Starr v. Credible Behavioral Health, Inc.

MARC STARR et al., Plaintiffs, v. CREDIBLE BEHAVIORAL HEALTH, INC., Defendant.

Civil No. 20-2986 PJM

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

May 25, 2021

MEMORANDUM OPINION

Marc Starr and five other named Plaintiffs, as well as members of the putative class, were all employed by Defendant Credible Behavioral Health, Inc., as partner services coordinators between October 15, 2017, and February 24, 2021. They allege that Defendant failed to pay them overtime wages for overtime hours they worked, in violation of the Fair Labor Standards Act (FLSA), 29 U.S.C. §§ 201 et seq.; Maryland Wage and Hour Law (MWHL), Md. Code Ann., Lab. & Empl. §§ 3-401 et seq.; and Maryland Wage Payment and Collection Law (MWPCL), Md. Code Ann., Lab. & Empl., §§ 3-501 et seq. Before the Court is an unopposed motion for conditional certification of the collective and class and preliminary approval of a settlement agreement. Having held a preliminary fairness hearing, for the reasons provided below, the Court GRANTS the motion.

I. Background

The complaint alleges that, as partner services coordinators, Plaintiffs provided customer service and routine technical support, primarily through answering phone calls and emails. Compl. ¶ 39, ECF No. 1. They were each assigned multiple client inquiries per day and were expected to respond promptly to every client and to resolve software issues according to Defendant's policies and procedures. Id. ¶¶ 40-41. Plaintiffs state that most client issues were basic technical problems, but more complicated matters frequently arose that required them to seek assistance from higher-ranking employees with greater authority. Id. ¶¶ 43-44. They were required to document every step they took and the amount of time they spent on each task. Id. ¶¶ 45-49. Plaintiffs also had to prepare and present demonstrations on how to use Defendant's software, typically outside of the office. Id. ¶¶ 50-51. Performing only basic duties requiring no special training, Plaintiffs were allegedly subject to close supervision and approval and had no independent judgment or ability to provide input into how Defendant conducted business. Id. ¶¶ 52-56.

Plaintiffs were all paid in the same manner and worked the same schedules. Id. ¶ 58. The named Plaintiffs earned annual salaries ranging from $55,000 to $70,000. Id. ¶¶ 59-62. They allege that they were expected to work a minimum of eight hours per day but consistently worked 50 to 55 hours per week, due to both heavy workloads and persistent understaffing. Id. ¶¶ 64, 69-72. Defendant purportedly knew that Plaintiffs worked more than 40 hours per week but classified them as exempt salaried employees not eligible for overtime pay and denied them overtime wages altogether. Id. ¶¶ 73-74. Further, Plaintiffs allege that Defendant instructed them to record no more than 40 hours per week on their required biweekly time reports, even if they worked in excess of 40 hours. Id. ¶ 76.

On October 15, 2020, Plaintiffs filed this putative collective and class action. The proceedings were thereafter stayed for the purpose of mediation, following which the parties reached a settlement agreement. On April 15, 2021, Plaintiffs filed the present unopposed motion for certification of the FLSA collective and Rule 23 class and approval of the parties' settlement agreement.¹ On May 19, 2021, the Court held a preliminary fairness hearing to consider themotion. The Court thereafter signed Plaintiffs' proposed order granting the motion and herein explains its findings in greater detail.

II. Analysis

The parties seek a settlement in the total amount of $575,000, to resolve all claims arising from Defendant's alleged failure to pay overtime wages to members of the putative class, in violation of the FLSA, MWHL, and MWPCL. Plaintiffs bring an unopposed motion seeking certification of the FLSA collective, certification of the Rule 23 Maryland class, and preliminary approval of the parties' settlement agreement. In addition, Plaintiffs request that the Court authorize the mailing of the proposed Notice of Class Action Settlement, preliminarily approve the requests for attorneys' fees and service awards, and set a final approval hearing for 60 days after preliminary approval.

A. The Settlement Agreement and Notice

For settlement purposes, the putative class is defined as "individuals who were employed by Defendant as partner service coordinators from October 15, 2017, through February 24, 2021." There are 50 individuals in the class, including the named Plaintiffs. The parties seek a gross settlement amount of $575,000, including $15,000 in total service awards to the three Plaintiffs who attended mediation and attorneys' fees of $191,666.67 or one-third of the settlement fund. This results in a net settlement fund totaling $383,333.33. See Settlement Agreement ¶ 7(a)(i), ECF No. 19-2. Settlement recoveries for individual class members average $7,666.67 and range from $134.59 to $25,361.43. Fifty percent of each settlement payment will be taxed as W-2 wages, with applicable deductions made, and the remaining 50% will be taxed as 1099 income, representing statutory damages.

Upon the Court's approval, Plaintiffs' counsel will mail and email their proposed Notice of Class and Collective Action Settlement to all eligible class members, which contains all the necessary information. Class members will have 30 days to opt out of or object to the settlement by mail or email to Plaintiffs' counsel; otherwise, they will automatically be included in the settlement. Following the conclusion of the opt-out period, Plaintiffs request a final approval hearing to be held virtually within 30 days. The agreement provides that within 21 days of the Court's final approval, Defendant will issue settlement payments, service awards, and attorneys' fees to Plaintiffs' counsel, who will then distribute the funds accordingly.

B. Certification of the Collective and Class

Plaintiffs request that the Court certify this case as a FLSA collective action and Rule 23 class action for settlement purposes only.

1. FLSA Collective

Certification of a collective action under the FLSA is a two-stage process. First, at the notice stage, the court "makes a 'threshold determination of whether the plaintiffs have demonstrated that potential class members are similarly situated, such that court-facilitated notice to putative class members is appropriate.'" Butler v. DirectSAT USA, LLC, 876 F. Supp. 2d 560, 566 (D. Md. 2012) (quoting Syrja v. Westat, Inc., 756 F. Supp. 2d 682, 686 (D. Md. 2010)). In this first stage, to obtain conditional certification, plaintiffs "need only make a 'relatively modest factual showing'" that they "were victims of a common policy, scheme, or plan that violated the law." Id. (quoting Marroquin v. Canales, 236 F.R.D. 257, 259 (D. Md. 2006)). Second, at the decertification stage, typically following discovery, the court performs a more stringent analysis as to whether the plaintiffs are in fact similarly situated and renders a final decision on the appropriateness of proceeding as a collective action. Syrja, 756 F. Supp. 2d at 686.

Plaintiffs seek certification of all individuals who were employed by Defendant as partner services coordinators between October 15, 2017, and February 24, 2021. All members of the putative collective had the same job duties and were allegedly subject to the same policies that denied them earned overtime compensation. Defendant uniformly classified partner services coordinators as exempt employees and paid them an annual salary without overtime pay. The 50 members of the putative collective advance all the same claims against Defendant concerning their unpaid overtime wages. For these reasons, the Court easily finds that Plaintiffs have met the burden of showing that all members are similarly situated, and it will preliminary certify the FLSA collective for purposes of the settlement.

2. Rule 23 Class

A court may certify a class for settlement where the plaintiffs demonstrate that the proposed class and class representatives meet the four requirements of Rule 23(a)—numerosity, commonality, typicality, and adequacy of representation—and satisfy one of the three categories of Rule 23(b). See Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 619-20 (1997). These provisions "focus court attention on whether a proposed class has sufficient unity so that absent members can fairly be bound by decisions of class representatives." Id. at 621.

a. Rule 23(a)

First, to meet the numerosity requirement, there must be a showing that the proposed class is so numerous that "joinder of all members is impractical." Fed. R. Civ. P. 23(a). The Fourth Circuit has held that a class with over 30 members generally satisfies this requirement. See Williams v. Henderson, 129 F. App'x 806, 811 (4th Cir. 2005). Here, the numerosity factor is satisfied because the class includes 50 eligible individuals, making joinder impractical.

Next, commonality is met when the prospective class members share the same central facts and applicable law. See Cuthie v. Fleet Rsrv. Ass'n, 743 F. Supp. 2d 486, 499 (D. Md. 2010). In other words, the class members need not have "suffered a violation of the same provision of law" but must "have suffered the same injury." Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 349-50 (2011) (quoting Gen. Tel. Co. v. Falcon, 457 U.S. 147, 157 (1982)). Here, commonality exists because the settlement class members suffered the same alleged injury (i.e., unlawfully denied overtime wages) and share the central question of whether or not all members were paid correctly when they were classified as salaried exempt employees.

Third, to meet the typicality requirement, the representative plaintiffs' claims must be sufficiently aligned with those of the putative class. Cuthie, 743 F. Supp. 2d at 499. The claims need not be identical, but the claims or defenses must have arisen from the same course of conduct and must...