Mercier v. United States

Michael Hamilton, Provost Umphrey Law Firm LLP, Nashville, TN, William H. Narwold, Motley Rice LLC, Hartford, CT, Guy Fisher, Provost Umphrey Law Firm LLP, Beaumont, TX, Robert H. Stropp, Jr., Mooney, Green, Saindon, Murphy & Welch, P.C., Washington, D.C., Bennett P. Allen, Cook, Allen & Logothetis, LLC, Cincinnati, OH, and E. Douglas Richards, E. Douglas Richards, PSC, Lexington, KY, for Plaintiffs.

P. Davis Oliver, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, Washington, D.C., with whom were Reginald T. Blades, Jr., Assistant Director, Martin F. Hockey, Jr., Acting Director, and Brian M. Boynton, Acting Assistant Attorney General, for Defendant.

OPINION AND ORDER

ELAINE D. KAPLAN, CHIEF JUDGE

BACKGROUND^[1]

Plaintiffs in this class action lawsuit are 3, 207 Advanced Practice Registered Nurses ("APRNs") and Physicians Assistants ("PAs") currently or formerly employed by the United States Department of Veterans Affairs ("VA"). They claim that the VA violated Title 38 of the United States Code and the VA's own policies and handbooks when it failed to pay them overtime for work they were induced to perform outside of their regular tours of duty in the VA's Computerized Patient Record System ("CPRS").

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Plaintiffs filed this suit on December 28, 2012. See Compl., ECF No. 1. The government filed a motion to dismiss on June 20, 2013, ECF No. 13, which the Court granted on February 27, 2014, ECF No. 24. See also Mercier v. United States (Mercier I), 114 Fed.Cl. 795 (2014), rev'd in part, Mercier v. United States (Mercier II) 786 F.3d 971 (Fed. Cir. 2015). The Court held that overtime is available under 38 U.S.C. § 7453(e)(1) only when it is "officially ordered or approved," and that this meant that an employee must be "expressly directed . . . to perform specified hours of overtime outside of their regular shifts." Mercier I, 114 Fed.Cl. at 802. Because Plaintiffs "ha[d] not alleged that they were expressly directed to work specific overtime hours for which they were not compensated," the Court concluded that they had failed to state a claim, and it granted the government's motion to dismiss. See id.

Plaintiffs timely appealed this Court's decision, and on May 15, 2015, the Federal Circuit reversed. See Mercier II, 786 F.3d at 983. Citing Anderson v. United States, 136 Ct. Cl. 365 (1956), it held that overtime may be considered "officially ordered or approved" under Title 38 where it is "induced" and not expressly directed. Mercier II, 786 F.3d at 982. It therefore remanded the case to allow the Court to apply the Anderson standard to Plaintiffs' claims. Id. at 983.

On remand, the parties engaged in extensive discovery, see, e.g., ECF Nos. 81, 87, 89, 101, & 103, and the case was certified as a class action on June 7, 2018, ECF No. 138. Merits discovery closed in December 2020, and the Court scheduled the trial to begin on February 22, 2021. ECF No. 207.

On December 14, 2020, at the parties' request, the Court transferred the case to Senior Judge Marian Horn for purposes of settlement discussions, in accordance with Appendix H of the Rules of the Court of Federal Claims ("RCFC"). ECF No. 220. On January 6, 2021, just six weeks before trial was to begin, the parties notified the Court that, following mediation on January 4, 2021, they had reached an agreement in principle to settle the litigation. ECF No. 226. The Court therefore canceled the trial. ECF No. 228. On July 8, 2021, the parties executed a Settlement Agreement resolving the unpaid overtime claims, see Pls.' Mem. of Law in Supp. of Their Unopposed Mot. for Prelim. Approval of Class Action Settlement Agreement and Approval of Notices of Class Action Settlement at 3, ECF No. 245, which the Court preliminarily approved on July 16, 2021, Op. and Order ("Preliminary Approval Order"), ECF No. 248.

Currently before the Court is Plaintiffs' Motion for Final Approval of Settlement Agreement, ECF No. 249, as well as class counsel's Motion for an Award of Attorneys' Fees, Costs, and Expenses, and Case Contribution Award to Class Representatives, ECF No. 251. For the reasons set forth below, the motion for approval of the Settlement Agreement is GRANTED. Class counsel's motion for an award of attorneys' fees, costs, and expenses, and for case contribution awards is GRANTED-IN-PART and DENIED-IN-PART.

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DISCUSSION

I. The Terms of the Settlement Agreement

The Settlement Agreement provides that the government shall pay $160, 000, 000 to resolve Plaintiffs' claims for unpaid overtime, interest, and attorneys' fees and expenses ("the Gross Settlement Fund"). App. to Pls.' Mem. of Law in Supp. of Mot. for Final Approval of Settlement Agreement ("App. to Pls.' Mem.") at A63-A74 (Ex. 5, Settlement Agreement) ¶ 9, ECF 250-1.^[2] The Gross Settlement Fund is comprised of $124, 331, 428.18 in gross back pay and $35, 668, 571.82 in interest. Settlement Agreement ¶ 10. Subject to the Court's approval, the Settlement Agreement designates $48, 463, 544.33 from the Gross Settlement Fund for attorneys' fees and expenses, $265, 000 for costs to be incurred by the Settlement Administrator to administer the settlement, and $120, 000 for case contribution awards to the six class representatives. Id. ¶ 14.

The amount that remains after deducting attorneys' fees and expenses, the Administrator's costs, and case contribution awards ("the Net Settlement Amount") consists of class members' back pay and interest, id. ¶ 10, from which the government will withhold federal taxes, id. ¶¶ 10-11. The Settlement Agreement provides that the amount of any reduction in attorneys' fees and expenses that this Court orders shall be added to the Net Settlement Amount. Id. ¶ 25. The Settlement Agreement further states that funds will be paid to individual plaintiffs from the Net Settlement Amount based on each plaintiff's proportionate share calculated from the number of hours each worked in excess of forty hours per week during the class period multiplied by his or her overtime rate of pay. See Pls.' Mem. of Law in Supp. of Mot. for Final Approval of Settlement Agreement ("Pls.' Mem.") at 5, 12, ECF No. 250; see also Attach. A to the Settlement Agreement ("Attachment A") (listing plaintiffs and their proportionate shares), ECF No. 247.

The Gross Settlement Fund of $160, 000, 000, according to Plaintiffs' damages expert, represents slightly more than 65% of the maximum amount Plaintiffs could have recovered if they had prevailed at trial. App. to Pls.' Mem. at A13-A21 (Ex. 2, Decl. of Dr. Liesl M. Fox) ("Fox Decl.") ¶ 10, ECF No. 250-1. Under the Settlement Agreement, each plaintiff will receive his or her proportionate share of the Net Settlement Amount to compensate for unpaid overtime based on an analysis of his or her work records, subject to the agreement of the parties that the minimum payment would be $250. Id.

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II. The Terms of the Settlement Agreement are Fair, Reasonable, and Adequate

RCFC 23 provides that "[t]he claims, issues, or defenses of a certified class . . . may be settled, voluntarily dismissed, or compromised only with the court's approval," RCFC 23(e), and "only after a hearing and only on finding that [the settlement agreement] is fair, reasonable, and adequate," RCFC 23(e)(2). In determining whether a proposed settlement is fair and reasonable, the Court looks to the "'paramount' twin elements of procedural and substantive fairness." Courval v. United States, 140 Fed.Cl. 133, 139 (2018) (quoting Christensen v. United States, 65 Fed.Cl. 625, 629 (2005)).

A. Procedural Fairness

Procedural fairness relates to "whether the settlement resulted from 'arms-length negotiations and whether plaintiffs' counsel have possessed the experience and ability, and have engaged in the discovery, necessary to effective representation of the class's interests.'" Id. (quoting Christensen, 65 Fed.Cl. at 629).

The Court concludes that the proposed settlement is procedurally fair. Class counsel has significant experience litigating class actions, including actions for the payment of overtime. App. to Pls.' Mem. at A22-A38 (Ex. 3, Decl. of Michael Hamilton) ("Hamilton Decl.") ¶¶ 2, 8. Counsel zealously represented the class through almost nine years of litigation, including a detour to the Court of Appeals. See id. ¶¶ 9-10. In addition, the parties engaged in extensive discovery regarding class certification, including several rounds of written discovery and seventeen depositions. Id. ¶ 10. Following class certification, the parties engaged in rigorous merits discovery, during which an additional thirty-one depositions were taken, including five expert depositions and more than ten RCFC 30(b)(6) depositions. Id.; Pls.' Mem. at 3. Plaintiffs' expert analyzed over 318 million records, including payroll records, tour of duty records, date-and time-stamped Notes and Orders from the CPRS, and, where available, logs of View Alerts received and/or processed and records of when class members had signed into or out of the CPRS. Fox Decl. ¶¶ 7-8.

The Court is satisfied that the parties' settlement negotiations, which were facilitated by a judge of this court, were conducted in good faith; without collusion, preferential treatment, or other deficiencies; and with an interest in ultimately resolving the case by settlement. In short, the Court concludes that the Settlement Agreement now before it "resulted from arms-length negotiations" and the "effective representation of the class's interest." Courval, 140 Fed.Cl. at 139 (citations and internal quotation marks omitted).

In addition, RCFC 23(e)(1)(B) obligates the Court to "direct notice in a reasonable manner to all class members who would be bound by the proposal" before approving a class action...