United States District Court, N.D. Indiana, South Bend Division
In re FEDEX GROUND PACKAGE SYSTEM, INC., EMPLOYMENT PRACTICES LITIGATION (MDL 1700)
FedEx Ground Package System, Inc., Civil No. 3:08cv336 RLM-MGG (OH) THIS DOCUMENT RELATES TO Paul Kelly, et al.
OPINION AND ORDER
L. Miller, Jr. Judge United States District Court.
proposed class actions in this multi-district litigation
docket came before me on March 13-14 for fairness hearings.
The cases are on limited remand from the court of appeals,
where nineteen of them awaited resolution. The Judicial Panel
on Multi-District Litigation centralized the cases under 28
U.S.C. § 1407, but the cases haven't been
consolidated, so each proposed settlement must be examined
History of the MDL Docket
August 2005, the JPMDL granted (over the plaintiffs'
objections) FedEx Ground's second request to centralize a
series of cases in which FedEx Ground drivers claimed to be
employees, rather than the independent contractors their
employment contracts announced. The Panel reasoned that
economies were to be gained because all drivers were governed
by the same contract. The MDL process proved cumbersome. Even
if the wording of each contract was the same, each
state's agency law varied, and differences in operation
from one terminal to the next had the potential of affecting
number of cases in the MDL docket eventually grew to 40. I
appointed attorneys from three law firms to serve as co-lead
counsel: Lockridge Grindal Nauen P.L.L.P. of Minneapolis,
Harwood Feffer LLP of New York City, and Leonard Carder LLP
of Oakland. I also appointed attorneys from three other firms
- Cureton Caplan, P.C. of Delran, NJ; Siegel, Brill,
Greupner, Duffy & Foster, P.A. of Minneapolis; and
Zimmerman Reed P.L.L.P. of Minneapolis - to complete the
plaintiffs' steering committee.
stakes were enormous. Not only did the plaintiffs'
co-lead counsel seek to represent upwards of 10, 000 arguably
under-compensated drivers, but the attack on drivers'
independent contractor status threatened FedEx Ground's
entire business model.
with those stakes, discovery was more than extensive.
Although damages discovery was deferred, merits discovery and
class discovery were conducted simultaneously. Some 3.2
million documents were produced and analyzed; seventeen sets
of interrogatories were answered; 215 named plaintiffs
answered fifteen requests for admission and sat for
depositions; 105 FedEx Ground personnel sat for daylong
depositions; 20 expert witnesses produced reports and sat for
daylong depositions; Daubert motions were filed and
defended. The class representatives were heavily involved in
tracking down records and documents, as well as in preparing
for, and giving, their own depositions.
plaintiffs filed class certification motions in each of the
cases; FedEx Ground opposed each motion. The plaintiffs filed
an omnibus fact memorandum supported by 65 bankers' boxes
of documents. In 2007 and 2008, I certified classes in 26 of
the then-40 cases, and in all of the 20 on limited remand
from the court of appeals. FedEx Ground sought interlocutory
appellate review of the certification grants, and the
plaintiffs successfully opposed that effort. Class
notifications were hampered by spotty databases.
summary judgment motions and briefing followed. The drivers
filed a 75-page statement of undisputed material facts with
citations to 12 volumes. In 2010 and 2011, I denied a few of
FedEx Ground's summary judgment motions but granted most,
and granted all in the 20 cases now on limited remand. With
respect to some of the cases, I suggested remand and the
Panel sent the cases back to the transferor courts. Co-lead
counsel appealed the summary judgment grants in these 20
cases to the United States Court of Appeals for the Seventh
Circuit; in most of those cases, FedEx Ground cross-appealed
the class certifications.
this court and the court of appeals, the parties recommended
that the Kansas Craig case be addressed first, as
something of a quasi-bellwether case. After briefing and
argument, the court of appeals certified the
employee/independent contractor case to the Kansas Supreme
Court, which devised a new 18-part test and answered the
certified question in the drivers' favor. Craig v.
FedEx Ground Package Sys., Inc., 335 P.3d 66 (Kan.
2014). The court of appeals ultimately reversed my grant of
summary judgment to FedEx Ground in Craig, and
remanded the case. In re FedEx Ground Package Sys., Inc.
Emp't Practices Litig., 792 F.3d 818 (7th Cir.
2015). In addition to the reversal in the Kansas case,
rulings in other courts were trending toward findings of
employee status, see Alexander v. FedEx Ground Package
Sys., Inc., 765 F.3d 981 (9th Cir. 2014) (California
law); Slayman v. FedEx Ground Package Sys., Inc.,
765 F.3d 1033 (9th Cir. 2015) (Oregon law), or at least
toward fact issues for trial. See Gray v. FedEx Ground
Package Sys., Inc., 799 F.3d 995 (8th Cir. 2015)
(Missouri law); Carlson v. FedEx Ground Package Sys.,
Inc., 787 F.3d 1313 (11th Cir. 2015) (Florida law).
parties didn't immediately ask me to find for the Kansas
drivers on liability and suggest remand to the United States
District Court for the District of Kansas. Instead, the
parties had chosen a mediator in an effort to resolve all of
the cases remaining in the Seventh Circuit.
case was mediated separately, with some cases requiring
several sessions. Each case was mediated with an eye on the
governing law, which varied from case to case. The mediation
spanned four weeks. The drivers and FedEx Ground exchanged
experts' views as to the maximum recovery for each case
if the drivers prevailed across the board. Settlements were
reached in each case, and the court granted preliminary
approval of each of the settlements. The plaintiffs then
retained Rust Consulting to administer the settlements.
conducted fairness hearings on March 13 and 14, 2017, and on
March 15 and 16, I notified the court of appeals of my
inclination to enter final approval of the class settlements.
The court of appeals entered a second limited remand order on
March 22 to allow me to do so.
Fairness of the Settlement
can't settle class actions without the court finding that
the proposed settlement is “fair, reasonable, and
adequate.” Fed. R. Civ. P.
Synfuel Technologies, Inc. v. DHL Express (USA),
Inc., 463 F.3d 646, 652 (7th Cir. 2006); see also
EEOC v. Hiram Walker & Sons, Inc., 768 F.2d 884, 889
(7th Cir. 1985) (“The district court may not deny
approval of a consent decree unless it is unfair,
unreasonable, or inadequate.”). In that effort, we in
this circuit consider several circumstantial factors:
(1) the strength of the case for plaintiffs on the merits,
balanced against the extent of settlement offer; (2) the
complexity, length, and expense of further litigation; (3)
the amount of opposition to the settlement; (4) the reaction
of members of the class to the settlement; (5) the opinion of
competent counsel; and (6) stage of the proceedings and the
amount of discovery completed.
Wong v. Accretive Health, Inc., 773 F.3d 859, 863
(7th Cir. 2014) (quoting Gautreaux v. Pierce, 690
F.2d 616, 631 (7th Cir. 1982)). Of those, the first is the
most important. Martin v. Reid, 818 F.3d 302, 306
(7th Cir. 2016).
Kelly case was filed in the Northern District of
Ohio in May 2008, and was centralized in this court under 28
U.S.C. § 1407 in July 2008. I granted the
plaintiffs' motion for certification of a class in July
2009, and granted summary judgment to FedEx Ground in
December 2010, finding that the plaintiffs were independent
contractors under Ohio law. The class appealed.
2016, the parties reached a proposed settlement. FedEx Ground
would pay $8, 350, 000 to the plaintiffs. For each workweek
of 35 or more hours during the class period, each class
member would receive $24.42; for each workweek of 16-35
hours, each class member would receive $8.55. No class member
would receive less than a $250 lump sum. The average recovery
per class member would be $6, 363, with the highest share
being $20, 611. No plaintiff would be required to fill out,
or collect the information needed for, a claim form. No part
of the settlement fund would revert to FedEx Ground if
anything were left over.
proposed settlement resulted from arms-length negotiations
with a private mediator. Each side took stock of potential
liability and damages under Ohio law. The class consulted an
expert in accounting and damages, who concluded that the
maximum recovery the plaintiffs could achieve would be $32,
525, 766. FedEx Ground assessed the claims' value at
about 15 percent of that. The proposed settlement amounts to
about 26 percent of the plaintiffs' estimate of a perfect
perfect outcome would be a long way off. At this point, my
ruling that these drivers are independent contractors under
Ohio law is the only judicial determination. The class would
need for the court of appeals to find my ruling to have been
in error; such an appellate ruling might consist only of a
determination that Ohio drivers might be employees, but a
trial is needed. Such a ruling would be followed by a likely
FedEx Ground motion to decertify the class (seeking to
exclude drivers who hired others to handle routes and arguing
that “full time” drivers would be too difficult
to identify), a remand to the district court in Ohio, and a
need to overcome defenses FedEx Ground didn't need to
raise at the summary judgment stage (FedEx Ground had
succeeded on some of those defenses in other states). If the
plaintiffs prevailed at trial, FedEx Ground would likely
appeal. Before the settlement, then, the class needed to
string together victories in many skirmishes, beginning with
a reversal in the court of appeals. The position of an
appellant is not one of strength. And receipt of any money by
any plaintiffs would be a long time off, well beyond the
eleven years already invested in this litigation.
plan for giving notice of the proposed settlement, and the
third party administrator's execution of the plan, are
detailed thoroughly in the papers supporting the
plaintiffs' motions, and comply with the preliminary
approval order, Federal Rule of Civil Procedure 23(e), and 28
U.S.C. § 1715.
class member has objected to the proposed settlement. Jack
Ryan objected because the settlement didn't include
anything for his claim of unlawful termination. But this
class action didn't involve claims about unlawful
terminations: it addressed whether the drivers were employees
rather than independent contractors and, if so, the extent to
which the drivers were damaged by being misclassified.
Including individual claims like Mr. Ryan's would have
made it harder for the case to proceed as a class action. Mr.
Ryan's objection - even if he's right ...