United States District Court, S.D. New York
CHANDRAKALLI SUKHNANDAN, FARHANA AKTER, TARA SINGH-PALTOO, AND SONIA BAILEY, on behalf of themselves, FLSA Collective Plaintiffs and the Class, Plaintiffs,
ROYAL HEALTH CARE OF LONG ISLAND LLC d/b/a ROYAL HEALTH CARE, Defendant.
OPINION AND ORDER
RONALD L. ELLIS, Magistrate Judge.
Plaintiffs Chandrakalli Sukhnandan, Farhana Akter, Tara Singh-Paltoo, and Sonia Bailey (collectively "The Named Plaintiffs'') worked as Marketing Representatives for Royal Health Care of Long Island, LLC d/b/a Royal Health Care ("Royal Health Care"). On May 29, 2012, Plaintiffs Sukhnandan, Akter, and Singh-Paltoo 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), on behalf of themselves and all similarly situated Marketing Representatives, claiming that Royal Health Care failed to pay them overtime wages to which they were entitled under the Fair Labor Standards Act ("FLSA") and New York Labor Law ("NYLL"). (Compl. ¶¶ 2, 41.) Plaintiffs Sukhnandan, Akter, and Singh-Paltoo amended the Complaint on September 19, 2012. The Amended Complaint added Sonia Bailey as a Named Plaintiff, and brought additional claims of unpaid overtime on behalf of Retention Representatives employed by Royal Health Care. In addition to unpaid wages, the Named Plaintiffs sought liquidated damages, pre-judgment interest and post-judgment interest, a declaratory judgment that the actions complained of are unlawful, equitable and injunctive relief: and costs and attorneys' fees. (Am. Compl. at 17-18.) On June 12, 2013, the Parties consented to conduct all proceedings before the undersigned. (Docket No. 183.)
Plaintiffs are employees of Royal Health Care, a health care technology and services company that operates in New York. (Arn. Compl. ¶ 2.) Before the Court is a motion for final approval of the class action settlement.
Having considered the Motion for Final Approval of Class Action Settlement, the supporting declarations, and the oral argument presented at the January 6, 2014 fairness hearing, and the complete record in this matter, for the foregoing reasons, and for good cause shown, NOW, THEREFORE, IT IS HEREBY ORDERED, ADJUDGED AND DECREED:
The Court certifies the following class under Federal Rule of Civil Procedure 23(a) and (b)(3), for settlement purposes (the "Rule 23 Class Members"):
(1) all individuals identified by Royal Health Care as employed by Royal Health Care in the Marketing Representative and/or Retention Representative positions between May 29, 2006, and May 17, 2013, who were employed for eight (8) or more work-weeks.
After exchanging document discovery to enable Plaintiffs to calculate damages and undertaking negotiations, the Parties reached a settlement totaling $1, 949, 000. Mem. of Law in Supp. of Pl.'s Mot. for Final Approval (Pl. Mem.) at 4. The Parties reached this settlement after Plaintiffs Sonia Bailey and Tara Singh-Paltoo appeared for depositions and after a full-day mediation with Ralph Berger on May 17, 2013. (Id.) At the mediation, the Parties reached an initial agreement on settlement. Id. In the following weeks, the parties negotiated the remaining terms of the settlement, which were memorialized in a formal Joint Settlement Agreement and Release ("Settlement Agreement") that was fully executed on August 1, 2013. Decl., Of Brian S. Schaffer In Supp. Of Pl. Mot. For Final Approval of Class Action Settlement ("Schaffer Decl., ") ¶ 26, Ex. A.
On September 3, 2013, this Court entered an Order preliminarily approving the settlement, preliminarily certifying the settlement class under New York Labor Law, conditionally certifying the settlement class under FLSA, preliminarily approving of Fitapelli & Schaffer, LLP, and Shulman Kessler, LLP, as class counsel, and authorizing notice to all Class Members. (Docket No. 190.)
On October 1, 2013, the claims administrator sent Court-approved notices to 409 Class Members informing them of their rights under the settlement, including the right to opt out of or object to the settlement for Class Members in New York, the state where Rule 23 claims were brought; the Plaintiffs' request for service awards in the total amount of $40, 000 to be paid to the Named Plaintiffs; and 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. Schaffer Decl., Ex. B ¶ 8, Ex. C. Notices were returned by the U.S. Postal service and the claims administrator was unable to find a successful forwarding address for four class members. Id. ¶¶ 10-12. The claims administrator sent Court-approved notices to two additional class members on November 20, 2013. Id. ¶ 13. No class members objected to or opted out of the settlement. Schaffer Decl., Ex. B ¶¶ 14, 15.
On December 18, 2013, Plaintiffs filed a Motion for Final Approval of Class Action Settlement ("Motion for Final Approval"). Defendants took no position with respect to the motion and did not object to the requests for attorneys' fees, costs, or service payments.
The Court held a fairness hearing on January 6, 2014. There were no objections at the hearing.
Plaintiffs meet all of the requirements for class certification under Federal Rule of Civil Procedure 23(a) and (b)(3). Plaintiffs satisfy Federal Rule of Civil Procedure 23(a)(l) because there are approximately 411 Rule 23 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."). The proposed class also satisfies Federal Rule of Civil Procedure 23(a)(2), the commonality requirement. The Named Plaintiffs and the Class Members share common issues of fact and law, including whether Defendants failed to pay overtime premiums in violation of federal and state wage and hour laws, and whether Defendants failed to keep accurate records of the hours the Named Plaintiffs and Class members worked. See Morris v. Affinity Health Plan, Inc., 859 F.Supp.2d 611, 615-16 (S.D.N.Y. 2012) (commonality satisfied where, among other allegations, plaintiffs claimed that defendant had a policy of not paying all class members overtime pay); Clark v. Ecolab Inc., No. 07cv8623 (PAC), 2010 WL 1948198, at *3 (S.D.N.Y. May 11, 2010) (common issues that help to satisfy Rule 23 commonality requirement include "whether [Defendant] failed to pay Plaintiffs and the state settlement Class Members overtime premium pay for all hours they worked over 40 in a workweek; and... whether [Defendant] maintained accurate time records of the hours Plaintiffs and the state settlement Class Members worked").
Plaintiffs satisfy Federal Rule of Civil Procedure 23(a)(3), typicality, because the Named Plaintiffs' claims arose from the same factual and legal circumstances that form the bases of the Class Members' claims. See Morris, 859 F.Supp.2d at 616. Plaintiffs also satisfy Federal Rule of Civil Procedure 23(a)(4) because there is no evidence that the Named Plaintiffs' and the Class Members' interests are at odds. Id. at 616; Johnson v. Brennan, No. 10cv4712 (CM), 2011 WL 4357376, at *5 (S.D.N.Y. Sept. 16, 2011).
In addition, Plaintiffs' counsel, Fitapelli & Schaffer and Shulman Kessler, will adequately represent the interests of the Class. Fed.R.Civ.P. 23(a)(4). See Girault v. Supersol 661 Amsterdam, LLC, No. 1 lcv6835 (PAE), 2012 WL 2458172, at *2 (S.D.N.Y. June 28, 2012) (referring to Fitapelli & Schaffer as "experienced and well-qualified employment lawyers and class action lawyers'" with "particular expertise in prosecuting and settling wage and hour class actions'") (quoting Matheson v. T-Bone Restaurant, LLC, et al., No. 09cv4214 (DAB), 2011 WL 6268216, at *3 (S.D.N.Y. Dec. 13, 2011)); Morris v. Affinity Health Plan, Inc., 859 F.Supp.2d 611, 616 (S.D.N.Y. 2012) (finding Shulman Kessler to have "substantial experience prosecuting and settling wage and hour actions"); 0 'Dell v. AMF Bowling Centers, Inc., No. 09cv759 (DLC), 2009 WL 6583142, at *2 (S.D.N.Y. Sept. 18, 2009) (describing Fitapelli & Schaffer as "experienced and well-qualified employment lawyers and class action lawyers"). Plaintiffs also satisfy Rule 23(b)(3). Plaintiffs' common factual allegations and a common legal theory that Defendants violated federal and state wage and hour laws by failing to pay overtime wages - predominate over any factual or legal variations among class members. See Torres v. Gristede's Corp., No 04cv13116, 2006 WL 2819730. at *16 (S.D.N.Y. Sept. 29, 2006) (plaintiffs "introduced sufficient proof that Defendants engaged in a common practice to deny employees overtime pay, " and "this issue predominates over any individual calculations of overtime wages").
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 Reyes v. Altamarea Grp., LLC, No. 10cv6451, 2011WL4599822, at *3 (S.D.N.Y. Aug. 16, 2011). The Named Plaintiffs and the 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, delay, and repetitive proceedings and by preventing inconsistent adjudications. See Hanlon v. Chrysler Corp., 150 F.3d 1011, 1023 (9th Cir. 1998) (class action against automobile company for defective latches superior when individual claims would burden judiciary and when high litigation costs relative to potential relief would disincentivize individual plaintiffs from bringing claims); see also Morris, 859 F.Supp.2d at 617; Damassia v. Duane Reade, Inc., 250 F.R.D. 152, 161, 164 (S.D.N.Y. 2008).
A. Approval of Settlement Agreement
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 USA Inc., 196 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).
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 In re EVCI Career Coils. Holding Corp. Sec. Litig., No. 05cvl0240 (CM), 2007 WL 2230177, at *4 (S.D.N.Y. July 27, 2007); Spann v. AOL Time Warner, Inc., No. 02cv8238 (DLC), 2005 WL 1330937, at *6 (S.D.N.Y. June 7, 2005).
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 (quoting Manual for Complex Litigation, Third, § 30.42 (1995)); 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 Calls. Holding Corp. Sec. Litig., 2007 WL 2230177, at *4; see also In re Top Tankers, Inc. Sec. Litig., No. 06cv13761 (CM), 2008 WL 2944620, at *3 (S.D.N.Y. July 31, 2008); In re BankAmerica Corp. Sec. Litig., 210 F.R.D. 694, 700 (E.D. Mo. 2002).
1. Procedural Fairness
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. Schaffer Decls. ¶¶ 17-19, 23, 27-28.
Because of the high number of opt-in Plaintiffs, discovery before the mediation was limited to a sample of 10 collective Class Members and the Named Plaintiffs ("the Sample Group"). Id. ¶ 18. Class Counsel reviewed hundreds of pages of documents from Class Members, including "pay stubs, compensation reports, compensation plans, offer letters, performance reviews, and job descriptions." Id. ¶ 7. Class Counsel examined Royal Health Care's records for the Sample Group including employee folders, performance reviews, and compensation records. Id. ¶ 21. Class Counsel also sought the assistance of an expert to conduct a search of the Sample Group's email accounts to find documents to support the Plaintiffs' claims. Id. ¶ 19. In addition, Class Counsel met with the Named Plaintiffs and opt-in Plaintiffs to discuss Royal Health Care's time keeping practices and compensation policies. Id. ¶ 22. Based on the pre-mediation discovery and meetings with Class Members, Plaintiffs were able to perform damages calculations and draft a mediation statement. Id. ¶ 23. The Parties attended a full-day mediation on May 17, 2013, before mediator Ralph Berger, Esq. Id. ¶ 24. The Parties came to a preliminary agreement on the material terms of the settlement at the mediation. Id. ¶ 26. The Parties' arm's-length settlement negotiations involved counsel and a professional mediator, raising a presumption that the settlement achieved meets the requirements of due process. See Wal-Mart Stores, 396 F.3d at 116; In re Penthouse Executive Club Comp. Litig., No. 10cvl145 (KMW), 2013 WL 1828598, at *2 (S.D.N.Y. Apr. 30, 2013) ("A settlement... reached with the help of third-party neutrals enjoys a presumption that the settlement achieved meets the requirements of due process.") (internal quotation marks and citation omitted); Reyes, 2011 WL 4599822, at *4.
In addition, courts encourage early settlement of class actions, when warranted, because early settlement allows class members to recover without unnecessary delay and allows the judicial system to focus resources elsewhere. See Hernandez v. Merrill Lynch & Co., Inc., No. l lcv8472 (KBF)(DCF), 2012 WL 5862749, at *2 (S.D.N.Y. Nov. 15, 2012) (endorsing early settlement of wage and hour class action); Castagna v. Madison Square Garden, L.P., No. 09cv10211 (LTS) (HP), 2011 WL 2208614, at *6 (S.D.N.Y. June 7, 2011) (commending plaintiffs' attorneys for negotiating early settlement); Diaz v. E. Locating Serv. Inc., No. 10cv4082 (JCF), 2010 WL 5507912, at *3 (S.D.N.Y. Nov. 29, 2010) (granting final approval of pre-suit class settlement in wage and hour case); In re Interpublic Sec. Litig., No. 02cv6527 (DLC), 2004 WL 2397190, at *12 (S.D.N.Y. Oct. 26, 2004) (early settlements should be encouraged when warranted by the circumstances of the case). The parties here acted responsibly in reaching an early pre-suit settlement. See Hernandez, 2012 WL 5862749, at *2; In re Interpublic Sec. Litig., 2004 WL 2397190, at* 12.
2. Substantive Fairness
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. 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 ofreasonableness of the settlement fund in light of ...