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Myers v. Jani-King of Philadelphia, Inc.

United States District Court, E.D. Pennsylvania

August 26, 2019

PAMELA MYERS ET AL.
v.
JANI-KING OF PHILADELPHIA, INC. ET AL.

          MEMORANDUM

          R. BARCLAY SURRICK, J.

         Presently before the Court are Plaintiffs' Unopposed Motion for Final Class Action Settlement Approval (ECF No. 159), and Plaintiffs' Unopposed Request for Incentive, Fee, and Expense Awards (ECF No.158). For the following reasons, Plaintiffs' Motion and Request will be granted.

         I. BACKGROUND

         A. Background Litigation

         In this class action, Plaintiffs Darryl Williams and Howard Brooks pursue claims on behalf of themselves and others similarly situated against Defendants Jani-King of Philadelphia, Inc.; Jani-King, Inc.; and Jani-King International, Inc. (collectively “Jani-King”). Plaintiffs performed cleaning services in Pennsylvania under Jani-King's janitorial franchise system. Plaintiffs allege that Jani-King misclassified them as independent contractors as opposed to employees and, by doing so, took improper deductions from their wages in violation of Pennsylvania's Wage Payment and Collection Law (“WPCL”), 43 Pa. Stat. Ann. § 260.1 et seq.

         On March 11, 2015, the Court certified a state-law class on Plaintiffs' WPCL claims. Myers v. Jani-King of Phila., Inc., No. 09-1738, 2015 WL 1055700, at *10 (E.D. Pa. Mar. 11, 2015), aff'd sub nom. Williams v. Jani-King of Phila. Inc., 837 F.3d 314 (3d Cir. 2016).[1] The Court certified the following class: “all individuals who signed contracts with [Jani-King], and performed cleaning services in Pennsylvania pursuant to such contract at any time from March 20, 2006 to present.” (Order, ECF No. 88.) There are approximately 290 class members.

         Jani-King filed a petition with the Third Circuit Court of Appeals pursuant to Rule 23(f) of the Federal Rules of Civil Procedure, seeking to appeal this Court's class certification. (ECF Nos. 93-95.) The Third Circuit granted the Petition and permitted the appeal. (ECF No. 97.) The matter was stayed pending the outcome of the appeal. (ECF No. 101.) On September 21, 2016, the Third Circuit affirmed the Court's grant of class certification on September 21, 2016. (ECF No. 103.) Trial was scheduled to take place on March 29, 2019. (ECF No. 112.) Just weeks before trial, the parties entered into settlement negotiations with the assistance of a mediator. (ECF No. 155.) The negotiations resulted in a Class Action Settlement Agreement and Release (the “Settlement Agreement”), which was executed in April 2019. (Settlement Agreement, Stmt. Mot. Ex. A.)

         On May 10, 2019, the Court preliminarily approved the Settlement Agreement. Myers v. Jani-King of Philadelphia, Inc., No. 09-1738, 2019 WL 2077719, at *1 (E.D. Pa. May 10, 2019). Specifically, we determined that the Settlement Agreement “does not raise any doubts as to fairness or otherwise reveal any deficiencies.” Id. at 3.

         B. Notice Period and Class Participation

         Pursuant to the Settlement Agreement, on May 20, 2019, Plaintiffs' settlement administrator mailed the Court-approved class notice and claim form to the last-known addresses for all individuals who purchased Jani-King franchises from any Jani-King Defendant and performed cleaning services in Pennsylvania pursuant to such contract at any time since March 2006. (Settlement Agreement ¶ 28.) Notice was mailed to approximately 288 class members. (Liss-Riordan Decl. ¶ 5, ECF No. 159-2.) Of these individuals, only 23 settlement class members were unable to be located. This means that class counsel was able to reach approximately 92% of the possible class members. Of those reached, approximately 109 class members filed claims after receiving notice of the Settlement Agreement. Class counsel received no objections to the proposed settlement. Five class members have requested to opt out of the settlement. These exclusions represent only 1.7% of the settlement class.

         A Fairness Hearing was held on August 20, 2019. (See Min. Entry, ECF No. 120.) The parties now seek the Court's final approval of the Settlement Agreement.

         C. The Settlement Agreement

         Under the proposed Settlement Agreement, Defendants will pay a total of $3, 700, 000 to a non-reversionary settlement fund. (Settlement Agmt. ¶¶ 7, 18.)[2] Reductions from this fund include amounts for attorneys' fees, expenses, and service awards. Specifically, Plaintiffs' counsel has requested $1, 233, 333.33 in attorneys' fees, $30, 000 in service awards to the Named Plaintiffs, and $16, 757.37 in costs. (Stmt. Mem. 1 n.3.)[3] After these reductions, $2, 419, 909.30 will remain in the settlement fund. This amount will be distributed to the 109 class members who have returned settlement claim forms. Pursuant to the Settlement Agreement, Plaintiffs' counsel will continue to accept late claims until 90 days before the final distribution. Counsel has indicated that Defendants intend to make the final distribution payment on September 1, 2020. Accordingly, late claims will be accepted up until approximately June 1, 2020. The average individual payout is anticipated to be approximately $10, 872.00.

         Jani-King agrees to pay the total settlement amount in two installments of $1, 850, 000, the first of which is to be paid 60 days after the Court grants final approval of the settlement. Jani-King agrees to pay the second installment on September 1, 2020. Class members who have submitted claim forms and executed updated franchise agreements by the time the first payment is made will receive their first installment payment from the settlement fund shortly after Jani-King makes the first payment, estimated to be in the Fall of 2019. (Stmt. Mem. 2.) Class members will receive a second payment shortly after Jani-King pays the second installment of the settlement fund.

         Payments will be calculated by taking the Qualifying Fees paid by a Claimant during the class period and dividing by the total Qualifying Fees paid by all Claimants during the class period. (Settlement Agreement ¶¶ 11, 33.) Claimants are class members who have filed claims. “Qualifying Fees” include initial franchise fees, fees for additional business, and insurance fees paid by a Claimant during the class period. (Settlement Agreement ¶ 11.) Distribution of settlement proceeds will be the responsibility of class counsel. Payments to each Claimant will be based on the franchise fees, franchise note payments, and insurance payments that they have made since 2006. This distribution formula has been approved by at least two other district courts handling similar class actions against Jani-King. See De Giovanni v. Jani-King, No. 07-10066 (D. Mass.); Fuller v. Jani-King, No. 15-00438 (D. R.I.).

         In addition to making payments, Jani-King has also agreed to make changes to its business practices. Franchisees who settle with Jani-King and wish to continue to do business with them will be offered a new franchise agreement. The aim of the new franchise agreement is to eliminate various controls that Jani-King has had over the franchisees. (Settlement Agreement ¶ 20.) For example, the new franchise agreement does not contain provisions for post-termination non-competition agreements. (Id.) It also shortens the non-solicitation period with respect to Jani-King accounts to 12 months. (Id.) In addition, franchisees may sign new business that they generate without paying finder's fees to Jani-King. (Id.) Jani-King also agrees to “work to transition its business to franchisees that manage multiple larger accounts and employ their own workers.” (Id. ¶ 21.)

         In addition to settlement payments, Jani-King also agrees to make buyout payments to franchisees with monthly revenues of less than $5, 000 per month, at the franchisees' option. (Id. at ¶¶ 20-21.) As part of the buyout, Jani-King purchases the class members' existing servicing contracts (and terminates their franchise) at a rate of two times the gross monthly revenue of their existing accounts. (Id.) The buy-out payment to those who qualify will be paid in addition to the damage payments under the settlement. These additional buyout payments could be worth as much as $10, 000 in additional consideration. (Id.) To date, approximately 20 class members have opted for a buyout payment. Class members that chose a buyout may continue to perform work for other Jani-King franchises that retain their accounts.

         The Settlement Agreement also provides for a total of $30, 000 in incentive payments to the Named Plaintiffs Darryl Williams, Howard Brooks, and Pamela Myers ($10, 000 each). (Settlement Agreement ¶ 24.) Finally, the Settlement Agreement provides for attorneys' fees in the amount of one-third of the settlement fund, or $1, 233, 333.33. (Id. at ¶ 23.)

         II. DISCUSSION

         Our consideration of the proposed settlement will include the following: (1) whether the proposed WPCL class action meets the requirements of Rule 23 of the Federal Rules of Civil Procedure and is entitled to final certification; (2) whether the settlement proposed by the parties is fair and adequate; (3) whether the service payment awards to the Named Plaintiffs are fair and reasonable; and (4) whether Plaintiffs' request for attorneys' fees and costs merits approval.

         A. Class Certification of WPCL Class Under Rule 23

         Before determining whether the proposed settlement warrants approval, we must first determine whether Plaintiffs have met the elements of final certification of the WPCL class. We previously granted preliminary certification to the WPCL class to include “all individuals who signed contracts with Jani-King of Philadelphia, Inc.; Jani-King, Inc.; or Jani-King International, Inc., and performed cleaning services in Pennsylvania pursuant to such a contract at any time from March 20, 2006 until the present.” Myers v. Jani-King of Philadelphia, Inc., No. 09-1738, 2015 WL 1055700, at *16 (E.D. Pa. Mar. 11, 2015), aff'd sub nom. Williams v. Jani-King of Philadelphia Inc., 837 F.3d 314 (3d Cir. 2016); (Order, ECF No. 88.)

         Class certification under Rule 23 has two components. The party seeking class certification must first establish the four requirements of Rule 23(a):

(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); see also In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 309 n.6 (3d Cir. 2008).

         “If all four requirements of Rule 23(a) are met, a class of one of three types (each with additional requirements) may be certified” under Rule 23(b). In re Hydrogen Peroxide Antitrust Litig., 552 F.3d at 309 n.6. Plaintiffs seek certification under Rule 23(b)(3), which states that “[a] class action may be maintained if Rule 23(a) is satisfied and if: (3) the court finds that the 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). These are known as the predominance and superiority factors of Rule 23(b)(3).

         The party seeking class certification “bears the burden of establishing each element of Rule 23 by a preponderance of the evidence.” Marcus v. BMW of N. Am., LLC, 687 F.3d 583, 591 (3d Cir. 2012). Certification is only proper “if the trial court is satisfied, after a rigorous analysis, that the prerequisites of Rule 23 are met.” In re Hydrogen Peroxide Antitrust Litig., 552 F.3d at 309 (footnote and quotation marks omitted).

         When we granted preliminary certification of this class, we provided an extensive analysis of the Rule 23 factors that govern certification. Myers, 2015 WL 1055700, at *5-15. Our grant of class certification was affirmed by the Third Circuit. See Williams, 837 F.3d at 325. As class counsel point out, the proposed settlement class is “coextensive with the class this Court has already certified.” (Stmt. Mem. 16.) Based upon this, final certification of ...


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