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Stephens v. Farmers Restaurant Group

United States District Court, District of Columbia

February 15, 2019

SHAYN STEPHENS et al., Plaintiffs,



         Plaintiffs in this action, who worked at several restaurants operated by Defendants in Virginia, Maryland, and the District of Columbia, bring claims under the Fair Labor Standards Act (FLSA) and District of Columbia and Maryland law, alleging Defendants failed to comply with federal and state minimum-wage, overtime-pay, and sick-leave requirements. The parties have reached a potential settlement agreement resolving all claims, and they now seek preliminary approval of that agreement from the Court. As such, before the Court is Plaintiffs' Consent Motion for Certification of the Rule 23 Class Action for Settlement Purposes, Approval of Notices, and Preliminary Approval of the Settlement Agreement. ECF No. 56. For the reasons explained below, the motion will be granted.

         I. Background

         A. Factual and Procedural History

         Farmers Restaurant Group and co-owners Daniel Simon and Michael Vucurevich (collectively, “Defendants”) operate five restaurants in Virginia, Maryland, and the District of Columbia. ECF No. 5 (“Am. Compl.”) ¶¶ 8-9. On June 7, 2017, six then-current and former employees of Defendants commenced this action, alleging Defendants violated various federal and state labor laws. Plaintiffs' complaint, as amended, brings claims under the FLSA, the District of Columbia Minimum Wage Act (DCMWA), D.C. Code § 32-1001 et seq., the District of Columbia Sick Leave Act (DCSLA), Id. § 32-131, the Maryland Wage and Hour Law (MWHL), Md. Code Ann., Lab. & Empl. § 3-401 et seq., and the Maryland Wage Payment and Collection Law (MWPCL), Id. § 3-501 et seq. See Am. Compl. ¶¶ 45-101.

         On July 31, 2017, Plaintiffs filed a motion seeking conditional certification of a collective action for their FLSA, DCMWA, and DCSLA claims. ECF No. 13. Defendants opposed certification, ECF No. 22, and they also filed a motion for partial judgment on the pleadings, ECF No. 23. The Court granted Plaintiffs' motion on January 31, 2018, conditionally certifying Plaintiffs' proposed collective action and establishing three subclasses for District of Columbia, Maryland, and Virginia employees. See Stephens v. Farmers Rest. Grp., 291 F.Supp.3d 95 (D.D.C. 2018). Upon the Court's approval, Plaintiffs' counsel sent putative members of the collective action a notice of lawsuit, see ECF Nos. 34, 35, advising those individuals that they must provide written consent or “opt in” to the collective action, no later than April 28, 2018, in order to participate as a member of the collective action. According to Plaintiffs' counsel, a total of 119 individuals opted in to the collective action. See ECF No. 56-5 (“Elkin Decl.”) ¶ 13.

         On March 9, 2018, Plaintiffs sought certification of two classes covering their District of Columbia and Maryland state-law claims pursuant to Federal Rule of Civil Procedure 23. See ECF No. 36. During the course of discovery, however, the parties decided to enter mediation. Elkin Decl. ¶ 15. And on May 21, 2018, the Court referred the matter to the Court's mediation program. On July 24, 2018, the parties submitted a joint status report indicating that they had reached a potential settlement agreement and that they intended to submit that agreement to the Court for preliminary approval. ECF No. 55. Accordingly, the Court denied Plaintiffs' motion for class certification and Defendants' motion for partial judgment on the pleadings without prejudice in anticipation of the parties' request for preliminary approval of their proposed settlement.

         On August 21, 2018, Plaintiffs filed the instant consent motion. ECF No. 56. The motion requests that the Court (1) certify the proposed Rule 23 classes for settlement purposes; (2) preliminarily approve the proposed settlement agreement; (3) approve the proposed notices to class members of the settlement; (4) approve their proposed class representatives; (5) appoint Rust Consulting as the administrator of the settlement; and (6) appoint Molly Elkin, counsel for Plaintiffs, as class counsel. Id.

         On November 6, 2018, the Court ordered supplemental briefing from the parties. See ECF No. 58. Specifically, the Court asked the parties to address whether the proposed class representatives adequately represented the absent Rule 23 class members during the settlement discussions, whether the proposed settlement sum and distribution of that sum reflect a fair resolution of Plaintiffs' claims against Defendants, and whether, as the settlement agreement contemplates, the absent Rule 23 class members who had not affirmatively opted in to the collective action can nonetheless be required to waive their FLSA claims if they do not affirmatively opt out of the Rule 23 settlement. The parties submitted their joint response addressing those questions on December 3, 2018. ECF No. 59 (“Supp. Memo.”).

         B. The Settlement Terms

         The parties have submitted a proposed settlement agreement, ECF No. 56-2 (“Agreement”), the pertinent terms of which are summarized below.

         The two putative Rule 23 settlement classes, under Maryland and District of Columbia law, respectively, will consist of 862 current and former servers who worked in one of Defendants' restaurants in either Maryland or the District of Columbia between June 7, 2014, and July 20, 2018. Agreement ¶ 1.2. The classes will also include those 119 individuals who have already opted in to the collective action, with the exception of those individuals who only worked in Defendants' Virginia locations.[1] Id.

         Within five business days of certification of the Rule 23 classes and preliminary approval of the Agreement, a notice will be sent to all 862 putative class members describing the terms of the Agreement and their various rights and obligations. Id. ¶ 5.1; ECF No. 59-5 (“Am. R. 23 Notice”). Putative Rule 23 class members will have 45 days from the date the notices are mailed to opt out of the class action settlement. Agreement ¶ 5.3. A separate notice of settlement will be sent to those 119 individuals who opted in to the collective action. Id. ¶ 5.1; ECF No. 56-3 (“FLSA Notice”).

         Defendants have agreed to deposit a total of $1, 490, 000 in a settlement fund to be distributed as described herein. Agreement ¶ 9.3. Class counsel will receive an award of $388, 484 in attorney's fees and $8, 516 for litigation expenses, and the settlement administrator will be paid in an amount not to exceed $35, 000 for its services. Agreement ¶¶ 10.3, 10.4. Each of the seven named plaintiffs, as representatives of the collective action and Rule 23 classes, will receive a service award of $5, 000. Id. ¶ 10.5. The 119 individuals who opted in to the collective action will receive a total of $498, 715, to be distributed to each individual based on the total number of weeks that he or she worked as a server during the applicable time period. Id. ¶¶ 10.6-.7. The remaining $524, 285 will be allocated to the 862 putative Rule 23 class members and distributed to each individual who timely submits a claim form. Id. ¶¶ 10.6, 10.8. No individual who opted in to the collective action will recover from this amount. Id. ¶ 1.2. And any unclaimed portion of the amount allocated to the Rule 23 class members will revert to Defendants. Id. ¶ 12.3.

         Following preliminary approval of the settlement, and in accordance with Federal Rule of Civil Procedure 23(e)(2), the Court will conduct a fairness hearing to determine whether to finally approve the settlement agreement. Members of the collective action or the Rule 23 classes may submit written objections to the proposed settlement and present objections orally at the hearing. Id. ¶¶ 7.1, 7.2.

         II. Legal Standard

         Whether to preliminarily approve a proposed class action settlement lies within the sound discretion of the district court. See Richardson v. L 'Oréal USA, Inc., 951 F.Supp.2d 104, 106 (D.D.C. 2013). When the parties are “seeking class certification and settlement at the same time, however, ” the agreement requires “‘closer judicial scrutiny' than settlements that are reached after class certification.” Trombley v. Nat 'l City Bank, 759 F.Supp.2d 20, 23 (D.D.C. 2011) (quoting Manual for Complex Litigation (Fourth) § 21.612 (2004)). Courts “will generally grant preliminary approval of a class action settlement if it appears to fall ‘within the range of possible approval' and ‘does not disclose grounds to doubt its fairness or other obvious deficiencies.'” Richardson, 951 F.Supp.2d at 106 (quoting Trombley, 759 F.Supp.2d at 23).

         III. Analysis

         The Court's analysis will proceed in three parts. First, the Court will determine whether to provisionally certify the proposed Rule 23 classes for settlement purposes. Second, the Court will address whether to preliminarily approve the proposed settlement agreement. Third, the Court will outline further proceedings, including the distribution of notices and the scheduling of a fairness hearing.

         A. Provisional Class Certification

         Parties seeking class certification must demonstrate that they meet the prerequisites of Rule 23(a) and fall within one of the categories described in Rule 23(b). See Amchem Products, Inc. v. Windsor, 521 U.S. 591, 613-14 (1997). “Rule 23(a) states four threshold requirements applicable to all class actions: (1) numerosity (a ‘class [so large] that joinder of all members is impracticable'); (2) commonality (‘questions of law or fact common to the class'); (3) typicality (named parties' claims or defenses ‘are typical . . . of the class'); and (4) adequacy of representation (representatives ‘will fairly and adequately protect the interests of the class').” Id. at 613 (alteration in original) (quoting Fed.R.Civ.P. 23(a)). And under Rule 23(b)(3), by which the parties seek certification, “they must demonstrate (1) predominance of common questions of law and fact to the entire class, and (2) superiority of the class action method to other methods of adjudication for the controversy.” Trombley, 826 F.Supp.2d at 193.

         1. Rule 23(a)

         a. Numerosity

         “Courts in this District have generally found that the numerosity requirement is satisfied and that joinder is impracticable where a proposed class has at least forty members.” Cohen v. Warner Chilcott Pub. Ltd. Co., 522 F.Supp.2d 105, 114 (D.D.C. 2007). The parties represent that there are 962 Rule 23 class members, including the 119 who have opted in to the collective action and who worked in either Maryland or the District of Columbia, with 272 individuals in the Maryland class and 690 individuals in the District of Columbia class. See ECF No. 56-1 (“Memo.”) at 25; Agreement, Exs. 1, 2. The Court therefore has no trouble concluding that the proposed classes satisfy the numerosity requirement.

         b. Commonality

         “To establish commonality under Rule 23(a)(2), a plaintiff must identify at least one question common to all members of the class.” Garcia v. Johanns,444 F.3d 625, 631 (D.C. Cir. 2006). “Indeed, factual variations among the class members will not defeat the commonality requirement, so long as a single aspect or feature of the claim is common to all proposed class members.” Bynum v. District of Columbia,214 F.R.D. 27, 33 (D.D.C. 2003). As the parties note, “all of the putative class members in both Rule 23 classes are or were Servers who, according to Plaintiffs, were subject to the same work policies and practices” underlying this lawsuit. Memo. at 26. Namely, according to Plaintiffs, class members “had the same job duties and responsibilities, had to buy clothing that the Servers assert were uniforms, had to buy ‘tools of the trade,' were required to engage in side work, were mandated to contribute to tip pools that they say were invalid, had to perform pre-shift work while off the clock, were subject to the same pay and time keeping ...

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