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Varley v. McGuire Group

February 7, 2006

THERESA VARLEY AND JUDY ALTMAN, ET AL., INDIVIDUALLY, ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, AND AS CLASS REPRESENTATIVES, PLAINTIFFS,
v.
THE MCGUIRE GROUP, INC. AND FRANCIS J. MCGUIRE, DEFENDANTS.



The opinion of the court was delivered by: William M. Skretny, United States District Judge

DECISION AND ORDER

1. This action was commenced in this district on February 2, 2004.*fn1 Plaintiffs assert claims against Defendants under the Fair Labor Standards Act, 29 U.S.C. § 201 et seq., and the New York Wage and Hour Law for Defendants' alleged failure to pay certain wage and overtime amounts to various classes of employees between February 24, 1997, and April 30, 2003. Defendants deny Plaintiffs' allegations. After engaging in voluntary discovery and mediation, the parties reached a settlement and filed a proposed settlement agreement on August 12, 2005. (Docket No. 168.)

2. On September 1, 2005, this Court issued an Order preliminarily approving the proposed settlement agreement and providing for notice of the settlement to the class. (Docket No. 171.) Based on its preliminary review, this Court found that the settlement was fair, just, reasonable and in the best interest of the named plaintiffs and the class as defined in the proposed settlement agreement. (Docket No. 171.) Pursuant to Rule 23(e) of the Federal Rules of Civil Procedure, this Court also scheduled a Fairness Hearing to further discuss the terms of the settlement and to provide an opportunity for any objections to be heard.

3. On January 19, 2006, counsel appeared before this Court for the Fairness Hearing. Counsel advised that no written objections to the settlement had been received*fn2 and no one appeared at the Fairness Hearing to voice an objection or otherwise be heard to contest the settlement. As such, this Court proceeded directly to a colloquy with counsel concerning the relevant factors that must be considered in determining whether to approve the settlement. See In re WorldCom, Inc. Sec. Litig., 388 F.Supp.2d 319, 336-37 (S.D.N.Y. 2005) (discussing relevant factors).*fn3 For the most part, the substance of that discussion is set forth below. The full text of that discussion is, however, incorporated herein by reference. (Docket No. 174.) For the following reasons, the proposed settlement is approved.

4. Rule 23(e) requires that any settlement of a class action be approved by the court. In reviewing a proposed class action settlement, the court must "carefully scrutinize the settlement to ensure its fairness, adequacy and reasonableness, and that it was not a product of collusion." D'Amato v. Deutsche Bank, 236 F.3d 78, 85 (2d Cir. 2001) (citation omitted); see also Joel A. v. Giuliani, 218 F.3d 132, 138 (2d Cir. 2000). The court must "eschew any rubber stamp approval" yet simultaneously "stop short of the detailed and thorough investigation that it would undertake if it were actually trying the case." City of Detroit v. Grinnell Corp., 495 F.2d 448, 462 (2d Cir. 1974).

5. The fairness of the proposed settlement must be determined "by examining the negotiating process leading up to the settlement as well as the settlement's substantive terms." D'Amato, 236 F.3d at 85. The court should analyze the negotiating process in light of "the experience of counsel, the vigor with which the case was prosecuted, and the coercion or collusion that may have marred the negotiations themselves." Malchman v. Davis, 706 F.2d 426, 433 (2d Cir. 1983) (citation omitted). The court must be satisfied that the settlement was the result of "arm's-length negotiations" and that plaintiffs' counsel engaged in the discovery "necessary to effective representation of the class's interests." D'Amato, 236 F.3d at 85.

6. In evaluating the substantive fairness of a settlement, a district court must consider the following factors, if applicable:

(1) the complexity, expense and likely duration of the litigation,

(2) the reaction of the class to the settlement,

(3) the stage of the proceedings and the amount of discovery completed,

(4) the risks of establishing liability,

(5) the risks of establishing damages,

(6) the risks of maintaining the class action through the trial,

(7) the ability of the defendants to withstand a ...


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