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Michael J. Davis, and v. J.P. Morgan Chase & Co

April 6, 2011


The opinion of the court was delivered by: David G. Larimer United States District Judge



This action was brought by five individual plaintiffs, on behalf of a class of persons, against J.P. Morgan Chase & Co. ("Chase") and several other defendants, alleging that Chase employed plaintiffs, and that Chase had misclassified plaintiffs as exempt from the overtime requirements of the Fair Labor Standards Act ("FLSA") and New York state law, and that as a result, plaintiffs were not paid overtime when they worked more than forty hours per week.

Pursuant to a stipulation entered December 4, 2002 (Dkt. #31), this action was then litigated by plaintiff Andrew Whalen, who was acting as a "test plaintiff" for purposes of the class claims in his case. After this Court granted summary judgment for Chase based on the FLSA's exemption for administrative employees, see 569 F.Supp.2d 327 (W.D.N.Y. 2008), the Court of Appeals for the Second Circuit reversed, 587 F.3d 529 (2d Cir. 2009), holding that "Whalen was not employed in a bona fide administrative capacity." Id. at 537.

The action was then reopened in this Court, and a fourth amended complaint (Dkt. #136) was filed by four of the original five plaintiffs, Michael Davis, Elena Lombardo, Carol Smith and Andrew Whalen. Plaintiffs filed a fifth amended complaint (Dkt. #181) on February 11, 2011, and on that same date they filed a motion for an order preliminarily approving a settlement of this action (Dkt. #183). That settlement, if approved, would result in the complaint and Chase's counterclaims being dismissed with prejudice.

Prior to the filing of the motion for approval of the settlement, however, Cynthia Cole and three other individuals ("Cole plaintiffs") had moved to intervene in this action (Dkt. #158). The Cole plaintiffs have filed an action against Chase in the Central District of California ("Cole action"), asserting claims similar to those in this action.

In addition, two other individuals, Gayla Pickle and Carol Hughes ("Pickle plaintiffs") have moved to join in the Cole plaintiff's motion to intervene (Dkt. #166). The Pickle plaintiffs have filed an action in the Southern District of New York ("Pickle action"), also asserting claims similar to those here. Both the Cole and Pickle actions are currently stayed pending this Court's decision as to whether to approve the proposed settlement in the instant case.

The Cole plaintiffs have filed objections both to the proposed settlement in this case (Dkt. #197), and to the proposed notice informing the class members in this action of the proposed settlement (Dkt. #198). The Pickle plaintiffs have also submitted a letter from their attorney (Dkt. #188) expressing their "concerns" concerning both the proposed settlement and the proposed notice, as well as written "comments" on the proposed notice (Dkt. #194).*fn1


I. Motions to Intervene

The Cole and Pickle plaintiffs (collectively "proposed intervenors") have moved to intervene in this action, ostensibly to protect the rights of class members in the Cole and Pickle actions, whose claims, they contend, would be extinguished as a result of the proposed settlement in this case.

"Under Federal Rule of Civil Procedure 23, a class action cannot be settled without the approval of the District Court. See Fed. R. Civ. P. 23(e). The District 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) (citations omitted). FLSA settlements also require court approval. See Misiewicz v. D'Onofrio Gen'l Contractors, No. 08 CV 4377, 2010 WL 2545439, at *3 (E.D.N.Y. May 17, 2010) ("[s]tipulated settlements in a FLSA case must be approved by the Court").

Although plaintiffs in the case at bar have moved for approval of the settlement of both their FLSA and state law claims, the proposed intervenors' motion principally concerns the Rule 23 class action, asserting claims under state law. Unlike a Rule 23 class action, which typically "binds all members of the class unless they have expressly opted out of the class action," in a collective action under the FLSA, a class member "must opt in to be bound." Woods v. New York Life Ins. Co., 686 F.2d 578, 579-80 (7th Cir. 1982) (emphasis added). Thus, on a motion to approve the settlement of both an FLSA collective action and class-action claims under state law, the court must be particularly sensitive to the due process concerns implicated by the latter. See, e.g., Willix v. Healthfirst, Inc., No. 07 Civ. 1143, 2011 WL 754862, at *5 (E.D.N.Y. Feb. 18, 2011) ("The standard for approval of an FLSA settlement is lower than for a Rule 23 settlement because an FLSA settlement does not implicate the same due process concerns as does a Rule 23 settlement").

After considering the matter, I deny the proposed intervenors' motion to intervene. Intervention is not necessary here to protect the proposed intervenors' or other class members' interests, and there are alternatives open to them which would be less disruptive to these proceedings and to the interests of the settling parties.

Rule 24(a)(2) of the Federal Rules of Civil Procedure requires the court to permit intervention by anyone who "claims an interest relating to the property or transaction that is the subject of the action, and is so situated that disposing of the action may as a practical matter impair or impede the movant's ability to protect its interest, unless existing parties adequately represent that interest." "In order to intervene as of right pursuant to Rule 24(a)(2), the applicant must: (1) file a timely motion; (2) show an interest in the litigation; (3) show that its interest may be impaired by the disposition of the action; and (4) show that its interest is not adequately protected by the parties to the action." In re Holocaust Victim Assets Litigation, 225 F.3d 191, 197 (2d Cir. 2000).

Rule 24(b)(1)(B) allows the court to permit anyone to intervene who "has a claim or defense that shares with the main action a common question of law or fact." "In exercising its discretion [under that rule] the court must consider whether the intervention will unduly delay or prejudice the adjudication of the original parties' rights." Fed. R. Civ. P. 24(b)(3).

In the case at bar, some of these factors, and the arguments advanced by the proposed intervenors in support of their motions, have already been addressed by the United States Judicial Panel on Multidistrict Litigation ("Judicial Panel"). On August 6, 2010, the Judicial Panel issued an order (Dkt. #158-8) denying centralization of this action, the Pickle action, and Ebert action (see n.1, supra). The Pickle plaintiffs sought centralization of all the actions in the Southern District of New York. The other parties all supported centralization here in the Western District of New York.

Denying the Pickle plaintiffs' request, the Judicial Panel stated that "[d]espite the fact that all parties now support centralization, we are not persuaded that significant efficiencies will be gained by centralization of this litigation at this late date, particularly in light of the substantial disparity in the progress of the actions." Id. Noting that the parties to the Davis action in this district had "announced that they had reached a tentative nationwide settlement," the Judicial Panel stated that "[p]laintiffs in the non-settling actions should reasonably anticipate an opportunity to object to the purported nationwide settlement and direct any concerns regarding the further adjudication of their claims to Judge David G. Larimer at a fairness hearing concerning the proposed settlement in Davis." Id.

The Judicial Panel's observations are directly on point here. The proposed intervenors' interests in this action can be fully protected at the fairness hearing for final approval of the settlement. See Fed. R. Civ. P. Rule 23(e)(2) (providing that "[i]f the propos[ed settlement] would bind class members, the court may approve it only after a hearing and on finding that it is fair, reasonable, and adequate"). In addition, any class members who do not want to be bound by the settlement will be given an opportunity to opt out and pursue their own claims separately.

In an analogous case, Doe v. Cin-Lan, Inc., No. 08-cv-12719, 2011 WL 37970 (E.D.Mich. Jan. 5, 2011), after the parties agreed to settle the plaintiffs' claims under the FLSA and Michigan law, plaintiffs from two actions that had been filed in California moved to intervene in the Michigan action, seeking, inter alia, to conduct discovery regarding the parties' conduct ...

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