation.
The second added factor, the percentage fee that would have been
negotiated had the case been subject to a private contingent fee arrangement
at the time counsel was retained, does weigh in favor of the requested award.
Generally, a request of “one-third of the settlement fund comports with
privately negotiated contingent fees negotiated on the open market.” Brumlet
v. Camin Cargo Control, Inc., Nos. 08-1798 (JLL), 10-2461 (JLL), 09-6128
(JLL), 2012 WL 1019337, at *12 (D.N.J. Mar. 26, 2012). Class counsel does
have a 40% contingency agreement in place with Amador. Cf. Lovett v.
Connect America.com, No. 14-2596, 2015 WL 5334261, at *5 (E.D. Pa. Sept.
14, 2015) (noting a 40% contingent fee agreement in an FLSA hybrid action).
Accordingly, the court finds that the request for 31.6667% of the claimed
settlement fund for attorneys’ fees falls within the acceptable range of privately
negotiated contingency fees.
Lastly, the court finds that the final added Prudential factor, innovative
terms of settlement, favors settlement. Here, the parties negotiated a void
provision, or reverse “blow-out” provision, that uniquely accounted for the
hybrid nature of the class claims and, more specifically, the relative weakness
of Group 2 claims. While the provision was not exercised and favored the
defendant alone, usage of this provision gave a layer of protection that made
it possible for the defendant to move forward with settlement despite the many
risks of litigation and the strength of its position. Class counsel’s ability to
navigate this unique provision while preserving settlement for as many as
possible weighs in favor of the request for attorneys’ fees.
The Lodestar Cross-Check
The court also finds that a lodestar cross-check comparing the
percentage-of-recovery rate with the attorneys’ hourly billing also supports the
request for attorneys’ fees. “The lodestar cross-check calculation need entail
neither mathematical precision nor bean-counting. The district courts may rely
on summaries submitted by the attorneys and need not review actual billing
records.” In re Rite Aid Corp. Secs. Litig., 396 F.3d 294, 306–07 (3d Cir. 2005)
(footnoted omitted) (citing In re Prudential, 148 F.3d at 342). The court should,
however, take into account the hourly rates of the various attorneys working
on the case and not a blended rate that might artificially reduce the multiplier.
Id. at 306. “Furthermore, the resulting multiplier need not fall within any pre51
defined range, provided that the [d]istrict [c]ourt’s analysis justifies the award.”
Id. at 307 (footnote omitted). While the court should not solely rely on a predefined range, the Third Circuit has noted that a factor ranging between 1 and
4 is generally common. In re Prudential, 148 F.3d at 341.
Attached to the request for attorneys’ fees is a declaration from Attorney
Head and Attorney Carson setting forth a summary of the hours and billing
rates for all of the attorneys, senior to associate, and support staff that worked
on this case. (Doc. 121-2; Doc. 121-3). Attorney Head provides that the
lodestar for Head Law Firm, LLC totals $386,085.00 as of the May 8, 2017.
(Doc. 121-2 at 6). Attorney Carson provides that Berger & Montague, P.C.’s
lodestar totals $767,712.50 as of May 5, 2017. (Doc. 121-3 at 4). Thus, the
total lodestar is $1,155,797.50. These numbers are based on an hourly rate
of $550.00 for Attorney Head as lead counsel and $795.00 for Attorney Carson
as co-lead counsel. When compared to the requested fee of $1,511,536.99,
the cross-check results in a 1.3 multiplier. These numbers, including the
multiplier, do not take into account any of the work that has occurred since the
filing of the motion for attorneys’ fees, including the final fairness hearing.
The court takes no position on whether or not Attorney Carson’s and
Attorney Head’s hourly rates are reasonable and finds instead that the
multiplier is low enough to take into account a range of hourly rates below
those billed that would still warrant the court’s approval even if this reduction
would result in a higher multiplier. As the court has repeated in several
instances, the court views this to be an excellent settlement and would not
hesitate to approve a multiplier above 1.3. The fact that the multiplier is so near
the requested fees speaks directly to the skill and efficiency of the attorneys
involved in this case, on both sides. Accordingly, the court will approve the
requested 31.6667% percentage-of-recovery rate for attorneys’ fees.
The named plaintiffs have also requested a total of $48,950.62 to
reimburse class counsel’s out-of-pocket costs. This is less than the $65,000.00
maximum agreed to by the parties in their amended settlement agreement.
The court will approve these costs in full.
The FLSA explicitly allows for the reimbursement of any costs expended
litigating the case. 29 U.S.C. §216(b). “Counsel for a class action is entitled to
reimbursement of expenses that were adequately documented and reasonably
and appropriately incurred in the prosecution of the class action.” In re Safety
Components, Inc. Sec. Litig., 166 F. Supp. 2d 72, 108 (D.N.J. 2001). Fees for
travel, legal research, telephone and fax charges, photocopying, mail and
postage, and fees for filing have all been held to acceptable and reasonably
incurred during litigation. Id. at 108; see also Keller, 2014 WL 5591033, at *16
(approving filing fees and mediation fees as reimbursable expenses).
Here, the named plaintiffs request reimbursement for class counsel for
a variety of expenses such as travel, photocopying, filing fees, research,
postage, and mediation fees. (Doc. 121-2 at 9–19; Doc. 121-3 at 11). The
named plaintiffs provided documentation of these fees in the form of
declarations from Attorney Head and Attorney Carson. (Id.; id). Attorney Head
and Attorney Carson list the category and amount of the expenses. (Id.; id.).
There is nothing on the lists provided that the court views as unreasonable or
excessive given the length and complexity of this case. Accordingly, the court
will approve the request for $48,950.62 to reimburse class counsel’s out-ofpocket costs.7
In accordance with the above, the court will grant the named plaintiffs’
motion for final approval of the parties amended settlement agreement, (Doc.
122), and grant the named plaintiffs’ motion for attorneys’ fees and costs, (Doc.
121). The court will finally certify the FLSA Collective Group for settlement and
finally certify the Rule 23 State Settlement Class. The parties amended
settlement agreement, (Doc. 118-3), will be finally approved. The court’s
approval will also include final approval of the named plaintiffs as
In a footnote with their brief in support, the named plaintiffs advised the court
that class counsel anticipated additional expenses would be incurred during
the administration of the settlement and in preparation for the final fairness
hearing. (Doc. 121-1 at 28 n. 11). They requested an opportunity to request
additional reimbursement at the time of final distribution. (Id.). The court has
not received any additional documentation with respect to reimbursable costs
to date, but the named plaintiffs may request additional reimbursement for
class counsel at the close of settlement.
representatives, $10,000.00 in service awards to the named plaintiffs, Dahl as
settlement administrator, Dahl’s costs totaling $15,882.00, and Berger &
Montague, P.C. and Head Law Firm, LLC as class counsel. Attorneys’ fees in
the amount of 31.6667% of the gross claimed fund will be approved for a total
of $1,511,536.99 in attorneys’ fees. The court will also award reimbursement
for out-of-pocket costs expended by class counsel in the amount of
$48,950.62. An appropriate order shall follow.
s/ Malachy E. Mannion
MALACHY E. MANNION
United States District Judge
DATED: October 2, 2017
O:\Mannion\shared\MEMORANDA - DJ\CIVIL MEMORANDA\2013 MEMORANDA\13-2529-02.wpd
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