EASTERDAY v. USPACK LOGISTICS LLC

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

CAMDEN VICINAGE

:

MICHAEL EASTERDAY, individually and on :

behalf of all others similarly situated, :

: Civil No. 1:15-CV-07559 (RBK/AMD)

Plaintiff, :

v. : OPINION

:

USPACK LOGISTICS LLC, :

:

Defendant. :

:

:

KUGLER, United States District Judge:

This matter is before the Court on Plaintiff’s unopposed Motion for Preliminary Approval

of Class Action Settlement (ECF No. 286 (“Mot.”)). Plaintiff seeks preliminary approval of the

parties’ Settlement Agreement (ECF No. 286-1 (“Agreement”)), settling wage and hour claims

and an unjust enrichment claim under Federal Rule of Civil Procedure 23. Specifically, Plaintiff

moves for an order (1) granting preliminary approval of the proposed class action settlement so

that Plaintiff may initiate notice to the settlement class and (2) setting a date for a final fairness

hearing 120 days after preliminary approval is granted. Defendant USPack Logistics LLC does

not oppose the motion. For the reasons set forth below, the Court grants Plaintiff’s motion for

preliminary settlement approval but denies Plaintiff’s request to set a date for a final fairness

hearing because Plaintiff’s proposed notice to the settlement class is insufficient to meet the

requirements of due process and Federal Rule of Civil Procedure 23(c).

I. Background

A. Factual Allegations and Litigation History

This lawsuit began on October 19, 2015, when Plaintiff filed the Complaint in this matter,

bringing claims against USPack under the New Jersey Wage Payment Law, N.J. Stat § 34:11-4.1,

et seq. (“NJWPL”), the New Jersey Wage and Hour law, N.J. Stat. § 34:11-56a, et seq.

(“NJWHL”), and New Jersey common law. (ECF No. 1). The claims arise out of Plaintiff’s

allegations that USPack classifies Plaintiff and other similarly situated individuals as “independent

contractors,” but the nature of the services and the manner in which the services are performed

classify Plaintiff and other similarly situated individuals as employees, such that they are entitled

to certain hour and wage protections under New Jersey law. (Id. ¶ 15). Plaintiff brought these

claims on behalf of a proposed class of “all other persons who have worked for USPack as courier

drivers operating in the State of New Jersey . . . during the applicable limitations period, and who

have been classified as independent contractors rather than employees.” (Id. ¶ 11).

USPack moved to compel arbitration and stay litigation on November 24, 2015. (ECF No.

8). On March 23, 2022, after the parties spent seven years litigating the arbitration issue, we entered

an Order and Opinion affirming Magistrate Judge Donio’s decision holding that the arbitration

agreement in question was unenforceable. (ECF Nos. 255, 256). The parties agreed to participate

in an alternative dispute resolution (ADR) process, which included a mediation session overseen

by Dennis Clifford, Esq. (Mot. at 5). As a result of the ADR process, the parties reached a

settlement agreement. (Id. at 6). On February 17, 2023, Plaintiff filed the instant unopposed

motion, which presents the parties’ proposed settlement agreement and Plaintiff’s position on the

law. (Mot. at 2).

B. Proposed Settlement

The proposed settlement class is defined as:

[A]ll individuals who provided courier services for US Pack Logistics, LLC in New

Jersey delivering, among other things, pharmaceuticals and related items, on behalf

of Omnicare in at least one or more workweeks during the Relevant Time Period.

(Agreement ⁋ 12(z)). “Relevant Time Period” is defined as January 1, 2013 through December 31,

2018. (Id. at ¶ 12(v)). Defendant has identified 367 individuals who qualify as a class member

under this definition. (Agreement ¶ 12(z)).

The proposed settlement would establish a non-reversionary fund of $2,850,000.00, to be

distributed as follows:

(1) $1,846,000.00 to be distributed to all participating class members;

(2) $980,000.00 in attorneys’ fees and costs, being one-third of the gross settlement

amount in attorneys’ fees plus $30,000.00 in out-of-pocket costs;

(3) $10,000.00 service award to Plaintiff; and

(4) $14,000.00 in costs to be paid to Analytics Consulting, LLC for third-party

settlement administration services.

(Agreement ¶ 12(k)–(o), (x); Mot. at 7). Each participating class member would receive a pro rata

share of the settlement, in addition to a minimum payout of $100. (Mot. at 8). Assuming full

participation of the 367 individuals eligible for participation in the class, Plaintiff estimates each

class member will receive $5,000.00 on average. (Id.).

In exchange for this consideration, Plaintiff and the settlement class would release

Defendant from all statutory or common law claims “arising from or related to the alleged

misclassification of Plaintiff and the Settlement Class as independent contractors[.]” (Agreement

¶ 14; see also Mot. at 9). Defendant denies the allegations in the Action and does not admit any

fault, liability, or wrongdoing, and further maintains the arbitration agreement signed by Plaintiff

and the proposed class members is enforceable under applicable law. (Agreement ¶ 9).

The Court must determine whether to (1) provisionally certify the proposed settlement

class under Federal Rule of Civil Procedure 23 and (2) preliminarily approve the parties’ proposed

Settlement Agreement.

II. Certification of Settlement Class

Certification of a settlement class is “a judicially crafted procedure” which permits the

Court to certify a class “for settlement purposes only, not for litigation.” In re General Motors

Corp. Pick-Up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768, 778 (3d Cir. 1995) (“GM

Trucks”). To certify a class for settlement purposes, a district court must determine that the

requirements for class certification under Rule 23(a) and (b) are met. Halley v. Honeywell Int’l,

Inc., 861 F.3d 481, 487 (3d Cir. 2017); see also In re Pet Food Prods. Liab. Litig., 629 F.3d 333,

341 (3d Cir. 2010). The court may take the proposed settlement into consideration when evaluating

whether these requirements are met. Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 613 (1997).

Under Rule 23(a), the plaintiff must demonstrate that:

(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). These four threshold requirements are commonly referred to as

“numerosity,” “commonality,” “typicality,” and “adequacy of representation.” See Pet Food

Prods., 629 F.3d at 341 n.14. Under Rule 23(b), certification is proper if “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 requirements are

commonly referred to as “predominance” and “superiority.” See Pet Food Prods., 629 F.3d at 341

n.14.

A plaintiff bears the burden of demonstrating that these requirements are met by a

preponderance of the evidence, and the district court “must make whatever factual and legal

inquiries are necessary and must consider all relevant evidence and arguments presented by the

parties.” In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 306 (3d Cir. 2008). Thus, a

district court should certify a class “only if the court is ‘satisfied, after a rigorous analysis, that the

prerequisites of Rule 23(a) have been satisfied.’” Beck v. Maximus, Inc., 457 F.3d 291, 297 (3d

Cir. 2006) (quoting Gen. Tel. Co. of the Sw. v. Falcon, 457 U.S. 147, 161 (1982)).

A. Rule 23(a)

1. Numerosity

Rule 23(a) requires that the class be “so numerous that joinder of all members is

impracticable.” Fed. R. Civ. P. 23(a)(1). There is “[n]o minimum number of plaintiffs . . . required

to maintain a suit as a class action[.]” Stewart v. Abraham, 275 F.3d 220, 226 (3d Cir. 2001).

However, numerosity is presumed satisfied “if the named plaintiff demonstrates that the potential

number of plaintiffs exceeds 40.” Id. at 226–27. Here, the parties have identified 367 individuals

who qualify as class members under the class definition in the settlement agreement. (Agreement

¶ 12(z)). Therefore, the numerosity requirement is satisfied.

2. Commonality/Predominance

When an action is brought under Rule 23(b)(3), the commonality requirement of Rule 23(a)

“is subsumed by the predominance requirement” of Rule 23(b)(3). Danvers Motor Co. v. Ford

Motor Co., 543 F.3d 141, 148 (3d Cir. 2008) (quoting Amchem Prods., 521 U.S. at 627). To certify

a class under Rule 23(b)(3), “questions of law or fact common to class members” must

“predominate over any questions affecting only individual members.” This requirement is “far

more demanding” than the commonality requirement set forth in Rule 23(a). Amchem Prods., 521

U.S. at 623–24. “[T]he predominance requirement focuses on whether essential elements of the

class’s claims can be proven at trial with common, as opposed to individualized, evidence.” Hayes

v. Wal-Mart Stores, Inc., 725 F.3d 349, 359 (3d Cir. 2013). “[W]here individual stakes are high

and disparities among class members [are] great,” courts should be hesitant to find that

predominance exists. Amchem Prods., 521 U.S. at 625.

Plaintiff argues commonality is satisfied because the claims of Plaintiff and the proposed

settlement class members raise the following common issues, among others: “(1) whether US Pack

misclassified the delivery drivers; (2) whether Settlement Class Members were entitled to overtime

compensation for their hours worked; (3) whether US Pack made deductions from the

compensation of Settlement Class Members; and (4) whether US Pack was unjustly enriched by

its pay practices.” (Mot. at 12). These questions can be answered with “common, as opposed to

individualized, evidence” because they concern Defendant’s treatment of the class generally.

Hayes, 725 F.3d at 359. Therefore, we are satisfied that the predominance and commonality

requirements are met.

3. Typicality

“[T]he claims of the class representatives must be typical of the class as a

whole.” Johnston v. HBO Film Mgmt., Inc., 265 F.3d 178, 184 (3d Cir. 2001). The typicality

requirement “is intended to assess whether the action can be efficiently maintained as a class and

whether the named plaintiff[ ][has] incentives that align with those of absent class members so as

to assure that the absentees’ interests will be fairly represented.” Baby Neal for and by Kanter v.

Casey, 43 F.3d 48, 57 (3d Cir. 1994). Typicality is generally satisfied when “a plaintiff’s claim

arises from the same event, practice or course of conduct that gives rise to the claims of the class

members.” Marcus v. BMW of North America, LLC, 687 F.3d 583, 598 (3d Cir. 2012). In this case,

Plaintiff argues that his “claims for unlawful deductions,unpaid-overtime compensation, and

unjust enrichment are typical of the claims of the Settlement Class.” (Mot. at 14). We agree.

Plaintiff’s claims arise from the “practice or course of conduct that gives rise to the claims of the

class members.” Marcus, 687 F.3d at 598. Plaintiff, like the class members, was a delivery driver

for Defendant who did not receive overtime compensation and other hour and wage benefits due

to Defendant’s alleged misclassification of Plaintiff, and the other class members, as independent

contractors. Therefore, typicality is satisfied.

4. Adequacy

The fourth requirement of Rule 23(a) requires a plaintiff to show that as class

representative, he “will fairly and adequately protect the interests of the class.” Fed. R. Civ. P.

23(a)(4). This adequacy requirement has two components: (1) whether counsel is qualified,

experienced, and able to conduct the litigation; and (2) whether any conflicts of interest exist

between the named parties and the class they seek to represent. See In re Cmty. Bank of N. Va.

Mortgage Lending Practices Litig., 795 F.3d 380 (3d Cir. 2015); In re Prudential Ins. Co. America

Sales Practice Litig. Agent Actions, 148 F.3d 283, 312 (3d Cir. 1998) (“Prudential II”). In

determining the adequacy of counsel, a court should consider the work counsel has done in

identifying or investigating potential claims in the action; counsel’s experience in handling class

actions, other complex litigation, and the types of claims asserted in the action; counsel’s

knowledge of the applicable law; and the resources that counsel will commit to representing the

class. Fed. R. Civ. P. 23(g)(1)(A).

No adequacy issues exist here. Class counsel has extensive expertise in wage and hour

class actions, and specifically in independent contractor misclassification claims. (ECF No. 286-2

¶¶ 5–9; ECF No. 286-3 ¶¶ 6–7). Counsel has also expended significant resources and effort in

prosecuting this action over the course of nearly eight years. We therefore find that class counsel

is qualified, experienced, and able to conduct the litigation. A named plaintiff is “adequate” if his

interests do not conflict with those of the class. Prudential II, 148 F.3d at 312. There are no obvious

conflicts between the representative Plaintiff and the class members. Further, Plaintiff and the class

members possess the same wage and hour claims against Defendant, and thus have a shared interest

in the outcome of the litigation. Therefore, adequacy of class counsel and adequacy of the named

Plaintiff are satisfied.

B. Rule 23(b)(3)

As the proposed settlement class meets the requirements of Rule 23(a), the Court now turns

to Rule 23(b), which imposes two additional requirements: “predominance” and “superiority.” See

Fed. R. Civ. P. 23(b)(3); Pet Food Prods., 629 F.3d at 341 n.14. As discussed above, predominance

is satisfied here. Superiority requires that “a class action [be] superior to other available methods

for the fair and efficient adjudication of the controversy.” Fed. R. Civ. P. 23(b)(3). In making this

determination a court may consider (1) the class members’ interests in individually controlling the

prosecution or defense of separate actions; (2) the extent and nature of any litigation concerning

the controversy already begun by or against class members; (3) the desirability or undesirability

of concentrating the litigation of the claims in the particular forum; and (4) the likely difficulties

in managing a class action. Id. This list is not exhaustive. Amchem, 521 U.S. at 615–16. A court

may consider any matter relevant “to balance, in terms of fairness and efficiency, the merits of a

class action against those of ‘alternative available methods’ of adjudication.” Georgine v. Amchem

Prods., Inc., 83 F.3d 610 (3d Cir. 1996).

Plaintiff argues that a class action is superior to “a multiplicity of individual and duplicative

proceedings” because of the “difficulty of finding legal representation and filing claims on an

individual basis” in this case. (Mot. at 15). Where individual claims are modest, class members’

interests in bringing individual actions is low. See Prudential II, 148 F.3d at 314. Here, each

individual class member’s claim is likely to be modest such that the benefit of bringing a claim

individually would be low. We agree with Plaintiff that the superiority requirement is met.

Because we find the Rule 23(a) and (b) factors are satisfied, we will grant provisionary

certification of the settlement class.

III. Preliminary Approval of Proposed Class Action Settlement

Federal Rule of Civil Procedure 23(e) provides “the claims . . . of a certified class may be

settled . . . only with the court’s approval.” “Even if it has satisfied the requirements for

certification under Rule 23, a class action cannot be settled without the approval of the court and

a determination that the proposed settlement is fair, reasonable and adequate.” Prudential II, 148

F.3d at 316 (quotation omitted). Review of a proposed class action settlement is a two-step process:

(1) preliminary approval and (2) a subsequent fairness hearing. In re Initial Pub. Offering Sec.

Litig., 226 F.R.D. 186, 191 (S.D.N.Y. 2005); see also Manual for Complex Litigation, Fourth §

21.632 (2004). At the first stage, the parties submit the proposed settlement to the court, which

makes a preliminary fairness evaluation. Id. If the proposed settlement is preliminarily acceptable,

the Court directs that notice be provided to all class members who would be bound by the proposed

settlement to afford them an opportunity to be heard on, object to, and opt out of the settlement.

Id.; Fed. R. Civ. P. 23(c)(2), (e)(1), (e)(5). At the second stage, after class members are notified of

the settlement, the Court holds a formal fairness hearing where class members may object to the

settlement. See Fed. R. Civ. P. 23(e); Manual for Complex Litigation, Fourth §§ 21.633–21.634.

If the Court concludes that the settlement is “fair, reasonable and adequate,” the settlement is given

final approval. Fed. R. Civ. P. 23(e)(2). A court considering final approval of a class action

settlement must evaluate the settlement under the factors set out in Girsh v. Jepson, 521 F.2d 153,

157 (3d Cir. 1975).

At the preliminary fairness evaluation stage, the court must determine whether the

proposed settlement falls “within the range of fairness, reasonableness and adequacy” required by

Rule 23(e). In re Amino Acid Lysine Antitrust Litigation, 1996 WL 197671, at *4 (N.D. Ill. Apr.

22, 1996). A proposed settlement “falls within the ‘range of possible approval’” so long as “there

is a conceivable basis for presuming that the standard applied for final approval—fairness,

adequacy, and reasonableness—will be satisfied.” In re Nat’l Football League Players’

Concussion Injury Litig., 301 F.R.D. 191, 198 (E.D. Pa. 2014). Generally, preliminary approval

should be granted “[w]here the proposed settlement appears to be the product of serious, informed,

non-collusive negotiations, has no obvious deficiencies, [and] does not improperly grant

preferential treatment to class representatives or segments of the class[.]” In re Nasdaq Mkt.-

Makers Antitrust Litig., 176 F.R.D. 99, 102 (S.D.N.Y. 1997). A settlement is presumed fair when

it results from “arm’s-length negotiations between experienced, capable counsel after meaningful

discovery.” Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 116 (2d Cir. 2005).

The standards for preliminary approval are met in this case. The proposed settlement

appears to be the result of serious arm’s-length negotiations between counsel for Plaintiff and

Defendant. The parties achieved settlement after egnaging in substantial discovery as to merits and

damages, followed by an all-day mediation session with an experienced wage and hour mediator.

(Mot. at 5, 16, 18). The settlement agreement secures substantial recoveries for the class members,

with a projected award of approximately $5000.00 on average, while Plaintiff’s counsel represents

that the attorneys’ fee award is “substantially less” than “awards approved in similar class action

settlements.” (Mot. at 19). With a modest service award of $10,000.00 to the named Plaintiff, the

agreement does not appear to unreasonably favor the class representative or any segment of the

class. The Court finds the proposed settlement agreement “falls within the range” of fairness,

reasonableness, and adequacy required by Rule 23(e). Therefore, we will grant preliminary

approval of the proposed settlement agreement.

IV. Approval of Class Notice

After preliminarily approving a proposed class settlement, a court 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). Class notice is subject to due process requirements, Zimmer Paper Prods., Inc. v. Berger

& Montague, 758 F.2d 86, 90 (3d Cir. 1985), and must comply with the method and content

guidelines in Rule 23(c)(2) and 23(e)(1). As to method, in a Rule 23(b)(3) class action, “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). Where settlement notice is sent simultaneously with notice of the class action itself,

the content of the notice must be sufficient to inform settlement class members that the settlement

agreement is not a “fait accompli” and that class members have the opportunity to be heard, to

object to the settlement, and to opt out of the settlement. See GM Trucks, 55 F.3d at 789

(citing Mars Steel v. Cont’l Ill. Nat’l Bank & Trust, 834 F.2d 677, 680–81 (7th Cir. 1987)). The

notice must “clearly and concisely state in plain, easily understood language”:

i. the nature of the action;

ii. the definition of the class certified;

iii. the class claims, issues, or defenses;

iv. that a class member may enter an appearance through an attorney if the

member so desires;

v. that the court will exclude from the class any member who requests

exclusion;

vi. the time and manner for requesting exclusion; and

vii. the binding effect of a class judgment on members under Rule 23(c)(3).

Fed. R. Civ. P. 23(c)(2)(B). Due process requires notification to the class “(1) of the nature of the

pending litigation, (2) of the settlement’s general terms, (3) that complete information is available

from the court files, and (4) that any class member may appear and be heard at the Fairness

Hearing.” In re Prudential Ins. Co. of Am. Sales Practices Litig., 962 F. Supp. 450, 527 (D.N.J.

1997) (“Prudential I”). Although the notice “need not be unduly specific,” In re Diet Drugs, 226

F.R.D. at 518 (E.D. Pa. 2005), it must “describe, in detail, the nature of the proposed settlement,

the circumstances justifying it, and the consequences of accepting and opting out of it.” Id. (citing

In re Diet Drugs, 369 F.3d 293, 308–10 (3d Cir. 2004)).

The proposed method of notice is “the best notice practicable under the circumstances.”

The Agreement provides that the third-party settlement administrator will be responsible for

preparing and mailing notice to all settlement class members. (Agreement ¶ 17(b))). Within ten

business days after this Court enters its preliminary approval of the proposed settlement, the

Defendant will provide the settlement administrator a file containing the names, last known

addresses, last known telephone numbers, and last known email addresses of each class member.

(Id. ¶ 17(c)). Within fifteen days after receiving the file, the settlement administrator will mail the

settlement notice to settlement class members by U.S. First Class Mail and by email. (Id. ¶ 17(f)).

Notice by first-class mail is regularly deemed adequate notice under Rule 23(c)(2). See Eisen v.

Carlisle & Jacquelin, 417 U.S. 156, 173 (1974) (individual notice is best notice practicable);

Steiner v. Equimark Corp., 96 F.R.D. 603, 614 (W.D.Pa. 1983) (individual notice by first-class

mail is “best notice practicable” under 23(c)(2)); Peil v. Nat’l Semiconductor Corp., 86 F.R.D.

357, 375 (E.D.Pa. 1980) (best notice practicable is by first class mailing).

While the method of the proposed notice passes muster, the proposed notice does not

contain all the content required by due process and Rule 23(c)(2)(B). The notice clearly and

concisely informs settlement class members of the nature of the litigation, the definition of the

class, the claims alleged against the Defendant, the settlement’s general terms, the option to be

excluded from or object to the settlement, the time and manner for requesting exclusion and for

objecting to the settlement, the binding effect of the settlement if it is approved, and the option to

be heard at the final fairness hearing. However, the notice neglects to inform class members that

they may enter an appearance through an attorney if they would like to do so, nor does the notice

inform class members of methods by which they can read the complete settlement agreement,

including the availability of the settlement agreement in court files. Furthermore, the notice

presents the settlement as a “fait accompli,” informing settlement class members that “the lawsuit

has been settled” in the first section of the notice form. See GM Trucks, 55 F.3d at 789. This

language may discourage class members who otherwise would have objected to the settlement

from exercising their right to do so. The notice should make clear to class members that the

settlement has only been preliminarily approved, but will not be finally approved until all class

members have an opportunity to be heard. Because of these failings, the proposed settlement notice

does not satisfy due process or the requirements of Rule 23(c)(2)(B), and therefore we cannot

direct notice at this time. Because we are unable to direct notice to the settlement class, we must

deny Plaintiff’s request to schedule a final fairness hearing.

V. Conclusion

For the foregoing reasons, Plaintiff’s unopposed motion for provisional certification of

a settlement class and preliminary approval of the proposed class settlement agreement is

GRANTED. However, because the proposed notice to the settlement class does not meet the

requirements of due process and Federal Rule of Civil Procedure 23(c), Plaintiff’s request to

schedule a final fairness hearing is DENIED. An order follows.

Dated: 7/6/2023 s/ Robert B. Kugler

ROBERT B. KUGLER

United States District Judge