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Stanley v. Turner Oil & Gas Properties, Inc.

United States District Court, S.D. Ohio, Eastern Division

June 12, 2018

JONATHAN STANLEY, et al., Plaintiffs,

          James L. Graham Judge.



         This matter was referred to the Undersigned, pursuant to 28 U.S.C. § 636(b), to conduct a fairness hearing and to issue a report and recommendation. (ECF No. 47 at 4.) In connection with the fairness hearing, the parties have filed a Joint Motion for Approval of Class Action Settlement (ECF No. 127) (“Joint Motion for Approval”) and Plaintiffs' counsel has filed a motion for attorney's fees and reimbursement of costs as well as supplements to that request. (ECF Nos. 121, 123, 125, 131.) For the reasons that follow, it is RECOMMENDED that these motions be GRANTED only on the condition that counsel submits additional information identified in this Report and Recommendation.


         This is a collective action under the Fair Labor Standards Act, 29 U.S.C. § 201, et seq. (“FLSA”), and a class action under Rule 23 of the Federal Rules of Civil Procedure, in which Plaintiffs allege Defendant Turner Oil & Gas Properties, Inc. (“Turner”) failed to compensate individuals it employed in the Landman position with overtime pay in violation of the FLSA and, for each Landman working in Ohio, the Ohio Minimum Fair Wage Standards Act (“OMFWSA”), Ohio Rev. Code Ch. § 4111. (ECF No. 3.) Plaintiffs maintain that Turner misclassified each Landman as an independent contractor, rather than an employee, and required them to work overtime without being properly paid. (Id.) Among other defenses, Turner asserts that Plaintiffs-Landmen were property classified, treated, and paid as independent contractors. (ECF No. 6.)

         On January 13, 2017, the Court granted in part Plaintiffs' motion to conditionally certify an opt-in class under 29 U.S.C. § 216(b), preliminarily certified this as a collective action, and authorized notice to be sent to potential opt-in Plaintiffs. (ECF No. 20.) Thereafter, the parties reached a settlement of the collective-action claims and moved the Court to approve their settlement. (ECF No. 41.)[1] On October 2, 2017, the Court granted the parties' joint motion for approval of the collective action settlement, which included the class representatives as well as twenty-five (25) other individuals who filed opt-in notices (“the Section 216(b) class”). (ECF No. 44.) Pursuant to the parties' agreement, Turner would pay a settlement fund of $344, 850, with $241, 895 of that total amount paid to the individual opt-in Plaintiffs and $102, 955 of the total payment paid to Plaintiffs' attorneys for fees, expenses, and costs. (Id. at 2.)

         The parties also moved for preliminary approval of the Rule 23 class action claim. (ECF No. 42.) In response to the Court's Order (ECF No. 45), the parties submitted a revised class notice. (ECF No. 46.) On March 6, 2018, the Court preliminarily approved the parties' settlement and conditionally certified the following settlement class of 106 individuals for settlement purposes only: all individuals who provided contract Landman abstract title and related services to Turner between May 20, 2014, and March 27, 2016 (“the Rule 23 settlement class”). (ECF No. 47 at 2-4.) The Court directed that notice be provided to the class members and referred this matter to the Undersigned to conduct a fairness hearing and to issue a report and recommendation. (Id. at 4.)

         Consistent with Section 4 of the Joint Stipulation of Class Action Settlement and Release (ECF No. 42-1) (“the Settlement Agreement”), Turner, as the claims administrator, provided notice to the members of the Rule 23 settlement class. (Defendant's Declaration of Due Diligence, ECF No. 126, ¶¶ 2-6 (“Defendant's Declaration”).). The notice period ran from March 27, 2018, through April 26, 2018. (Id. at ¶ 3.) No. objections to the proposed settlement have been filed.

         On June 5, 2018, the Undersigned conducted a fairness hearing. (ECF Nos. 128, 129.) Counsel for both parties appeared. Other than named Plaintiff Jonathan Stanley, no class members or objectors appeared personally. The parties have moved for final approval of the class action settlement. (ECF No. 127.) Plaintiff's counsel has filed a motion for attorney's fees and reimbursement of costs as well as supplements to that request. (ECF Nos. 121, 123, 125, 131.) This matter is now ripe for the Undersigned's consideration.

         II. A. Class Certification

         “To merit certification, a putative class must satisfy the four requirements of Rule 23(a)-numerosity, commonality, typicality, and adequate representation-plus fit within one of the three types of classes listed in Rule 23(b).” Sandusky Wellness Ctr., LLC v. ASD Specialty Healthcare, Inc., 863 F.3d 460, 466 (6th Cir. 2017). “A district court has broad discretion to decide whether to certify a class.” In re Whirlpool Corp. Front-Loading Washer Prod. Liability Litig., 722 F.3d 838, 850 (6th Cir. 2013).

         As set forth above, the Rule 23 settlement class consists of all individuals who provided contract Landman abstract title and related services to Turner between May 20, 2014, and March 27, 2016. (ECF No. 47 at 2-4.) At the beginning of the fairness hearing, Attorney Sara Jodka, counsel for Turner, clarified that the Rule 23 settlement class contained 124 individuals, not 106 individuals, as initially represented to the Court (ECF No. 42) and as represented in Defendant's Declaration, ¶ 1. (ECF No. 129 at 3.) During the notice period, 55 individuals opted out of the settlement, and 15 individuals opted into the settlement. (Id. at 3-4, 9; ECF No. 123; Defendant's Declaration, ¶¶ 3-4.) The remaining class members either did not respond, attempted to respond via email only without fully executed-required paperwork, or responded outside the notice period. (Defendant's Declaration, ¶ 5.)

         As to numerosity, Federal Rule of Civil Procedure 23(a)(1) requires that the class be “so numerous that joinder of all member is impracticable[.]” Fed.R.Civ.P. 23(a)(1). “There is no strict numerical test for determining impracticability of joinder.” In re Am. Med. Sys., Inc., 75 F.3d 1069, 1079 (6th Cir. 1996). Here, while there were a high number of opt-outs (55), the Court may consider that joinder may be impracticable in an employment action due to the possibility of retaliation and economic dependency arising from the employment relationship. See Castillo v. Morales, Inc., 302 F.R.D. 480, 487 (S.D. Ohio 2014).[2] Under the circumstances of this particular case, the Undersigned finds that the numerosity requirement has been met.

         In considering the commonality, typicality, and adequacy of representation requirements under Rule 23(a)(2)-(4), courts consider whether there are questions of fact or law common to the class, whether a named plaintiff's claim arises from the same event or course of conduct and is based on the same legal theory, and whether a named plaintiff has common interests with the class and will vigorously pursue the interests of the class through qualified counsel. Young v. Nationwide Mut. Ins. Co., 693 F.3d 532, 542 (6th Cir. 2012); Bittinger v. Tecumseh Prods. Co., 123 F.3d 877, 884 (6th Cir. 1997); In re Am. Med. Sys., Inc., 75 F.3d at 1083. Here, as set forth in the Order preliminarily certifying the class (ECF No. 47 at 2), all of the contract Landmen engaged in similar work on similar terms and entered into contracts with Turner. In particular, Jonathan Stanley and Mary Elliott, named-representative Plaintiffs (collectively, the “Representative Plaintiffs”), and the class members attended the same pre-shift meetings and had the same amount of time for their meal breaks. The Representative Plaintiffs worked as Landmen at Turner during at least part of the relevant time period and assert the same claims as may be asserted by the absent class member, namely, alleged violations of Ohio Revised Code § 4111.03. The claims are based on the same allegations that Turner misclassified the Representative Plaintiffs and class members as independent contractors instead of employees and that Turner did not pay them overtime for hours worked in excess of forty hours in a single workweek. In addition, as set forth in more detail below, most of Plaintiffs' attorneys have extensive experience in employment matters and they, like the Representative Plaintiffs, have the ability to vigorously pursue the claims of the class. Based on this record, there is no evidence of a conflict of interest between the Representative Plaintiffs and the class. For all of these reasons, the Undersigned concludes that the remaining requirements of Rule 23(a) have been met.

         The Representative Plaintiffs next seek class certification under Rule 23(b)(3), which authorizes a class action if the court finds that questions of law or fact common to the class predominate and that a class action is superior to other methods of adjudication. Rule 23(b)(3) requires a showing that questions common to the class predominate. Bridging Communities Inc. v. Top Flite Fin. Inc., 843 F.3d 1119, 1124 (6th Cir. 2016). To satisfy this requirement, “‘a plaintiff must establish that the issues in the class action that are subject to generalized proof, and thus applicable to the class as a whole, . . . predominate over those issues that are subject only to individualized proof.'” Id. at 1124-25 (quoting Beattie v. CenturyTel, Inc., 511 F.3d 554, 564 (6th Cir. 2007)). “The predominance requirement is satisfied unless it is clear that individual issues will overwhelm the common questions and render the class action valueless.” In re Cardizem CD Antitrust Litig., 200 F.R.D. 297, 307 (E.D. Mich. 2001) (internal quotation marks and citation omitted). Courts consider “‘the difficulties likely to be encountered in the management of a class action'” when determining whether the superiority requirement of Rule 23(b)(3) has been satisfied. Young v. Nationwide Mut. Ins. Co., 693 F.3d 532, 545 (6th Cir. 2012) (quoting Beattie, 511 F.3d at 567)). “‘Where it is not economically feasible to obtain relief within the traditional framework of a multiplicity of small individual suits for damages, aggrieved persons may be without any effective redress unless they may employ the class-action device.'” Id. (quoting Deposit Guar. Nat'l Bank v. Roper, 445 U.S. 326, 339 (1980)).

         Here, for the reasons discussed in connection with Rule 23(a), the Undersigned finds that the predominance prong of Rule 23(b)(3) has been met. In addition, the Undersigned agrees with the parties that, depending on his or her length of service as a Landman for Turner, each class member may recover twenty dollars to a few thousand dollars should he or she prevail in an individual lawsuit. Based on this record, a class action is the superior method for adjudicating these claims. The Undersigned therefore concludes that certification of a class under Rule 23(b)(3) is proper.

         Any class certified under Rule 23(b)(3) must satisfy the notice requirements under Federal Rules of Civil Procedure 23(c)(2)(B) and 23(e). Rule 23(e) requires that “[t]he claims, issues, or defenses of a certified class may be settled, voluntarily dismissed, or compromised only with the court's approval” and must be preceded by notice to class members. Fed. R. Civ.

         P. 23(e). Under Rule 23(c)(2), notice to the class must be “the best notice that is practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort.” Fed.R.Civ.P. 23(c)(2)(B). The notice must be “‘reasonably calculated, under all circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.'” Int'l Union, United Auto., Aerospace, & Agric. Implement Workers of Am. v. Gen. Motors Corp., 497 F.3d 615, 629-30 (6th Cir. 2007) (quoting Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950)).

         Here, the Court rejected the parties' first proposed notice (ECF No. 43) and required that notice be amended to include the following additional language:

Turner has agreed to pay up to $500, 000 to compensate current and former landmen who worked in excess of 40 hours a week and didn't receive overtime pay. As a class member, if you file a claim, you engage in legally protected activity. Any act by Turner or its agents to intimidate, harass, threaten or otherwise dissuade you or another class member from filing a claim is retaliation, which is prohibited. You should notify plaintiffs' counsel immediately if you have reason to fear retaliation or believe you have experienced retaliation.

(ECF No. 45 (emphasis in original).) The subject notice also “explained its purpose, discussed the nature of the pending suit and proposed class and accurately summarized the [] settlement agreement.” Int'l Union, United Auto., Aerospace, & Agric. Implement Workers of Am., 497 F.3d at 630; see also Notice, ECF No. 46. Stated differently, the notice “‘fairly apprise[d] the prospective members of the class of the terms of the proposed settlement' so that class members may come to their own conclusions about whether the settlement serves their interests.” Int'l Union, United Auto., Aerospace, & Agric. Implement Workers of Am., 497 F.3d at 630 (quoting Grunin v. Int'l House of Pancakes, 513 F.2d 114, 122 (8th Cir. 1975)). Moreover, counsel has explained how all class action notices were delivered via email or U.S. regular mail. (Defendant's Declaration, ¶ 6.) Notably, no objections have been filed. Based on this record, the Undersigned finds that the notice was sufficient.

         B. Fairness of the Proposed Settlement

         Pursuant to the terms of the Settlement Agreement, the parties originally created a total settlement fund of $500, 000, and then proportionally reduced that amount in light of the opt-in and opt-out forms received. (Settlement Agreement, Section 5.8; ECF No. 129 at 6-9.) Taking into account the 55 opt-outs and 15 opt-ins and calculating a proportional reduction, the parties represent that the total amount remaining in the class settlement fund is $165, 122.24. (Id.; ECF No. 123.)[3] After subtracting 30% of that total for payment attorneys fees (see Settlement Agreement, Section 5.8, and addressed in more detail below), counsel for both parties represented at the hearing that the total amount remaining for distribution to the Rule 23 settlement class is $115, 585.57. (ECF No. 129 at 9.) Counsel represent in their Joint Motion for Approval that the 15 individual class members who opted-in will receive payments ranging from $104.69 to $11, 733.11, at a minimum. (ECF No. 127 at 6-7 (representing further that “[a] total list of anticipated payouts will be provided to the Court within 14 calendar days”).) During the fairness hearing, counsel also represented that this distribution amount is a 100% potential recovery for the 15 individuals who opted in to the settlement. (Id. at 8-9.) Finally, the Settlement Agreement also provides that a cy pres fund will be established for any unclaimed funds. (Settlement Agreement, Sections 4.7 & 5.4.1.)

         The parties jointly ask the Court to grant final approval to the Settlement Agreement pursuant to Rule 23(e), which governs settlements of class actions and imposes the following procedural safeguards:

(1) The court must direct notice in a reasonable manner to all class members who would be bound by the proposal.
(2) If the proposal would bind class members, the court may approve it only after a hearing and on finding that it is fair, reasonable, and adequate.
(3) The parties seeking approval must file a statement identifying any agreement made in connection with the proposal.
(4) If the class action was previously certified under Rule 23(b)(3), the court may refuse to approve a settlement unless it affords a new opportunity to request exclusion to individual class members who had an earlier opportunity to request exclusion but did not do so.
(5) Any class member may object to the proposal if it requires court approval under this subdivision (e); the objection may be withdrawn only ...

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