Browne v. PAM Transport Inc

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF ARKANSAS

FAYETTEVILLE DIVISION

DAVID BROWNE, ANTONIO

CALDWELL, and LUCRETIA HALL,

on behalf of themselves and

others similarly situated PLAINTIFFS

V. CASE NO. 5:16-CV-5366

P.A.M. TRANSPORT, INC. DEFENDANT

OPINION AND ORDER GRANTING FINAL APPROVAL

OF COLLECTIVE AND CLASS ACTION SETTLEMENT

This litigation began nearly four years ago when the Named Plaintiffs filed their

complaint alleging claims under the Fair Labor Standards Act (“FLSA”) and the Arkansas

Minimum Wage Act (“AMWA”), along with some other collateral claims. Over the course

of the hard-fought litigation, the Court certified class and collective actions of over-the-

road truck drivers employed by Defendant P.A.M. Transport, Inc. (“PAM”). Ultimately, the

parties in this case reached a Settlement Agreement (the “Agreement”) in February 2020,

on the eve of trial. The Court gave preliminary approval to the Agreement and ordered

that notice of the settlement be provided to all class members, more than sixteen

thousand over-the-road truck drivers in all. See Doc. 282. Notice having gone out and the

objection and opt-out periods having expired, Plaintiffs filed the instant unopposed Motion

seeking final approval of the Agreement, accompanied by a Brief in Support (Docs. 297

& 298). On July 31, 2020, the Court held a hearing via telephone on the Motion for Final

Approval and ruled from the bench that the Motion should be GRANTED. This written

Order is intended to supplement the Court’s oral rulings from the bench, but to the extent

that there is any discrepancy between this written Order and the rulings from the bench,

this Order shall control.

In considering and ruling on Plaintiffs’ Motion for Final Approval, the Court makes

the following findings:

I. Settlement of FLSA Collective Action

Before a court approves an FLSA settlement agreement, it must determine that

“the litigation involves a bona fide dispute and that the proposed settlement is fair and

equitable to all parties.” Boland v. Baue Funeral Home Co., 2015 WL 7300507, at *2 (E.D.

Mo. Nov. 18, 2015) (citations omitted). “A settlement is bona fide if it reflects a reasonable

compromise over issues actually in dispute, since employees may not waive their

entitlement to minimum wage and overtime pay under [the] FLSA.” King v. Raineri

Constr., LLC, 2015 WL 631253, at *2 (E.D. Mo. Feb. 12, 2015) (citing D.A. Schulte, Inc.

v. Gangi, 328 U.S. 108, 115 (1946)). If the court determines that there is a bona fide

dispute, it must next determine that the agreement purporting to settle that agreement is

fair and reasonable to all parties. Such a determination usually involves considering:

the stage of the litigation and amount of discovery exchanged, the

experience of counsel, the probability of plaintiffs’ success on the merits,

any ‘overreaching’ by the employer in the settlement negotiations, and

whether the settlement was the product of arm’s length negotiations

between represented parties based on the merits of the case.

Id. (citing Carrillo v. Dandan Inc., 51 F. Supp. 3d 124, 132-33 (D.D.C. 2014)).

As the Court stated from the bench during the final approval hearing, the Court

finds that the Agreement is a fair, reasonable, and equitable settlement. The parties

reached the settlement on the eve of trial after extensive discovery, dozens of

depositions, expert reports, and a ruling on a motion for summary judgment. The Court is

confident that there is a bona fide dispute between the parties and that this settlement

agreement is the product of arm’s length negotiations based on the merits of the case.

II. Settlement of Rule 23 Class Claims

The Plaintiffs also brought claims that were certified as class claims pursuant to

Rule 23 of the Federal Rules of Civil Procedure. In the case of settlement, pursuant to

Rule 23(e)(2), the Court is to analyze whether the settlement is “fair, reasonable, and

adequate.” The Eighth Circuit has specified four factors to consider in this analysis: (1)

the merits of the plaintiff’s case, weighed against the terms of the settlement; (2) the

defendant’s financial condition; (3) the complexity and expense of further litigation; and

(4) the amount of opposition to the settlement. Petrovic v. Amoco Oil Co., 200 F.3d 1140,

1150, 1152 (8th Cir.1999).

Here, the Court notes that this case was exceedingly complex, both with respect

to the sheer number of data points to be considered in calculating damages and with

regard to the novel legal issues raised in the case, for which there was no binding

precedent in this Circuit. The Court also notes that PAM submitted an affidavit attesting

to its precarious financial situation, which suggested that Plaintiffs likely would not have

been able to secure any more relief than this Agreement awards them. Finally, the Court

observes that though notice was sent to more than sixteen thousand class members, not

a single objection was filed, and only two class members opted out of the settlement. For

these and all the other reasons stated from the bench, the Court is confident that the

settlement is fair, reasonable, and adequate.

III. Attorney Fees

The settlement agreement provides for Plaintiffs’ class counsel to seek one-third

of the total settlement amount to cover the attorneys’ fees in this matter, a total of

$5,500,000. In considering the appropriate amount of attorney fees, courts in the Eighth

Circuit have considered the factors laid out in Johnson v. Ga. Highway Express, Inc.: (1)

the time and labor required; (2) the novelty and difficulty of the questions; (3) the skill

requisite to perform the legal service properly; (4) the attorney’s preclusion of other

employment due to acceptance of the case; (5) the customary fee; (6) whether the fee is

fixed or contingent; (7) the time limitations imposed by the client or the circumstances; (8)

the amount involved and the results obtained; (9) the experience, reputation, and ability

of the attorneys; (10) the “undesirability” of the case; (11) the nature and length of the

professional relationship with the client; and (12) awards in similar cases. See Allen v.

Tobacco Superstore, Inc., 475 F.3d 931, 944 (8th Cir. 2007) (finding no abuse of

discretion where the district court considered the Johnson factors in determining the final

fee award) (citing 488 F.2d 714, 717–19 (5th Cir.1974), abrogated on other grounds by

Blanchard v. Bergeron, 489 U.S. 87, 90 (1989)).1

The Court notes that not all of these factors will apply or need weigh in favor of the

ultimate fee award. Nevertheless, the Court finds that here, all of the factors apply and all

of them weigh in favor of a finding that a one-third contingency fee is appropriate in this

1 As the Court noted from the bench, these factors overlap almost completely with the

factors laid out by the Arkansas Supreme Court in Chrisco v. Sun Industries, Inc., 800

S.W.2d 717, 718–19 (Ark. 1990) for assessing appropriate attorney fees under state law.

The Eighth Circuit has recognized that these factors are appropriate for consideration in

matters of Arkansas law. See All-Ways Logistics, Inc. v. USA Truck, Inc., 583 F.3d 511,

520–21 (8th Cir. 2009).

case. For example, the case was extremely hard-fought. The litigation stretched over

nearly four years and involved extensive motion practice, voluminous discovery, and

numerous depositions. It presented novel questions of law. Plaintiffs’ counsel proved

themselves to be highly skilled and experienced in this particular area of litigation. They

took the case on a contingent basis despite a significant risk that they might not prevail

or might not be able to collect the judgment in full even if they did prevail. Plaintiffs’

counsel also had considerable success on the merits of the case, prevailing in part on a

motion for summary judgment before reaching a settlement on the Friday before the trial

was to begin. Additionally, the Agreement negotiated by class counsel provides for

injunctive relief requiring PAM to change some of its business practices in addition to

providing financial compensation to class members.

The Court also exercised its discretion to use the lodestar method to cross-check

the attorneys’ fees awarded as a percentage of the common fund. As stated from the

bench, the Court emphasizes its disagreement with Plaintiffs that $500 is a reasonable

hourly rate for the work of the attorneys in this case given that the reasonable rate is

determined based on the locality in which the matter is litigated. Nevertheless, even

adjusting downward the reasonable hourly rate, resulting in a higher multiplier, the Court

believes that the lodestar calculation supports the appropriateness of the one-third

contingency fee in this case.

IV. Plaintiff Service Awards

Rule 23(e)(2)(D) requires that a settlement agreement treat class members

“equitably relative to each other.” It is common practice to bestow service awards on

individual plaintiffs in recognition of particular contributions to the case. For example,

service payments are frequently made to named plaintiffs in recognition of the effort and

risk taken on by the individuals who bring the case on behalf of similarly situated class

members.

In this case, the Court finds that the Named Plaintiffs put themselves on the line to

carry this case to its ultimate conclusion. The Named Plaintiffs faced two offers of

judgment and nevertheless decided to persevere on behalf of the class, even taking on

the potential risk of having to pay Defendant’s legal costs if the Plaintiffs were not

ultimately successful. The Named Plaintiffs invested a substantial amount of time over

several years—they indicate that they spent approximately 400 hours helping counsel

litigate this case on behalf of the class. The Court recognizes that the Named Plaintiffs

are worthy of extraordinary recognition for their role in this litigation and will approve a

service award of $40,000 to each of the three Named Plaintiffs. In declining to award the

full $50,000 requested by Plaintiffs, the Court notes that the amount awarded represents

approximately $100 per hour each Named Plaintiff spent on the case. It is the Court’s

position that this is appropriate compensation and that any more would constitute a

windfall.

The Court finds that the proposed service awards of $1,000 to Plaintiffs who sat

for deposition and $2,500 to Plaintiffs who were prepared to appear and testify at trial are

also appropriate.

V. Cy Pres Award

The settlement agreement proposes that any unclaimed funds from the settlement

be donated to the St. Christopher Truckers Development and Relief Fund. The Eighth

Circuit acknowledges that “[i]n the class action context, it may be appropriate for a court

to use cy pres principles to distribute unclaimed funds.” Caligiuri v. Symantec Corp. 855

F.3d 860, 866 (8th Cir. 2017) (quoting In re Airline Ticket Comm’n Antitrust Litig., 307

F.3d 679, 682 (8th Cir. 2002)). However, “cy pres distribution to a third party of unclaimed

settlement funds is permissible only when it is not feasible to make further distributions to

class members . . . .” In re BankAmerica Corp. Securities Litig., 775 F.3d 1060, 1064 (8th

Cir. 2015) (internal quotation marks omitted). Further distributions are not required where

“the amounts involved are too small to make individual distributions economically viable.”

Id. at 1065 (quoting Am. Law Inst., Principles of the Law of Aggregate Litigation § 3.07(a)

(2010)). “In such a case, the unclaimed funds should be distributed for a purpose as near

as possible to the legitimate objectives underlying the lawsuit, the interests of class

members, and the interests of those similarly situated.” Caligiuri, 855 F.3d at 866. The

Eighth Circuit directs that “cy pres distributions simply must be for the next best use for

indirect class benefit, and for uses consistent with the nature of the underlying action and

with the judicial function.” Id. at 867 (internal quotation marks omitted).

The Court believes that the St. Christopher Fund is an appropriate cy pres recipient

in this case, as it provides support to truck drivers and their families who face financial

struggles because of injury or illness. However, in light of the case law cited above, the

Court concludes that a final decision regarding the distribution of the residual amount in

the settlement fund is better made when the parties and the Court know exactly what that

amount is. Therefore, the Court will direct the parties to update the Court one year after

the final check is mailed, inform the Court how much is left in the settlement fund, and

make a recommendation as to the best way to distribute the remaining funds—either

through a second round of checks to class members or as a cy pres award to the St.

Christopher Fund.

Based on all the findings discussed above and stated on the record from the bench,

the Court hereby:

1. GRANTS final approval of the Class and Collective Settlement filed with

the Court at Doc. 279-1 (the “Settlement”);

2. ORDERS Defendant to wire the entire Settlement Fund of

$16,500,000 to the Claims Administrator within 10 days of the date of this Order pursuant

to §3.1(B) of the Settlement;

3. ORDERS Defendant, pursuant to §3.5 of the Settlement, to cease

charging $10 service fees for wage advances and to stop withholding wages on payday

due to late paperwork;

4. ORDERS the Claims Administrator to distribute the Settlement Fund to

all Class Members Consistent with the Settlement, subject to any modification directed

by the Court;

5. GRANTS Class Counsel’s requests for their reasonable attorneys’ fees

of $5,500,000, representing 33 1/3% of the Settlement Fund;

6. GRANTS Named Plaintiffs David Browne, Antonio Caldwell, and Lucretia

Hall modified service payments of $40,000 each for the efforts and risks they took to

benefit to the Class;

7. GRANTS Service Payments of $1,000 each to the Opt-in Plaintiffs who

sat for deposition, whose identities are provided in §3.3(A)(a) of the Settlement.

8. GRANTS Service Payments of $2,500 each to the Opt-in Plaintiffs who

sat for deposition and who had made arrangements to travel to Arkansas to testify live

at trial, whose identities are provided in §3.3(A)(b) of the Settlement;

9. GRANTS Class Counsel’s request for reimbursement of their reasonable

litigation costs of $600,000;

10. GRANTS the Claims Administrator its reasonable fees and costs incurred

in providing notice of and administering the settlement to be paid from the Settlement

Fund in accordance with the Settlement Agreement, not to exceed $124,500;?

11. ORDERS that the release provided in the Settlement is binding on all class

members, except for the two individuals who opted out of the litigation, Kyle S. Bartels

and William C. Morris, Jr. See Ex D of Decl. of Steve Giannotti (Doc. 294, p. 24);

12. ORDERS that after one year of the final settlement check being issued,

the parties submit to the Court information as to any unclaimed funds remaining in the

Settlement Fund and the best allocation of those funds—either distribution among the

class members or donation to the St. Christopher Truckers Relief Fund; and

13. ORDERS that it shall retain jurisdiction to enforce the terms of the

settlement and directs the Parties to provide a status report to the Court in 90 days.

IT IS SO ORDERED, this 31st day of July, 2020.

UNITED STATES DISTRICT JUDGE

2 The Court notes that it stated this number to be $124,000 from the bench. As indicated

in the Order appointing Angeion Group, LLC, the Claims Administrator may seek no more

than $124,500 in compensation for its work. See Doc. 292.