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Alloways v. The Cruise Web, Inc.

United States District Court, D. Maryland, Southern Division

April 29, 2019

AMY ALLOWAYS, et al., Plaintiffs,
v.
THE CRUISE WEB, INC., Defendant.

          MEMORANDUM OPINION

          CHARLES B. DAY UNITED STATES MAGISTRATE JUDGE

         Plaintiffs Amy Alloways (“Alloways”), Michele Higginson (“Higginson”), and Christy McGee (“McGee”) (hereinafter collectively “Plaintiffs”), on behalf of themselves and other similarly situated individuals, brought suit against Defendant The Cruise Web, Inc. (“Defendant”), alleging violations under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201, et seq., the Maryland Wage and Hour Law (“MWHL”), Md. Code Ann., Lab. & Empl. §§ 3-401, et seq., and the Maryland Wage Payment and Collection Law (“MWPCL”), Md. Code Ann., Lab. & Empl. §§ 3-501, et seq., for failure to pay minimum wage and overtime compensation. Pls.' Class & Collective Compl. for Wages Owed (“Pls' Compl.”), ECF No. 1. Plaintiffs brought these claims as a collective action under the FLSA, 29 U.S.C. § 216(b), and as a class action under Federal Rule of Civil Procedure 23. Plaintiffs sought damages from Defendant, including liquidated and treble damages. On February 22, 2018, the Court approved the parties' Stipulation and Joint Motion Regarding Conditional Certification, which conditionally certified the case as a collective class action under the FLSA. See Paperless Order Approving Parties' Stipulation & Joint Mot. Regarding Conditional Certification, Messitte, J., ECF No. 21; Findings of Fact & Conclusions of Law & Order Approving Conditional Certification of Class (“Order Approving Conditional Certification of Class”), ECF No. 23. Plaintiffs and Defendant eventually reached a settlement, and on October 26, 2018, Plaintiffs filed an unopposed motion seeking preliminary approval of the parties' agreement. Pls.' Unopposed Mot. for Preliminary Approval of the Class Action Settlement & Unopposed Mot. to Approve Settlement Agreement & Release of Wage Claims Under Fed. & Md. Law (“Pls.' Unopposed Mot. for Preliminary Approval”), ECF No. 46. Attached to that motion as an exhibit was a copy of the settlement agreement. Class Action Settlement Agreement (“Settlement Agreement”), ECF No. 46-3. After a telephone conference, this Court granted the parties' motion. Paperless Order Granting Mot. for Settlement (“Preliminary Approval Order”), Day, J., Dec. 20, 2018, ECF No. 48.

         Currently pending before the Court is Plaintiffs' Unopposed Motion for Final Approval of the Class/Collective Action Settlement (“Pls.' Unopposed Mot. for Final Approval”), ECF No. 50. Plaintiffs seek an order that: (1) grants final approval of the Settlement Agreement between Plaintiffs and Defendant in the total gross amount of $60, 000.00; (2) grants final certification of the settlement class pursuant to Federal Rule of Civil Procedure 23; (3) grants final certification of this matter as a collective action pursuant to 29 U.S.C. § 216(b); (4) approves a payment of $32, 000.00 to class counsel for their attorneys' fees and litigation expenses; (5) approves an incentive payment totaling $6, 000.00 to be divided as outlined in the Settlement Agreement to Plaintiffs McGhee, Alloways, Higginson, and Derek Cade;[1] and, (6) dismisses this action with prejudice. Pursuant to Federal Rule of Civil Procedure 23(f), a Final Fairness and Approval Hearing (“Fairness Hearing”) took place on March 4, 2019, at which counsel for both parties were present. ECF No. 51. At the request of the Court, the parties each submitted supplemental filings with additional information necessary to make a determination on this matter. See Def.'s Supplemental Statement in Supp. of Unopposed Mot. for Final Approval, Mar. 4, 2019, ECF No. 52; Pls.' 2d Supplement in Supp. of Their Unopposed Mot. for Final Approval, Mar. 5, 2019, ECF No. 53.

         For the reasons that follow, the Court hereby GRANTS Plaintiff's Unopposed Motion, APPROVES the parties' Settlement Agreement without modification, and orders this case be DISMISSED WITH PREJUDICE. A separate Order shall issue.

         I. Background

         On September 20, 2017, Plaintiffs commenced this proceeding against Defendant alleging the commission payment plan used by Defendant to compensate Plaintiffs violated the FLSA, MWHL, and MWPCL. Pls.' Compl. ¶¶ 98-165. Defendant is a for-profit travel agency that “specializes in planning cruises.” Id. at ¶¶ 4-9, 33. The named Plaintiffs and members of the proposed class all worked as “cruise consultants” (“Cruise Consultant(s)”) for Defendant. Id. at ¶ 10. The job of a Cruise Consultant was to provide booking and customer support services to prospective clients seeking to reserve a cruise through Defendant's company. Id. at ¶¶ 38-50, 56. This involved cold calling, returning messages, data entry, completing and compiling paperwork, and other administrative tasks. Id. All the tasks for a particular reservation had to be completed within a twenty-four-hour window or it would be considered “late” and the Cruise Consultant could face “repercussions.” Id. at ¶ 50. Defendant controlled the hours worked by each Cruise Consultant by managing their schedules, determining the number of Cruise Consultants it would employ, and setting “strict protocols” it expected to be followed at all times. Id. at ¶¶ 57-69.

         According to Plaintiffs, this job was time consuming and often resulted in Cruise Consultants “regularly work[ing] through their entire shifts without a break” as well as “well past the times their shifts were scheduled to end” in order to complete tasks within the timeframe Defendant expected. Id. at ¶¶ 50-59. There were also “simply not enough employees to handle all of the work.” Id. at ¶ 58. According to Plaintiffs, Defendant was “well aware” of the situation but was more concerned about its customers than its employees. Id. at ¶¶ 59, 61.

         Defendant compensated its Cruise Consultants according to a commission payment plan.[2]Id. at ¶¶ 74, 83. For the first six (6) months of their employment, each Cruise Consultant was in a training period and compensated according to the “Training Period Commission Plan.” Id. at ¶ 74. Under this plan, Cruise Consultants received the same set amount of pay on a bi-weekly basis regardless of the number of sales they made. Id. If they exceeded their sales expectations, a Cruise Consultant was supposed to receive a percentage of “all net agency commissions” as a commission paid out at the end of the training period. Id. at ¶ 75. According to Plaintiffs, while some Cruise Consultants received a commission at the end of the training period, it did not exceed fifty percent (50%) of their pay. Id. at ¶ 77. As a result of this payment plan and the number of hours each individual worked, Plaintiffs asserted that they were entitled to overtime in accordance with the FLSA and Maryland law. Id. at ¶ 81.

         On December 18, 2017, Defendant filed an answer that denied Plaintiffs' allegations that it had knowingly violated the FLSA and Maryland's wage and hour laws. Def.'s Answer, ECF No. 11. Defendant also asserted a number of defenses. Id. at 15-19. These included the defense that, due to its commission payment plans, Plaintiffs were barred from bringing this suit as they were “exempt from overtime ” pursuant to Section 7(i) of the FLSA[3] and the related provision under Maryland law. Id. at 17.

         That same day, Plaintiffs filed a motion to obtain conditional class certification under the FLSA. Mot. for Conditional Certification of a Collective Class, ECF No. 10. Before the Court could rule on the motion, the parties filed a stipulation in which they agreed to the parameters of the proposed class in order “[t]o avoid the expense associated with motion practice at the preliminary stage of conditional certification, and to allow putative class members to make an informed decision regarding whether to join [the] lawsuit on a conditional basis . . . .” Stipulation & J. Mot. Regarding Conditional Certification ¶ 3, Dec. 22, 2017, ECF No. 14. After a telephone conference and additional materials were submitted, the Honorable Peter J. Messitte issued an order approving conditional certification of the class under the FLSA only and made certain findings of fact and conclusions of law. See Order Approving Conditional Certification of Class. This order conditionally certified the putative class as “[C]ruise [C]onsultants who participated in Defendant's training period pay plan” during the period in question (“the Collective Settlement Class”). See Id. (noting the similarities between the putative class members and “incorporate[ing] by reference the terms and conditions of the [p]arties' Stipulation”). The parties also agreed to a 60-day opt-in period, which closed on May 21, 2018. Joint Status Report & Request for Early Settlement Conference (“May 24 Joint Status Report”) ¶ 3, May 24, 2018, ECF No. 34. During that time, seven additional former employees filed consents to join the action.[4]

         Plaintiffs and Defendant eventually reached a Settlement Agreement, and on October 26, 2018, Plaintiffs filed an unopposed motion seeking preliminary approval of their Settlement Agreement. See Pls.' Unopposed Mot. for Preliminary Approval. The Settlement Agreement contemplates certification of a settlement class consisting of 54 individuals who worked for Defendant as Cruise Consultants during the period in question. Settlement Agreement 17-18. In very basic terms, the Settlement Agreement requires Defendants to pay a maximum amount of $60, 000.00 to be divided as follows: (1) $11, 000.00 for unpaid wages to be divided among the participating class members; (2) $11, 000.00 for liquidated damages to be divided among the participating class members; (3) $6, 000.00 total for incentive payments to be divided among Plaintiff Alloways ($2, 000.00), Plaintiff McGhee ($2, 000.00), Plaintiff Higginson ($1, 000.00), and Plaintiff Cade ($1, 000.00); and (4) $32, 000.00 in attorneys' fees and expenses to be paid to class counsel and (where applicable) to each participating class member. Id. at 6. The amount of unpaid wages and liquidated damages each class member would be entitled to would be calculated individually. Id. This matter was then referred to the undersigned for all further proceedings. After a telephone conference, the Court issued an order granting the motion and preliminarily approving the Settlement Agreement. The Preliminary Approval Order conditionally certified the following class pursuant to Federal Rule of Civil Procedure 23(a)(1)-(4) and 23(b) (the “Rule 23 Settlement Class”):

Every Cruise Consultant who participated in Defendant's training period commission pay plan at any time between September 21, 2014 and February 22, 2018.

         The Preliminary Approval Order appointed Plaintiffs Alloways, Higginson, and McGee as class representatives. The Preliminary Approval Order also appointed The Law Offices of Peter T. Nicholl as class counsel and RG/2 Claims Administration LLC (“RG/2 Claims”) as claims administrator. Finally, the Preliminary Approval Order approved the notice forms provided by the parties; instructed the parties to comply with the notice protocols set forth in the Settlement Agreement; and set a date for the Fairness Hearing.

         On February 25, 2019, Plaintiffs filed their Unopposed Motion for Final Approval. The Fairness Hearing was held on March 3, 2019, at 10:00 a.m., after which the parties submitted supplemental information as requested by the Court. See Def.'s Supplemental Statement in Supp. of Unopposed Mot. for Final Approval; Pls.' 2d Supplement in Supp. of Their Unopposed Mot. for Final Approval.

         II. Analysis

         After carefully considering the terms of the Settlement Agreement, Plaintiffs' Unopposed Motion for Final Approval, the supplemental materials in support thereof, and the statements of counsel for both parties at the Fairness Hearing held on March 3, 2019, the Court now addresses whether the proposed class should receive final certification; whether the Settlement Agreement is fair, reasonable, and adequate; whether the Settlement Agreement represents a fair compromise of a bona fide FLSA dispute; and whether class counsel's request for attorneys' fees and costs, as well as an incentive payment for certain individual plaintiffs, should be granted. Each of these issues will be addressed in turn.

         A. Final Certification of the Settlement Class

         In seeking approval of the proposed Settlement Agreement, the parties are resolving a “hybrid wage-and-hour law case” due to the combination of collective action claims raised under the FLSA and state law claims brought as a class action under Federal Rule of Civil Procedure 23 (“Rule 23”). See Edelen v. Am. Residential Servs., LLC, No. Civ. A. DKC 11-2744, 2013 WL 3816986, at *3 (D. Md. July 22, 2013); see also Shaver v. Gills Eldersburg, Inc., Civ. No. 14-3977-JMC, 2016 WL 1625835, at *1 (D. Md. Apr. 25, 2016). As a result, this Court must assess the request for final class certification under two separate standards. See Edelen, 2013 WL 3816986, at *3.

         1. Certification of the Collective Settlement

         “Under the FLSA, plaintiffs may maintain a collective action against their employer for violations under the act pursuant to 29 U.S.C. § 216(b).” Quinteros v. Spark le Cleaning, Inc., 532 F.Supp.2d 762, 771 (D. Md. 2008). The statute provides in relevant part:

An action . . . may be maintained against any employer . . . in any Federal or State court of competent jurisdiction by any one or more employees for and in behalf of himself or themselves and other employees similarly situated. No. employee shall be a party plaintiff to any such action unless he gives his consent in writing to become such a party and such consent is filed in the court in which such action is brought.

         29 U.S.C. § 216(b). This requirement that potential plaintiffs provide the court with their affirmative consent to be a part of the suit is known as “an ‘opt-in' scheme.” Edelen, 2013 WL 3816986, at *3 (citing Quinteros, 532 F.Supp.2d at 771). Determining whether to certify a collective action under the FLSA is a two-stage process. Id. (citing Syrja v. Westat, Inc., 756 F.Supp.2d 682, 686 (D. Md. 2010). Stage one requires “a ‘threshold determination' [ ] be made regarding ‘whether the plaintiffs have demonstrated that potential class members are similarly situated, such that court-facilitated notice to the putative class members would be appropriate.” Id. (quoting Syria, 756 F.Supp. at 686) (internal quotation marks omitted); see also Shaver, 2016 WL 1625835, at *2 (“Preliminary approval should be granted when a proposed settlement is ‘within the range of possible approval,' subject to further consideration after a final fairness hearing . . . .”).

         Here, Judge Messitte issued an order finding that Plaintiffs “made the required ‘modest factual showing' that they are ‘similarly situated' to other cruise consultants working for Defendant during their six-month training periods.” Order Approving Conditional Certification of Class ¶ 7. This conditional certification was “limited to Plaintiffs' allegation that Defendant's Training Period Commission Plan violates the FLSA.” Id. at ¶ 7 n.2. Accordingly, Plaintiffs have meet the requirements of the first stage of the evaluation for final approval of their Collective Settlement Class.

         The second stage of the evaluation requires “a ‘more stringent inquiry' . . . to determine whether the plaintiffs are, in fact, ‘similarly situated' . . . .” Edelen, 2013 WL 3816986, at *4 (citing Rawls v. Augustine Home Health Care, Inc., 244 F.R.D. 298, 300 (D. Md. 2007)). Even in situations where settlement agreements have been made, the court must still make a final determination on whether to certify the class. See Id. In doing so, courts consider a variety of factors, including: “(1) the disparate factual and employment settings of the individual plaintiffs; (2) the various defenses available to [the] defendant which appear to be individual to each plaintiff; and (3) fairness and procedural considerations.” Rawls, 244 F.R.D. at 300 (internal quotation marks omitted) (discussing the “decertification” process). Due to the overlap between class certifications under Rule 23 of the Federal Rules of Civil Procedure, “these factors need only be ‘address[ed] . . . in passing.'” Edelen, 2013 WL 3816986, at *4 (citations omitted).

         Here, the claims of each member of the Collective Settlement Class have the same factual underpinning. Each member was employed in the same position (Cruise Consultant) and went through the same training period, during which they were allegedly compensated by the same commission payment plan. The class as a whole is therefore “similarly situated” to the representative Plaintiffs. Additionally, Defendant has not raised any defenses that are individualized in nature. See Def.'s Answer 16-19. “In any event, individualized defenses typically raise concerns because they pose case management problems; such complications are largely irrelevant where a collective class is being certified for settlement purposes.” Edelen, 2013 WL 3816986, at *5 (citing Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 620 (1997)). Finally, with respect to fairness, a settlement resolving the FLSA claims of all Cruise Consultants who went through the six-month training period is an effective and efficient means of resolving the common issue of the legality of the Defendant's commission payment plan.

         In sum, the Court finds that Plaintiffs are similarly situated to the members of the Collective Settlement Class and, accordingly, final certification pursuant to Section 216(b) of the FLSA is warranted.

         2. Rule 23 Class Certification

         Certification as a class action under Rule 23 is also a two-stage process: a class must meet the four prerequisites under Rule 23(a) and fall within one of the three subdivisions of Rule 23(b). Calderon v. GEICO Gen. Ins. Co., 279 F.R.D. 337, 345-46 (D. Md. 2012). When parties seek to settle a case on behalf of a Rule 23 certified class, the court is required to “‘pay undiluted, even heightened attention' to class certification requirements . . . .” Edelen, 2013 WL 3816986, at *5 (citing Amchem Prods., 521 U.S. at 620 (internal quotation marks omitted)). This Court has already preliminarily approved the certification of the proposed Rule 23 Settlement Class. See Preliminary Approval Order. Accordingly, it will now consider the proposed Rule 23 Settlement Class with heightened attention to the requirements laid out in Rule 23.

         a. Rule 23(a) Prerequisites

         Under Federal Rule of Civil Procedure 23(a),

One or more members of a class may sue . . . as representative parties on behalf of all members only if: (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.

Calderon, 279 F.R.D. at 345 (citing Fed.R.Civ.P. 23(a)). Based on a review of the parties' submissions and counsel's representations during the Fairness Hearing, the Court finds the Rule 23 Settlement Class meets the numerosity, commonality, typicality, and adequacy prerequisites of Rule 23(a).

         Numerosity

         The inquiry of numerosity is not simply one of numbers as there is no set threshold by which a class is deemed numerous enough to meet this first requirement. See Edelen, 2013 WL 3816986, at *5. Rather, the inquiry must look to whether it would be “impracticable” to join each individual member's case. Craighead v. Full Citizenship of Maryland, Inc., No. CV PX-17-595, 2018 WL 3608743, at *2 (D. Md. July 27, 2018) (citation omitted). In making this determination, the court considers factors such as “the possible geographic disbursal of the claimants, the small size of individual ...


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