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., THIS DOCUMENT RELATES TO: Sharon Whiteside,
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
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 the
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. 23(e); 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).
Whiteside case was filed on May 2, 2007, in the
Western District of North Carolina, and was centralized in
this court under 28 U.S.C. § 1407 in July 2007. I
granted the plaintiffs' motion for certification of a
707-member class in July 2009, and granted summary judgment
to FedEx Ground in December 2010, finding that the plaintiffs
were independent contractors under North Carolina law. The
2016, the parties reached a proposed settlement. FedEx Ground
would pay $20, 000, 000 to the plaintiffs. For each workweek
of 35 or more hours during the class period, each class
member would receive $51.90; for each workweek of 16-35
hours, each class member would receive $18.16. No class
member would receive less than a $250 lump sum. The average
recovery per class member would be $19, 250, with the highest
share being $53, 440. 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 North Carolina law. The class
consulted an expert in accounting and damages, who concluded
that the maximum recovery the plaintiffs could achieve would
be $30, 714, 643 or, if the treble damages provision was
triggered, $92, 143, 929, exclusive of interest. FedEx Ground
believed that 80 percent of the drivers had lost their
statutory claims because they had signed renewals of their
operating agreements. The proposed settlement amounts to
about 65 percent of the maximum recovery without treble
damages, and 22 percent of a perfect outcome.
perfect outcome would be a long way off. At this point, my
ruling that these drivers are independent contractors under
North Carolina 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 North Carolina 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 and that incorporated entities
can't meet that definition), a remand to the district
court in North Carolina, and a need to overcome defenses
FedEx Ground didn't need to raise at the summary judgment
stage. 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 ten 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. William
Goswick sent in an untimely opt-out notice in November ...