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Jason Hall, et al v. Best Buy Co.

March 24, 2011

JASON HALL, ET AL., PLAINTIFFS,
v.
BEST BUY CO., INC., ET AL. DEFENDANTS.



The opinion of the court was delivered by: Rufe, J.

MEMORANDUM OPINION AND ORDER

The Parties in this putative class action alleging violations of Pennsylvania wage and labor laws have jointly moved for final approval of a negotiated settlement agreement and allocation among class members [doc. no. 79], and Plaintiffs have moved for approval of Plaintiffs' request for attorneys' fees and expenses and enhancement awards for the class representatives Jason Hall, Samuel Keck and Paul Eisenhower [doc no. 80]. After multiple hearings on the fairness of the settlement and adequacy of notice, and for the reasons that follow, the Court will: (1) certify the settlement class; (2) approve the Agreement, finding that pursuant to Rule 23(e) of the Federal Rules of Civil Procedure, its terms are fair, reasonable and adequate, and that the class received both reasonable and the best practicable notice of the settlement; and (3) approve Plaintiffs' request for attorneys fees and enhancement awards, finding both reasonable.

I. BACKGROUND

A. The Litigation

On October 17, 2007, Plaintiff Jason Hall filed a complaint against Best Buy Co., Inc. in the Court of Common Pleas of Philadelphia County, Pennsylvania, alleging breach of contract, unjust enrichment, and violations of Pennsylvania's Wage Payment and Collection Law ("WPCL"),*fn1 on behalf of a class defined as all those employed by Best Buy between October 15, 2003 and the time of filing and subject to the alleged unlawful employment practices. On November 8, 2007, Defendant Best Buy timely removed the state court action to this Court pursuant to 28 U.S.C. §§ 1332(d), 1441, 1453 and 1446.*fn2

On December 5, 2007, Hall subsequently amended his complaint, adding putative class representatives Samuel Keck and Paul Eisenhower; Defendants BBC Investment Co., BBC Property Co., and Best Buy Stores, L.P. (collectively "Best Buy"); and a claim for violation of the Pennsylvania Minimum Wage Act.*fn3 The Amended Complaint set the class period beginning at October 17, 2003 and continuing until such time as the complained-of practices were eliminated.*fn4 Named Plaintiffs alleged that, in violation of applicable state wage and labor statutes, Best Buy had a consistent policy of failing to compensate in-store hourly employees with either straight-time or overtime pay for off-the-clock time spent awaiting and undergoing security checks after the end of a shift; denying mandatory meal and rest breaks and failing to compensate for work performed during them; and requiring employees to perform off-the-clock work prior to clocking in and after clocking out, among other allegations.*fn5 Plaintiff Hall alleged that he and other employees were required to wait up to 15 minutes per day for post-shift security checks, depending on whether the shift ended during store hours or after closing.*fn6 Closing-shift employees allegedly endured the lengthiest waits because of Best Buy's alleged practice of requiring all employees to gather at the front of the store prior to the security checks.*fn7 Plaintiff Keck alleged that management routinely required that he and other employees work through lunch breaks and mandatory 15-minute rest periods without compensation and to perform retail sales work, such as paperwork, after clocking out.*fn8 Finally, Plaintiff Eisenhower alleged that, in addition to uncompensated time spent waiting for security checks at a shift's end, he was uncompensated for waiting periods and shift-work performed prior to clocking in.*fn9

Best Buy has denied Plaintiffs' allegations and asserted a range of affirmative defenses that, if proved, could entitle them to judgment on Plaintiffs' claims, limit Plaintiffs' recovery or prevent certification of the proposed class.*fn10

Following amendment of the Complaint, discovery ensued shortly thereafter, with discovery deadlines extended several times through early 2009.*fn11 The named Plaintiffs and corporate representatives were deposed and documents were produced by the Parties.*fn12 In

particular, Best Buy produced paper documents (such as manuals and policies), video recordings, and electronic time-keeping data. At some point in late 2008, settlement negotiations began and, on February 26, 2009, a proposed conditional settlement agreement was reached, which was memorialized in a Joint Stipulation and Settlement Agreement (the "Settlement Agreement") in November 2009.*fn13

B. The Settlement Agreement

The Settlement Agreement establishes a total settlement fund of $907,566.*fn14 Of that amount: (1) $592,566, designated by the agreement as the "Net Settlement Amount" is allocated to class members for unpaid wages during closing shifts, with $241,757 allocated to current employees and $350,809 allocated to former employees; (2) $15,000 is allocated for Enhancement Awards for Class Representatives; and (3) a maximum of $300,000, or just over 33% is allocated for class counsels' fees & expenses.*fn15 Costs of claims administration are borne by Defendants; these costs do not reduce the amounts available to the class.*fn16

The amount designated for individual class members is based on the number of closing shifts worked by that class member during the class period. A closing shift is a shift worked in which the employee clocks in or out after the last customer transaction of the day.*fn17 Under the Agreement, class members are compensated at a rate of $.50/closing shift worked during the class period.*fn18 At the initial final approval hearing, Class Counsel represented that the $0.50 rate was based on both an average wage of $8.00 and an average of five minutes in off-the-clock waiting time discerned through discovery. Employees working five or fewer closing shifts, however, are presumed to have worked five shifts, such that every employee is entitled to a claim of at least $2.50, whether or not they worked a closing shift.*fn19 Participating claimants' payments are subject to payroll taxes and other payroll withholdings such that the net amount they receive will be lower than the gross claim.*fn20 Unclaimed amounts from the Settlement Fund revert back to Best Buy.*fn21

The Settlement Agreement also provides for limited injunctive relief, requiring Best Buy to modify its Standard Operating Procedure Manual, for at least two years, to include language addressing time-keeping procedures for employees who exit the store after store closing. The agreement requires adoption of language substantially similar to the following:

Only Managers, Key-Holding Supervisors, or Inventory/LP Team Members are authorized to unlock the front doors for exiting employees when the store is closed. . . .

Employees must wait for the Manager, Key-Holding Supervisor, or Inventory/LP Team Member at the Loss Prevention desk.

Employees must remain punched in until the Manager, Key Holding Supervisor or Inventory/LP Team Member is available. Note: At no time should an employee punch out and await to be let out of the store. All employee-waiting time must be on the clock.*fn22

When queried by the Court during the initial final approval hearing, Class Counsel estimated that this injunctive relief has an monetary value of $100,000 to $200,000 annually.

The Settlement Agreement stipulates that, excepting opt-outs, all class members release Best Buy from a range of potential state law claims arising under the facts alleged in the Complaint, whether known or unknown, and accruing between October 17, 2003 and Final Approval (the "Release Period").*fn23 In addition,class members who submit claim forms pursuant to this agreement release Best Buy from federal Fair Labor Standards Act claims related to the acts and practices alleged in the Complaint and arising during the Release Period that, including any off-the-clock work.*fn24 Consequently, under the Settlement Agreement, all class members, whether or not submitting claim forms, release Best Buy from liability under the enumerated types of state claims, but only participating class members are barred from bringing federal claims.*fn25

C. Preliminary Approval

On January 27, 2010, Plaintiffs filed a motion seeking this Court's preliminary approval of the proposed Settlement Agreement, certification of a settlement class, appointment of the named plaintiffs as class representatives, approval of a claims administrator, and publication of notice to the putative class [doc. no. 32].*fn26 On February 19, 2010, the Court held a hearing on Plaintiffs' unopposed Motion [doc. no. 34]. During the hearing and upon consideration of the Parties' papers, this Court directed the Parties to: (1) revise their proposed order to adequately reflect the role of the proposed claims administrator, Garden City Group; (2) amend the proposed Class Notice to add specific language regarding class members' rights to hire their own attorneys and enter an appearance through those attorneys; and (3) submit the proposed revised order and revised notice to the Court.*fn27 After consideration of the Parties' arguments, supporting documents and other evidence presented at the hearing, this Court granted preliminary approval of the proposed Settlement Agreement, certified both a class and a collective action pursuant to 29 U.S.C. § 216(b) of the Fair Labor Standards Act for settlement purposes only, approved class notices by mail, designated named Plaintiffs Hall, Keck and Eisenhower as Class Representatives and three law firms as class counsel,*fn28 appointed Garden City Group as Claims Administrator, and approved the revised notice submitted by the Parties.*fn29 Both the class and collective action were defined to include: "All individuals who were employed by Best Buy in a non-exempt position at a retail store in Pennsylvania at least one day from October 17, 2003 to November 3, 2009."*fn30 The Court directed that notice be mailed within 30 days of the Order and that Defendants file with the Court a proof of mailing of the class notice. Objectors were required to object within 90 days from date notice was mailed, and class members seeking to appear at the final approval hearing were required to file a notice of intent to appear at least 14 days prior to the hearing. The Court also set the hearing date for final approval.*fn31 The claims process, described infra, commenced thereafter.

D. The First Notice Period

During the first notice period, the Claims Administrator mailed the notice-later determined to be defective, as discussed infra-to 20,455 putative class members on June 10, 2010. The notice packet included the Court-approved Notice and associated approved forms:

1. Notice to Class Members Regarding Pendency of a Class and Collective Action and Notice of Hearing on Proposed Settlement;

2. Change of Name and/or Address Information Form;

3. Election to Opt Out of Settlement and Class Action Form; and

4. Consent to Join Settlement and Claim Certification Form ("Consent Form").

The Notice included a description of the litigation, including the list of class claims and the respective positions of the Parties regarding the outcome of the action; a lengthy description of the settlement terms, including monetary and injunctive relief and the means of calculating amounts owed to each class member; the class definition; how to submit a claim under the settlement; the binding nature of the settlement on all class members who do not exclude themselves; disclosure of class members' right to opt-out or object and a clear discussion of the process to do so; and the impact on a claimant's right if they submit a claim form (the release of state and federal wage and hour claims) or fail to opt-out (the release of state wage and hour claims). Each Consent Form included a pre-printed number for the closing shifts each class member actually worked during the class period, gleaned from Best Buy's employment records. Pursuant to the Court's Preliminary Approval Order, the deadline to mail the Consent to Join Settlement and Claim Certification Form and the Opt-out Form, and to file a Notice of Objection, was September 9, 2010. The Claims Administrator also maintained a toll-free hotline to take inquiries from putative class members, receiving some 534 calls.

During the first notice period, about 10 percent of the class (2,100 class members) filed claim forms, and 38 class members opted out.*fn32 No objections were filed. The average payment per claim was $71.16. A total of 298,363 closing shifts were claimed by consenting class members, which was adjusted to 298,882 to provide all persons with less than five closing shifts a minimum of five such shifts for damages purposes. No class member submitted a notice of intent to appear at the October 22, 2010 fairness hearing.

After the Parties learned that 977 class members received Claim Certification forms that underestimated closing shifts worked-none of whom opted out and 131 of whom returned claim certification forms-the Claims Administrator sent letters to the 131 responding employees explaining the under-reporting of closing shifts and providing the correct number of closing shifts worked, and sent a revised ...


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