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Aragon v. Clear Water Products LLC

United States District Court, D. Colorado

December 18, 2018

THOMAS ARAGON, on behalf of himself and all similarly situated persons, Plaintiff,
v.
CLEAR WATER PRODUCTS LLC, MILLS SOLIDS CONTROL CONSULTING, LLC, AQUA CLEAR SOLUTIONS LLC, BRODY HANSEN, SCOTT FORKNER, WAYNE JEFFREY HUBBARD, JAY GARRETT MILLS, and DANIELLE MILLS, Defendants.

          ORDER

          PHILIP A. BRIMMER UNITED STATES DISTRICT JUDGE.

         This matter comes before the Court on the Joint Motion for Final Approval of Settlement Agreement [Docket No. 110] and plaintiff's Unopposed Motion for Approval of Attorney's Fees and Costs [Docket No. 109]. The Court has jurisdiction over this lawsuit pursuant to 28 U.S.C. § 1331.

         I. BACKGROUND

         This case arises out of a wage dispute. Plaintiff, a solids control technician, claims that he and other similarly situated employees of defendants were not paid full compensation for overtime hours worked and were instead paid a “day rate with no overtime premium pay.” Docket No. 1 at 4, ¶ 9. Plaintiff also alleges that he was not paid for all his hours worked and rest breaks as mandated by Colorado law. Id.

         Plaintiff filed a class action complaint on December 28, 2015. Docket No. 1. Plaintiff asserts claims for violation of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., the Colorado Wage Claim Act, Colo. Rev. Stat. § 8-4-101, et seq., the Colorado Minimum Wage Act, Colo. Rev. Stat. § 8-6-101, et seq., and breach of contract. Id. at 6-9, ¶¶ 14-37. On May 5, 2017, the parties filed a joint motion for preliminary approval of a class action settlement. Docket No. 103. The Court granted the motion on March 5, 2018 and approved the parties' plan to disseminate notice of the settlement to class members. Docket No. 106. On May 14, 2018, plaintiff filed a motion requesting an award of attorney's fees and costs. Docket No. 109. On June 28, 2018, the parties moved for final approval of the class action settlement. Docket No. 110. The Court held a final fairness hearing regarding the proposed settlement on December 13, 2018. Docket No. 114.

         II. FINAL APPROVAL OF CLASS ACTION SETTLEMENT

         A. Overview of the Settlement Agreement

         The proposed settlement agreement defines the settlement class as:

all persons who worked for Clear Water as solids control technicians and were paid a day rate at any time from December 28, 2013 through the date that the Court enters an order preliminarily approving this Agreement.

Docket No. 103-3 at 1, ¶ II.A. Under the proposed settlement agreement, defendants agree to pay a total of $350, 000.00 as well as the settlement administrator's fees. Id. at 6, ¶ IV.E.1. The settlement funds are to be distributed as follows: (1) service awards of $7, 000.00 to plaintiff and $2, 750.00 each to opt-in plaintiffs Michael Aragon, Raymond Romero, Kevin Shay, and David Yoho, id., ¶ IV.E.3; (2) payments to class counsel of up to $116, 666.00 for attorneys' fees and costs, id., ¶ IV.E.2; (3) payment of class members' payroll taxes, id. at 7, ¶ IV.E.4; and (4) pro rata payments to settlement class members of all remaining funds based on the number of weeks they were paid a day rate since December 28, 2013. Id., ¶ IV.E.7.

         B. Notice to the Settlement Class

         Under Rule 23(e)(1), a district court approving a class action settlement “must direct notice in a reasonable manner to all class members who would be bound by the proposal.” Fed.R.Civ.P. 23(e)(1). Rule 23(c)(2)(B) provides, in relevant part, that for “any class certified under Rule 23(b)(3), the court must direct to class members 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). In addition to the requirements of Rule 23, the Due Process Clause also guarantees unnamed class members the right to notice of a settlement. DeJulius v. New England Health Care Emps. Pension Fund, 429 F.3d 935, 943-44 (10th Cir. 2005). However, due process does not require that each class member receive actual notice to be bound by the adjudication of a representative action. Id. Instead, the procedural rights of absent class members are satisfied so long as “the best notice practicable under the circumstances [is given] including individual notice to all members who can be identified through reasonable effort.” In re Integra Realty Resources, Inc., 262 F.3d 1089, 1110 (10th Cir. 2001) (citation omitted). Thus, “[t]he legal standards for satisfying Rule 23(c)(2)(B) and the constitutional guarantee of procedural due process are coextensive and substantially similar.” DeJulius, 429 F.3d at 944.

         The Court finds that the parties complied with the notice plan that was approved by this Court in its ruling on the parties' motion for preliminary approval of the class action settlement. See Docket No. 106 at 16-18. The settlement administrator mailed a notice of preliminary approval to each of the eighty-nine settlement class members. Docket No. 110-2 at 2, ¶ 6. The settlement administrator also emailed notice of the settlement to eighty-six class members. Id. One class notice was returned to the settlement administrator and was undeliverable upon remailing of the notice. Id. at ¶ 7.

         Consistent with its prior order, the Court finds that the parties made reasonable efforts to identify and provide notice to all class members who would be bound by the settlement. See Fed. R. Civ. P. 23(e)(1) (requiring court to “direct notice in a reasonable member to all class members who would be bound by the proposal”); Tennille v. W. Union Co., 785 F.3d 422, 438-39 (10th Cir. 2015) (finding that mailing of settlement notice to addresses updated through post office's change-of-address database was sufficient under Rule 23 and due process); DeJulius, 429 F.3d at 944 (noting that due process inquiry “focuses upon whether the district court gave the best notice practicable under the circumstances including individual notice to all members who can be identified through reasonable effort” (internal quotation marks omitted)). Moreover, the notice itself contained information regarding the nature of the lawsuit, the definition of the class, class members' anticipated recovery under the settlement, the amount of attorneys' fees and costs sought, and a summary of the class members' legal rights, including the right to object or exclude themselves from the settlement. See Docket No. 110-3; see also Fed. R. Civ. P. 23(c)(2)(B) (describing information to be included in notice). The notice also directed class members to a toll-free number for additional information regarding the settlement. See Docket No. 110-3 at 4; see also Tennille, 785 F.3d at 437 (finding that “notice satisfied due process by informing class members of several ways they could obtain information about the claims that they would be releasing if they joined the settlement”).

         Based on the foregoing, the Court is satisfied that the notice provided to class members met the requirements of Rule 23(e) and Due Process.

         C. Analysis of Rule 23 Factors [1]

         Rule 23(e) provides that a proposed settlement may only be approved after a “finding that it is fair, reasonable, and adequate.” Fed.R.Civ.P. 23(e)(2). In this process, “trial judges bear the important responsibility of protecting absent class members, ” and must be “assur[ed] that the settlement represents adequate compensation for the release of the class claims.” In re Pet Food Prods. Liab. Litig., 629 F.3d 333, 349 (3d Cir. 2010); see also Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 623 (1997) (noting that the Rule 23(e) inquiry “protects unnamed class members from unjust or unfair settlements affecting their rights when the representatives become fainthearted before the action is adjudicated or are able to secure satisfaction of their individual claims by a compromise”) (citations omitted). To determine whether a proposed settlement is fair, reasonable, and adequate, courts consider the following factors: “(1) whether the proposed settlement was fairly and honestly negotiated; (2) whether serious questions of law and fact exist, placing the ultimate outcome of the litigation in doubt; (3) whether the value of an immediate recovery outweighs the mere possibility of future relief after protracted and expensive litigation; and (4) the judgment of the parties that the settlement is fair and reasonable.” Rutter & Wilbanks Corp. v. Shell Oil Co., 314 F.3d 1180, 1188 (10th Cir. 2002). If the settling parties can establish these factors, courts usually presume that the proposed settlement is fair and reasonable. In re Warfarin Sodium Antitrust Litig., 391 F.3d 516, 535 (3d Cir. 2004) (applying an “initial presumption of fairness” to a proposed settlement where: (1) it was the result of arm's length negotiations; (2) it was based on sufficient discovery; (3) “the proponents of the settlement [were] experienced in similar litigation; and (4) only a small fraction of the class objected”).

         With regard to the first factor, the Court finds no evidence of collusion. This case has been pending for nearly three years, during which time the parties have briefed several motions and engaged in formal discovery, including written discovery and depositions. See Docket No. 110 at 7; Docket No. 79 (plaintiff's motion for class certification); Docket No. 80 (plaintiff's motion to approve Hoffman-LaRoche notice). The parties also engaged in informal discovery, which indicated that any substantial recovery won by plaintiff could lead to defendants' bankruptcy. See Docket No. 110 at 7. Based on the information provided, the Court is satisfied that the parties' settlement is the product of fair and honest negotiations between the parties. See Reiskin v. Reg'l Transp. Dist. Colo., No. 14-cv-03111-CMA-KLM, 2017 WL 5990103, at *2 (D. Colo. July 11, 2017) (finding that class settlement was fairly and honestly negotiated where “case involved intensive discovery, ” “expert witness reports, ” depositions, and “[n]umerous motions”).

         The Court also finds that there are serious questions of law and fact in this case that likely would have affected plaintiffs' chance at recovery. Defendants represent that they believe that many of the class members are subject to the Motor Carrier Act exemption to the FLSA, 29 U.S.C. § 213(b)(1). See Docket No. 110 at 8-9. The parties also dispute several issues related to damages, such as which statute of limitations applies and to what extent the Motor Carrier Act exemption applies. Id. Finally, the financial information disclosed by defendants during discovery indicated that defendants would not have been able to pay a large lump sum judgment, possibly leading to minimal recovery by the class members. Id. at 7. Given the real prospect that plaintiffs would not have obtained any recovery had the case proceeded to trial, the Court finds that this factor weighs in favor of approving the parties' settlement agreement.

         The Court next considers whether the value of immediate recovery outweighs the mere possibility of future relief after protracted and expensive litigation. The parties indicate that continued litigation would lead to additional discovery, extensive motions practice, trial, and an appeal. See Docket No. 110 at 9-10. Under the parties' settlement agreement, class members will receive a pro rata share of $350, 000, less attorney's fees and other adjustments. See Docket No. 110-1 at 6-7, ΒΆΒΆ 1-7. Given the risks and costs of protracted litigation and uncertainty surrounding class members' ability to recover on ...


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