United States District Court, District of Columbia
JOSE ALVAREZ, et al. Plaintiffs,
KEYSTONE PLUS CONSTRUCTION CORPORATION, et al., Defendants. on behalf of themselves and all similarly situated individuals
KETANJI BROWN JACKSON, District Judge.
Plaintiffs Jose Alvarez and Juan Jose Alvarez ("Plaintiffs") have sued Defendants Keystone Plus Construction Corporation ("Keystone") and its owner Carlos Perdomo (together, "Defendants"), on behalf of themselves and similarly situated individuals, claiming that the company's policies with respect to compensation for overtime work performed in connection with a specific construction project violated the Fair Labor Standards Act, 29 U.S.C. § 201-19; the District of Columbia Minimum Wage Revision Act, D.C. Code § 31-1001-15; and the District of Columbia Wage Payment and Collection Law, D.C. Code § 32-1301-310. This matter is now before the Court on the parties' Joint Motion for Final Approval of the Settlement of this putative class action. (Joint Motion for Final Approval of Settlement ("Final Approval Mot."), ECF No. 16.) Upon consideration of the parties' submissions, the arguments and representations made at the preliminary and final fairness hearings, the relevant statutes, case law, and the entire record, the Court will GRANT the parties' motion for final approval. A separate Order consistent with this Memorandum Opinion will issue.
A. Alleged Facts and Procedural History
This case stems from a complaint Plaintiffs filed that alleges that the named plaintiffs and others similarly situated were denied overtime pay while performing construction work on Defendants' "LK Downing" construction project, from approximately June of 2012 to September of 2012. (Complaint ("Compl."), ECF No. 1, ¶ 13.) Plaintiffs allege that, rather than paying its workers time-and-a-half when they worked over 40 hours, Keystone would send them pay stubs indicating that they had worked 40 hours only, and that they were being credited with additional payments for "tools, " which had a per unit cost equal to the Plaintiffs regular per hour rate. ( Id. ¶¶ 16-21.) For example, if a Keystone employee whose regular wage was $25/hour worked 10 overtime hours in a week, his paystub for that week would include a line item for ten units of "tools" at a per unit cost of $25 each, although none of the employees had purchased any tools on behalf of Defendants. ( Id. ¶¶ 21-22.) Plaintiffs allege that, in this way, Defendants substituted these "tools" payments for Plaintiffs' hourly wages on their overtime hours, and thereby avoided paying them time-and-a-half for those hours as required by federal and D.C. law. ( Id. ¶¶ 20-23.) According to the complaint, this scheme had the effect of denying the workers overtime pay in violation of state and federal law. ( Id. ¶ 1.)
Plaintiffs filed their complaint on April 30, 2013. On July 17, 2013, after the Court had granted one motion for an extension of time to respond to the complaint, the parties filed a notice of settlement and requested additional time in order to finalize the details of the settlement. (Joint Notice of Settlement, ECF No. 7.) The parties subsequently filed two status reports, on August 29, 2013, and September 18, 2013, notifying the Court that settlement negotiations were ongoing, and that they expected to finalize a settlement agreement and submit it for the Court's approval by the first week of October. ( See Joint Status Reports, ECF Nos. 8, 10.) On September 27, 2013, the parties filed a joint motion for preliminary approval of the settlement, as well as for class certification, appointment of class counsel, and approval of the manner of notice to the class. (Joint Mot. for Prelim. Approval of Settlement ("First Approval Mot."), ECF No. 11.) The parties attached the proposed settlement agreement to this motion. ( See First Settlement Agreement, Ex. A to First Approval Mot., ECF No. 11-1.) The Court then held a motion hearing on the motion for preliminary approval on December 6, 2013. At the hearing, the Court noted certain concerns that it had with the settlement agreement as it had been submitted, including and in particular, concerns regarding the agreement's language relating to the scope of the release.
On December 17, 2013, the parties submitted a second Motion for Preliminary Approval of Settlement (ECF No. 13), which attached a revised version of the settlement agreement that addressed the Court's concerns. ( See Revised Settlement Agreement ("Settlement Agreement"), Ex. A to Second Approval Mot., ECF No. 13-1.) The Court granted this motion on December 23, 2013, allowing notice to be provided to a class defined as: "[A]ll non-exempt employees who worked more than forty hours in a workweek on the Defendants' LK Downing' Project between June 1, 2012[, ] and October 30, 2012." (Order Certifying Settlement Class and Preliminarily Approving Settlement ("Preliminary Approval Order"), ECF No. 14.)
B. Terms Of The Settlement And Notice To The Class
Based on informal discovery conducted during their settlement negotiations, the parties created a comprehensive list of 47 individuals who, based on the company's employment and payroll records, had been identified as members of the class. (Settlement Agreement at 14-15.) The Settlement Agreement provides for a monetary payment to each of these class members consisting of 1.37 times the amount owed for overtime during the relevant period, for a total of $51, 018.45 in payments to the 47 class members. ( Id. at 5, 15.) The individual payments that are to be made to each class member under the settlement agreement are structured for tax purposes as half wages owed and half liquidated damages. ( Id. at 8.) In addition, the Settlement Agreement provides that the two named plaintiffs shall each receive a $500 incentive payment, and Class Counsel shall receive $14, 000 in costs and attorney's fees. ( Id. at 6.)
In its December 23, 2013, order preliminarily approving the Settlement Agreement, the Court preliminarily approved the payment amount and structure set forth in the parties' Settlement Agreement, and provisionally certified the class for the purpose of providing notice to the putative class members. The Court also approved the parties' proposed form and manner of notice to the class. (Prelim. Approval Order ¶¶ 6-13.) The notice provisions of the Order stipulated that Defendants must send a "Notice of Class Action Lawsuit and Proposed Settlement" to the last known address of each putative class member by first-class mail within ten days of the preliminary approval of the settlement. ( Id. ¶ 6.) This notice form itself provided a clear and concise explanation of the basis of the lawsuit and of the putative class members' rights with respect to the suit, including the right to opt out of the lawsuit altogether and the right to object to the specifics of the settlement, as well as the procedure for lodging such objection. The notice form sent to each class member also included a statement of the amount of money each member was entitled to under the terms of the settlement. ( See Notice Form, Ex. B to Settlement Agreement, ECF No. 13-2.) Additionally, the notice form clearly explained the scope of the rights that the putative class members were releasing if they chose to remain in the class ( i.e., if they did not opt out) and accepted the payments they were due under the terms of the settlement. ( Id. at 6-8.)
In its order, the Court also endorsed the detailed procedure set forth in that agreement regarding the process to be followed if any of the putative class members could not be located for notice and/or payment purposes. Specifically, 50 days after the settlement checks are to be mailed, Defendants are required to provide Class Counsel with a list of any checks that have been returned or that have not been cashed. (Settlement Agreement at 10.) Defendants must repeat this procedure after 100 days. ( Id. ) If any checks remain uncashed at that point, Class Counsel will have the opportunity to file a motion with the Court requesting that the remaining funds be paid to an appropriate cy pres recipient. ( Id. at 9-10.)
Finally, the Preliminary Approval Order also directed Class Counsel to file a sworn statement within fifty days of the issuance of that order listing all individuals who had opted out of the class or objected to the settlement. (Preliminary Approval Order ¶ 10.) On February 10, 2014, Class Counsel submitted an affidavit in accordance with this directive, attesting that no class member had chosen to opt out and that no class member had lodged any objection to the settlement. (Zelikovitz Aff., ECF No. 15.)
C. Joint Motion For Final Approval and Fairness Hearing
On February 21, 2014, the parties filed a joint motion for final approval of the settlement. (Final Approval Mot., ECF No. 16.) As required by Federal Rule of Civil Procedure 23(e), on March 18, 2014, the Court held a fairness hearing at which counsel for all parties were present. At that hearing, counsel for both parties represented to the Court that notices had been issued and delivered successfully to nearly all of the class members; that neither Class Counsel nor Defense Counsel was aware of any objection to the settlement; and that the named plaintiffs and other class members that Class Counsel had spoken with had no complaints about the settlement. No objectors appeared at the fairness hearing.
II. LEGAL STANDARDS
In its Preliminary Approval Order, the Court granted both provisional class certification for the purpose of providing notice of the proposed settlement to the putative class members, and preliminary approval for the settlement, pending a fairness hearing in accordance with Rule 23(e). Accordingly, this Opinion addresses both final certification of the class for settlement purposes and approval of the settlement itself.
A. Class Certification
Classes certified for settlement purposes only are a hallmark of class action litigation. See, e.g., Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 618 (1997) (noting that the settlement-only class has "become a stock device"); Cohen v. Chilcott, 522 F.Supp.2d 105, 113 (D.D.C. 2007). When presented with a settlement-only class, a court must determine whether the proposed class satisfies the requirements of Federal Rule of Civil Procedure 23, with one exception: the court does not need to consider whether "the case, if tried, would present intractable management problems, " as it otherwise would have to determine when ruling on class certification under Rule 23(b)(3)(D). Amchem, 521 U.S. at 620; see also Thomas v. Albright, 139 F.3d 227, 234 (D.C. Cir. 1998).
Under Rule 23(a), there are four prerequisites to class certification: "(1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class." Fed.R.Civ.P. 23(a). These requirements are generally referred to as "numerosity, commonality, typicality, and adequacy of representation." Chilcott, 522 F.Supp.2d at 113. In addition, in order for the class to be certified, it must also satisfy at least one of three sets of criteria set forth in Rule 23(b). Here, the parties seek to have the Court certify the class under Rule 23(b)(3). That Rule requires the Court to find that "the questions of law or fact common to class members predominate over any questions affecting only individual members, ...