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Sanders v. CJS Solutions Group, LLC

United States District Court, S.D. New York

February 26, 2018

PATRICIA SANDERS, ANTHONY WILSON, JAIMEY GARRETT, and DANOIS ALLEN, on behalf of themselves and others similarly situated, Plaintiffs,


          Edgardo Ramos, U.S.D.J.

         On 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.

         I. Background and Procedural History

         The 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).

         HCI is 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. Id.

         Plaintiffs 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. ¶¶ 47-48.

         Plaintiffs 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. ¶¶ 160-62.

         After 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;[1] (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.

         II. Proposed Settlement Agreement

         The 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.

         The 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 ¶ 14(n).

         In its 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 Court.[2]

         First, 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 release).

         III. Conditional Certification of the Settlement Class ...

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