Opinion
No. 99 Civ. 11774 (KMW) (JCF).
August 9, 2005
MEMORANDUM AND ORDER
The issues addressed in this opinion arise from the administration of a settlement agreement in a class action for unpaid wages by employees on cruise ships operated by the defendants. Approximately nineteen months after their issuance, 958 of the checks issued by the Claims Administrator to pay claims approved under the agreement have not been cashed. These outstanding checks represent $466,664.78. The defendants seek an order from this Court that this amount be returned to them. The plaintiffs oppose this motion and seek an order that the Claims Administrator, in consultation with plaintiffs' counsel, make reasonable efforts to ensure that all eligible approved claims are paid.
Background
The parties in this case entered into a settlement agreement designed to conclude this litigation on October 22, 2002.Dahingo v. Royal Caribbean Cruises, Ltd., 312 F. Supp. 2d 440, 442 (S.D.N.Y. 2004). (Letter of Paul T. Hofmann dated June 15, 2005 ("Hofmann Letter"), Exh. 1). On November 5, 2002, the Honorable Kimba M. Wood, U.S.D.J., certified a settlement class. Id. Pursuant to the settlement agreement, the defendants were obliged to create a fund of $18.4 million dollars, which after the deduction of attorneys' fees and other agreed-to expenses, would represent the source from which unnamed class members would be paid. Id. at 442-43. The agreement provided for the appointment of a claims administrator, Gilardi Co., L.L.C. ("Gilardi"), which was assigned the responsibility of administering payment from the settlement fund, including determining, subject to the terms of the agreement and the parties' objections, who should be paid from the settlement fund and how much. (Hofmann Letter, Exh. 1, § 2.04). Under the agreement, any amount in excess of that needed to pay the plaintiffs' claims would be returned to the defendants. (Hofmann Letter, Exh. 1, §§ 2.05(a) 2.08(d)). The agreement also provided that I would be the final arbiter of all disputes arising from the administration, processing, and determination of claims to be paid from the settlement fund.Id. at 443-44. (Hofmann Letter, Exh. 1, § 2.06(f), (g), (h)).
On November 4, 2003, Gilardi mailed checks for approved sums to the eligible approved claimants. (Hofmann Letter at 2; Letter of Sanford L. Bohrer dated June 16, 2005 ("6/16/05 Bohrer Letter"), at 2). The checks had a void date of February 2, 2004. (6/16/05 Bohrer Letter at 1). Approximately 17 months after the checks were sent and 14 months after they had expired, the Claims Administrator notified the parties that 958 approved claimants had not yet cashed their checks. (Hofmann Letter, Exh. 3). To date, there has apparently been no contact between these 958 claimants and the parties or Gilardi. (Hofmann Letter, Exh. 3). The total value of the outstanding checks is $466,664.78. (Hofmann Letter at 2 Exh. 3). There is nothing in the record definitively showing why these checks are uncashed, or even if all of the checks were delivered. According to the plaintiffs, the defendants have refused to allow Gilardi to release any information regarding the identities of the owners of the uncashed checks. (Hofmann Letter at 2).
As noted above, the parties disagree about how to proceed. The defendants urge that pursuant to the settlement agreement, this Court should return the outstanding funds to them. (Letter of Sanford L. Bohrer dated May 2, 2005; 6/16/05 Bohrer Letter at 2-3; Letter of Sanford Bohrer dated June 24, 2005). Plaintiffs' counsel request an order directing Gilardi to "make reasonable efforts, in consultation with class counsel," to facilitate the payment of those class members who still must be paid. (Hofmann Letter at 3). Plaintiffs' counsel also seek more information about the identities of the owners of the unpaid checks and the efforts made by Gilardi to locate those individuals. (Hofmann Letter at 3). Finally, they suggest that the unpaid class members be given several more years within which to seek payment. (Letter of Paul T. Hofmann dated May 10, 2005, at 1; Letter of Paul T. Hofmann dated June 23, 2005, at 3). In addition, Gilardi has made several recommendations, proposing that:
1. All outstanding checks should be voided and one replacement check for each outstanding check should be printed and kept at its office. The replacement checks should not have a void date in order to allow class members the maximum amount of time to negotiate them.
2. All future class member correspondence should be directed to plaintiffs' counsel, who should have access to a database containing information regarding class members who have filed claims and their claim status.
3. If a class member indicates that he or she did not receive a check and is included among the 958 class members who have not cashed their checks, plaintiffs' counsel should ascertain the current address information for that class member and forward the information to Gilardi. Gilardi should then forward the check one last time to the updated address.
4. A fixed date should be set by the Court by which to conclude the final check negotiation process.
(Hofmann Letter, Exh. 3).
Discussion
The facts just described present a number of practical dilemmas. A large number of individuals who have submitted claims which were approved have not been paid. The checks they were issued are now void, and it does not appear that any of the owners of the unpaid checks have been in touch with either the parties or Gilardi. It is thus not known why these individuals have not cashed checks entitling them on average to approximately eight hundred dollars per person. Dahingo, 312 F. Supp. 2d at 444.
In the interest of accomplishing the goals of the settlement agreement and compensating the maximum number of claimants, none of whom live in the United States, I adopt a modified version of Gilardi's recommendations:
Because it is still uncertain what amount of the settlement fund will ultimately be unclaimed, it is unnecessary at this point to determine how the unclaimed funds should be allocated.
1. Within 30 days from the date of this Order, a replacement check for each outstanding check shall be issued and held by Gilardi in its office. The replacement checks shall have a void date of one year from the date of issuance. Some void date is necessary to ensure that the litigation will achieve closure.
2. Within the same thirty day period, Gilardi shall provide to plaintiffs' counsel information regarding class members who have not yet been paid and its efforts to locate those individuals, including: the identities of the unpaid approved class members, their most recent addresses and telephone numbers, the details of any efforts by Gilardi to date to locate those individuals, the details of any communication since the checks were mailed, if any, between those individuals and Gilardi, and a statement regarding the status of the unpaid checks, if known.
3. After locating a class member who has not cashed his or her check, plaintiffs' counsel shall ascertain the current address information for that class member and forward the information to Gilardi, who shall forward the check to the address provided. Replacement checks for those individuals located by plaintiffs' counsel shall be mailed within six months of the date of this Order.
Conclusion
For the reasons set forth above, the defendants' application is denied. The plaintiffs' application is granted to the extent that they request an order instructing Gilardi to make reasonable efforts, in coordination with class counsel, to insure that the maximum number of eligible approved claims are paid. Gilardi and plaintiffs' counsel shall implement the procedures outlined above.
SO ORDERED.