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Kis v. Covelli Enterprises, Inc.

United States District Court, N.D. Ohio

July 26, 2019

ERIN KIS, on behalf of herself and all others similarly situated, et al., Plaintiffs,



         In this Fair Labor Standards Act (“FLSA”) collective action, nearly five hundred current and former Panera Bread assistant managers seek unpaid overtime wages from Covelli Enterprises, Inc. The parties now propose a settlement.[1]

         Under the proposed settlement, Defendant Covelli will pay up to $3, 725, 000 to settle the collective action's claims.[2] The parties also ask the Court to conditionally certify a related Ohio wage law class action for settlement purposes. Covelli will pay up to $900, 000 to settle the class action's claims.[3]

         Plaintiffs ask the Court to: (i) approve the collective action settlement, (ii) conditionally certify the class for settlement, (iii) preliminarily approve the class settlement, (iv) appoint Plaintiffs' counsel as class counsel, and (v) issue the proposed class and collective action notices.[4] For the following reasons, the Court GRANTS Plaintiffs' motion.

         I. The FLSA Collective Action Settlement

         In this circuit, whether an FLSA collective action settlement even requires court approval is an open question, and the other circuits are split.[5] However, this Court has previously required it.[6] This comports with the FLSA's animating assumption: unequal bargaining power between employers and employees requires government supervision.[7]

         When deciding whether to approve the settlement, the Court considers: (i) the likelihood of success on the merits, (ii) the complexity, expense, and duration of litigation, (iii) the amount of discovery completed, (iv) the risk of fraud or collusion, and (v) the public interest.[8] Taken together, the factors favor approval.

         The likelihood of success on the merits is the most important factor, [9] and is used to ensure that the settlement's value fairly reflects the case's strength.[10] Here, Plaintiffs would likely succeed. The primary question in this case is whether Defendant properly classified Plaintiffs as overtime-exempt executives. Plaintiffs have submitted dozens of affidavits showing that their jobs primarily involved manual labor and customer service, [11] placing them outside the exemption.[12] Additionally, assistant manager training uniformity and corporate micromanagement makes this job duty evidence broadly applicable to all Plaintiffs.[13]

         Under the settlement, Plaintiff will receive 83% of the estimated total potential award.[14] This properly reflects the case's strength while accounting for the unpredictability of jury trials and the challenges in presenting a case through representative evidence.

         The Court next considers the complexity, expense, and duration of the litigation (the more complex the case, the more settlement is favored). One on hand, the proposed settlement comes on the eve of trial. Thus, most of the time and expense to be spent on this case has already been spent. However, the parties would still face two complex jury trials (damages and liability) involving dozens of witnesses and a likely appeal.[15] This factor is thus mixed.

         Third, the Court examines the amount of discovery completed to ensure the settlement is well-informed.[16] The parties here conducted extensive discovery, deposing fourteen witnesses, issuing hundreds of document requests and interrogatories, serving third-party subpoenas, and attending seven discovery conferences.[17]

         Fourth, there is little risk that fraud or collusion produced the settlement. The parties vigorously litigated this case for more than a year, fighting over certification, discovery, and the trial plan.[18] The record is littered with failed settlement attempts.[19] And, importantly, they reached this settlement through a mediator.[20]

         Finally, the Court considers the public interest, which is mixed. On one hand, the public interest favors settling large complex actions to preserve judicial resources.[21]However, the public interest also favors enforcing the FLSA.[22] Conspicuously absent from the settlement is any requirement that Covelli change its overtime practices.[23]

         Considering the factors, the Court approves the collective action settlement.

         II. Conditional Class Action Certification

Plaintiffs ask the Court to conditionally certify a class for settlement composed of:
All Assistant Managers who work or have worked for Defendant at any time from January 9, 2016 until the date of final judgment in this action, who Defendant classified as exempt from overtime.[24]

         For class certification, Plaintiffs must show that: (i) the class is too numerous to proceed through joinder, (ii) there are common questions of law or fact, (iii) the representative parties' claims or defenses are typical of the class, and (iv) the representative parties will adequately protect the class interests.[25] Also, because Plaintiffs seek Rule 23(b)(3) certification, they must show that common questions predominate over individualized questions and class adjudication is superior to other methods.[26]

         First, with an estimated 614 members, the class easily clears numerosity.[27]

         Next, for common questions of law or fact predominate, the questions subject to generalized proof must outweigh those requiring individualized proof.[28] Here, the Plaintiffs worked the same job, for the same employer, classified under the same overtime exemption. Further, the evidence uncovered in the FLSA collective action indicates that they received the same training and likely had similar job responsibilities.

         Also, the representative parties bring the same claims, arising out of the same policy, as the whole class. Typicality is met.[29] Similarly, because the representatives' claims are typical of the class, and because there are no conflicts of interests, they will adequately protect the class's interests.[30]

         The Court also considers whether a class action is the superior method of adjudication. In doing so it considers whether the class will promote efficiency, minimize expense, and achieve decisional uniformity between similarly situated persons.[31]

         Because Plaintiffs seek certification only for settlement purposes, there will be no difficulty in managing the class.[32] Moreover, there are no alternative methods that could resolve these cases as efficiently, cheaply, or uniformly. Thus, the Court conditionally certifies the sought class for settlement purposes.

         III. Class Counsel

         Class counsel must fairly and adequately represent the interests of the class.[33] In considering whom to appoint, the Court must consider: (i) counsel's efforts in identifying and investigating potential claims, (ii) counsel's experiences in handling class actions and similar claims, (iii) counsel's ...

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