Smith v. Res-Care, Inc.

Filing 56

MEMORANDUM OPINION AND ORDER granting Plaintiff's 54 MOTION for Preliminary Approval of Proposed Class Settlement, Certification of a Class for the Purposes of Settlement, and Approval of Form and Manner of Notice and directing as more fully set forth herein. Signed by Judge Robert C. Chambers on 2/3/2015. (cc: attys; any unrepresented parties) (mkw)

IN THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF WEST VIRGINIA
HUNTINGTON DIVISION

JASON SMITH on behalf of himself and
all other Similarly situated,
Plaintiffs,
v.

CIVIL ACTION NO. 3:13-5211

RES-CARE, INC., a Kentucky corporation,
Defendant.

MEMORANDUM OPINION AND ORDER
Currently before the Court for preliminary approval is a settlement (the “Settlement”) of
this class action (the “Civil Action”), asserting claims for alleged violations of the Fair Credit
Reporting Act (“FCRA”) 15 U.S.C. §§ 1681a-1681x, with respect to ResCare, Inc. (“ResCare” or
“Defendant”). ECF No. 54. The terms of the Settlement are set out in a Stipulation of Settlement
dated November 21, 2014 (the “Stipulation”), which has been executed by Plaintiff Jason Smith
(“Smith”) and Defendant (collectively with Plaintiff, the “Parties”). For the reasons stated herein,
the Court GRANTS Plaintiff’s motion to preliminarily approve the Settlement.

I. Background
On March 15, 2013, Plaintiff Jason Smith commenced this Civil Action against ResCare,
Inc., on behalf of himself and all other similarly situated individuals, alleging certain violations of
the Fair Credit Reporting Act (“FCRA”) 15 U.S.C. §§ 1681a-1681x (Doc. 1). On November 5,
2013, Smith voluntarily dismissed without prejudice Counts I and II of his Complaint, which
alleged violations of 15 U.S.C. § 1681b(b)(2)(A) (Doc. 25). The class claims encompassed

applicants nationwide who sought employment with ResCare and were the subject of a consumer
report obtained by ResCare for employment purposes. Specifically, Smith alleged that ResCare
willfully violated the FCRA by failing to provide job applicants pre-adverse action notice along
with a copy of the consumer report and a Summary or Rights to applicants before taking adverse
action based in whole or in part on information contained in the report. 15 U.S.C. §
1681b(b)(3)(A).
Shortly after the filing of the Civil Action, ResCare served an offer of judgment, which
Smith rejected. Thereafter, the Settling Parties litigated a Rule 12(b) motion, which the court
denied on August 28, 2013. After reviewing documents produced and deposition transcripts from
prior litigation against ResCare involving FCRA claims, the Settling Parties agreed to mediation
with the Honorable C. Cleveland Gambill (Ret.) in Louisville, Kentucky on March 18, 2014.
Although initially unsuccessful, the parties continued settlement discussions with the help of
Judge Gambill and ultimately reached the agreement discussed herein.
Smith believes that the claims asserted in the Civil Action have merit and that if the case
did not settle he would prevail at trial. ResCare, on the other hand, believes that if the case
proceeded to trial, ResCare would prevail. Regardless, it is understood that if the case proceeded to
trial and Smith failed to prove that ResCare willfully violated the FCRA, that Smith’s claims
would fail, and he and any potential class members would not be entitled to any monetary amount.
Conversely, if Smith prevailed at trial, then he and any potential class members would be entitled
to statutory damages between $100.00 and $1,000.00, plus attorney fees and other relief under the
FCRA. See 15 U.S.C. § 1681n.

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II. The Proposed Settlement
A. Settlement Terms
This proposed class action settlement requires ResCare to pay $840,000. This figure is an
“all-in” payment that will cover all settlement expenses – payment to class members, a proposed
$7,500 service award to Mr. Smith, attorneys’ fees and costs, and costs of settlement
administration and notice.
1. Certification of a Fed. R. Civ. P. 23(b)(3) Settlement Class
For settlement purposes, Plaintiff seeks preliminary certification of a Fed. R. Civ. P.
23(b)(3) class, defined as follows:
All natural persons residing in the United States who applied for employment with
ResCare during the Class Period and about whom ResCare procured a Consumer
Report and as a result of ResCare procuring a Consumer Report, were denied
employment based in whole or in part on the contents of the Consumer Report and
to whom either a copy of the Consumer Report or a copy of the Summary of Rights
was not provided.
2. Class Representative and Class Counsel
For settlement purposes, Plaintiff requests to be appointed as Class Representative on
behalf of the Class Members. Matthew A. Dooley and Anthony R. Pecora of O’Toole McLaughlin
Dooley & Pecora Co., LPA, Leonard A. Bennett of Consumer Litigation Associates, P.C., and
John W. Barrett of Bailey & Glasser LLP, request appointment as counsel for the Class Members.

3. Settlement Administrator
Class Counsel will hire a third-party class action settlement administrator, Epperly
Re:Solutions (the “Settlement Administrator”), to oversee the administration of the settlement and
the notification to Class Members. All costs and expenses for the Settlement Administrator are to

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be paid from the Settlement Funds. The Settlement Administrator will be responsible for mailing
the approved class action notices and class forms to the Class Members. If this Class Action
Settlement receives final approval, the Class Administrator will mail the settlement checks to the
Class Members who made a valid claim.
4. Notice
The Settlement Administrator will research and update the Class Members’ mailing
addresses. After updating addresses in the manner described in the Settlement Agreement, the
Settlement Administrator will send, via First Class U.S. mail, the Court-approved written notices
of the settlement to each Class Member at his or her last known valid address. If any notice is
returned with a new address, the notices will be re-mailed by the Settlement Administrator to the
new address. Additionally, Class Counsel will establish a Settlement Website with the assistance
of the Settlement Administrator containing relevant information such as the Stipulation of
Settlement, the Notice, Claim Form, Preliminary Approval Order, and contact information for the
Settlement Administrator.
5. Settlement Payment
ResCare will deposit $840,000.00 (the “Settlement Funds”) in an account established
pursuant to the Stipulation of Settlement within ten (10) business days of the Court’s preliminary
approval of the Settlement, but in no event before January 5, 2015. This amount will be inclusive
of attorneys’ fees and costs, any Service Award, payments to Class Members, and all costs to
administer the Settlement. Class Counsel may seek approval of fees and expenses as may be
awarded by the Court up to 33% of the Settlement Funds. Smith will also seek a service award in
the amount of $7,500.00.

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ResCare estimates that the class includes between 5,000 and 10,000 Class Members. Each
Class Member will receive a pro rata sum calculated after a deduction from the Settlement Funds
has been made for the payment of attorney fees and the cost of notice and administration of the
settlement.
6. Narrow Release
The Settlement includes a narrowly-tailored release from Class Members limited to the
claims and issues in this case. Class Members who have not opted out will release Defendant only
from claims arising under the FCRA or similar state laws. Class Members have agreed to this
release in exchange for the cash payments that they will receive under the Settlement, which are
intended to compensate them for any possible harm that they might have alleged in this case had it
proceeded to trial.
7. Uncashed or Expired Settlement Checks
Settlement Checks that are returned, undeliverable, or remain uncashed for sixty (60) days
from the date upon which they were mailed to Class Members will have no legal or monetary
effect. After expiration of the sixty-day period after settlement checks are mailed to Class
Members, any sums represented by uncashed settlement checks will revert to the Settlement Funds
account to be distributed in accordance with the Stipulation of Settlement to the designated cy pres
beneficiaries.
8. Exclusions and Objections
Any Class Member who desires to be excluded from the class must send a written request
for exclusion to the Settlement Administrator, postmarked no later than the date set by the Court to
object to the Settlement and provided in the Class Notice. The Settlement Administrator will

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provide a list of the names of each Class Member who submitted a timely exclusion to counsel for
Defendant and Class Counsel.
III. The Settlement Merits Preliminary Approval
To preliminarily approve a settlement in a class action lawsuit, before directing that
members of the class be given notice and an opportunity to be heard in a formal fairness hearing,
the Court should be satisfied that “the proposed settlement appears to be the product of serious,
informed, non-collusive negotiations, has no obvious deficiencies, does not improperly grant
preferential treatment to class representatives or segments of the class, and falls within the range of
possible approval.” Samuel v. Equicredit Corp., 2002 U.S. Dist. LEXIS 8234, at *1 (E.D. Pa.
2002) (citing Manual of Complex Litigation § 30.44 (1985)).
Consideration of all of these factors indicates that the proposed settlement merits
preliminary approval. The Court preliminarily finds that: (a) the proposed Settlement resulted
from arm’s-length negotiations; (b) the Stipulation of Settlement was executed only after Class
Counsel had researched and investigated multiple legal and factual issues pertaining to the Named
Plaintiff’s and Class Members’ claims; (c) there is a genuine controversy between the Parties
regarding Defendant’s compliance with the requirements of the FCRA; (d) the Settlement appears
on its face to be fair, reasonable, and adequate, and (e) the Settlement is sufficiently fair,
reasonable, and adequate to warrant sending Notice of the Action and the Settlement to the
Preliminary Settlement Class.
IV. Preliminary Certification of the Class is Appropriate
Although the parties have agreed to the certification of the classes for settlement purposes,
the Court nonetheless must find the proposed classes are appropriate for class certification. See
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Amchem Prod., Inc. v. Windsor, 521 U.S. 591, 620 (1997). Certification requires the named
plaintiff to meet all of the prerequisites of Federal Rule of Civil Procedure 23(a)—numerosity,
commonality, typicality, and adequacy of representation—and at least one of the subsections of
Rule 23(b). See Gunnells v. Healthplan Servs., Inc., 348 F.3d 417, 423 (4th Cir. 2003). Here,
Plaintiff seeks certification under Rule 23(b)(3), which requires that common issues predominate
over individual ones and that a class action be superior to other available methods of adjudication.
Consideration of these factors, as discussed below, supports certification of the proposed
settlement classes.
A. The Proposed Class Satisfies the Elements of Rule 23(a).
1. Numerosity
Rule 23(a)(1) requires that the class be “so numerous that joinder of all members is
impracticable.” There is no set minimum number of potential class members that fulfills the
numerosity requirement. See Holsey v. Armour & Co., 743 F.2d 199, 217 (4th Cir. 1984) (citing
Kelley v. Norfolk & Western Ry. Co., 584 F.2d 34 (4th Cir. 1978)). However, where the class
numbers twenty-five or more, joinder is usually impracticable. Cypress v. Newport News General
& Nonsectarian Hosp. Ass’n, 375 F.2d 648, 653 (4th Cir. 1967) (eighteen class members
sufficient); cf. Kennedy v. Va. Polytechnic Inst. & State Univ., No. 7-08-cv-00579, 2010 WL
3743642, at *3 (W.D. Va. Sept. 23, 2010) (noting “it is exceedingly rare to certify classes with less
than 25 members”).
Inasmuch as there are approximately 10,000 class members, the numerosity requirement is
easily met here. Joinder of this many individuals is neither practicable nor even possible. See, e.g.,

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Gunnells v. Healthplan Servs., Inc., 348 F.3d 417, 425 (4th Cir. 2003) (finding that a class of 1,400
members “easily satisfied Rule 23(a)(1)’s numerosity requirement”).
2. Commonality
Rule 23(a)(2) requires that the court find that “there are questions of law or fact common to
the class.” “Commonality is satisfied where there is one question of law or fact common to the
class, and a class action will not be defeated solely because of some factual variances in individual
grievances.” Jeffreys v. Commc’ns Workers of Am., AFL-CIO, 212 F.R.D. 320, 322 (E.D. Va.
2003). “Commonality requires the plaintiff to demonstrate that the class members ‘have suffered
the same injury.’” Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551 (2011) (quoting Falcon,
457 U.S. at 157). And the common issue must be such that “determination of its truth or falsity will
resolve an issue that is central to the validity of each one of the claims in one stroke.” Id. The
standard is a liberal one that cannot be defeated by the mere existence of some factual variances
among class members. Jefferys, 212 F.R.D. at 322; Mitchell-Tracey v. United Gen. Title Ins. Co.,
237 F.R.D. 551, 557 (D. Md. 2006) (Factual differences among class members will not preclude
certification “if the class members share the same legal theory”).
Here, Class Members share the same questions of law and fact. Class Members are alleged
to be victims of policies and procedures whereby ResCare, in violation of the FCRA, did not give
lawful notice when denying employment based in whole or in part on a consumer report.
Specifically, Smith alleged that ResCare did not provide applicants with a copy of their consumer
report and a written description of their FCRA rights before taking adverse action based in whole
or in part on the applicants’ consumer report. The theories of liability as to all Class Members,

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therefore, arise from the same practices and present basic questions that are common to all
members of the Settlement Class.
3. Typicality
“A class representative must be part of the class and possess the same interest and suffer
the same injury as the class members.” Lienhart v. Dryvit Sys., Inc., 255 F.3d 138, 146 (4th Cir.
2001). “Nevertheless, the class representatives and the class members need not have identical
factual and legal claims in all respects. The proposed class satisfies the typicality requirement if
the class representatives assert claims that fairly encompass those of the entire class, even if not
identical.” Fisher v. Va. Elec. & Power Co., 217 F.R.D. 201, 212 (E.D. Va. 2003). “The typicality
requirement mandates that Plaintiffs show (1) that their interests are squarely aligned with the
interests of the class members and (2) that their claims arise from the same events and are premised
on the same legal theories as the claims of the class members.” Jeffreys, 212 F.R.D. at 322.
Commonality and typicality tend to merge because both “serve as guideposts for determining
whether under the particular circumstances maintenance of a class action is economical and
whether the named plaintiff’s claim and the class claims are so interrelated that the interests of the
class members will be fairly and adequately protected in their absence.” Wal-Mart, 131 S. Ct. at
2551 n.5.
Here, Smith’s claims arise from ResCare’s practices concerning the use of consumer
reports for employment purposes. As discussed above, Smith’s and the Class Members’ claims
rest on the same legal and factual issues. Thus, in seeking to prove his claims, Smith will
necessarily advance the claims of the Class. This is the hallmark of typicality. See Deiter v.
Microsoft Corp., 436 F.3d 461, 466 (4th Cir. 2001) (citing Fed. R. Civ. P. 23(a)(3)).

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4. Adequacy of Representation
“Finally, under Rule 23(a)(4), the class representatives must adequately represent the
interest of the class members, and legal counsel must be competent to litigate for the interests of
the class.” Jeffreys, 212 F.R.D. at 323. “Basic due process requires that the named plaintiffs
possess undivided loyalties to absent class members.” Fisher, 217 F.R.D. at 212 (citing Broussard
v. Meineke Disc. Muffler Shops, 155 F.3d 331, 338 (4th Cir. 1998).
The adequacy of representation requirement is met here. Smith understands and has
accepted the obligations of a class representative, has adequately represented the interests of the
putative class. He also retained experienced counsel who has handled numerous FCRA class
actions, typically as lead or co-lead counsel. Soutter v. Equifax Info. Servs., LLC, No. 3:10-cv-107,
2011 WL 1226025, at *10 (E.D. Va. Mar. 30, 2011), rev’d on other grounds, 498 F. App'x 260
(4th Cir. 2012) (stating “the Court finds that Soutter’s Counsel [Leonard A. Bennett] is qualified,
experienced, and able to conduct this litigation. Muhammad v. Nat’l City Mortgage, Inc., No.
2:07-cv-423, 2008 U.S. Dist. LEXIS 103534, at *11 (S.D.W. Va. Dec. 19, 2008) (recognizing that
Plaintiff’s counsel, Bailey & Glasser, particularly John W. Barrett and Jonathan R. Marshall, are
“skilled and experienced in class action litigation, and have served as class counsel in several
cases[.]”).
Smith has no antagonistic or conflicting interests with the Class Members. Smith is a
member of the Class, and both he and the Class seek statutory and punitive damages for ResCare’s
allegedly unlawful actions. Considering that the claims are identical, there is no potential for
conflicting interests to arise between Smith and the Class Members.

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B. The Proposed Class Satisfies the Elements of Rule 23(b)(3)
1. Predominance
Rule 23(b)(3) requires that the questions of law or fact common to all members of the class
predominate over questions pertaining to individual members. Common questions predominate if
classwide adjudication of the common issues will significantly advance the adjudication of the
merits of all class members’ claims. “The predominance inquiry ‘tests whether proposed classes
are sufficiently cohesive to warrant adjudication by representation.’” Lienhart v. Dryvit Systems,
Inc., 255 F.3d 138, 142 (4th Cir. 2001) (quoting Amchem Prod., Inc., 521 U.S. at 623); Gariety, 368
F.3d at 362.
The common questions outlined above are broad and apply equally to all class members,
and are readily capable of determination on a classwide basis.
2. Superiority
The superiority inquiry requires that a class action be “superior to other available methods
for fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). When
determining whether a class action is superior, the Court should consider the following factors:
(A) The interest of members of the class in individually controlling
prosecution or defense of separate actions; (B) the extent and nature of any
litigation concerning the controversy already commenced by or against
members of the class; (C) the desirability or undesirability of concentrating
the litigation of the claims in the particular forum; [and] (D) the difficulties
likely to be encountered in the management of a class action. 1
Jeffreys, 212 F.R.D. at 323; see also Fed. R. Civ. P. 23(b)(3)(A)-(D).

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Because this is a settlement class, there is no concern with manageability of the case. See
Amchem Prods., Inc., 521 U.S. at 620 (“Confronted with a request for settlement-only class
certification, a district court need not inquire whether the case, if tried, would present intractable
management problems, see Fed. R. Civ. P. 23(b)(3)(D), for the proposal is that there be no trial.”).
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“In determining superiority, courts also consider the anticipated amount of recovery for
each plaintiff. Class actions are particularly appropriate where multiple lawsuits would not be
justified because of the small amount of money sought by the individual plaintiffs.” Advisory
Committee’s Note to 1996 Amendment to Rule 23. In other words, a class action is superior when
potential damages may be too insignificant to provide class members with incentive to pursue a
claim individually. Thus, the class mechanism permits a large group of claimants to have their
claims adjudicated in a single lawsuit. The same is true here, where statutory damages for each
Class Member (ranging between $100.00 and $1,000.00, as set forth in 15 U.S.C. § 1681n) are
small, providing little incentive for individual litigation of the Class. See Amchem, 521 U.S. at 617
(“The policy at the very core of the class action mechanism is to overcome the problem that small
recoveries do not provide the incentive for any individual to bring a solo action prosecuting his or
her rights.”) (quoting Mace v. Van Ru Credit Corp., 109 F.3d 338, 344 (7th Cir. 1997)).
The class action procedure is the superior method for dispute resolution in this matter as the
alternative mechanism, permitting individual lawsuits for statutory damages, would be costly and
duplicative. Through the class action procedure, these common claims can be brought in one
proceeding, preserving limited judicial resources and eliminating unnecessary duplication and
potentially divergent judicial decisions.
C. Class Counsel are Qualified to Represent the Class
Rule 23(g) requires that a court certifying a class also appoint class counsel. It directs a court to
consider several factors, including
[t]he work counsel has done in identifying or investigating potential claims in the
action; [c]ounsel’s experience in handling class actions, other complex litigation,
and claims of the type asserted in the action; [c]ounsel’s knowledge of the
applicable law; and [t]he resources counsel will commit to representing the class.
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Fed. R. Civ. P. 23(g)(1)(C)(i).
Here, Class Counsel has handled numerous FCRA class actions, typically as lead or colead
counsel. Soutter v. Equifax Info. Servs., LLC, No. 3:10-cv-107, 2011 WL 1226025, at *10 (E.D.
Va. Mar. 30, 2011), rev’d on other grounds, 498 F. App'x 260 (4th Cir. 2012) (stating “the Court
finds that Soutter’s Counsel [Leonard A. Bennett] is qualified, experienced, and able to conduct
this litigation”); Muhammad v. Nat’l City Mortgage, Inc., No. 2:07-cv-423, 2008 U.S. Dist.
LEXIS 103534, at *11 (S.D.W. Va. Dec. 19, 2008) (recognizing that Plaintiff’s counsel, Bailey &
Glasser, particularly John W. Barrett, is “skilled and experienced in class action litigation, and
[has] served as class counsel in several cases[.]”). Counsel is experienced in class action work, as
well as consumer protection issues, and has been approved by this Court and others as class
counsel in numerous cases.
V. Conclusion
In accordance with the above, the Court GRATNS all portions of Plaintiff’s Unopposed
Motion (ECF NO. 54) and hereby ORDERS as follows:

1. The proposed settlement is preliminarily approved, including the appointment of Class
Counsel;
2. The following class is conditionally certified, for settlement purposes only:
All natural persons residing in the United States who applied for employment
with ResCare during the Class Period and about whom ResCare procured a
Consumer Report and as a result of ResCare procuring a Consumer Report,
were denied employment based in whole or in part on the contents of the
Consumer Report and to whom either a copy of the Consumer Report or a copy
of the Summary of Rights was not provided.
3. Epperly Re:Solutions shall serve as settlement administrator;
4. The parties’ proposed mailed notice is approved;
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5. The parties shall comply with their respective obligations pursuant to the Settlement
Agreement, and
6. The parties shall adhere to the following deadlines:
a.
b.
c.
d.
e.

Class Notice Mailed within 60 days of this order
Submission of Claims/Opt-outs within 120 Days of this Order
Objections Date within 120 Days of this Order
Final Approval Submissions within 150 Days of this Order
Final Approval Hearing: [at least 180 days after Preliminary Approval]

The Court will schedule a final approval hearing after the final approval submissions due
date.
The Court DIRECTS the Clerk to send a copy of this written Opinion and Order to counsel
of record and any unrepresented parties.
ENTER:

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February 3, 2015