United States District Court, S.D. New York
PATRICIA SANDERS, ANTHONY WILSON, JAIMEY GARRETT, and DANOIS ALLEN, on behalf of themselves and others similarly situated, Plaintiffs,
THE CJS SOLUTIONS GROUP, LLC d/b/a THE HCI GROUP, Defendant.
OPINION AND ORDER
Edgardo Ramos, U.S.D.J.
January 16, 2018, Plaintiffs submitted an unopposed motion
for preliminary approval of the settlement agreement. Doc.
93. On January 29, 2018, this Court denied Plaintiffs'
motion without prejudice to refile an amended settlement
agreement addressing the Court's concerns. Doc. 95. On
February 18, 2018, Plaintiffs filed an amended unopposed
motion for preliminary approval of the settlement agreement
(“Am. Settlement Mot.”). Doc. 97. For the reasons
stated herein, that motion is GRANTED.
Background and Procedural History
Court assumes familiarity with the record and its prior
opinion, which details the facts and procedural history of
this case, and discusses here only those facts necessary for
its disposition of the instant motion. See Order
dated January 29, 2018 (Doc. 95).
a healthcare information technology firm that provides
training and support to medical facilities in connection with
their transition to new electronic recordkeeping systems.
First Amended Complaint (“FAC”) (Doc. 92) ¶
18. Named Plaintiffs Patricia Sanders
(“Sanders”), Anthony Wilson
(“Wilson”), Jaimey Garrett
(“Garrett”), and Danois Allen
(“Allen”) worked as consultants for HCI at
various times between 2014 and 2017. Id.
¶¶ 4-7. Plaintiffs worked for HCI in New York,
North Carolina, Maryland, Washington, and Rhode Island.
were classified by HCI as “independent contractors,
” but allege that they were actually employees.
Id. ¶ 25. They also allege that they were
“regularly” required to work twelve hour shifts
for seven days a week while consulting for HCI. Id.
¶ 44. However, HCI paid them on an hourly basis for the
hours they worked and did not use an overtime rate for hours
worked beyond a forty hour workweek. Id.
bring nine causes of action against Defendant. First,
Plaintiffs, on behalf of a proposed Fair Labor Standards Act
(“FLSA”) collective action, allege that Defendant
failed to pay overtime in violation of the FLSA. Id.
¶¶ 96-100. Second, Plaintiffs, on behalf of a
nationwide class, allege that Defendant was unjustly enriched
by retaining the benefits of Plaintiffs' labor without
paying overtime. Id. ¶¶ 103-04. Third,
Plaintiffs Sanders and Wilson, on behalf of consultants who
worked in New York, allege violations of New York Labor Law.
Id. ¶¶ 116-18. Additionally, Plaintiff
Garrett, on behalf of consultants who worked in the state of
Washington, brings five claims under Washington law:
violations of the Washington Minimum Wage Act, Id.
¶¶ 121, 126-28, failure to pay for rest breaks,
Id. ¶¶ 133-37, failure to provide meal
periods, Id. ¶¶ 143-47, unpaid wages on
termination, Id. ¶¶ 150-51, and willful
refusal to pay wages, Id. ¶¶ 154-56.
Finally, Plaintiff Allen, on behalf of consultants who worked
in North Carolina, brings a claim for violation of North
Carolina wage and hour laws. Id. ¶¶
engaging in settlement negotiations with mediator Ruth D.
Raisfield, the parties reached an agreement and submitted a
proposed settlement to the Court on January 16, 2018. On
January 29, 2018, the Court denied that motion, finding that
it did not have probable cause to hold a full-scale hearing
as to the fairness of the agreement. See Order dated January
29 (Doc. 95) at 7. Plaintiffs have now submitted an amended
agreement (the “Amended Settlement Agreement”)
and request that the Court: (1) grant preliminary approval of
the Amended Settlement Agreement; (2) conditionally certify
the proposed settlement class under Rule 23 of the Federal
Rules of Civil Procedure and the proposed collective action
under § 216(b) of the FLSA; (3) preliminarily approve
the Named Plaintiffs as the settlement class representatives;
(4) appoint Berger & Montague, P.C., Lichten &
Liss-Riordan, P.C., and Blanchard & Walker PLLC as class
counsel; (5) preliminarily appoint JND Legal Administration
as Settlement Administrator and preliminarily approve the
costs of claims administration; and (6) approve the
Settlement Notice and Claim Forms and the schedule for final
approval of the settlement agreement. Doc. 97.
Proposed Settlement Agreement
approval of a proposed class action settlement is a matter of
discretion for the trial court. Maywalt v. Parker &
Parsley Petroleum Co., 67 F.3d 1072, 1079 (2d Cir.
1995). Preliminary approval of a settlement agreement
requires only an “initial evaluation” of the
fairness of the proposed settlement on the basis of written
submissions and an informal presentation by the settling
parties. Herbert B. Newberg & Alba Conte, Newberg on
Class Actions (“Newberg”) § 13.10
n.7.50 (5th ed. 2017). The fairness of a settlement turns on
its terms as well as the negotiating process from which it
emerged. Wal-Mart Stores, Inc. v. Visa U.S.A., Inc.,
396 F.3d 96, 116 (2d Cir. 2005) (citing D'Amato v.
Deutsche Bank, 236 F.3d 78, 85 (2d Cir. 2001)). To grant
preliminary approval, the Court need only find that there is
“‘probable cause' to submit the [settlement]
to class members and hold a full-scale hearing as to its
fairness.” In re Traffic Executive
Ass'n-Eastern R.R., 627 F.2d 631, 634 (2d Cir.
1980). If, after a preliminary evaluation of the proposed
settlement, the Court finds that it “appears to fall
within the range of possible approval, ” the Court
should order that the class members receive notice of the
settlement. See Newberg § 13.10 n.10.
Settlement Agreement reached by the parties provides that
Defendants will pay a non-reversionary sum of $3, 240,
000.000 (the “Gross Settlement Amount”) “in
exchange for the release of the Settling Class Members'
Released Claims.” See Am. Settlement Agreement
January 29th Order, the Court identified two
problems with the Settlement Agreement that precluded
preliminary approval. First, the general and nonmutual
releases binding on the Named Plaintiffs “far
exceed[ed] the scope of the FLSA.” Order dated January
29, 2018 (Doc. 95) at 8. Second, the parties did not
articulate “the range of possible recovery” for
Plaintiffs. Id. The parties have resolved both of
these issues in the Amended Settlement Agreement before the
the parties have now consented to a release that is still
non-mutual, but releases only those complaints “that
were or could have been asserted” in this action
against HCI. See Am. Settlement Agreement ¶ 17. This
falls well within the scope of permissible releases under
Cheeks v. Freeport Pancake House, Inc., 796 F.3d
199, 206 (2d Cir. 2015). Second, Plaintiffs have explained
that, based on HCI's production of a spreadsheet showing
the hours worked by potential class members, Plaintiffs could
expect to recover $3, 455, 803.50 if completely successful.
See Declaration of Sarah R. Schalman-Bergen in Support of
Plaintiffs' Renewed Motion for Preliminary Settlement
Approval (“Schalman-Bergen Decl.”) (Doc. 97-3)
¶¶ 17-18. Here, Defendants have agreed to pay $3,
240, 000.00 to settle Plaintiffs' claims. Am. Settlement
Agreement ¶ 14(n). Although the Amended Settlement
Agreement provides for a slightly lower recovery, pursuing
litigation would also bring considerable risk and delay
recovery. See Schalman-Bergen Decl. ¶¶ 14-16
(describing the work required to continue pursuing
litigation). Further, the settlement was negotiated for at
arm's length with the assistance of an independent
mediator, which reinforces the non-collusive nature of the
settlement. See O'Dell v. AMF Bowling Ctrs.,
Inc., No. 09 Civ. 759 (DLC), 2009 WL 6583142, at *1
(S.D.N.Y. Sept. 18, 2009). The Court is therefore persuaded
that the settlement amount is reasonable in light of the
Plaintiffs' range of recovery, and should be submitted
for a full-scale hearing on its fairness. See also Santos
v. El Tepeyac Butcher Shop Inc., No. 15 Civ. 814 (RA),
2015 WL 9077172, at *1 (S.D.N.Y. Dec. 15, 2015) (finding a
settlement reasonable in light of the litigation risk and the
existence of arm's-length negotiations between the
parties but denying preliminary approval due to an overbroad
Conditional Certification of the Settlement Class ...