FedEx’s $227M Settlement|With Drivers Can Proceed

     (CN) – FedEx and its drivers that were misclassified as independent contractors may proceed with a $227 million settlement despite a “handful” of objections, a federal judge has ruled.
     Lead plaintiff Dean Alexander originally sued FedEx in state court in 2005. He and 16 full-time drivers of the company’s two operating divisions, FedEx Ground and FedEx Home Delivery, argued that they were employees under California law rather than so-called independent contractors.
     The drivers sought classwide damages for unreimbursed employment expenses, illegal wage deductions, failure to provide meal and rest periods, unpaid overtime for drivers of trucks weighing less than 10,001 pounds, interest, civil penalties, and attorneys’ fees and costs.
     From 2003 to 2009, FedEx faced similar lawsuits in 40 states.
     In multidistrict litigation, the trial court partially granted the plaintiffs’ request for class certification on some claims — then ultimately granted summary judgment to FedEx.
     The pickup and delivery drivers appealed the decision to the Ninth Circuit and prevailed in 2014, with the appeals court ruling that the drivers are technically employees under California’s right-to-control test.
     “Labeling the drivers ‘independent contractors’ in FedEx’s operating agreement does not conclusively make them so,” Circuit Judge Stephen Trott wrote.
     FedEx then filed several motions back in lower court to limit its liability, demanding class clarification, and claiming that changes to its business model limited the damages.
     Ultimately, the parties negotiated a $227 million settlement in the decade-old lawsuit.
     Class member Henry Zohrabians, who moved to intervene, sought appointment as a subclass representative in the action. Zohrabians’ motions were ultimately denied, however, and U.S. District Judge Edward Chen granted preliminary approval of the proposed settlement.
     On April 5, a settlement administrator reported 1,544 claim forms had been received, a 77 percent response rate.
     Because of a technical problem with a mailing list which included 2,016 individuals, notice of the settlement was reissued.
     The final reported claims tally $149 million of the gross settlement and average individual payouts of $112,000, court documents state, with “the lowest award at $250 and the highest award [at] $440,670.10.”
     The remaining portion of the net settlement, according to the parties’ agreement, is to be distributed to claiming members on a pro rata basis.
     Chen noted in his April 12 ruling that a “handful” of objections were made to the settlement, including Zohrabians’ motions, but that no requests for exclusion were reported.
     Chen granted conditional approval of the settlement, ruling the objections did not warrant denial of final approval.
     A pair of plaintiff objectors claimed that they did not receive overtime pay, though similar drivers received the wages.
     Under California law, drivers with a gross vehicle weight of less than 10,001-pounds may receive overtime pay. The pair of plaintiffs who operated vehicles exceeding the limit claimed like drivers received the pay but that they did not.
     “There is no evidence before the court to support this claim,” Chen wrote, noting that the pair were excluded from the class.
     El-Hani Services, which FedEx hired to service routes, separately objected to the settlement, claiming it could be sued by “secondary drivers.”
     Those drivers, hired by El-Hani, should be added to the settlement and their claims against class members released, Chen said.
     “The entire premise of El-Hani’s objection is that class members and secondary drivers have a conflict, and therefore the two groups cannot be similarly situated,” the 17-page ruling states. “Including secondary drivers in the class could be problematic.”
     Chen added that he would review the settlement claim response rate after additional outreach is made to non-claiming class members and after reviewing a supplemental brief regarding fees.
     The plaintiffs requested 22 percent of the gross settlement fund for fees and expenses — less than the 25 percent Ninth Circuit benchmark — totaling $50 million.
     El-Hani called that amount “excessive.”
     Chen ordered the supplemental brief to be filed by May 23.

%d bloggers like this: