ORDER DENYING MOTION TO MODIFY COURT'S ORDER APPROVING PARTIES' SECOND MODIFIED FLSA COLLECTIVE ACTION SETTLEMENT WITHOUT PREJUDICE
Re: ECF No. 227
JON S. TIGAR, District Judge.
The parties have jointly moved for the Court's approval of several changes to their Second Modified FLSA Collective Action Settlement. ECF No. 227. The Court had previously approved the agreement on July 2, 2015. ECF No. 226. For the reasons set forth below, the parties' motion to modify the Court's July 2 order and to approve the suggested modifications to the settlement agreement is denied without prejudice.
A. The Parties and Claims
Defendant CrowdFlower, Inc. ("CrowdFlower") is an internet-based company that distributes small and simple repetitive tasks to individuals in exchange for pay on a per-task basis. Second Am. Compl. ("SAC") ¶¶ 4, 8, 16-20, ECF No. 121. Defendants Lukas Biewald and Chris Van Pelt are the Chief Executive Officer and Chief Technology Officer of CrowdFlower, respectively.
Named Plaintiffs Christopher Otey and Mary Greth performed tasks for CrowdFlower through a website called Amazon Mechanical Turk ("AMT"). ECF No. 219-1 ¶ 7. The gravamen of their Complaint is that CrowdFlower pays its contributors, whom it classifies as independent contractors, less than the minimum wage under FLSA, 29 U.S.C. § 206(a), and Oregon law, ORS §§ 653.025 and 652.150. SAC ¶¶ 5, 36. Plaintiffs brought their Oregon law claims as class action claims under Rule 23.
B. Procedural Background
On August 27, 2013, the Court granted Plaintiffs' Motion for Conditional Certification of a Collective Action, and conditionally certified the following class:
ECF No. 167 at 8. In the same order, the Court approved Plaintiffs' proposed notice and consent form and ordered that notice should be emailed to the class members and posted online.
On January 24, 2014, Plaintiffs filed a Motion for Approval of FLSA Collective Action Settlement, Final Collective Action Certification for Settlement Purposes Only, and Authorization for the Parties to Effectuate Their Settlement, which the Court denied on April 15, 2014. ECF Nos. 187, 195. On December 16, 2015, the Court denied Plaintiffs' motion for approval of a modified settlement agreement, identifying several remaining deficiencies that precluded approval at that stage. ECF Nos. 207, 210. On April 8, 2015, Plaintiffs filed a new Motion for Approval of Parties' Second Modified FLSA Collective Action Settlement, Final Collective Action Certification for Settlement Purposes Only, Authorization for the Parties to Effectuate their Settlement, and Request for Tolling. ECF No. 218. On July 2, 2015, the Court granted approval of the second modified settlement agreement, authorized the parties to effectuate their settlement, and denied the request for tolling. ECF No. 226. On September 8, 2015, the parties filed a Joint Motion to Modify the Court's July 2, 2015 Order Granting Motion for Approval of Parties' Second Modified FLSA Collective Action Settlement ("Motion to Modify"). ECF No. 227
C. Overview of the Settlement Agreement
The elements of the Second Modified Stipulation of Settlement of Collective Action ("Settlement"), ECF No. 218-1, are only briefly summarized here. A more thorough description of the Settlement can be found in this Court's prior order approving the agreement.
The Settlement called for Defendants to pay a total of $585,507.00, to be allocated as follows: (1) a net settlement amount available for class member's claims estimated at $297,672.66; (2) claims administration expenses not to exceed $70,000.00; (3) class representative service awards not to exceed $5,000.00 for Plaintiff Greth and $6,000.00 for Plaintiff Otey; (4) reasonable costs incurred in obtaining a response to a subpoena issued to AMT; (5) attorneys' fees in an amount not to exceed $146,377.00; and (6) costs in an amount not to exceed $50,457.34.
For the purpose of settlement, the parties stipulated to the decertification of the conditionally certified class and the certification of a provisional settlement class of
Claims administrator Simpluris Inc. will mail class notice and settlement award checks to all members of the provisional settlement class at their last known or updated address.
Simpluris will promptly resend any returned class notice and settlement check after reasonable efforts to determine a correct address; issue reminder postcards; re-issue settlement award checks for a period of up to three years after initial mailing; and undertake reasonable efforts to contact provisional class members who have not yet negotiated their settlement checks every 180 days until the expiration of the three-year period.
Plaintiffs agree to release:
D. The Parties' Proposed Modifications
The parties explain in their Motion to Modify that they encountered a number of administrative problems upon receiving the subpoenaed data from AMT containing the personal contact information for the provisional class members. ECF No. 227 at 5. They jointly propose the following modifications.
i) The claims administrator identified 3,234 provisional class members who did not appear to provide their full legal names, but instead provided only a first or last name, a screenname or e-mail address, or a business name.
ii) 65 provisional class members were identified as having multiple accounts with identical or nearly identical names and mailing addresses. ECF No. 227 at 8. For these members, the parties propose sending only one check to the shared name and address, with the combined amounts from all matching records.
iii) The claims administrator also identified 73 people who had incomplete mailing addresses.
iv) 636 records contained mailing addresses outside of the United States. ECF No. 227 at 10. The parties acknowledge that the Settlement originally called for limiting the provisional class to those individuals who accessed Crowdflower through an IP address within the United States.
v) The claims administrator identified 300 provisional class members who had earned less than $5.00 in the aggregate through Crowdflower. ECF No. 227 at 11. The provisional class was originally defined as including only those individuals who had earned more than $5.00, but this did not account for the fact that AMT collects a premium from the amounts paid out by Crowdflower.
vi) To account for these changes, the parties propose increasing the allotted expenses for claims administration from $70,000 to $98,898.
vii) Finally, the parties propose a modified timeline to account for an ambiguity in the previous agreement.
This Court has jurisdiction over this action under 28 U.S.C. § 1331.
II. LEGAL STANDARD
The FLSA was enacted for the purpose of protecting workers from substandard wages and oppressive working hours.
The Ninth Circuit has not established the criteria that a district court must consider in determining whether an FLSA settlement warrants approval. Most courts in this circuit, however, first consider whether the named plaintiffs are "similarly situated" to the putative class members within the meaning of 29 U.S.C. § 216(b) (providing that an aggrieved employee may bring a collective action under the FLSA on behalf of himself and "other employees similarly situated"). If the collective action members are similarly situated, most courts then evaluate the settlement under the standard established by the Eleventh Circuit, which requires the settlement to constitute "a fair and reasonable resolution of a bona fide dispute over FLSA provisions."
The Court has previously determined that the provisional class members are similarly situated, and that this case arises from a "bona fide dispute."
A. Requirement for Proof of Identification to Receive Re-Issued Check
As explained above, the parties have proposed changes to their notification procedures to account for those provisional class members who may not have provided a full legal name or valid mailing address. These changes include two form e-mails to those members who did not provide full names or addresses, and an addition to the class notice informing all class members that they may get their checks re-issued to a different name.
Significantly, however, the two form e-mails and the class notice revision inform the provisional class members that they may be required to provide identification, such as a driver's license or passport, to obtain their checks.
B. Exclusion of Class Members Without United States Mailing Addresses
The Motion to Modify also proposes to exclude all individuals who did not provide mailing addresses within the United States. The parties' reasoning for this proposal is that a United States IP address is an insufficient indicator of whether the individual using that IP address is in fact within the United States. In essence, then, the parties appear to propose re-defining the class to limit its members by mailing address rather than by IP address.
The parties' reasoning is unconvincing. The Court notes that prior to settlement, it conditionally certified a class of all persons who "performed crowdsourced work in the United States and its territories in response to any online request by CrowdFlower." ECF No. 167 at 8 (emphasis added). There are many reasons why an individual who performed crowdsourced work within the United States may nevertheless have a foreign mailing address. The provided address may be an old one that is no longer used, a permanent address for a transient person such as a student, or the home address for an individual who is currently residing and working away from home in the United States.
Moreover, if the provisional class is re-defined to exclude the 636 individuals who used a U.S. IP address but not a U.S. mailing address, it follows that it should also be re-defined to add those individuals in the reverse situation — namely, those who have a U.S. mailing address but did not access Crowdflower through a U.S. IP address. No one suggests such a change, and so the proposed modification acts as a one-way ratchet. The Court concludes that the parties have not sufficiently explained why the proposed re-definition of the class is fair and reasonable.
The joint motion to modify the Court's approval of the Settlement is denied without prejudice. The parties may file a new motion that addresses the deficiencies identified in this order within 60 days of the date this order is filed.
To provide for further management of the case in the event that a new motion is not forthcoming, the Court hereby sets a case management conference on January 13, 2016 at 2:00 p.m. A Joint Case Management Statement must be filed at least ten court days beforehand. If a new motion for approval of modifications is filed within 60 days of the date of this order, the parties may request that the Court vacate the case management conference.