UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
ELECTRONIC PUBLICATION ONLY
ISAAC REID, CLEMENT GREEN, ROBERT
B. WALKER, LIONEL SINGH, KEITH
CLARKE, IBRAHIMA BAH, MAMADOU
WAGUE, MARIE W. DASNEY, ORVILLE
HARRIS, GREGORY MORGAN, TREVOR
FRANCIS, EVERTON WELSH, FRANK
TAYLOR, SEYMOUR LEWIS, AND
JOHANN RAMIREZ on behalf of themselves
and all others similarly situated,
Plaintiffs,
- versus -
MEMORANDUM
08-CV-4854 (JG)(VVP)
SUPERSHUTTLE INTERNATIONAL, INC.,
SUPERSHUTTLE FRANCHISE
CORPORATION, VEOLIA
TRANSPORTATION SERVICES, INC., d.b.a.
SUPERSHUTTLE, SHUTTLE ASSOCIATES,
LLC.,
Defendants.
A P P E A R A N C E S :
HARWOOD FEFFER LLP
488 Madison Avenue
8th Floor
New York, New York 10022
By: Robert I. Harwood
Peter W. Overs, Jr.
- and -
GANGEMI LAW FIRM, P.C.
82 Wall Street
Suite 300
New York, New York 10005
By: Salvatore G. Gangemi
Attorneys for the Plaintiffs
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MORGAN, LEWIS & BOCKIUS LLP
101 Park Avenue
New York, New York 10178
By: Christopher A. Parlo
Melissa C. Rodriguez
Leni D. Battaglia
Attorneys for the Defendants
JOHN GLEESON, United States District Judge:
The Plaintiffs have moved for final approval of a proposed settlement of this class
action, as well as certification of a settlement class, appointment of class representatives and
counsel, approval of case contribution awards and an award of expenses and attorney’s fees.
Having reviewed the written submissions and conducted a fairness hearing on June 5, 2012, the
Court has determined that the settlement should be approved. In separate orders, filed
simultaneously with this memorandum, the Plaintiffs’ motions are granted.
BACKGROUND
The Plaintiffs are current and former franchisees of SuperShuttle International,
Inc. (“SuperShuttle”), “the nation’s leading shared-ride airport taxi shuttle.” Am. Compl. ¶ 28,
ECF No. 11 (internal quotation marks omitted). They commenced this action on December 2,
2008, principally asserting various claims under the New York Labor Law (the “NYLL”) and the
Fair Labor Standards Act (the “FLSA”) concerning wages and unpaid overtime. The case was
brought on behalf of a class of all current and former franchisees who worked for SuperShuttle in
New York from December 2, 2002, until the entry of judgment. The FLSA claims were brought
as an opt-in collective action.
After several years of proceedings, which included this Court granting a motion to
compel some of the Plaintiffs to assert their claims in arbitration, the parties reached a settlement
in 2011. The settlement consists primarily of (a) monetary relief of $100 for class members who
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do not currently have a SuperShuttle franchise; and (b) a new SuperShuttle program called the
Franchise Resale Opportunity Program (“FROP”), which would allow current franchisees to sell
a new ten-year franchise through financing provided by SuperShuttle. In addition, the settlement
provides current franchisees with “procedural safeguards.” Specifically, certain SuperShuttle
policies will be made clearer; and any decisions to suspend or terminate a franchisee will be
made by higher level mangers after the franchisee has had an opportunity to tell his or her side of
the story.
The Court held a status conference on January 20, 2012, in connection with the
Plaintiffs’ motion for preliminary approval of the settlement. During the status conference, I
raised concerns regarding the adequacy of the settlement and the apparent lack of a nexus
between the benefits provided by the FROP and the claims asserted in this lawsuit. After hearing
from the parties and receiving additional materials, preliminary approval of the settlement was
granted and a class was conditionally certified on February 8, 2012.
After notice was provided to the class, the Court received several letters from
class members who had opted out of the class and urged the Court not to grant final approval of
the settlement. Approximately 38% of the class has opted out. However, no objections have
been filed. On May 29, 2012, the Plaintiffs moved for final approval of the settlement. At the
fairness hearing on June 5, 2012, no one appeared to object to the settlement.
DISCUSSION
A. Approval of the Settlement
Settlement of a class action requires court approval. In re Visa Check/
MasterMoney Antitrust Litig., 297 F. Supp. 2d 503, 509 (E.D.N.Y. 2003) (citing Fed. R. Civ. P.
23(e)), aff’d sub nom., Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96 (2d Cir. 2005). In
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considering whether to approve a class action, a court should determine whether the proposed
settlement is fair, adequate and reasonable. See D’Amato v. Deutsche Bank, 236 F.3d 78, 85 (2d
Cir. 2001). In making this determination, a court should be cognizant of “the general policy
favoring settlement.” Visa Check/MasterMoney, 297 F. Supp. 2d at 509; see also In re
PaineWebber Ltd. P’ships Litig., 147 F.3d 132, 138 (2d Cir. 1998). It must not “rubber stamp
the settlement,” but it also must not “engage in the detailed and thorough investigation that it
would undertake if it were actually trying the case.” Visa Check/MasterMoney, 297 F. Supp. 2d
at 509 (internal quotation marks and citation omitted).
A court should consider the fairness of the settlement both procedurally, by
examining the negotiations that led to the settlement, and substantively, by examining the
settlement’s terms. See McReynolds v. Richards-Cantave, 588 F.3d 790, 803–04 (2d Cir. 2009);
see also Visa Check/MasterMoney, 297 F. Supp. 2d at 509. Where, as here, a settlement is the
“product of arm’s length negotiations conducted by experienced counsel knowledgeable in
complex class litigation,” the negotiation enjoys a “presumption of fairness.” In re Austrian &
German Bank Holocaust Litig., 80 F. Supp. 2d 164, 173–74 (S.D.N.Y. 2000), aff’d sub nom.,
D’Amato, 236 F.3d 78; see also Wal-Mart Stores, 396 F.3d at 116. In light of the efforts of
experienced and able counsel on both sides over several years, I conclude that the settlement is
procedurally fair.
In considering the substantive fairness of a settlement, a court should consider the
following factors:
(1) the complexity, expense and likely duration of the litigation,
(2) the reaction of the class to the settlement, (3) the stage of the
proceedings and the amount of discovery completed, (4) the risks
of establishing liability, (5) the risks of establishing damages,
(6) the risks of maintaining the class action through the trial,
(7) the ability of the defendants to withstand a greater judgment,
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(8) the range of reasonableness of the settlement fund in light of
the best possible recovery, (9) the range of reasonableness of the
settlement fund to a possible recovery in light of all the attendant
risks of litigation.
City of Detroit v. Grinnell Corp., 495 F.2d 448, 463 (2d Cir. 1974) (citations omitted), abrogated
on other grounds by Goldberger v. Integrated Res., Inc., 209 F.3d 43 (2d Cir. 2000); see also
McReynolds, 588 F.3d at 804.
The expense and likely duration of this case favor settlement. Absent a
settlement, this case would likely take substantial time and resources to resolve. There would be
the completion of additional discovery, briefing and argument of motions for summary judgment
and for class certification (and, with class certification, potential appeals) and eventually,
perhaps, a lengthy trial followed by further appeals. Thus, the first factor weighs in favor of
approving the settlement. See Visa Check/MasterMoney, 297 F. Supp. 2d at 510.
The second factor – the reaction of the class – is somewhat mixed. Although not
a single class member has objected to the settlement, a substantial minority of class members –
38%, including some named plaintiffs – has opted out of the settlement.1
1 Some of the class members who have opted out filed letters with the Court objecting in general
terms to the settlement. However, by opting out, these class members relinquished their standing to formally object
to the settlement. See In re Vitamins Antitrust Class Actions, 215 F.3d 26, 28–29 (D.C. Cir. 2000); In re Warner
Commc’ns Sec. Litig., 618 F. Supp. 735, 753 (S.D.N.Y. 1985), aff’d, 798 F.2d 35 (2d Cir. 1986); see also 4 Alba
Conte & Herbert B. Newberg, Newberg on Class Actions § 11:55, at 177–78 (4th ed. 2002).
However, even if all of
the opt-outs are deemed to oppose the settlement, that degree of opposition does not bar approval
of a settlement. “Preventing a settlement that a district court properly determines to be fair and
reasonable solely because of majority opposition ‘not only deprives other class members of the
benefits of a manifestly fair settlement and subjects them to the uncertainties of litigation, but . . .
[may] result[] in the eventual disappointment of the objecting class members as well.’” Grant v.
Bethlehem Steel Corp., 823 F.2d 20, 23 (2d Cir. 1987) (quoting TBK Partners, Ltd. v. Western
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Union Corp., 675 F.2d 456, 462–63 (2d Cir. 1982)) (alterations in original). Especially in light
of the lack of formal objections, the 38% opt-out rate does not bar approval of the settlement.
However, it weighs somewhat against approval.
The third factor favors approval of the settlement. Although it is not yet
complete, a substantial amount of discovery has already taken place. Moreover, there has been
substantive motion practice as well as mediation.
The fourth, fifth and sixth factors, which relate to the risks of obtaining relief and
maintaining a class, substantially weigh in favor of approval. The Plaintiffs face significant risks
in establishing liability. They would have to prove, inter alia, that they were SuperShuttle
employees rather than independent contractors. As they note, similar claims brought by drivers
have failed on the merits or at the class certification stage. See, e.g., In re FedEx Ground
Package Sys., Inc., Employment Practices Litig., 758 F. Supp. 2d 638, 661–733 (N.D. Ind. 2010)
(granting summary judgment in defendants’ favor in multidistrict litigation brought by drivers of
package delivery company); Edwards v. Publishers Circulation Fulfillment, Inc., 268 F.R.D.
181, 184, 188–89 (S.D.N.Y. 2010) (denying class certification in suit brought by newspaper
delivery drivers). And SuperShuttle drivers have failed to prove their status as employees in
some arbitration proceedings. See, e.g., SuperShuttle DFW, Inc. v. Amalgamated Transit Union
Local 1338, No. 16-RC-10963 (N.L.R.B. Aug. 16, 2010). Moreover, the fact that many
SuperShuttle drivers have agreed to arbitrate their claims would complicate the Plaintiffs’ efforts
to certify a class.
The Plaintiffs faced other significant obstacles to any recovery. For example, the
Defendants intended to argue that SuperShuttle drivers are not entitled to overtime compensation
under the FLSA or the NYLL because of the “Motor Carrier Exemption,” 29 U.S.C. § 213(b)(1);
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see also 12 N.Y.C.R.R. § 142-2.2. The Defendants also intended to argue that most of the
Plaintiffs’ would be unable to recover for any violation of the minimum wage laws because their
gross income exceeded the applicable minimum wage.
In short, the Plaintiffs face a real and substantial risk of obtaining nothing if this
case were to proceed. This weighs heavily in favor of a settlement, albeit a modest one.
The final two factors require considering the range of reasonableness of the
settlement in light of the best possible recovery and in light of all the attendant risks of litigation.
Compared to the best possible recovery, the settlement is modest, and this weighs against
approval. But the settlement does provide real benefits to class members. The fact that further
litigation of this case may result in the class obtaining nothing weighs heavily in favor of
approval.
Having reviewed all of the relevant factors, I conclude that the settlement is
substantively fair and adequate and should be approved.
B. Certification of a Settlement Class
Before certifying a class for settlement purposes, a court must determine whether
the requirements for class certification have been met. Denney v. Deutsche Bank AG, 443 F.3d
253, 270 (2d Cir. 2006). Rule 23(a) of the Federal Rules of Civil Procedure sets forth the
following requirements for class 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.
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Fed. R. Civ. P. 23(a). These requirements are generally referred to as numerosity, commonality,
typicality and adequacy.
In addition, class certification requires that the class action fall into one of the
categories specified in Rule 23(b). See Cordes & Co. Fin. Servs., Inc. v. A.G. Edwards & Sons,
Inc., 502 F.3d 91, 104 (2d Cir. 2007). Here, the Plaintiffs seek class certification on the grounds
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.” Id. 23(b)(3).
I find that each of the Rule 23(a) requirements is satisfied. The potential class
consists of 192 former franchisees and 124 current franchisees. Even excluding the opt-outs,
there are close to 200 class members, which is well above the 40-member point at which
“[n]umerosity is generally presumed.” Damassia v. Duane Reade, Inc., 250 F.R.D. 152, 156
(S.D.N.Y. 2008); see also Consol. Rail Corp. v. Town of Hyde Park, 47 F.3d 473, 483 (2d Cir.
1995).
The commonality requirement is satisfied because there are several questions of
law and fact that are common to the class members. These include whether they were
SuperShuttle employees or independent contractors and whether SuperShuttle’s compensation
policies violated the FLSA or the NYLL. The typicality requirement is satisfied because the
named Plaintiffs’ claims are for the same type of injury under the same legal theory as the rest of
the class. See Shahriar v. Smith & Wollensky Rest. Grp., Inc., 659 F.3d 234, 252 (2d Cir. 2011).
Finally, the proposed class representatives will provide adequate representation because they
“have an interest in vigorously pursuing the claims of the class, and . . . have no interests
antagonistic to the interests of other class members.” In re Literary Works in Elec. Databases
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Copyright Litig., 654 F.3d 242, 249 (2d Cir. 2011) (internal quotation marks and citation
omitted).2
In addition, I find 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). In particular, whether SuperShuttle franchisees are independent contractors
or employees is the predominant issue in this case and is common to all class members. This
issue is subject to class-wide proof, involving standardized documents common to all
franchisees. A class action is superior to other methods for adjudicating this controversy, given
the costs and other burdens that would be involved in individual litigation.
Accordingly, certification of a class for settlement purposes is warranted.
C. Approval of Attorney’s Fees
The lodestar method – in which a reasonable hourly rate is multiplied by the
number of hours required to litigate the case – is an accepted methodology for calculating an
appropriate award of attorney’s fees. See McDaniel v. Cnty. of Schenectady, 595 F.3d 411, 419
(2d Cir. 2010); Goldberger v. Integrated Res., Inc., 209 F.3d 43, 50 (2d Cir. 2000). In
determining the appropriate fee amount, the following factors should be considered: “(1) the
time and labor expended by counsel; (2) the magnitude and complexities of the litigation; (3) the
risk of the litigation . . .; (4) the quality of representation; (5) the requested fee in relation to the
settlement; and (6) public policy considerations.” Goldberger, 209 F.3d at 50 (quoting In re
Union Carbide Corp. Consumer Prods. Bus. Sec. Litig., 724 F. Supp. 160, 163(S.D.N.Y. 1989))
(internal quotation marks omitted) (alteration in original).
2 The proposed class representatives are one current franchisee and one former franchisee, which
ensures that both these types of class members will be represented adequately.
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Here, Plaintiffs’ counsel has submitted documentation that they spent more than
1,787 hours on this case, resulting in total fees of $794,550.13.3
CONCLUSION
In addition, they have incurred
unreimbursed expenses of $32,204.80. They seek an award of $394,500, which is 47.7% of the
total lodestar amount. Having considered the relevant factors, I conclude this award is fair and
reasonable.
For the reasons stated above, the Plaintiffs’ motions for final approval of the
settlement, certification of a settlement class, appointment of class representatives and counsel,
approval of case contribution awards and an award of expenses and attorney’s fees will be
granted in separate orders.
So ordered.
John Gleeson, U.S.D.J.
Dated: August 10, 2012
Brooklyn, New York
3 The hourly rates range from $250 for a paralegal to $700 for a partner. See Overs Decl., Ex. A,
ECF No. 128.
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