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Flores v. Eagle Diner Corp.

United States District Court, E.D. Pennsylvania

August 21, 2019

ALEXIS FLORES and VIRGINIA GOOLD, for themselves and all others similarly situated, Plaintiffs,
EAGLE DINER CORP., et al., Defendants.


          ANITA B. BRODY, J.

         Alexis Flores and Virginia Goold, on behalf of themselves and all others similarly situated, bring this class and collective action lawsuit against Eagle Diner Corporation, James Rokos, Maria Rokos, Marko Rokos, and Zisi Rokos (“the Rokoses”).[1] Eagle Diner is a restaurant in Warminster, Pennsylvania owned by the Rokoses. Flores and Goold, former Servers at the Eagle Diner, allege that the restaurant and the Rokoses violated the Pennsylvania Minimum Wage Act (“PMWA”), 43 P.S. § 333.101, et seq., and the federal Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201, et seq., by implementing illegal tip-pool and overtime policies during Flores's and Goold's times of employment.[2]

         Flores and Goold now submit an Unopposed Motion for Preliminary Class and Collective Action Settlement Approval. Plaintiffs move for an order: (1) preliminarily certifying Plaintiffs' proposed settlement class; (2) preliminarily approving the Parties' class settlement; (3) approving their FLSA settlement; (4) appointing Alexis Flores and Virginia Goold Settlement Class Representatives; (5) appointing Stephan Zouras LLP as Class Counsel; (6) approving the Parties' Proposed Notice of Class Action and Collective Action Settlement (“Proposed Notice”); (7) appointing a claims administrator, Atticus Administration LLC; (8) setting a schedule for disseminating notice, opting out, objecting, and/or withdrawing consent; and (9) scheduling a final settlement approval hearing. For the reasons below, I will grant Plaintiffs' motion.

         I. BACKGROUND

         1. Flores's and Goold's Claims

         Defendant Eagle Diner is a restaurant in Warminster, Pennsylvania, that is owned and operated by the remaining Defendants, the Rokoses. In August 2018, Plaintiffs filed a notice of suggestion of bankruptcy relating to Eagle Diner's August 8, 2018 Chapter 11 bankruptcy filing. Plaintiffs Flores and Goold worked as servers at the Eagle Diner. Flores and Goold allege that the Defendants engaged in a variety of illegal practices relating to paying Flores and Goold and other employees at the Eagle Diner. Flores and Goold allege that, during their time as servers, Defendants: (1) operated a mandatory tip pool into which servers were required to contribute a fixed sum from their tips each shift; (2) paid servers a reduced wage and used tips to cover the difference between the reduced wage and the minimum wage; (3) used the tip pool to pay bussers' wages; and (4) failed to pay Servers all overtime wages.

         In March 2018, Flores and Goold filed this lawsuit. In July 2018, I held an initial case management conference. On October 5, 2018, after a period of discovery, Plaintiffs filed a Motion for Conditional Certification of their Collective Action Class. On January 30, 2019, the Parties submitted their Unopposed Motion for Preliminary Class and Collective Action Settlement Approval.

         2. The Proposed Settlement Agreement and Proposed Notice

         The proposed settlement agreement in this case purports to resolve all putative Class Members' wage and hour claims against the Rokos Defendants. See Pls.' Mot. at 3. Specifically, Class Members will release the Rokoses from any and all claims that were or could have been brought based on the facts alleged in the Amended Complaint, including all claims relating to overtime pay, minimum wages, and other claims for damages, penalties, liquidated damages, attorney's fees and expenses flowing from the conduct alleged in the Complaint. Id. at 5. The settlement purports to entitle all putative Class Members, i.e., all people who worked as a Server at Eagle Diner between March 22, 2015 and December 12, 2018 (the “Class”), to anticipate and claim a benefit. See id.; see also generally Settlement Agreement (Pls.' Ex. A) (“the Settlement Agreement”).

         In return, Defendants propose to pay up to $162, 500.00 to resolve this litigation: $88, 875.00 for Class Members' damages claims; two separate $5, 000.00 enhancement awards to the two Named Plaintiffs; up to $53, 625.00 in attorney's fees; and up to $10, 000.00 to reimburse “out-of-pocket” costs incurred by Class Counsel and pay settlement administration costs. See Agreement at ¶¶ 4.1, 4.7, 4.12, 4.14, 4.15. Each Class Member will receive a pro-rata share of the Settlement Fund, calculated based upon the Class Member's total earnings during the Class Period of March 22, 2015 through December 12, 2018. Id. at ¶ 4.7. The Class Member settlement awards will be paid 50% as W-2 wages (with typical withholding taken) and 50% as 1099 interest, liquidated damages, and/or penalties (without withholding). Id. Approximately 129 Class Members will be entitled to claim payments from the settlement. Any returned or un-cashed checks issued to Settlement Class Members shall be distributed to a cy pres fund to be agreed upon by the Parties after a 120-day acceptance period. Id.

         The Settlement Agreement outlines a notice plan that will permit the Settlement Class Members to evaluate the proposed settlement and decide whether to participate. Id. at ¶ 4.8. Under this proposed plan, Plaintiffs will disseminate a Settlement Notice to all Class Members that: (1) describes the Class and the litigation; (2) describes the proposed settlement, including the nature of the monetary recovery to be awarded to each Class Member and the scope of the proposed releases; (3) identifies Class Counsel; (4) discloses Class Counsel's request for an award of attorney's fees and costs reimbursements; (5) explains the Class Member's right to request exclusion from the settlement, identifies the procedure for requesting exclusion and describes the consequences of exclusion; (6) explains the Class Member's right to object to the settlement and identifies the procedure for submitting settlement objections; and (7) announces the time and location of the final approval hearing. Id.; see also Proposed Notice (Pls.' Mot. Ex. B). Defendants agreed to provide Plaintiffs with the last-known address of each Class Member within fourteen days after entry of this preliminary approval order. See Settlement Agreement ¶ 4.6. Thereafter, Plaintiffs will mail the proposed Settlement Notice to each Class Member, make reasonable efforts to track any returned pieces, obtain updated addresses and perform any necessary re-delivery services, assisted as needed by Defendant. Id. ¶ 4.8.


         A. Preliminary Certification of the Settlement Class

         Plaintiffs move for preliminary certification of the Settlement Class. At the preliminary approval stage of a class action settlement, a court may preliminarily certify a settlement class pursuant to Federal Rule of Civil Procedure 23(e) and reserve the certification decision for a later date. In re Nat'l Football League Players Concussion Injury Litig., 775 F.3d 570, 583-84 (3d Cir. 2014) [hereinafter NFL I]. “[F]or uncertified settlement classes [this] makes sense, particularly from a notice perspective.” Id. at 583. “Permitting a district court to manage a settlement class in this manner provides the flexibility needed to protect absent class members' interests and efficiently evaluate the issues of class certification and approval of a settlement agreement.” Id. at 586. Accordingly, I reserve the final certification decision until after notice of the proposed Settlement Agreement has been sent to putative Class Members.

         “This preliminary determination employs a ‘less rigorous analysis than that necessary for final certification' because courts conduct a ‘fairness hearing in order to issue a final class certification and approve the settlement.'” In re: Shop-Vac Mktg. & Sales Practices Litig., MDL No. 2380, 2016 WL 3015219, at *3 (M.D. Pa. May 26, 2016) (quoting In re: Amtrak Train Derailment, MDL No. 2654, 2016 WL 1359725, at *2, *4 (E.D. Pa. Apr. 6, 2016)); see also NFL I, 775 F.3d at 586 (noting that when the district court made a preliminary determination on class certification, “it reserved the ‘rigorous analysis'” on certification until after the fairness hearing). In making this preliminary certification determination a court examines whether “the proposed class satisfies the criteria set out in Rule 23(a) and at least one of the subsections of Rule 23(b).” Manual for Complex Litigation § 21.632 (4th ed. 2019); In re: Shop-Vac, 2016 WL 3015219, at *3 (same).

         Plaintiffs seek certification of a Rule 23(b)(3) settlement class. Federal Rule of Civil Procedure 23(a) contains four threshold requirements for certification:

(1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.

Fed. R. Civ. P. 23(a). Rule 23(b)(3) imposes two additional requirements: that “questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” Fed.R.Civ.P. 23(b)(3). The Rule 23(b)(3) requirements are commonly referred to as predominance and superiority. Sullivan v. DB Investments, Inc., 667 F.3d 273, 296 (3d Cir. 2011) (en banc).

         “[T]he party proposing class-action certification bears the burden of affirmatively demonstrating by a preponderance of the evidence her compliance with the requirements of Rule 23.” Byrd v. Aaron's Inc., 784 F.3d 154, 163 (3d Cir. 2015), as amended (Apr. 28, 2015). However, the existence of a settlement means that “certain Rule 23 considerations . . . are not applicable.” Rodriguez v. Nat'l City Bank, 726 F.3d 372, 378 (3d Cir. 2013). For example, because a settlement obviates the need for trial, concerns regarding the manageability of a Rule 23(b)(3) class disappear. See Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 619-20 (1997); In re Warfarin Sodium Antitrust Litig., 391 F.3d 516, 529 (3d Cir. 2004) (“[C]oncerns with regards to case manageability that arise with litigation classes are not present with settlement classes, and thus those variations are irrelevant to certification of a settlement class.” (citing Amchem, 521 U.S. at 620)).

         1. Rule 23(a) Requirements

         a. Numerosity

         Rule 23(a)(1) requires that a class be “so numerous that joinder of all members is impracticable.” Fed.R.Civ.P. 23(a)(1). “No minimum number of plaintiffs is required to maintain a suit as a class action, but generally if the named plaintiff demonstrates that the potential number of plaintiffs exceeds 40, the first prong of Rule 23(a) has been met.” Stewart v. Abraham, 275 F.3d 220, 226-27 (3d Cir. 2001). The parties represent more than 120 Class Members in this case. See Pls.' Mot. at 6 (“Defendants confirm that the proposed Settlement Class includes approximately 129 people.”). Accordingly, Plaintiffs satisfy the numerosity requirement of Rule 23(a).

         b. Commonality

          Rule 23(a)(2) requires that “there are questions of law or fact common to the class.” Fed.R.Civ.P. 23(a)(2). To satisfy the commonality requirement, class members' claims “must depend upon a common contention . . . of such a nature that it is capable of classwide resolution-which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011). Commonality may be shown by “demonstrat[ing] that the class members ‘have suffered the same injury.'” Id. (quoting Gen. Tel. Co. of the Southwest v. Falcon, 457 U.S. 147, 157 (1982)). A ...

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