United States District Court, Southern District New York
July 25, 2012
ANDERSON A. PEREZ AND JUAN CARLOS PEREZ, ON BEHALF OF THEMSELVES AND OTHERS SIMILARLY SITUATED, PLAINTIFFS,
JUPADA ENTERPRISES, INC., D/B/A MCDONALD'S; DETAIL SYSTEMS, INC., D/B/A MCDONALD'S; AND DAVID MOYETT, AN INDIVIDUAL, DEFENDANTS
The opinion of the court was delivered by: Jesse M. Furman, District Judge.
MEMORANDUM OPINION AND ORDER
On December 6, 2011, Plaintiffs in this action, brought under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq., and the New York State Labor Law ("NYLL"), Art. 19 § 650 et seq., moved for preliminary approval of settlement, conditional certification of a class action for purposes of settling the NYLL claims, appointment of Plaintiffs' counsel as class counsel, and approval of Plaintiffs' proposed notice of settlement and class action settlement procedure.*fn1 Under Rule 23 of the Federal Rules of Civil Procedure and the FLSA, the Court must, among other things, direct notice in a reasonable manner to all class members who would be bound by the proposal and must scrutinize the proposed settlement to ensure that it is fair, reasonable, and adequate. See Fed. R. Civ. P. 23(e)(1)-(2); see also, e.g., Wolinsky v. Scholastic Inc., 11 Civ. 5917(JMF), 2012 WL 2700381, at *1 (S.D.N.Y. July 5, 2012).
On June 25, 2012, the parties appeared for a conference before the Court. Pursuant to discussion on the record, the Court denied Plaintiffs' motion without prejudice based on concerns about various provisions in the proposed settlement and notice to class members. The parties were directed to edit and re-file their motion, along with additional submissions, by July 9, 2012. Among other things, the Court ordered the parties to provide justification for the proposed award of attorney's fees and for their claim that the notice requirements of the Class Action Fairness Act ("CAFA"), Pub.L. No. 109–2, 119 Stat. 4 (2005), codified at 28 U.S.C. §§ 1332(d), 1453, 1711–1715, do not apply to this case. Plaintiffs timely re-filed their motion and submitted the requested documents after consultation with Defendants.
I. Notice to State and Federal Officials Pursuant to CAFA
As an initial matter, the Court concludes that the notice requirements set forth in Section Three of CAFA and codified at Title 28, United States Code, Section 1715(b) do apply in this case. To the extent relevant here, that provision states that "[n]ot later than 10 days after a proposed settlement of a class action is filed in court, each defendant that is participating in the proposed settlement shall serve upon the appropriate State official of each State in which a class member resides and the appropriate Federal official"—as those terms are defined in Section 1715(a)—"a notice of the proposed settlement" consisting of certain enumerated materials. The term "class action" is defined, in turn, by Section 1711 to broadly include "any civil action filed in a district court of the United States under rule 23 of the Federal Rules of Civil Procedure[.]" 28 U.S.C. § 1711 (emphasis added). This case, of course, is a civil action filed under Rule 23. On its face, therefore, CAFA's notice provision would seem to apply.
To be sure, the Supreme Court and the Second Circuit have cautioned that the word "any" in a statute does not always deserve a "broad interpretation." ACLU v. Dep't of Defense, 543 F.3d 59, 68–69 (2d Cir.2008) (discussing cases), vacated on other grounds by 130 S.Ct. 777 (2009). Instead, an expansive application of the word is warranted only "where the surrounding statutory language and other relevant legislative context support it ." Id. at 69. But that is the case here. First, there is " 'no intimation' in the statute as a whole that Congress meant otherwise." Id. (quoting United States v. Gonzales, 520 U.S. 1, 9–10 (1997)). And second, interpreting the notice requirements set forth in Section 1715(b) (which were one of several procedural protections enacted by CAFA) to apply to any and all class actions filed in or removed to federal court is consistent with one of Congress's main purposes in enacting CAFA: "to ... assure fair and prompt recoveries for class members with legitimate claims." Pub.L. No. 109–2, § 2, 119 Stat. 4, codified at 28 U.S.C. § 1711 Note; see also id. (finding, among other things, that "[o]ver the past decade, there have been abuses of the class action device that have ... harmed class members with legitimate claims and defendants that have acted responsibly"); S.Rep. No. 109–14, at 27 (describing CAFA as, in part, an "attempt to address a number of the problems and abuses in the [then] current class action system"), reprinted in 2005 U.S.C.C.A.N. 3, 27. Put simply, there is no reason to think that Congress would have enacted procedural protections to curb perceived abuses of the class action device, but then limited those procedural protections to a small subset of the class actions litigated in federal court.
In arguing otherwise, Plaintiffs contend that CAFA applies only if a case involves "more than 100 actual named plaintiffs or more than $5,000,000 in controversy." (Letter from Penn Dodson to the Court, dated July 2, 2012, at 1). Notably, however, the only authority they cite in support of that position is a corporate law firm's April 2005 "Client Alert," which is obviously not legal authority upon which a court can or should rely (and which does not clearly support Plaintiffs' point in any event). More fundamentally, Plaintiffs' argument rests on conflating two distinct provisions of CAFA: Section Four, which amended the diversity jurisdiction statute to provide for original federal jurisdiction over certain interstate class actions in which the amount in controversy exceeds $5,000,000 and involves 100 or more class members, see Pub.L. No. 109–2, § 4, 119 Stat. 4, codified at 28 U.S.C. § 1332(d), and Section Three, which enacted various procedural protections for class actions, including the notice requirements at issue in this case, see id. § 3, codified at 28 U.S.C. §§ 1711–1715. Nothing in the text of either section suggests that the procedural protections in Section Three are limited to the subset of class actions falling within the new provision of the diversity statute.*fn2 To the contrary, as noted above, the plain terms of Section Three indicate that it applies to "any" class action filed in or removed to federal court. "[W]here, as here, the statute's language is plain, the sole function of the courts is to enforce it according to its terms." Katzman v. Essex Waterfront Owners LLC, 660 F.3d 565, 568 (2d Cir.2011) (quoting United States v. Ron Pair Enters., Inc., 489 U.S. 235, 241 (1989)).
Although no court appears to have addressed the question presented here explicitly, this reading of CAFA is supported by cases in which notice was given pursuant to Section 1715(b) even though the amount in controversy did not exceed $5,000,000 or jurisdiction was not premised on Section Four of CAFA. See, e.g., Hopson v. Hanesbrands, No. CV–08–0844 EDL, 2008 WL 3385452, at *1, 3 (N.D.Cal. Aug. 8, 2008) (explaining that defendants complied with CAFA's notice requirements in a case with a proposed settlement of $400,000 representing 39% of the maximum recovery); Catala v. Resurgent Capital Services L.P., Civ. 08 CV 2401 NLS, 2010 WL 2524158, at *8 (S.D. Cal. June 22, 2010) (noting compliance with CAFA's notice requirements in a case filed pursuant to the Fair Debt Collection Practices Act). It is also supported by commentary on CAFA. See, e.g., Steven M. Puiszis, Developing Trends with the Class Action Fairness Act of 2005, 40 J. Marshall L.Rev. 115, 167 n. 314 (2006) (explaining that "the notification requirements found in § 1715(b) are not limited to class actions where federal court jurisdiction is based on CAFA's revised diversity rules but to any federal court class action") (emphasis added); accord Sarah S. Vance, A Primer on the Class Action Fairness Act of 2005, 80 Tul. L.Rev.. 1617, 1634 (2006); Robert H. Klonoff & Mark Herrmann, The Class Action Fairness Act: An Ill–Conceived Approach to Class Settlements, 80 Tul. L.Rev.. 1695, 1709 (2006). No doubt, there are class action cases in which courts failed to order notice pursuant to CAFA. But that fact alone is unremarkable, both because the statute is relatively new and because the parties that are most likely to raise an argument about notice under Section 1715(b)—namely, absent class members—are, by definition, not before the court when a proposed settlement is filed. In the absence of a court raising the issue sua sponte (as the Court did in this case), the issue is simply unlikely to arise.
II. Preliminary Approval of Settlement, Conditional Certification of the Settlement Class, and Appointment of Class Counsel
Turning to the heart of the parties' motion, having reviewed the Joint Settlement Agreement ("Settlement Agreement") and the parties' additional submissions, the Court grants preliminary approval of the Settlement Agreement and conditional certification of the settlement class based upon the terms set forth in the parties' Settlement Agreement. Plaintiffs appear to meet all the requirements for class certification under Rule 23(a) and (b)(3) of the Federal Rules of Civil Procedure. And at this juncture, the proposed settlement appears to be fair, reasonable, and adequate to the Settlement Class and is presumptively valid, subject to any objections that may be raised at the final hearing and to final approval by this Court. See In re Currency Conversion Fee Antitrust Litig., No. M 21–95, 2006 WL 3247396, at *5 (S.D.N.Y. Nov. 8, 2006) ("Where 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 reasonable range of approval, preliminary approval is granted.") (quoting In re Nasdaq Market–Makers Antitrust Litig ., No. 94 Civ. 3996(RWS), 1997 WL 805062, at *7 (S.D.N.Y. Dec. 31, 1997)) (internal quotation marks omitted).
Further, the Court appoints Plaintiffs' counsel to be Class Counsel and preliminarily approves Class Counsel's request for attorney's fees as set forth in the Settlement Agreement. See Damassia v. Duane Reade, Inc., 250 F.R.D. 152, 165 (S.D.N.Y.2008) ("In deciding whether counsel is 'adequate' to represent the class, a court must consider 'the work counsel has done in identifying or investigating potential claims in the action, ... counsel's experience in handling class actions, other complex litigation, and claims of the type asserted in the action, ... counsel's knowledge of the applicable law, and ... the resources counsel will commit to representing the class.' ") (quoting Fed.R.Civ.P. 23(g)); In re Herald, Primeo, & Thema Sec. Litig., 09 Civ. 289(RMB), 2011 WL 4351492, at *4 (S.D.N.Y. Sept. 15, 2011) ("At the preliminary approval stage, [c]ourts assess the reasonableness of attorneys' fees to protect class members from unfair settlements and require the party seeking such fees to explain to th[e] Court why ... a large percentage of the [s]ettlement [f]und should be given to the ... attorneys.") (internal quotation marks and citations omitted).
The Court is not prepared, however, to approve the proposed notice to potential class members and the proposed form for opting out of the settlement class in their current forms. Attached to this Order are a revised notice and opt-out form containing proposed edits made by the Court. (Should the parties desire "redlined" versions revealing the proposed edits, they may contact the Court to obtain them.) The parties shall have until Friday, August 3, 2012, to file any objections to the Court's proposed revisions to the notice and form.
III. Redaction of the Parties' Letters
Finally, the parties have submitted two letters to the Court, dated June 13, 2012, and July 2, 2012, regarding the proposed settlement and have requested that the letters be kept confidential because they address settlement of the named plaintiffs' retaliation claims, which are not subject to Court approval. The parties' request is supported by the interest in preserving the confidentiality of settlement discussions where settlement does not require Court approval. See, e.g., Gambale v. Deutsche Bank AG, 377 F.3d 133, 143 (2d Cir.2004) (explaining that "when the settlement documents were not filed with the court and were not the basis for the court's adjudication ... honoring the parties' express wish for confidentiality may facilitate settlement, which courts are bound to encourage"); cf. Wolinsky, 2012 WL 2700381, at *4 (holding that where court approval of a proposed settlement is required, the common law right of access to judicial documents often requires disclosure of the proposed settlement agreement).
The sealing of a judicial document, however, must be "narrowly tailored" to the interests justifying that sealing. Lugosch v. Pyramid Co. of Onondaga, 435 F.3d 110, 120 (2d Cir.2006). Here, in light of that principle, there is no basis to seal the parties' letters in their entirety. Accordingly, it is hereby ORDERED that, on or before August 3, 2012, the parties shall submit proposed redactions of the two letters to the Court for its consideration. The parties are directed to Rule 4(A) of the Court's Individual Rules and Practices in Civil Cases (available at http://nysd.uscourts.gov/judge/Furman) for guidance on how to submit proposed redactions for Court review.
For the reasons stated above, preliminary approval of the Settlement Agreement and conditional certification of the settlement class is hereby granted. Plaintiffs' counsel's motion to be appointed Class Counsel is also granted. The Court preliminarily approves Class Counsel's request for attorney's fees as set forth in the Settlement Agreement.
The parties shall have until Friday, August 3, 2012, to file (1) any objections to the Court's proposed revisions to the notice to potential class members and the form for opting out of the settlement class; and (2) proposed redactions of the letters dated June 13, 2012, and July 2, 2012. If the parties have no objections to the notice and opt out form as revised by the Court, the parties shall submit a proposed order to the Court consistent with the rulings set forth above by August 3, 2012. The parties shall submit the proposed order in .pdf format by e-mail to the Orders and Judgments Clerk and in Microsoft Word format by e-mail to the Court.
Finally, pursuant to Title 28, United States Code, Section 1715, and mindful that the proposed settlement has already been filed in this Court, Defendants are hereby ORDERED to provide notice to the appropriate State and Federal officials within ten (10) days of this order.