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In re Fedex Ground Package System

United States District Court, N.D. Indiana, South Bend Division

September 5, 2018

IN RE FEDEX GROUND PACKAGE SYSTEM, INC. EMPLOYMENT PRACTICES LITIGATION (MDL 1700)
v.
FEDEX GROUND PACKAGE SYS., INC Defendant This Document Relates to: CARLENE M. CRAIG, et al., Plaintiffs

          OPINION AND ORDER

          Robert L. Miller, Jr. Judge

         For the following reasons, the court grants the plaintiffs' motion[1] for preliminary approval of the proposed ERISA class action settlement [Doc. No. 3152].

         I. Procedural History

         The plaintiffs filed this suit, the Kansas ERISA class action, in 2004, and amended their complaint in January 2006 to include an ERISA national class action. The court granted the plaintiffs' motion to certify a nationwide ERISA class in October 2007. The class included:

All persons who: 1) entered into a FXG Ground or FXG Home Delivery Form Operating Agreement (now known as a Form OP-149 and Form OP-149 RES); 2) drove a vehicle on a full-time basis (meaning exclusive of time off for commonly excused employmet absences) during the class period to provide package pick-up and delivery services pursuant to the Operating Agreement; and 3) were eligible for ERISA Plan benefits, absent their mischaracterization as independent contractors.

[Doc. No. 906].[2]

         On June 28, 2010, the court granted FedEx Ground's motion for partial summary judgment, and dismissed the plaintiffs' ERISA claims without prejudice for failure to exhaust administrative remedies. [Doc. No. 2078]. Pursuant to the order, only the named plaintiffs in the Craig case were required to exhaust their administrative remedies. Id. at p. 32 (citing In re Household Int'l Tax Reduction Plan, 441 F.3d 500, 501-02 (7th Cir. 2006)).

         Administrative review was completed in February 2011, while the Craig case was on appeal. When the court of appeals remanded the case in July 2015, the parties moved for an immediate stay, so they could engage in settlement negotiations.

         Michael Dickstein was selected to serve as mediator, and successfully negotiated the settlement of the non-ERISA claims. Mediation on the ERISA claims was set for June 6, 2016. In preparation, the plaintiffs retained a forensic accounting expert, David Breshears, to calculate their potential damages and to prepare a damage exposure model, the parties exchanged their damages models, and plaintiffs' Co-Lead Counsel consulted with local counsel for the named plaintiffs and coordinated their attendance at the mediation. The parties didn't reach an agreement on June 6, 2016, but they continued to work with Mr. Dickstein toward resolution of the ERISA claims, and on June 7, 2017 executed a “Deal Point Memorandum” setting forth the terms of a tentative settlement.

         On June 19, 2017, the plaintiffs filed their Fifth Amended Complaint reasserting the ERISA claims and related state law claims, [3] and in late August/early September 2017 they executed the Settlement Agreement [Doc. No. 3154-1] for which the plaintiffs now seek preliminary approval.

         II. The Proposed Settlement

         Under the terms of the Settlement Agreement, FedEx Ground would pay $13, 325, 000 (the “Total Settlement Fund”) to resolve all ERISA class claims (and similar state laws) that were brought, or could have been brought, against FedEx Ground during the release period, which runs from the beginning of “the class period” (February 11, 1998 for Kansas class members and January 9, 2001 for all other class members) through September 8, 2017, “the date of filing [the] motion for preliminary approval of the settlement”. [Doc. No. 3154-1(Sec. I(W))]. In exchange, the named plaintiffs and all class members who don't opt out would be required to execute a general release of any claim they had or may have had during that 15-year period.

         The plaintiffs' Lead Counsel propose to distribute the $13, 325, 000 settlement this way:

(1) Administration and notice costs - approximately $125, 000;
(2) Service awards to the 13 named plaintiffs - totaling $67, 500;
(3) Attorneys' fees - a “maximum of” $4, 377, 062 (33.33% of the Total Settlement Fund after deductions for ...

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