United States District Court, D. Idaho
YVETTE NORTON, JEANNETTE RODRIGUEZ-GUZMAN, KELLY BARKER, JOSEPH BELL, BRAD EPPERLY, STEPHANIE JONES, KATHERINE KELLEY KNOWLES, NANCY RICHARDS, and MARK ZUMWALT, individually and on behalf of all others similarly situated, Plaintiffs,
MAXIMUS, INC., Defendant.
MEMORANDUM AND ORDER RE: MOTION FOR FINAL APPROVAL OF
WILLIAM B. SHUBB UNITED STATES DISTRICT JUDGE
brought this collective action against defendant Maximums,
Inc., alleging that defendant misclassified them as salaried
employees, failed to pay them overtime wages, and failed to
keep accurate time records in violation of the Fair Labor
Standards Act (“FLSA”), 29 U.S.C. §§
201 et seq. (First Am. Compl. (“FAC”) (Docket No.
34).) There were two sub-classes in this action: a trainer
sub-class and a supervisor sub-class. (Id. at 2.)
The trainer sub-class has settled its claims with defendant,
and the court has approved that settlement. (See Nov. 19,
2015 Order (Docket No. 139).) Before the court now is the
supervisor sub-class's Motion for final approval of its
settlement with defendant. (Pls.' Mot. (Docket No. 212).)
Factual and Procedural Background
operates calls centers across the country that
“interface with the public regarding . . . the
Affordable Care Act.” (FAC ¶ 2.) It employs--at
its Boise, Idaho and Brownsville, Texas
locations--“first-level” supervisors who manage
its call agents, monitor phone calls, and compile reports for
higher-level managers within the company. (Id.
¶ 4.) These supervisors (“supervisors”)
comprise the supervisor sub-class. (See Id. ¶
brought this action against defendant on January 24, 2014,
alleging the following claims under the FLSA: (1)
misclassification of employment status, 29 U.S.C. §
213(a)(1); (2) failure to pay required overtime, Id.
§ 207(a)(2)(C); and (3) failure to keep accurate time
records, Id. § 211(c). (See Compl. at 21-24 (Docket
No. 1).) On May 19, 2016, the court granted summary judgment
to supervisors on the issue of misclassification, finding
that defendant's method of calculating their wages failed
to meet the ‘salary basis' test of 29 C.F.R. §
541.602(a). (See May 19, 2016 Order at 21 (Docket No. 187).)
Because defendant did not pay supervisors on a ‘salary
basis, ' the court concluded, it misclassified them as
exempt from FLSA-required overtime wages. (Id.)
November 1, 2016, supervisors and defendant notified the
court that they reached a settlement in this case. (Docket
No. 204.) The settlement pays “$575, 000 in overtime
hours and $402, 500 in [liquidated] damages” to
supervisors, and a “separate award of costs and
attorney fees of $575, 280” to supervisors'
counsel. (Pls.' Mem. in Supp. of Mot. for Prelim.
Approval (“Pls.' Mem.”) at 17 (Docket No.
206-1).) The average recovery, assuming each of the 106
supervisors who opted in to this action were to receive
settlement funds, is $9, 221.69.
court granted final collective action certification and
preliminary approval of class settlement to supervisors on
February 22, 2017 (“preliminary approval order
order”). (Feb. 22, 2017 Order (Docket No. 211).)
Supervisors now move for final approval of their settlement
with defendant. (Pls.' Mot.) Defendant supports
supervisors' Motion. (See Def.'s Resp. (Docket No.
Ninth Circuit has declared a “strong judicial
policy” in favor of settling of class actions.
Class Plaintiffs v. City of Seattle, 955 F.2d 1268,
1276 (9th Cir. 1992). Where the “parties reach a
settlement agreement prior to class certification, ”
however, “courts must peruse the proposed compromise to
ratify both  the propriety of the certification”
under Federal Rule of Civil Procedure 23(a), and “
the fairness of the settlement” under Rule 23(e).
Staton v. Boeing Co., 327 F.3d 938, 952 (9th Cir.
2003); see also Khanna v. Inter-Con Sec. Sys., Inc.,
No. CIV S-09-2214 KJM, 2012 WL 4465558, at *3 (E.D. Cal.
Sept. 25, 2012) (applying the two requirements stated in
Staton in approving FLSA collective action settlement). Each
requirement generally proceeds in a two-stage process:
preliminary approval, followed by final approval. See
Carter v. Anderson Merchandisers, LP, No. EDCV
08-00025-VAPOPX, 2010 WL 144067, at *3 (C.D. Cal. Jan. 7,
respect to the propriety of certification, the court has
already granted final collective action certification in this
action. (Feb. 22, 2017 Order at 16.)
respect to the fairness of the settlement, the court
preliminarily approved the parties' settlement as fair
and reasonable on February 22, 2017. (Id.) The only
remaining issue in the settlement approval process,
therefore, is whether the court should grant final fairness
approval with respect to the parties' settlement.
Terms of Settlement
terms of the parties' settlement are as follows:
(1) The Settlement Class: The settlement
class is comprised of “[a]ll First-Level Supervisors
employed by Maximus from on or around August of 2013 and
thereafter who were assigned to supervise a team of
approximately 14 call center employees responsible for
handling telephone calls on behalf of Maximus[, ]were
classified by the company as exempt employees under the FLSA,
” and opted in to this action. (Id.)
(2) Notice: Supervisors' counsel sent
opt-in notice via postal mail to supervisors in October 2014.
(See Oct. 28, 2014 Order (Docket No. 62).) 106 supervisors
opted in to this action. (Pls.' Mem. at 19.) After opt-in
took place, supervisors' counsel informed opt-in
supervisors on at least six different occasions, via postal
mail, email, and telephone, that they needed to submit their
claimed overtime hours in order to be eligible to receive
settlement funds. (See Pls.' Mot. at 3-5.) 92 opt-in
supervisors submitted their claimed overtime hours.
(Pls.' Mem. at 19.) After the court preliminarily
approved the parties' settlement, supervisors'
counsel mailed and emailed notice of settlement to all opt-in
supervisors. (Id. at 2.)
(3) Opt In / Opt Out Procedure: As noted
above, an opt-in notice was sent to supervisors in October
2014. Supervisors had sixty days from the date opt-in notice
was sent to opt in to this action by mail, email, or fax.
(See Opt-In Notice at 1 (Docket No. 61).) To receive payment
under the parties' settlement, opt-in supervisors also
needed to submit their claimed overtime hours. Supervisors
were able to submit those hours by email from June 2014
through September 2016. (See Decl. of Jennifer Hanway
(“Hanway Decl.”) Ex. A, June 3, 2014 Email
Correspondence; Decl. of Jeremiah Hudson (“Hudson
Decl.”) Ex. A, Sept. 8, 2016 Email Correspondence.)
Because each opt-in supervisor agreed to be bound by this
action, (see Opt-In Notice at 1 (“You will be bound by
the decisions of the Court concerning this lawsuit, whether
favorable or unfavorable.”)), no opt-out procedure has
(4) Objection Procedure: Pursuant to the
court's preliminary approval order, opt-in supervisors
were given twenty-six days from the date notice of settlement
was sent to object to the parties' settlement. (See Feb.
22, 2017 Order at 17 (requiring that notice be sent by March
2 and objections be filed by March 28).) The notice of
settlement stated that objections must be in writing, sent to
supervisors' counsel, and filed with the court by March
28, 2017. (See id.; Notice of Settlement at 4 (Docket No.
206-2).) The notice also stated that supervisors who wish to
object in person or via counsel at the final fairness hearing
must file a notice of appearance with the court by March 28.
(See Notice of Settlement at 4.) The court is aware of one
objection that was sent to supervisors' counsel, but not
filed with the court. (See Pls.' Mot. at 2-3.)
(5) Settlement Amount: Defendant will pay
$575, 000 in back overtime wages and $402, 500 in liquidated
damages to participating supervisors. (Notice of Settlement
at 2- 3.) This amount “will not be subjected to a
reduction for . . . attorneys' fees or costs.”
(Id. at 3.)
(6) Attorneys' Fees and Costs and Enhancement
Award: Supervisors' counsel will receive
“a separate award of costs and attorney fees of $575,
280” under the parties' settlement. (Pls.' Mem.
at 17.) The named supervisor in this action, Yvette Norton,
has not requested an enhancement award.
(7) Settlement Distribution: Settlement
funds will be distributed “based upon the hours of . .
. [unpaid] overtime reasonably claimed by each
Supervisor.” (Id.) The number of claimed
overtime hours that are “reasonable” will be
determined based on “period of employment as a
Supervisor, ” “a review of PTO, Holiday, LWP and
FMLA hours taken, ” and “a review of badge swipes
to determine the days Supervisors were present at a call
center.” (Id.) Supervisors' counsel
represent that each supervisor who submitted his or her
claimed overtime hours can expect to receive
“approximately 79.09% of [his or her] reasonably
claimed overtime hours multiplied by an average overtime
hourly rate of $26.97, ” plus “an additional
payment equal to 78.94% of his or her reasonably claimed
overtime payment as liquidated damages.” (Notice of
Settlement at 3.) The average recovery, assuming each of the
106 opt-in supervisors were to receive settlement funds, is
(8) Release: The settlement will release
“all the claims that were asserted in the Complaint and
Amended Complaint against [defendant] under the FLSA in
Boise, Idaho or Brownsville, Texas.” (Id.) For
supervisors, these claims are: (1) misclassification of
employment status, 29 U.S.C. § 213(a)(1); (2) failure to
pay required overtime, Id. § 207(a)(2)(C); and
(3) failure to keep accurate time records, Id.
§ 211(c). (See FAC at 20-24.) The settlement also
releases an unlawful retaliation claim, 29 U.S.C. §
215(a)(3), brought individually by Ms. Norton. (See
Id. at 24-26.)
Fairness of Settlement
Rule of Civil Procedure 23(e) “requires the district
court to determine whether a proposed [class] settlement is
fundamentally fair, adequate, and reasonable.”
Hanlon v. Chrysler Corp.,150 F.3d 1011, 1026 (9th
Cir. 1998). In determining the fairness of a class