Case 3:15-cv-01550-JAM Document 120 Filed 06/27/17 Page 1 of 45 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF CONNECTICUT CARLOS TAVERAS, individually and on behalf of all others similarly situated, Plaintiff, C.A. No. 3:15-cv-01550-JAM v. XPO LAST MILE, INC. Defendant. XPO LAST MILE, INC. Third-Party Plaintiff, v. EXPEDITED TRANSPORT SERVICES, LLC. Third-Party Defendant. PLAINTIFF’S ASSENTED-TO MOTION FOR FINAL APPROVAL OF A CLASS ACTION SETTLEMENT Plaintiff filed this lawsuit on behalf of himself and a class of similarly situated delivery drivers who performed delivery services for Defendant XPO Last Mile, Inc. in Connecticut pursuant to standard contracts under which they were classified as independent contractors. Plaintiff alleges that XPO’s delivery contractors were actually employees, and based on this misclassification, XPO’s practice of making deductions from its delivery drivers’ pay for such things as damage claims and worker’s compensation violates the Connecticut wage payments laws. Conn. Gen. Stat. Sec. 31-71e. The parties have reached a non-reversionary class action settlement for $950,000. 1 Case 3:15-cv-01550-JAM Document 120 Filed 06/27/17 Page 2 of 45 On March 17, 2017, the Court granted preliminary approval of the proposed settlement, certified a class of individuals who performed delivery services for Defendant XPO Last Mile, Inc. in Connecticut pursuant to contracts that class them as independent contractors, and authorized notice to the class. ECF No. 115. Plaintiff now seeks the Court’s final approval of the proposed class action settlement at the final settlement approval hearing scheduled for July 7, 2017. This Court should grant final approval because, as discussed herein, the class action settlement is fair, adequate and reasonable. Indeed, the proposed settlement is similar to class action settlements reached in two prior cases filed against XPO that were approved by federal courts in Massachusetts and Illinois. See Martins v. 3PD, Inc., No. 11-11313-DPW (March 2, 2016 D. Mass.) (ECF No. 209); Brandon v. 3PD, Inc., No. 13-3745 (Jan. 26, 2016 N.D. Ill.) (ECF No. 151).1 The settlement satisfies the requirements for class action settlement under Rule 23(e). Of the 103 eligible class members, none filed objections to the settlement, and none sought exclusion from the settlement. Sixty-seven class members have filed claims, for a 65 percent return rate, which is expected to increase after the first round of settlement payments are disbursed. Class claimants will initially receive their minimum share based on a 100-percent claims rate. Forty-five days later, Class Counsel will make a second distribution of the remaining settlement funds, with any class members who file late claims receiving their share, and with the remaining funds being distributed to class members who filed timely claims. 1 XPO Last Mile, Inc. purchased 3PD, Inc. in 2013 and, even though those cases were filed against 3PD, the plaintiffs actually drove for XPO for much of the relevant time period and XPO ultimately settled the cases. 2 Case 3:15-cv-01550-JAM Document 120 Filed 06/27/17 Page 3 of 45 This is a very high rate of return for an employment class action. This settlement is non- reversionary, thus all available funds will be distributed to the claimants on a pro rata basis. Indeed, each claimant is set to receive substantial compensation, with an average payout of approximately $9,000. If an additional 20 percent of class members file claims, the average payout will be approximately $6,300. Moreover, the class members who filed claims suffered the most in potential damages. So far, the settlement claimants suffered 77 percent of the total deductions made during the class period. See Settlement Distribution Chart (attached as Ex D) Overall, the settlement provides an excellent result for the class. As discussed below, despite considerable risks to recovery, after payment of fees and incentive payments, Class Counsel will distribute, pursuant to the formula described below, $614,000 to class claimants. The proposed settlement is, therefore, fair and reasonable. Moreover, the recovery for the class is remarkably similar to the settlements with XPO in Massachusetts and Illinois that were both ultimately approved by the courts.2 I. BACKGROUND Plaintiff Carlos Taveras filed his class action complaint on October 26, 2015. ECF No. 1. On January 8, 2016, XPO filed its answer and a third-party complaint against the LLC operated 2 Based on the data provided by XPO here, its contractors worked approximately 7,436 week from October 2013 to February 2017. A gross settlement of $950,000 would, therefore, provide class members with a gross of $127.50 per week worked. The class in Martins v. 3PD (Massachusetts) included 198 contractors who worked a total of 13,524 week, which meant that the gross settlement of $2,187,500 worked out to an average weekly gross settlement of $161.75 per week worked for the class. In Brandon v. 3PD, Inc. (Illinois), the class included 292 contractors who worked a total of 30,152 weeks. The settlement in Brandon was $2,8000,000, which equated to $92.86 for each week a contractor worked for 3PD/XPO. As explained below, XPO attempted to compel Plaintiff to arbitrate his claims. While the Court denied XPO’s motion to compel arbitration based on delay, this left the possibility that XPO would seek to compel arbitration of claims brought by other class members and enforce its class-action waiver. Arbitration was raised as a defense in either Martins or in Brandon. This made recovery in this case potentially more problematic. 3 Case 3:15-cv-01550-JAM Document 120 Filed 06/27/17 Page 4 of 45 by Taveras, Expedited Transport Services, LLC seeking indemnification pursuant to the Delivery Service Agreement Taveras signed to work for XPO. ECF No. 17-18. XPO amended the third- party complaint to clarify that it was seeking indemnification against Expedited Transport Services, LLC. ECF No. 32. On February 19, 2016, Plaintiff filed a motion to dismiss the third-party complaint. ECF 39. The Court then required that the motion to dismiss be filed on behalf of Expedited Transport Services, LLC, and not the named Plaintiff. The motion to dismiss was refiled pursuant to the Court’s instructions. ECF No. 51. On April 25, 2016, the Court held oral argument and denied Plaintiff’s motion to dismiss the third-party complaint. ECF No. 56. On April 8, 2016, XPO filed a motion to compel arbitration. ECF No. 57. On April 29, 2016, Plaintiff opposed the motion to compel. ECF No. 57. XPO filed its reply brief on May 12, 2016 (ECF No. 65) and Plaintiff filed a sur-reply in opposition to arbitration on May 17, 2016 (ECF No. 69). The Court then requested additional briefing on whether Plaintiff as an individual could be bound by an arbitration agreement entered into by him on behalf of a corporate entity. ECF No. 88. On June 19, 2016, the parties provided their supplemental briefing pursuant the Court’s request. ECF Nos. 89, 90. On June 20, 2016, the Court held oral argument and denied XPO’s motion to compel arbitration. The Court held that XPO had waived its right to compel arbitration by litigating the case for six months, which included filing the third-party complaint and engaging in discovery disputes, before filing its motion to compel. On July 5, 2016, XPO filed a motion to certify the decision to deny its motion to compel for interlocutory appeal pursuant to 28 U.S.C. § 1292(b). ECF No. 95. On September 12, 2016, 4 Case 3:15-cv-01550-JAM Document 120 Filed 06/27/17 Page 5 of 45 the Court denied XPO’s motion to certify, holding that its finding of waiver was a factual determination that did not raise a controlling question of law. ECF No. 99. In addition to motion practice, the parties have engaged in extensive discovery. The parties both issued full sets of interrogatories and requests for production of documents. These, in turn, led to several conferences with the Court dealing with discovery disputes. On May 4, 2016, XPO filed a motion to stay discovery until its motion to compel arbitration was ruled upon. ECF No. 58. On May 12, 2016, Plaintiff opposed the motion to stay. ECF No. 66. On May 16, 2016, 2016, XPO filed its reply brief in support of stay discovery. ECF No. 67. Also on May 16, 2016, Plaintiff filed a letter requesting that this Court compel XPO to comply with discovery requests for class-wide discovery. ECF No. 68. XPO filed its reply to the discovery letter on May 18, 2016. ECF No. 70. On May 19, 2016, the Court held discovery conference and ruled that some additional discovery be produced. ECF No. 82. Moreover, Plaintiff’s counsel deposed two XPO employees over the course of three full days. Furthermore, the parties engaged in two full-day mediations with a nationally-recognized expert in state and federal law concerning the employment classification of delivery drivers, Carole Katz, Esq., on November 10, 2016 and February 17, 2017. Prior to the mediations, XPO produced voluminous data concerning all deductions it has made from its contractors pay since October 26, 2013. On March 16, 2017, Plaintiffs filed an assented-to motion for preliminary approval of a class action settlement. ECF No. 114. On March 17, 2017, the Court granted Plaintiffs’ motion for preliminary approval and certified a settlement class of: All individuals who entered into a Delivery Service Agreement, either in their individual capacities or through their own business entities, with XPO Last Mile, Inc., and personally performed deliveries on a full-time basis within the State of Connecticut at 5 Case 3:15-cv-01550-JAM Document 120 Filed 06/27/17 Page 6 of 45 any time from October 26, 2013 to the date of preliminary approval of the proposed class action settlement ECF No.