United States District Court, D. Kansas
MEMORANDUM AND ORDER
Kathryn H. Vratil United States District Judge
matter is before the Court on Plaintiffs' Amended
Motion For Preliminary Approval Of Settlement (Doc.
#817) filed March 7, 2018. Plaintiffs' unopposed motion seeks
(1) preliminary approval of the parties' settlement
agreement; (2) approval of the parties' Stipulation
For Dismissal Without Prejudice And Revisions To Class
List (Doc. #785) filed October 24, 2017 and
Stipulation For Dismissal With Prejudice Of Certain Class
Members (Doc. #786) filed October 24, 2017; (3) a
finding that plaintiffs' requests for attorneys' fees
are fair and reasonable; (4) approval of plaintiffs'
requests for costs to class counsel and service awards to
class representatives and class members who prepared to
testify at trial; and (5) a final settlement approval
hearing. Plaintiffs' Amended Motion (Doc. #817),
¶¶ 1-7. For reasons below, the Court sustains
plaintiffs' motion in part.
And Procedural Background
February 7, 2008, nine plaintiffs - former Sprint retail
store employees - filed suit against their employers Sprint
Nextel Corporation and Sprint/United Management Company
(collectively, “Sprint”). Complaint
(Doc. #1). Plaintiffs alleged that when Sprint acquired
Nextel, it failed to properly integrate the companies'
payroll systems and routinely failed to pay commissions that
plaintiffs had earned. Id. On behalf of a nationwide
class of similarly-situated Sprint employees, plaintiffs
asserted claims for violations of the Kansas Wage Payment Act
(“KWPA”), K.S.A. § 44-313 et seq.,
and breach of contract.
November 24, 2008, the Court certified a class pursuant to
Rule 23(b)(3), Fed. R. Civ. P., composed of “[a]ll
persons nationwide who worked for Sprint's retail stores
since their merger with Nextel [in August of 2005] . . .
whose compensation was based in full or in part on
commissions.” Memorandum And Order (Doc. #99)
at 10-21. It also appointed Nichols Kaster, PLLP and Stueve
Siegle Hanson LLP as class counsel. Id. On March 13,
2009, the Court directed class counsel to mail potential
class members a letter to place them on notice of the suit
and their ability to opt out of it. Memorandum And
Order (Doc. #124) at 5. On January 15, 2014, the parties
stipulated that the class would be limited to employees who
held specific retail positions from August 12, 2005 through
September 30, 2009. Joint Stipulation Specifying Class
Membership And Class Period (Doc. #503). In early 2014,
the parties sent a letter which described these limitations
to individuals who had received the 2009 certification letter
and to new potential class members. Order (Doc.
#504) filed January 27, 2014; see Doc. #503-1 filed
January 15, 2014 (notice letter); see Doc. #503-2
the past ten years, the parties have engaged in extensive
discovery and motion practice. Because this case involved an
extraordinary amount of highly technical data, the Court
appointed a Special Master and a Technical Advisor to assist
with pending motions. Order Of Appointment (Doc.
#532) filed April 14, 2014 at 1; Appointment Of Neutral
Technical Advisor (Doc. #559) filed October 1, 2014 at
1. Sprint alone produced more than 18 million pages of
documents. Amended Memorandum In Support Of
Plaintiffs' Motion For Preliminary Approval Of
Settlement (Doc. #818) filed March 7, 2018 at 6 (citing
Memorandum Of Law In Support Of Defendants'
Motion To Decertify The Class (Doc. #620) filed March 7,
2016 at 13).
parties relied heavily on experts who examined Sprint's
computerized commissions system. The Special Master
summarized the experts' challenge as follows:
The amount of work required of the experts . . . was massive.
That is because, during the class period: (1) Sprint employed
over 30, 000 class members; (2) these class members engaged
in a total of over 350 million potentially-commissionable
sales transactions, which were documented by over 6 billion
computerized records; (3) Sprint's compensation scheme
changed several times, creating over a dozen variations on
how commissions were calculated; (4) each one of these
compensation schemes was complicated, involving intricate
assessments of sales and also different commission measures
for different product categories; (5) the information
necessary for the experts to calculate and reconcile historic
commissions came from numerous sources - for example, the
experts had to match information contained in (a) retail
sales databases, (b) customer billing databases, (c)
databases defining which products and services were
commissionable, and (d) payroll databases, among others; (6)
the relevant data was generated by and flowed through many
different computer programs, which were not necessarily
designed to “talk to each other;” and (7) as
Sprint and Nextel merged their operations, Sprint changed the
computer programs it used to calculate employee compensation.
Report Regarding Cross-Motions To Exclude Expert
Testimony (Doc. #701) filed April 7, 2017 at 4-5. The
experts analyzed Sprint's payroll system and produced
reports which summarized various errors in it, along with
amendments to their reports and criticism of opposing expert
analysis and methodology. See id. at 5. The experts
reached dramatically different conclusions. Plaintiffs'
experts concluded that Sprint had underpaid the class by $95,
584, 122.27. Memorandum In Support (Doc. #818) at 8
(citing Balance Engines LLC Supplement To Expert Report
To Exclude Ramp-Up Months (Doc. #749-2) filed
July 26, 2017 at 3). On the other hand, Sprint experts
calculated that Sprint had overpaid the class by $75, 004,
761. Id. (citing January 28, 2016 Rebuttal
Report Of Janet R. Thornton, Ph.D. (Doc.
#616-90) filed February 29, 2016 at 60 n.106).
parties also engaged in protracted motion practice. Shortly
after plaintiffs commenced this action, Sprint successfully
moved the Court to dismiss some of plaintiffs' claims.
Memorandum And Order (Doc. #77) filed July 30, 2008
at 7-11. Sprint twice moved to decertify the class.
Defendants' Motion To Decertify (Doc. #450)
March 25, 2013; Defendants' Motion To Decertify
(Doc. #619) March 3, 2016. When the Court overruled its
second motion for decertification, Sprint attempted an
interlocutory appeal, which the Tenth Circuit denied.
Order (Doc. #727) filed June 8, 2017; Doc. #735
filed June 23, 2017; Order (Doc. #752) filed August
7, 2017. Throughout the pendency of this case, the parties
filed and briefed numerous motions, including but not limited
to multiple rounds of motions to exclude expert testimony
under Daubert v. Merrell Dow Pharm. Inc., 509 U.S.
579 (1993), cross-motions for summary judgment and objections
to the Special Master's reports on these motions. See
Memorandum In Support (Doc. #818) at 8-9.
September 1, 2017, the Court ordered the parties to engage in
mediation before the Honorable Daniel D. Crabtree. Order
Referring The Parties To Mediation (Doc. #762). On
January 8 and 9, 2018, approximately five months before
trial, the parties attended mediation sessions with Judge
Crabtree. ADR Report (Doc. #798) filed January 10,
2018; Third Amended Scheduling Order (Doc. #771) at
2 (trial set for June of 2018). The parties did not settle
during these sessions, but on January 18, 2018 - with the
continued aid of Judge Crabtree - the parties reached a
settlement which resolved this action. ADR Report
(Doc. #798); see Memorandum In Support (Doc. #818)
Preliminary Settlement Approval
March 7, 2018, plaintiffs moved for preliminary approval of
their settlement agreement. Plaintiffs' Amended
Motion (Doc. #817). On March 8, 2018, the Court held a
preliminary settlement approval hearing. At the hearing, the
Court voiced concerns about certain aspects of the proposed
settlement agreement. On March 16, 2018, plaintiffs filed a
Supplemental Memorandum In Support Of Plaintiffs'
Motion For Preliminary Approval Of Settlement (Doc.
#821). Plaintiffs' supplemental memorandum provided
additional information concerning (1) revisions to the class
definition; (2) revisions to the settlement process; (3) the
reasonableness of the settlement amount; (4) the parties'
efforts to ensure the most practicable notice of settlement;
and (5) a new cy pres recipient. See generally
April 5, 2018, the Court ordered the parties to submit
additional information and show cause why they should not
revise certain provisions of the proposed settlement.
Order To Show Cause (Doc. #823) at 1-8. On April 16,
2018, the parties responded and submitted for preliminary
approval the revised settlement agreement.
Plaintiffs' Response To Order To Show Cause
(Doc. #824); Defendants' Response To The Court's
Order To Show Cause  Regarding The Supplemental Memorandum
In Support Of Plaintiffs' Motion For Preliminary Approval
Of Settlement (Doc. #826). On May 2, 2018, plaintiffs
submitted a revised settlement agreement which corrected
typographical errors and revised one provision of the prior
draft. See Settlement Agreement (Doc. #828-1).
Proposed Settlement (Doc. #828-1)
settlement agreement defines the settlement class as follows:
All persons nationwide who did not opt out of the Class
Litigation and worked in Sprint's retail stores during
the Class Period of August 12, 2005 through September 30,
2009, including Retail Store District Managers, Retail Store
Managers, Assistant Retail Store Managers, Lead Retail
Consultants, Retail Consultants, Retail Sales
Representatives, and other retail employees (all of whom held
at least one of the job titles set forth in Exhibit A to the
Expert Stipulation entered at Docket No. 357-1 in the Class
Litigation) and whose compensation was based in full or in
part on commissions. The parties have agreed there are 34,
909 individuals in the Settlement Class.
Settlement Agreement (Doc. #828-1), ¶ 4.
settlement agreement provides that Sprint will pay a total
settlement amount of $30, 500, 000. Id., ¶
1.ll. From the settlement fund, class counsel will receive
attorneys' fees up to $7, 015, 000 and up to $7, 000, 000
in litigation costs. Id., ¶ 8.a. After fees and
litigation and settlement costs, the class will receive
approximately 54 per cent of the fund - or $16, 550, 129.
Doc. #824-12 at 2 (16, 550, 129/30, 500, 000 = .543). The
claims administrator will allocate the fund among class
members. Settlement Agreement (Doc. #828-1), ¶
6. To calculate most of the allocations, the administrator
will use plaintiffs' expert calculations performed to
determine each class member's net underpayment during the
class period. Id. The administrator will allocate
each member a pro rata share of his or her calculated
underpayment. Id. Under this allocation process, if
Sprint underpaid a class member by less than $25, he or she
will receive a flat payment of $25. Id.
class members will not receive allocations in the manner
described above: (1) 4, 482 class members who were correctly
paid or overpaid, (2) 274 class members who only worked in
Period 65 and (3) 2, 787 class members for whom the record
contains insufficient data to calculate overpayment or
underpayment. Id.; see Plaintiffs' Response
To Order To Show Cause (Doc. #824) at 6-7. Class members
who were correctly paid or overpaid under the expert
calculation will receive no allocation. Settlement
Agreement (Doc. #828-1), ¶ 6. Class members who
only worked in Period 65 (August of 2005) - which is only
partially covered by the class period - will receive the
minimum recovery of $25. Id. Finally, because Sprint
did not produce individualized data for 2, 787 class members,
the experts could not calculate their damages.
Plaintiffs' Supplemental Submission On The
Court's Order To Show Cause Regarding Judgment As A
Matter Of Law  (Doc. #749) filed July 26, 2017 at 4.
The parties refer to these individuals as “insufficient
data” class members. Id. Under the settlement
agreement, insufficient data class members will receive the
average class allocation of approximately $541.73.
Settlement Agreement (Doc. #828-1), ¶ 6;
Plaintiffs' Response To Order To Show Cause
(Doc. #824) at 7.
addition to their settlement allocations, nine class
representatives will receive $10, 000 service payments and 11
class members who prepared to testify at trial will receive
$3, 000 service payments. Settlement Agreement (Doc.
#828-1), ¶ 9.a. Notably, none of the class
representatives are in the correctly paid or overpaid group,
Period 65 group ...