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finding fairness where there were no objections or requests for exclusion
Summary of this case from Surdu v. Madison Glob., LLCOpinion
No. 12 Civ. 2987 (DF)
02-05-2013
[PROPOSED] ORDER GRANTING PLAINTIFF'S MOTION FOR CERTIFICATION OF THE SETTLEMENT CLASS , FINAL APPROVAL OF THE CLASS ACTION SETTLEMENT, APPROVAL OF THE FLSA SETTLEMENT, AND APPROVAL OF ATTORNEYS' FEES, REIMBURSEMENT OF EXPENSES, AND CLASS REPRESENTATIVE SERVICE AWARD
Plaintiff and the class members are approximately 368 current and former front- and back-of-the-house restaurant workers, including servers, runners, bussers, bartenders, barbacks, cocktail waitresses, cooks, dishwashers, and other hourly service workers employed by Ajna Bar NYC, Little Rest Twelve, Inc., and Jean-Yves Haouzi (collectively "Defendants") between November 2008 through March 31, 2010 or November 30, 2010 (collectively, "Plaintiffs").
On April 16, 2012, Plaintiff Franklin Guaman commenced this action as a putative class action under Federal Rule of Civil Procedure 23 and as a collective action under 29 U.S.C. § 216(b), bringing claims under the New York Labor Law ("NYLL") and the Fair Labor Standards Act ("FLSA") against Defendants. Declaration of Rachel Bien in Support of Plaintiff's Motion for Certification of the Settlement Class, Final Approval of the Class Action Settlement, and Approval of the FLSA Settlement ("Bien Decl.") ¶ 4. Plaintiff alleged that Defendants violated the FLSA and NYLL by: (1) failing to pay employees overtime for the hours that they worked over 40 in a workweek; (2) failing to pay employees for all of the hours they worked; (3) improperly taking a tip credit and failing to pay employees at the full minimum wage rate; (4) misappropriating tips from tipped employees by distributing them to managers who are not entitled to tips; and (5) failing to pay employees who worked more than 10 hours in a day spread-of-hours pay.
The parties reached this $250,000 settlement under the supervision of an experienced employment law mediator. Id. ¶ 12. The parties agreed to the material terms of the settlement at the mediation, including the monetary amount and the timing of the payment and executed a Memorandum of Understanding. Id. The parties then drafted and negotiated a detailed final settlement agreement including all terms ("Settlement Agreement"). Id. ¶ 13.
On November 5, 2012, the Court entered an Order preliminarily approving the settlement, conditionally certifying the settlement class, appointing Outten & Golden LLP as Class Counsel, and authorizing the dissemination of the proposed settlement notice ("Notice"). ECF No. 15. On December 27, 2012, a claims administrator sent the Court-approved Notice to class members informing them, among other things, of their right to opt out or object to the settlement, of Class Counsel's intention to seek up to one-third of the settlement fund for attorneys' fees and reimbursement of their out-of-pocket expenses, and of Plaintiff's request for a service award.
On January 22, 2013, Plaintiff filed a Motion for Certification of the Settlement Class, Final Approval of the Class Action Settlement, and Approval of the FLSA Settlement ("Motion for Final Approval"). That same day, Plaintiff also filed Motions for Approval of Attorneys' Fees and Reimbursement of Expenses ("Motion for Attorneys' Fees") and for Class Representative Service Award ("Motion for Service Award"). Defendants took no position with respect to any of these motions and did not object to the requests for attorneys' fees, costs, or service payment.
The Court held a fairness hearing on February 5, 2013. No Class Member objected to the settlement or requested exclusion.
Having considered the Motion for Final Approval, the Motion for Attorneys' Fees and Reimbursement of Expenses, the Motion for Service Award, and the supporting declarations, the oral argument presented at the February 5, 2013 fairness hearing, and the complete record in this matter, for the reasons set forth therein and stated on the record at the February 5, 2013 fairness hearing, and for good cause shown, NOW, THEREFORE, IT IS HEREBY ORDERED, ADJUDGED AND DECREED:
CERTIFICATION OF THE SETTLEMENT CLASS
1. The Court certifies the following class under Federal Rule of Civil Procedure 23(e), for settlement purposes:
a) non-managerial, back-of-the-house workers, including kitchen workers, who worked for Defendants from November 1, 2008 through November 30, 2010;
b) non-managerial, front-of-the-house workers, including servers, runners, bussers, and bartenders, who worked for Defendants from November 1, 2008 through March 31, 2010; and
c) the following non-managerial front-of-the-house workers, including servers, runners, bussers, and bartenders who worked for Defendants for the period from November 1, 2008 through November 30, 2010: Matthew LaFountain, Gigmy Bista, Victor Chavez, Ian Christie, Elina Golovko, Batjargal Gotov, Jeime Vasquez, Mohammed Ahmed, Mohhamad Allaudin, Christian Cartagena Posada, Hwa Low Chow, Mohammed M Haider, Sandra Heras, Nimago Mohamed, Mario Pretel, Rudy Tira, Fofana Vamuya, Esteban Oropeza, Hector Oropeza, Carmelo Ramirez, Ermir Cela, Segundo Matute, Oscar Torrau, Jose Tupacyupanqui, Gerard Amyzial, Lindsey Harriman, Karyn Lisko, Brittany McBride, Diego Mora, Hannah Rhee, Osualdo Oropeze, MD Rhman, Marcela Ceballos, Amanda Dorfman,
Dora Regan, Lindsay Santos, Michelle Thomas, Tetyana Chystakova.
2. Plaintiff meets all of the requirements for class certification under Fed. R. Civ. P. 23(a) and (b)(3).
3. Plaintiff satisfies Fed. R. Civ. P. 23(a)(1) because there are approximately 368 Class Members and, thus, joinder is impracticable. See Consol. Rail Corp. v. Town of Hyde Park, 47 F.3d 473, 483 (2d Cir. 1995) ("[N]umerosity is presumed at a level of 40 members").
4. The proposed class also satisfies Fed. R. Civ. P. 23(a)(2), the commonality requirement. All class members raise common issues including whether Defendants failed to pay overtime for all hours worked, misappropriated tips by unlawfully distributing a portion to non-tip eligible workers, and failed to pay spread-of-hours pay. See Johnson v. Brennan, No. 10 Civ. 4712, 2011 WL 4357376, at *4-5 (S.D.N.Y. Sept. 16, 2011); Reyes v. Altamarea Grp., LLC, No. 10 Civ. 6451, 2011 WL 4599822, at *2 (S.D.N.Y. Aug. 16, 2011).
5. Plaintiff satisfies Federal Rule of Civil Procedure 23(a)(3), typicality, because Plaintiff's claims arose from the same factual and legal circumstances that form the bases of the class members' claims. See Johnson, 2011 WL 4357376, at *5; Reyes, 2011 WL 4599822, at *2.
6. Plaintiff satisfies Fed. R. Civ. P. 23(a)(4) because there is no evidence that the Plaintiff's and the class members' interests are at odds. See Johnson, 2011 WL 4357376, at *5; Reyes, 2011 WL 4599822, at *2.
7. In addition, Outten & Golden LLP, "have substantial experience prosecuting and settling employment class actions, including wage and hour class actions[,] and are well-versed in wage and hour law and class action law." Westerfield v. Wash. Mut. Bank, Nos. 06 Civ. 2817, 08 Civ. 00287, 2009 WL 6490084, at *3 (E.D.N.Y. June 26, 2009); deMunecas v. Bold Food LLC, No. 09 Civ. 0440, 2010 WL 2399345, at *7 (S.D.N.Y. Apr. 19, 2010) (O&G "are experienced employment lawyers with good reputations among the employment law bar").
8. Plaintiff also satisfies Rule 23(b)(3). Common factual allegations - that Defendants failed to pay overtime for all hours worked, misappropriated tips by unlawfully distributing a portion to non-tip eligible workers, and failed to pay spread-of-hours pay - and a common legal theory - that these policies violated the NYLL - predominate over any factual or legal variations among class members. See Johnson, 2011 WL 4357376, at *6-7; Reyes, 2011 WL 4599822, at *3.
9. Class adjudication of this case is superior to individual adjudication because it will conserve judicial resources and is more efficient for class members, particularly those who lack the resources to bring their claims individually. See Johnson, 2011 WL 4357376, at *7; Reyes, 2011 WL 4599822, at *3. Plaintiff and class members have limited financial resources with which to prosecute individual actions. Concentrating the litigation in this Court is desirable because the allegedly wrongful conduct occurred within its jurisdiction. Employing the class device here will not only achieve economies of scale for class members, but will also conserve judicial resources and preserve public confidence in the integrity of the system by avoiding the waste and delay repetitive proceedings and preventing inconsistent adjudications. See Hanlon v. Chrysler Corp., 150 F.3d 1011, 1023 (9th Cir. 1998) (class action superior when individual claims would burden judiciary, be inefficient for plaintiffs, and yield inconsistent results); see also deMunecas, 2010 WL 2399345, at *2 (class adjudication would conserve judicial resources and increase efficiency for class members in restaurant case on behalf of tipped minimum wage workers). APPROVAL OF THE SETTLEMENT AGREEMENT
10. The Court hereby grants the Motion for Final Approval and finally approves the settlement as set forth in the Settlement Agreement.
11. Rule 23(e) requires court approval for a class action settlement to ensure that it is procedurally and substantively fair, reasonable, and adequate. Fed. R. Civ. P. 23(e). To determine procedural fairness, courts examine the negotiating process leading to the settlement. Wal-Mart Stores, Inc. v. Visa U.S.A. Inc., 396 F.3d 96, 116 (2d Cir. 2005); D'Amato v. Deutsche Bank, 236 F.3d 78, 85 (2d Cir. 2001). To determine substantive fairness, courts determine whether the settlement's terms are fair, adequate, and reasonable according to the factors set forth in City of Detroit v. Grinnell Corp., 495 F.2d 448 (2d Cir. 1974).
12. Courts examine procedural and substantive fairness in light of the "strong judicial policy favoring settlements" of class action suits. Wal-Mart Stores, 396 F.3d at 116; see also Spann v. AOL Time Warner, Inc., No. 02 Civ. 8238, 2005 WL 1330937, at *6 (S.D.N.Y. June 7, 2005); In re EVCI Career Colls. Holding Corp. Sec. Litig., No. 05 Civ. 10240, 2007 WL 2230177, at *4 (S.D.N.Y. July 27, 2007).
13. A "presumption of fairness, adequacy and reasonableness may attach to a class settlement reached in arm's-length negotiations between experienced, capable counsel after meaningful discovery." Wal-Mart Stores, 396 F.3d at 116 (internal quotation marks omitted); see also D'Amato, 236 F.3d at 85. "Absent fraud or collusion, [courts] should be hesitant to substitute [their] judgment for that of the parties who negotiated the settlement." In re EVCI Career Colls. Holding Corp. Sec. Litig., 2007 WL 2230177, at *4; see also In re Top Tankers, Inc. Sec. Litig., No. 06 Civ. 13761, 2008 WL 2944620, at *3 (S.D.N.Y. July 31, 2008); In re BankAmerica Corp. Sec. Litig., 210 F.R.D. 694, 700 (L.D. Mo. 2002).
Procedural Fairness
14. The settlement is procedurally fair, reasonable, adequate, and not a product of collusion. See Fed. R. Civ. P. 23(e); Reyes, 2011 WL 4599822, at *4. The settlement was reached after the parties had conducted a thorough investigation and evaluated the claims and defenses, and after arm's-length negotiations between the parties.
15. Class counsel reviewed Defendants' tip sheets and payroll and time records for all of its employees between November 2008 and November 2010. Bien Decl. ¶ 7. From this data, Plaintiffs were able to calculate damages on a classwide basis and evaluate the strengths and weaknesses of their claims. Id. ¶ 11.
16. On January 31, 2012, the parties attended a mediation session with an experienced employment law mediator. The parties came to a preliminary agreement on the material terms of the settlement at the mediation and executed a Memorandum of Understanding. Id. ¶ 12. These arm's-length negotiations involved counsel and a mediator well-versed in wage and hour law, raising a presumption that the settlement achieved meets the requirements of due process. See Wal-Mart Stores, 396 F.3d at 116; Reyes, 2011 WL 4599822, at *4; deMunecas, 2010 WL 3322580, at *1.
Substantive Fairness
17. The settlement is substantively fair. All of the factors set forth in Grinnell, which provides the analytical framework for evaluating the substantive fairness of a class action settlement, weigh in favor of final approval.
18. The Grinnell factors are: (1) the complexity, expense and likely duration of the litigation; (2) the reaction of the class; (3) the stage of the proceedings and the amount of discovery completed; (4) the risks of establishing liability; (5) the risks of establishing damages; (6) the risks of maintaining the class action through the trial; (7) the ability of the defendants to withstand a greater judgment; (8) the range of reasonableness of the settlement fund in light of the best possible recovery; and (9) the range of reasonableness of the settlement fund to a possible recovery in light of all the attendant risks of litigation. 495 F.2d at 463.
19. Litigation through trial would be complex, expensive and long. Therefore, the first Grinnell factor weighs in favor of final approval.
20. The class's reaction to the settlement was positive. The Notice included an explanation of the allocation formula and an estimate of each class member's award. The Notice also informed class members of their right to object to or exclude themselves from the Settlement and explained how to do so. No class member objected to or opted out of the settlement. This favorable response demonstrates that the class approves of the settlement and supports final approval. See Reyes, 2011 WL 4599822, at *4; deMumcas, 2010 WL 3322580, at *5; Wright v. Stern, 553 F. Supp. 2d 337, 344-45 (S.D.N.Y. 2008) ("[t]he fact that the vast majority of class members neither objected nor opted out is a strong indication" of fairness).
21. The parties have completed enough discovery to recommend settlement. The pertinent question is "whether counsel had an adequate appreciation of the merits of the case before negotiating." In re Warfarin Sodium Antitrust Litig., 391 F.3d 516, 537 (3d Cir. 2004) (internal quotation marks omitted). Here, through an efficient, informal exchange of information, Plaintiff obtained sufficient discovery to weigh the strengths and weaknesses of the claims. The parties' participation in a mediation session allowed them to further explore the claims and defenses. The third Grinnell factor weighs in favor of final approval.
22. The risk of establishing liability and damages further weighs in favor of final approval. "Litigation inherently involves risks." In re PaineWehber Ltd. P'ships Litig., 171 F.R.D. 104, 126 (S.D.N.Y. 1997). Indeed, the primary purpose of settlement is to avoid the uncertainty of a trial on the merits. In re Ira Haupt & Co., 304 F. Supp. 917, 934 (S.D.N.Y. 1969); see also Velez v. Majik Cleaning Serv., Inc., No. 03 Civ. 8698, 2007 WL 7232783, at *6 (S.D.N.Y. June 25, 2007). Here, both the legal and factual questions surrounding Plaintiff's overtime and tip credit and misappropriation claims present risk. The proposed settlement eliminates this uncertainty. This factor therefore weighs in favor of final approval.
23. The risk of obtaining class certification and maintaining it through trial is also present. A contested class certification motion would likely require extensive discovery and briefing. If the Court were to grant class certification, Defendants might seek to file an appeal under Federal Rule of Civil Procedure 23(f), the resolution of which would require an additional round of briefing. Settlement eliminates the risk, expense, and delay inherent in the litigation process. The fifth Grinnell factor weighs in favor of final approval.
24. Even if Defendants could have withstood a greater judgment, which was in doubt, a "defendant's ability to withstand a greater judgment, standing alone, does not suggest that the settlement is unfair." Frank v. Eastman Kodak Co., 228 F.R.D. 174, 186 (W.D.N.Y. 2005) (internal quotation marks omitted). Accordingly, this factor is neutral and does not preclude the Court from approving the settlement.
25. The substantial amount of the settlement weighs in favor of final approval. The determination of whether a settlement amount is reasonable "does not involve the use of a mathematical equation yielding a particularized sum." Frank, 228 F.R.D. at 186 (internal quotation marks omitted). "Instead, 'there is a range of reasonableness with respect to a settlement - a range which recognizes the uncertainties of law and fact in any particular case and the concomitant risks and costs necessarily inherent in taking any litigation to completion.'" Id. (quoting Newman v. Stein, 464 F.2d 689, 693 (2d Cir. 1972)). The seventh Grinnell factor weighs in favor of final approval. APPROVAL OF THE FLSA SETTLEMENT
26. The Court hereby approves the FLSA settlement.
27. Because, under the FLSA, "parties may elect to opt in but a failure to do so does not prevent them from bringing their own suits at a later date," FLSA collective actions do not implicate the same due process concerns as Rule 23 actions. McKenna v. Champion Int'l Corp., 747 F.2d 1211, 1213 (8th Cir. 1984); see Reyes, 2011 WL 4599822, at *6. Accordingly, the standard for approval of an FLSA settlement is lower than for a class action under Rule 23.
28. Courts approve FLSA settlements when they are reached as a result of contested litigation to resolve bona fide disputes. See Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350, 1353 n.8 (11th Cir. 1982); Reyes, 2011 WL 4599822, at *6. Typically, courts regard the adversarial nature of a litigated FLSA case to be an adequate indicator of the fairness of the settlement. Lynn's Food Stores, 679 F.2d at 1353-54. If the proposed FLSA settlement reflects a reasonable compromise over contested issues, it should be approved. Id. at 1354; Reyes, 2011 WL 4599822, at *6.
29. In this case, the settlement was the result of litigation and arm's-length negotiation. Bien Decl. ¶ 16. During the negotiation and at the mediation, Plaintiff and Defendants were represented by counsel. Accordingly, the Settlement Agreement resolves a clear and actual dispute under circumstances supporting a finding that is fair and reasonable. DISSEMINATION OF NOTICE
30. Pursuant to the Preliminary Approval Order, the Notice was sent by first-class mail to each class member at his or her last known address (with re-mailing of returned Notices for which new addresses could be located). The Court finds that the Notice fairly and adequately advised class members of the terms of the settlement, as well as the right of members of the class to opt out of or to object to the settlement, and to appear at the fairness hearing conducted on February 5, 2013. Class members were provided with the best notice practicable under the circumstances,
31. The Court further finds that the Notice and its distribution comported with all constitutional requirements, including those of due process.
32. The Court confirms Settlement Services, Inc. as the claims administrator. AWARD OF FEES AND COSTS TO CLASS COUNSEL AND AWARD OF SERVICE AWARD TO PLAINTIFF
33. On November 5, 2012, the Court appointed Outten & Golden LLP as Class Counsel because they met all of the requirements of Fed. R. Civ. P. 23(g).
34. Class Counsel are experienced employment lawyers with good reputations among the employment law bar. See Westerfield, 2009 WL 6490084, at *3 (Outten & Golden LLP "have substantial experience prosecuting and settling employment class actions, including wage and hour class actions[,] and are well-versed in wage and hour law and class action law").
35. The work that Class Counsel has performed in litigating and settling this case demonstrates their commitment to the class and to representing the class's interests. Class Counsel has committed substantial resources to prosecuting this case.
36. The Court hereby grants Plaintiff's Motion for Attorneys' Fees and awards Class Counsel $83,333, which is one-third of the settlement fund.
37. The trend in this Circuit is to use the percentage of the fund method to compensate attorneys in common fund cases like this one. McDaniel v. County of Schenectady, 595 F.3d 411, 417 (2d Cir. 2010); Wal-Mart Stores, 396 F.3d at 121; Reyes, 2011 WL 4599822, at *7.
38. Although the Court has discretion to award attorneys' fees based on the lodestar method or the percentage-of-recovery method, McDaniel, 595 F.3d at 417, in wage and hour class action lawsuits, public policy favors a common fund attorneys' fee award, see Reyes, 2011 WL 4599822, at *7. Fee awards in wage and hour cases are meant to "encourage members of the bar to provide legal services to those whose wage claims might otherwise be too small to justify the retention of able, legal counsel." Sand v. Greenberg, No. 08 Civ. 7840, 2010 WL 69359, at *3 (S.D.N.Y. Jan. 7, 2010). The FLSA and the NYLL are remedial statutes, the purposes of which are served by adequately compensating attorneys who protect wage and hour rights. Reyes, 2011 WL 4599822, at *7; Sand, 2010 WL 69359, at *3.
39. Where relatively small claims can only be prosecuted through aggregate litigation, and the law relies on prosecution by "private attorneys general," attorneys who fill the private attorney general role must be adequately compensated for their efforts. Reyes, 2011 WL 4599822, at *7; Sand, 2010 WL 69359, at *3. If not, wage and hour abuses would go without remedy because attorneys would be unwilling to take on the risk. Reyes, 2011 WL 4599822, at *7; Sand, 2010 WL 69359, at *3 ("But for the separate provision of legal fees, many violations of the Fair Labor Standards Act would continue unabated and uncorrected.")
40. Common fund recoveries are contingent on a successful litigation outcome. Such "contingency fees provide access to counsel for individuals who would otherwise have difficulty obtaining representation . . . and transfer a significant portion of the risk of loss to the attorneys taking a case. Access to the courts would be difficult to achieve without compensating attorneys for that risk." deMunecas, 2010 WL 3322580, at *8 (internal quotation marks omitted). Many individual litigants, including the class members here, "cannot afford to retain counsel at fixed hourly rates . . . yet they are willing to pay a portion of any recovery they may receive in return for successful representation." Id.
41. Class counsel's request for one-third of the Fund is reasonable and "consistent with the norms of class litigation in this circuit." See Gilliam v. Addicts Rehab. Ctr. Fund, 05 Civ. 3452, 2008 WL 782596, at *5 (S.D.N.Y. Mar. 24, 2008).
42. Although Arbor Hill Concerned Citizens Neighborhood Association v. County of Albany does not address a common fund fee petition, it supports class counsel's request for one-third of the fund because "'reasonable, paying client[s]' . . . typically pay one-third of their recoveries under private retainer agreements." Reyes, 2011 WL 4599822, at *8 (quoting Arbor Hill, 522 F.3d 182, 191 (2d Cir. 2008)) (internal citation omitted). While Arbor Hill is not controlling because it does not address a common fund fee petition, it supports use of the percentage of the fund method. Id.
43. All of the factors in Goldberger v. Integrated Resources, Inc., 209 F.3d 43, 48-49 (2d Cir. 2000) weigh in favor of the requested fee award.
44. Applying the lodestar method as a "cross check," see id. at 50, the Court finds that the fee that class counsel seeks is reasonable. Here, Class Counsel are seeking a fee award below their lodestar amount.
45. The fact that Class Counsel's fee award will not only compensate them for time and effort already expended, but for time that they will be required to spend administering the settlement going forward also supports their fee request. See Reyes, 2011 WL 4599822, at *8.
46. The Court also awards Class Counsel reimbursement of their litigation expenses in the amount of $2,633.15. Courts typically allow counsel to recover their reasonable out-of-pocket expenses. See In re Indep. Energy Holdings PLC Sec. Litig., 302 F. Supp. 2d 180, 183 n.3 (S.D.N.Y. 2003). Here, Class Counsel's unreimbursed expenses include telephone charges, postage, transportation, working meal costs, photocopies, and electronic research, are reasonable and were incidental and necessary to the representation of the class.
47. The attorneys' fees and the amount in reimbursement of litigation costs and expenses shall be paid from the settlement fund.
48. The Court finds reasonable a service award of $2,500 for class representative Franklin Guaman. This amount shall be paid from the settlement fund.
49. Service awards are common in class action cases and serve to compensate plaintiffs for the time and effort expended in assisting the prosecution of the litigation, the risks incurred by becoming and continuing as a litigant, and any other burdens sustained by the plaintiffs. Reyes, 2011 4599822, at *9.
50. The "Effective Date" of the settlement shall be 31 days after the date of this Order if no party appeals. If a party appeals, the "Effective Date" of the settlement shall be the day after all appeals are finally resolved.
51. Within 10 days of the Effective Date, the claims administrator shall distribute the funds in the settlement account by making the following payments in the order below:
a. Paying Class Counsel one-third of the fund ($83,333);
b. Reimbursing Class Counsel for $2,633.15 in litigation costs and expenses;
c. Paying a service award of $2,500 to Franklin Guaman;
d. Paying the remainder of the fund to class members in accordance with the allocation plan described in the Settlement Agreement.
52. The Court retains jurisdiction over this action for the purpose of enforcing the Settlement Agreement and overseeing the distribution of settlement fund. The parties shall abide by all terms of the Settlement Agreement, which are incorporated herein, and this Order.
53. Upon the Effective Date, this litigation shall be dismissed with prejudice and all members of the Class who have not excluded themselves from the settlement shall be permanently enjoined from pursuing and/or seeking to reopen claims that have been released pursuant to the settlement.
It is so ORDERED this 5th day of February, 2013.
/s/_________
Honorable Debra Freeman
United States Magistrate Judge