Altnor v. Preferred Freezer Servs., Inc.

197 F.Supp.3d 746

Edwin ALTNOR, et al., Plaintiffs,

v.PREFERRED FREEZER SERVICES, INC., Defendant.

CIVIL ACTION No. 14-7043

United States District Court, E.D. Pennsylvania.

Signed July 18, 2016

David J. Cohen, Stephan Zouras LLP, Philadelphia, PA, Ryan F. Stephan, Stephan Zouras LLP, Chicago, IL, for Plaintiffs.

Karl A. Fritton, Michael D. Jones, Reed Smith LLP, Philadelphia, PA, Richard L. Etter, Reed Smith LLP, Pittsburgh, PA, for Defendant.

MEMORANDUM

EDUARDO C. ROBRENO, District Judge.

Table of Contents

I. BACKGROUND...752

II. THE PROPOSED SETTLEMENT AGREEMENT...754

A. The Proposed Settlement Class and Collective...754

B. The Proposed Settlement Agreement's Terms...754

III. DISCUSSION...755

A. State Law Class Certification under Rule 23...756

1. Rule 23(a) Criteria...756

2. Rule 23(b) Criteria...757

B. FLSA Collective Certification...758

C. The Fairness of the Proposed Settlement...760

1. Class Action Settlement...760

2. Collective Action Settlement...763

D. Attorneys' Fees...764

E. Incentive Award...769

IV. CONCLUSION...772

Plaintiffs Edwin Altnor and Christina Oyola ("Named Plaintiffs"), on behalf of a putative class, and Defendant Preferred Freezer Services, Inc. ("Defendant") have negotiated and agreed to a collective and class settlement that will resolve Plaintiffs' claims under the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. ("FLSA"); the Pennsylvania Minimum Wage Act, 43 Pa. Cons. Stat. § 333.101 et seq. ("MWA"); and the Pennsylvania Wage Payment and Collection Law, 43 Pa. Cons. Stat. § 260.1 et seq. ("WPCL").

The Court previously granted Plaintiffs' unopposed motion for preliminary approval, and Plaintiffs now seek final approval of the class and collective action settlement. For the reasons that follow, the Court will grant in part and deny in part the motion for final approval.

I. BACKGROUND

The Named Plaintiffs are former employees of Defendant, a refrigerated warehouse company. On December 11, 2014, the Named Plaintiffs filed a Class/Collective Action Complaint against Defendant, alleging that Defendant failed to pay overtime wages for missed and shortened meal breaks as required under the FLSA and Pennsylvania state wage and hour laws. ECF No. 1. Plaintiffs brought their FLSA claim as a collective action on behalf of Defendant's full-time hourly employees throughout the United States, id.¶ 17, and their state law claims as a class action on behalf of Defendant's hourly employees in Pennsylvania, id.¶ 21.

According to the Complaint, Named Plaintiff Edwin Altnor worked as an hourly-paid crane operator and inventory clerk at Defendant's South Philadelphia warehouse from May 2010 to December 2013. Id.¶ 6. He earned a straight-time wage of approximately $14.50 per hour. Id. Defendant regularly scheduled Altnor to work five days per week from 2:30 p.m. to 11:00 p.m., with one unpaid, thirty-minute meal break per shift. Id. Altnor often worked during part of his unpaid meal breaks due to business demands. Id. He alleges that he did not receive overtime pay from Defendant for his work during meal breaks. Id.

Named Plaintiff Christina Oyola worked as an hourly-paid receiving clerk at the same warehouse from October 2013 to August 2014. Id.¶ 7. She earned a straight-time wage of approximately $15.00 per hour. Id. Defendant regularly scheduled Oyola to work five days per week from 5:30 a.m. to 2:00 p.m., with one unpaid, thirty-minute meal break per shift. Id. Oyola often worked during part of her unpaid meal breaks due to business demands. Id. She alleges that she did not receive overtime pay from Defendant for her work during meal breaks. Id.

On January 9, 2015, Defendant filed an Answer that generally denied Plaintiffs' allegations. ECF No. 2. After an initial pretrial conference, this Court referred the matter to Magistrate Judge Thomas J. Rueter for settlement purposes, ECF No. 10. The parties participated in a mediation session with Judge Rueter on October 8, 2015, ECF No. 16, which culminated in an agreement on October 29, 2015, to settle the litigation for $175,000, ECF No. 17.

Thereafter, the parties confirmed the agreement's essential terms, identified the class members, determined the ranges of values for individual damage payments, and prepared a Joint Stipulation of Settlement. ECF No. 18-3.

On January 11, 2016, Plaintiffs filed an unopposed motion for preliminary approval of the proposed settlement agreement; conditional certification of the FLSA collective action; preliminary certification of the state law settlement class; appointment of class representatives and class counsel; and approval of a class notice plan. ECF No. 18.

The Court granted Plaintiffs' motion for preliminary and conditional approval of the proposed settlement agreement. ECF No. 19. In granting preliminary approval, however, the Court underscored that its decision to certify the class/collective and approve the settlement agreement was just that: preliminary. The Court articulated specific areas of concern for the parties to address at the final fairness hearing stage. Id. at 1 n.1. The Court further explained that the request for final approval must be supported by way of witnesses at the hearing, affidavits, and/or documentation by persons with knowledge of the requisite information, so that the Court could properly discharge its duty of judicial review. Id.

Following preliminary approval, the notice and claim forms were sent to the class members. Cohen Decl. ¶¶ 14, 16-20, ECF No. 21-5. Plaintiffs did not receive any objections, exclusion requests as to the state law class, or written communications from the putative class members. Id. at ¶ 19. Plaintiffs received twenty-four timely requests to participate in the FLSA settlement collective, which results in an FLSA settlement collective of twenty-six members when including two Named Plaintiffs. Id. at ¶ 20.

On April 25, 2016, Plaintiffs filed an unopposed motion for final approval of the settlement agreement. ECF No. 21. Plaintiffs also filed a supplemental memorandum of law in support of the Named Plaintiffs' proposed incentive award and the requested attorneys' fees, which are also unopposed. ECF No. 22. After a final fairness hearing with counsel for the parties on May 25, 2016, ECF No. 25, the motion for final approval is now ripe for disposition.

II. THE PROPOSED SETTLEMENT AGREEMENT

The terms of the proposed settlement agreement are set forth in the Joint Stipulation of Settlement ("Settlement" or "Settlement Agreement"), ECF No. 21-3, and are outlined below.

A. The Proposed Settlement Class and Collective

The Settlement Agreement sets forth the following state law settlement class:

[A]ll Pennsylvania residents whom Defendant has employed in the following positions since December 1, 2011 who d[id] not submit a timely, valid request to opt-out of the settlement as provided in the Class Notice: belt checker, cleco operator, customer service staff, cycle count clerk, inbound checker, inventory control clerk, inventory lead, maintenance, maintenance helper, order picker, outbound checker, receiving checker, receiving clerk, receiving/shipping assistant, runner, shipping clerk, shipping/receiving checker, switch operator, turret/cleco operator, USDA insp./checker, USDA inspections, or warehouse worker.

Id. at ¶ 20.

The Settlement Agreement sets forth the following "FLSA Settlement Collective":

All individuals whom Defendant employed in the following positions since December 1, 2011 who submit[ted] a timely, valid opt-in form as provided in the Class Notice: belt checker, cleco operator, customer service staff, cycle count clerk, inbound checker, inventory control clerk, inventory lead, maintenance, maintenance helper, order picker, outbound checker, receiving checker, receiving clerk, receiving/shipping assistant, runner, shipping clerk, shipping/receiving checker, switch operator, turret/cleco operator, USDA insp./ checker, USDA inspections, or warehouse worker.

Id. at ¶ 11.

B. The Proposed Settlement Agreement's Terms

The Settlement Agreement provides that, upon judicial approval, Defendant will pay $175,000 in total to settle Plaintiffs' claims. Settlement Agreement ¶¶ 17, 27, ECF No. 21-3. This amount is to be distributed as follows: $85,000 divided amongst the class and collective members as damages; $8,000 divided equally between the two Named Plaintiffs ($4,000 each) as an enhancement award, id.¶ 31; $80,000 to class counsel as attorneys' fees, id.¶¶ 2, 32; and $2,000¹ to class counsel for out-of-pocket costs and expenses, id.¶¶ 2, 32.

The parties have agreed to a process for determining each member's individual share under the Settlement Agreement. The eighty-one state-law class members will receive one share for each year that he or she worked for Defendant between 2012 and 2015, thereby allowing for a maximum of four state class shares per class member. Cohen Decl. ¶ 12. To be awarded a share for any given year, the class member must have logged payable hours during one pay period for that year. Id. According to class counsel, "[t]his system is intended to strike a fair balance between providing greater compensation to longer-tenured employees (who experienced a greater number of shortened meal breaks), providing a reasonable recovery to all Class members...[,] and avoiding the burden and attendant expense of employing a expert to perform damages calculations based on a finer scale (such as awarding a share for each individual day worked)." Pls.' Mem. 22 n.4, ECF No. 12-2 (citing Cohen Decl. ¶ 12, ECF No. 21-5). Class counsel avers that the state law class is entitled to a total of 172 shares based on the applicable employment date ranges. Id. at 22.

Each of the twenty-six FLSA collective action members will receive a share for each year that they worked for Defendant between 2012 and 2015, thereby allowing for up to an additional four shares in addition to his or her state law shares. Cohen Decl. ¶ 12. Counsel avers that the FLSA collective is entitled to a total of sixty-five additional...