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Sibley v. Sprint Nextel Corp.

United States District Court, D. Kansas

May 9, 2018

ROXIE SIBLEY, et al., Plaintiffs,
v.
SPRINT NEXTEL CORPORATION, et al., Defendants

          MEMORANDUM AND ORDER

          Kathryn H. Vratil United States District Judge

         This matter is before the Court on Plaintiffs' Amended Motion For Preliminary Approval Of Settlement (Doc. #817) filed March 7, 2018.[1] 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.

         Factual And Procedural Background

         On 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.

         On 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 (same).

         Throughout 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).

         Both 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).

         The 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.

         On 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) at 10.

         I. Preliminary Settlement Approval

         On 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 id.

         On 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).

         II. Proposed Settlement (Doc. #828-1)

         The 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.

         A. Settlement Payments

         The 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.

         Certain 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.

         In 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), ΒΆ 9.a. Notably, none of the class representatives are in the correctly paid or overpaid group, Period 65 group ...


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