DKT 063 Memo in Supp of JNT MTN For Prelim Approval

CASE 0:15-cv-02498-SRN-BRT Document 63 Filed 02/16/16 Page 1 of 43
UNITED STATES DISTRICT COURT

DISTRICT OF MINNESOTA
Duniyo Hussein, et al.,
on behalf of themselves,
the Proposed Rule 23 Class, and
others similarly situated,
Plaintiffs,
Civil No. 15-CV-2498 (SRN/BRT)

JOINT MEMORANDUM IN
SUPPORT OF PRELIMINARY
APPROVAL OF PROPOSED
CLASS ACTION SETTLEMENT
v.
Capital Building Services Group., Inc.,
Defendant.
INTRODUCTION
Plaintiffs Duniyo Hussein (Plaintiff Hussein), Naima Omar Issa (Plaintiff
Issa), Leyla Yusuf (Plaintiff Yusuf), Raymond Deshler (Plaintiff Deshler),
Assiongbonvi Luc Kangnigan (Plaintiff Kangnigan), Melvin Holmes (Plaintiff
Holmes), Abraham Quevedo Orantes (Plaintiff Quevedo), and Leticia Zuniga
Escamilla (Plaintiff Zuniga), (collectively, the Named Plaintiffs or Plaintiffs),
individually and on behalf of current and former employees of Defendant Capital
Building Services Group, Inc. (Capital or Defendant) who worked as cleaners
(including crew leads) in Minnesota from May 20, 2012, through January 15, 2016,
(Class Members or Proposed Rule 23 Class), jointly with Defendant, seek
preliminary approval of a proposed settlement of this action which alleges unlawful pay
practices arising under the Fair Labor Standards Act (FLSA), 29 U.S.C. 201 et seq.,
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Minnesota Fair Labor Standards Act, Minn. Stat. 177.24, and Minnesota Payment of
Wages Act, Minn. Stat. 181.001, et seq. Plaintiffs and Defendants (collectively the
Parties) Stipulation of Settlement resolves all of the Named Plaintiffs and Class
Members stated claims against Defendant in exchange for the payment by Capital of
$425,000.
The proposed settlement and plan of distribution are the product of an arms-length
mediation and non-collusive negotiations by experienced and informed counsel and fall
well within the range of possible approval as the terms are fair, reasonable, and
adequate. Fed. R. Civ. P. 23(e)(2). Accordingly, the Parties request the Court: (1)
preliminarily approve the settlement; (2) certify Plaintiffs Hussein, Issa, Yusuf, Deshler,
Kangnigan, Holmes, Quevedo, and Zuniga as the Class Representatives; (3) preliminarily
certify the Proposed FLSA collective and Rule 23 Class for purposes of settlement; (4)
appoint Paul Lukas, Adam Hansen, and Carl Engstrom of Nichols Kaster, PLLP, as Class
Counsel; (5) approve, and direct mailing of, the proposed Notice of Settlement (Class
Notice) to the Class; and (6) schedule a final approval hearing on the question of
whether the proposed settlement should be finally approved as fair, reasonable, and
adequate as to the members of the Class.
PROCEDURAL AND FACTUAL HISTORY
I.
LITIGATION, DISCOVERY, MEDIATION AND SETTLEMENT.

A.
Litigation Procedural History.
On May 20, 2015, Plaintiffs filed this putative FLSA collective and Rule 23 class
action against Defendant. (Compl. 1, ECF No. 1.) Plaintiffs alleged that Defendant
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failed to pay proper minimum wage and overtime compensation in violation of the
federal FLSA and that Defendant violated several Minnesota state wage and hour laws.
(Id. 1011.) Specifically, Plaintiffs alleged that Defendant violated: the Fair Labor
Standards Act (FLSA), 29 U.S.C. 206, 207, Minnesota Fair Labor Standards Act
(MFLSA), Minn. Stat. 177.23, .24, .25, .255, and .30, and the Minnesota Payment
of Wages Act (PWA), Minn. Stat. 181.032, .101, .13, and .14. (Id. 98175.)
Defendant filed an Answer denying all of Plaintiffs allegations. (ECF No. 29.)
In the Complaint, the Plaintiffs alleged Capital failed to pay employees for all
hours worked, resulting in minimum wage, gap time, and overtime violations under the
FLSA and MNFLSA. (Compl. 98-152, ECF No. 1.) Plaintiffs allege that meal breaks
are systematically deducted from employees hours worked, even when those breaks are
not actually taken. (Id.) Plaintiffs allege that some employees have to purchase their own
cleaning supplies, and these unreimbursed expenses cause employees wages to drop
even further below minimum wage. (Id.) Plaintiffs allege that when employees are asked
to clean a store where they do not normally work, their time is seldom tracked, and often
unpaid. (Id.) Plaintiffs allege that travel time between stores is not compensated. (Id.)
Plaintiffs allege that workers have no choice but to be paid with debit cards, and thus
must pay ATM fees in order to access their own wages. (Id.) Plaintiffs allege that
beginning in their second pay period, employees only other option is to receive direct
deposit, which is not an option for workers who do not have bank accounts. (Id.)
Plaintiffs allege that on numerous occasions, terminated employees were not paid for
work performed during their final pay periods. (Id.) Last, Plaintiffs allege that Capital
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failed to maintain accurate employment records and supply pay stubs (or electronic
access to pay stubs) to employees. (Id.) Plaintiffs seek damages, equitable relief,
injunctive relief, penalties, attorneys fees, and costs, on their own behalf and on behalf
of all those similarly situated.
Defendant contends that all of Capitals employees were compensated in
compliance with the law and that any alleged failure to pay wages was not willful.
Defendant has denied, and continues to deny, each of the claims and contentions alleged
by the Plaintiffs in the Action, and so it denies any wrongdoing or legal liability arising
from any facts or conduct alleged in the Action. Nevertheless, Defendant has concluded
that further litigation would be protracted and expensive and would divert management
and employee time. Defendant has taken into account the uncertainty and risk inherent in
litigation and concluded it is appropriate to fully and finally settle the Action in the
manner, and upon the terms, set forth in the settlement.
On June 3, 2015, the Plaintiffs filed their Motion for Conditional Certification and
Notice, Class Certification, and a Preliminary Injunction. (ECF No. 5.) Defendant
opposed Plaintiffs motions, and submitted voluminous testimonial and documentary
evidence setting forth Defendants responses to Plaintiffs allegations in detail. (ECF
Nos. 18-23.) On November 20, 2015, this Court granted Plaintiffs motion for conditional
certification and deferred ruling on Plaintiffs motions for class certification and
injunctive relief. (ECF 58.) With mediation pending, the parties entered into a private
agreement to defer mailing the court-approved notice and toll the claims of all class
members until after mediation. (Hansen Decl. 3) Because the discussions produced a
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settlement, Plaintiffs counsel did not send conditional certification notice to the class.
(Hansen Decl. 4)
B.
Discovery Efforts.
The Parties have engaged in limited discovery. (Hansen Decl. 5) In anticipation

of mediation, Capital produced all payroll and timekeeping data for all members of the
class. (Hansen Decl. 6) In addition, the parties agreed on a methodology whereby both
parties could ask questions of the other parties in order to clarify points of dispute.
(Hansen Decl. 7) During the period of discovery, for example, Defendant provided
detailed information on the nature of its timekeeping and payroll data, where the data
resides, and who may access or change the data. (Hansen Decl. 8) Defendant also
provided discovery on Defendants policies related to payment, travel time, meal breaks,
timekeeping, and providing access to paystubs. (Hansen Decl. 9) Last, Defendant
produced detailed financial information relating to Capitals assets, liabilities, debts,
accounts, and contractual relationships. (Hansen Decl. 10) The Parties agreed to defer
further discovery and associated disputes in favor of settlement. (Hansen Decl. 11)
In pursuing claims at issue in the Action, and in evaluating the merits of the
settlement, Class Counsel have (1) reviewed thousands of pages of data and documents,
(2) conducted over a dozen witness interviews, (3) held meetings and conferences
between representatives of the Parties, (4) researched federal and Minnesota law, (5)
investigated facts regarding the Class Members claims, (6) gathered declarations, (7)
researched and investigated potential defenses to Plaintiffs claims, and (8) analyzed the
damages incurred by the Class. (Hansen Decl. 12)
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C.
Mediation History.
On December 11, 2015, the Parties participated in a full-day mediation session

conducted by the Honorable Arthur Boylan (Ret.). (Hansen Decl. 13) Following the
mediation, the parties continued negotiating over a variety of sensitive monetary and nonmonetary terms. (Hansen Decl. 14) On January 22, 2016, as a result of these arms
length negotiations, the Parties agreed to the settlement. (Hansen Decl. 15) The Parties
have worked diligently to resolve numerous issues regarding settlement. (Hansen Decl.
16) The Parties believe they are fully and adequately informed of all facts necessary to
evaluate the case for settlement. (Id.)
D.
Summary of Plaintiffs Claims And Defendants Defenses
Defendant is in the business of providing commercial cleaning services to retail,

corporate, commercial, industrial, banking, and educational venues. (ECF No, 8-4, Ex.
11.) Defendant maintains its corporate office in Lake Zurich, Illinois. (ECF No, 8-4, Ex.
12.) Capital services more than 300 facilities in 25 states. (ECF No, 8-4, Ex. 13.)
Capital has cleaning contracts with twenty-seven facilities in Minnesota. (ECF No,
8-2, Ex. 8.) Capital currently employs approximately 50 cleaners (including crew leaders)
in Minnesota. (Id. 21.) Given the high turnover among cleaners, Defendant has likely
employed over several hundred cleaners (including crew leaders) within the three years
prior to the filing of the Complaint. (Id.)
Plaintiffs all work or worked as cleaners (including crew leaders) for Defendant
within the three years prior to the filing of the Complaint. (ECF No, 8-2, Hussein Decl.
2, Ex. 2; ECF No, 8-2, Issa Decl. 2, Ex. 3; ECF No, 8-2, Yusuf Decl. 2, Ex. 4; ECF
No, 8-2, Deshler Decl. 2, Ex. 5; ECF No, 8-2, Kangnigan Decl. 2, Ex. 6; ECF No, 82, Holmes Decl. 2, 5, Ex. 7; ECF No, 8-2, Quevedo Decl. 2, Ex. 8; ECF No, 8-2,
Zuniga Decl. 2, Ex. 9.) Plaintiffs have worked primarily at eight of the twenty-seven
Minnesota department stores cleaned by Capital. (Id.) However, Plaintiffs have at various
points worked at nearly every store cleaned by Capital in Minnesota. (Id.)
Plaintiffs allege that Capital has a top-down organizational structure. All policies
related to timekeeping and payroll emanate from Capitals corporate office. (ECF No, 82, Quevedo Decl. 15.) In Minnesota, Capital has appointed a single district manager to
implement and enforce these policies across the state while also managing day-to-day
cleaning operations state-wide. (Id. 15.) The district managers duties include setting
employees schedules, inputting employees hours for payroll, and handling all employee
disputes relating to compensation. (Id. 810, 17.) The district manager is responsible
for making all hiring and firing decisions. (Id. 1719.) The district manager has
exclusive responsibility for everything related to timekeeping and payroll. (Id. 810,
1719.)
Below the district manager is the area manager. (Id. 18.) The area managers
primary duty is to travel between stores throughout Minnesota to perform cleaning tasks
when employees do not show up for work or extra cleaning is necessary at a particular
store. (Id. 3, 18.) The area manager is paid on a salary basis, though the legality of this
designation of area managers as exempt from the overtime requirements of the FLSA is
contested. (Id. 5; Compl. 19299, ECF No. 1.) Beneath the area manager is the crew
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leader. (ECF No, 8-2, Quevedo Decl. 19.) The crew leader bears primary responsibility
for the cleanliness of a store, but has no managerial responsibilities other than
occasionally delegating cleaning tasks to other cleaners. (Id.) Crew leaders may be
required to travel between stores to cover for absent cleaners. (ECF No, 8-2, Holmes
Decl. 5, Ex. 7.)
Given Capitals organizational structure and the division of responsibilities among
managers, Plaintiffs allege that all Capital cleaners working in Minnesota were subject to
only one set of policies relating to timekeeping and payroll that were set by Capitals
corporate office. Those policies were then implemented and enforced throughout
Minnesota by one personthe district manager. Plaintiffs allege these policies all affected
them in a similar manner, because they are all non-exempt employees paid on an hourly
basis at similar wage levels, and all share the same primary job dutycleaning Macys
and Herbergers department stores. (ECF No, 8-2, Hussein Decl. 2, Ex. 2; ECF No, 8-2,
Issa Decl. 2, Ex. 3; ECF No, 8-2, Yusuf Decl. 2, Ex. 4; ECF No, 8-2, Deshler Decl.
2, Ex. 5; ECF No, 8-2, Kangnigan Decl. 2, Ex. 6; ECF No, 8-2, Holmes Decl. 23,
Ex. 7; ECF No, 8-2, Quevedo Decl. 2, 5, 11, Ex. 8; ECF No, 8-2, Zuniga Decl. 2, Ex.
9.)
1.
Plaintiffs Allegations Regarding Earnings Statements
Plaintiffs allege that none of the Plaintiffs or class members received earnings
statement as required by Minnesota law. Minn. Stat. 181.032 states, At the end of each
pay period, the employer shall provide each employee an earnings statement, either in
writing or by electronic means, covering that pay period. The earnings statement must
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include, among other information, the dates covered, the hourly rate of pay, the number
of hours worked, gross pay, all deductions, and net pay. Minn. Stat. 181.032(b). If an
employer chooses to provide employees electronic paystubs, each employee must be
provided with access to an employer-owned computer during an employees regular
working hours to review and print earnings statements. Minn. Stat. 181.032(a). An
employer must provide statements in written form upon receiving notice that an
employee prefers written statements. Minn. Stat. 181.032(c).
Defendant denies the allegation that none of the Plaintiffs or class members
received earnings statements as required by Minnesota law. In response, Defendant
argues that Minnesota law gives employers the option of providing earnings statements to
employees either in writing or by electronic means, Minn. Stat. 181.032(a), and that
employers must provide the earnings statement to the employee in writing, rather than by
electronic means, only if the employer has received at least 24 hours notice from an
employee that the employee would like to receive earnings statements in written form,
Minn. Stat. 181.032(c). Defendant argues that it has complied with this legal
requirement. The two plaintiffs who requested written earning statements received them
from Capital. Three Plaintiffs who allege they never received written earnings statements
never requested them in the first place.
2.
Plaintiffs Allegations Regarding Section 181.032
Plaintiffs also allege that Defendant violated Section 181.032 in a number of ways.
According to Plaintiffs, until early 2015, cleaners were not provided with any form of
earnings statement, written or electronic. (ECF No, 8-2, Hussein Decl. 3, Ex. 2; ECF
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No, 8-2, Issa Decl. 3, Ex. 3; ECF No, 8-2, Yusuf Decl. 3, Ex. 4; ECF No, 8-2, Deshler
Decl. 3, Ex. 5; ECF No, 8-2, Kangnigan Decl. 3, Ex. 6; ECF No, 8-2, Holmes Decl.
4, Ex. 7; ECF No, 8-2, Quevedo Decl. 58, Ex. 8; ECF No, 8-2, Zuniga Decl. 3, Ex.
9.) Beginning in early 2015, when Capital switched its payroll provider, employees were
given the ability to view their earnings statements online. (ECF No, 8-2, Holmes Decl.
4, Ex. 7; ECF No, 8-2, Quevedo Decl. 6, Ex. 8.) However, employees are not given
access to a work-owned computer to view or print these earnings statements during
working hours, as the law requires. (ECF No, 8-2, Hussein Decl. 3, Ex. 2; ECF No, 8-2,
Issa Decl. 3, Ex. 3; ECF No, 8-2, Yusuf Decl. 3, Ex. 4; ECF No, 8-2, Deshler Decl.
3, Ex. 5; ECF No, 8-2, Kangnigan Decl. 3, Ex. 6; ECF No, 8-2, Holmes Decl. 4, Ex.
7; ECF No, 8-2, Quevedo Decl. 67, 20, Ex. 8; ECF No, 8-2, Zuniga Decl. 3, Ex. 9.)
In fact, Plaintiffs either do not have access to a computer during their working hours or
are not allowed to use whatever computer might be available. (ECF No, 8-2, Quevedo
Decl. 7, 20, Ex. 8.) Furthermore, Plaintiffs who have attempted to access their online
earnings statements have not thus far been able to view their hours worked or hourly
wage rate. (ECF No, 8-2, Holmes Decl. 4, Ex. 7; ECF No, 8-2, Quevedo Decl. 6, Ex.
8.) But even if these electronic earnings statements contained the information required by
Minn. Stat. 181.032, Plaintiffs argue, Defendant would still be in violation of the statute
because employees are not able to view or print these statements using an employerowned computer during their working hours. Minn. Stat. 181.032.
Defendant counters, however, that both the electronic and written earnings it
provided its employees include all of the elements required by Minn. Stat. 181.032(b),
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including: (i) the employee name; (ii) the hourly rate of pay; (iii) the total number of
hours worked; (iv) the total amount of gross pay; (v) a list of deductions; (vi) the net
amount of pay; (vii) the date on which the pay period ends; and (viii) the legal name of
the employer. (K.Z. Decl., Exs. 6,7.) For example, the electronic earning statement for
Plaintiff Melvin Holmes for the pay period ending on December 31, 2015, shows that Mr.
Holmes received $9.00 per hour for 80 hours of straight-time and $13.50 per hour for
35.50 hours of overtime during that pay period. (Id., Ex. 7.) It also shows the amounts
that Capital withheld the mandatory tax withholding as well as an additional tax levy that
Capital was required to withhold due to Mr. Holmes failure to pay taxes in previous
years.
3.
Plaintiffs Recordkeeping Allegations
Plaintiffs next allege that Capital does not maintain accurate records as required by
Minnesota and federal labor law. Employers are required to maintain records of all hours
worked by an employee each day and each workweek. Minn. Stat. 177.30; Minn. R.
5200.0100. Plaintiff alleges Defendant fails to meet this obligation in a number of ways.
First, Defendant sometimes simply fails to record entire shifts that are worked. (ECF No,
8-2, Hussein Decl. 7, Ex. 2; ECF No, 8-2, Yusuf Decl. 56, Ex. 4; ECF No, 8-2,
Holmes Decl. 7, Ex. 7.) Second, Defendant routinely underreports Plaintiffs hours
worked. (ECF No, 8-2, Hussein Decl. 4, Ex. 2; ECF No, 8-2, Issa Decl. 4, Ex. 3; ECF
No, 8-2, Yusuf Decl. 4, 6, Ex. 4; ECF No, 8-2, Kangnigan Decl. 4, Ex. 6; ECF No,
8-2, Holmes Decl. 5, 7, Ex. 7; ECF No, 8-2, Quevedo Decl. 11, Ex. 8; ECF No, 8-2,
Zuniga Decl. 4, Ex. 9.) Third, Defendant improperly deducts lunch breaks from
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Plaintiffs compensation that are never taken or that are interrupted. (ECF No, 8-2,
Hussein Decl. 5, Ex. 2; ECF No, 8-2, Issa Decl. 5, Ex. 3; ECF No, 8-2, Kangnigan
Decl. 5, Ex. 6; ECF No, 8-2, Holmes Decl. 8, Ex. 7.) See Minn. R. 5200.0120, subp. 4
(stating that employer can only deduct bona fide meal periods from hours worked, and
that employees must be paid for meal periods that are interrupted by calls to duty).
Defendant argues, however, that the evidence overwhelmingly disproves
Plaintiffs allegation that Capital fails to maintain accurate timekeeping records. Instead,
it shows that Capital maintains detailed, down-to-the-minute timekeeping records based
on the employees own activities of clocking-in or out. The records show the hours
worked each day and each workweek by the employee. In addition, Capital has records
concerning the name, address, and occupation of each employee, as well as payroll
records showing the rate of pay and the amount paid to each employee for each pay
period. (K.Z. Decl., Exs. 15, 16, 17, 19, 20, 21, 22, 23.)
Moreover, Defendant argues that it has procedures in place to address those
limited instances in which an employees work hours are not recorded, such as when an
employee forgets to clock-in or clock-out. Several of the Plaintiffs have taken advantage
of this Administrative Pay Corrections policy on multiple occasions, including Melvin
Holmes, Naima Issa, and Leticia Escamilla. When these employees reported inaccuracies
in their work hours, Capital promptly investigated their claims and issued retroactive
payment to them. (K.Z. Decl. 7.) And to the extent that Plaintiffs have alleged a handful
of additional incidents in which they questioned the accuracy of their pay, those kinds of
isolated errors are likely to occur in any business.
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Finally, Defendant alleges Capitals meal break policy is completely legal.

Capitals policy directs employees to take a thirty-minute lunch break whenever they
work a shift of seven hours or longer. (K.Z. Decl., Ex. 1.) Consistent with this policy,
Capital automatically deducts meal-break time from shifts of seven hours or more unless
the employee notifies Capital that he or she worked during the lunch break. (Id.) Each of
the Plaintiffs signed acknowledgements agreeing that they understood this policy. (K.Z.
Decl., Ex. 4.) Automatic meal-break deduction policies like the one maintained by
Capital are lawful, and numerous cases have held that if an employer establishes a
reasonable process for an employee to report uncompensated work time the employer is
not liable for non-payment if the employee fails to follow the established process. White
v. Baptist Mem. Health Care Corp., 699 F.3d 869, 876 (6th Cir. 2012).
4.
Plaintiffs Allegations Regarding Wage Payment Methods
Plaintiffs also allege that Defendants method of paying wages violates Minnesota
law. Minn. Stat. 177.23, subd. 4 states that wages must be made payable by: (1) cash;
(2) check; (3) direct deposit; or (4) payroll card. Employers may not use direct deposit if
the employee objects in writing. Minn. Stat. 177.23, subd. 4(3). Similarly, an employer
may only use payroll cards if the employee consents in writing to that method of
payment. Minn. Stat. 177.255, subd. 6. Read together, these statutes require an
employer to pay an employee with either cash or check if the employee declines to be
paid by direct deposit or payroll card. Employers who pay their employees by electronic
transfer to payroll cards must permit each employee to withdraw the employees entire
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net pay in one free transaction on or after the employees regular payday. Minn. Stat.
177.255, subd. 4.
Plaintiffs allege Capitals pay practices violate these statutes in at least two ways.
First, employees are only given two options: direct deposit or payroll cards. (ECF No, 82, Quevedo Decl. 12, Ex. 8.) Second, Capital does not permit employees to withdraw
their entire net pay in a free transaction on and after the employees regular pay day.
(ECF No, 8-2, Deshler Decl. 6, Ex. 5; ECF No, 8-2, Quevedo Decl. 12, Ex. 8.)
Instead, Plaintiffs end up paying ATM fees to access their own wages. (Id.)
Defendants contend that these assertions are without merit. Minnesota law permits
employers to pay wages to employees using either direct deposit or electronic fund
transfers to a payroll card account. Minn. Stat. 177.23, subd. 4(3-4). Each of the
Plaintiffs consented in writing to receive their wages from Capital either by direct deposit
or payroll card account. (K.Z. Decl., Ex. 10.) The only circumstances in which payment
via direct deposit or payroll card account is not permissible under Minnesota law is in
instances of written objection to the employer by the employee or instances in which an
employee requested to be paid in a manner other than by payroll card account. Minn.
Stat. 177.23, subd. 4(3-4); see also Minn. Stat. 177.255, subd. 11. None of the
Plaintiffs allege that they objected in writing to the method by which Capital pays their
wages or requested a different method of payment.
In addition, only one of the eight Plaintiffs (Ray Deshler) claims to have incurred
ATM fees due to his payroll card account, but Mr. Deshler could use his SimplyPaid
payroll card to access cash without paying any fees by: (i) visiting an AllPoint ATM; (ii)
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visiting any Bank; or (iii) requesting cash back during a PIN purchase. (K.Z. Decl. Ex.
12.) There are numerous Allpoint ATM locations throughout the Minneapolis and St.
Paul area, including at least six within 0.2 miles of Mr. Deshlers home. (Id. Exs. 13-14.)
5.
Plaintiffs Allegation Regarding Overtime and Minimum Wage
Plaintiffs allege that Defendant routinely fails to pay all overtime owed. Plaintiffs
are hourly, non-exempt employees and therefore are entitled under the FLSA to payment
at one-and-one-half times their regular rate of pay for all hours worked in excess of forty
in a workweek. 29 U.S.C. 207(a). Several Plaintiffs have worked more than forty hours
in at least one workweek within the past three years, but based upon their net pay, were
not paid the overtime premiums to which they were entitled. (ECF No, 8-2, Hussein Decl.
6, Ex. 2; ECF No, 8-2, Issa Decl. 6, Ex. 3; ECF No, 8-2, Kangnigan Decl. 6, Ex. 6;
ECF No, 8-2, Holmes Decl. 7, 10, Ex. 7; ECF No, 8-2, Quevedo Decl. 14, Ex. 8;
ECF No, 8-2, Zuniga Decl. 6, Ex. 9.)
Plaintiffs also allege that Defendant routinely fails to pay the applicable minimum
wage. Beginning August 1, 2014, Minnesota law required employers to pay employees at
a rate of no less than $8.00 per hour. Minn. Stat. 177.24, subd. 1(b)(1)(i). Since July
2009, the FLSA has required employers to pay a wage of at least $7.25 per hour. 29
U.S.C. 206(a)(1). An employee earning a gross wage of $8.00 per hour should
generally receive take home pay of $7.38 per hour net of tax withholdings. An employee
earning a gross wage of $7.25 per hour should generally receive take home pay of $6.70
per hour net of tax withholdings.
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Defendant claims to pay Plaintiffs at a rate equal to or greater than the state and
federal minimum wage. (ECF No, 8-2, Hussein Decl. 2, Ex. 2; ECF No, 8-2, Issa Decl.
2, Ex. 3; ECF No, 8-2, Yusuf Decl. 2, Ex. 4; ECF No, 8-2, Deshler Decl. 2, 4, Ex.
5; ECF No, 8-2, Kangnigan Decl. 2, Ex. 6; ECF No, 8-2, Holmes Decl. 3, Ex. 7; ECF
No, 8-2, Quevedo Decl. 5, Ex. 8; ECF No, 8-2, Zuniga Decl. 2, Ex. 9.) However, as a
result of Defendants alleged failure to pay Plaintiffs for all hours worked, based upon
their hours worked and net pay, Plaintiffs say they were paid below the minimum wage in
one or more workweeks during the past three years. (ECF No, 8-2, Hussein Decl. 4, Ex.
2; ECF No, 8-2, Issa Decl. 2, 4, Ex. 3; ECF No, 8-2, Yusuf Decl. 46, Ex. 4; ECF
No, 8-2, Deshler Decl. 45, Ex. 5; ECF No, 8-2, Kangnigan Decl. 4, Ex. 6; ECF No,
8-2, Holmes Decl. 9, Ex. 7; ECF No, 8-2, Quevedo Decl. 13, Ex. 8; ECF No, 8-2,
Zuniga Decl. 45, Ex. 9.) Indeed, Plaintiffs declarations identify as examples specific
pay periods in which their compensation fell below minimum wage levels based upon the
number of hours worked. (ECF No, 8-2, Hussein Decl. 4, Ex. 2; ECF No, 8-2, Yusuf
Decl. 46, Ex. 4; ECF No, 8-2, Kangnigan Decl. 4, Ex. 6.)
Defendants assert, however, that its timekeeping and payroll definitively disprove
the vast majority of Plaintiffs allegations, many of which are based on inaccurate reading
of the time records or faulty math. For example, Plaintiff Duniyo Hussein alleges that
during the pay period of June 18, 2014, to July 1, 2014, she was paid only $539.12 for
130 hours of work. (ECF 8-2, at 2-3.) This assertion is based on a misreading of an
earnings statement in which Ms. Hussein received a retroactive raise, and is plainly
untrue. (K.Z. Decl., Ex. 15.) Likewise, Assiongbonvi Kangnigan asserts that he does not
16
believe he was paid overtime for several pay periods in January and February 2014. (See
ECF 8-2, at 14.) Again, Capitals pay records decisively show that he was paid for all
overtime owed. (K.Z. Decl., Ex. 20.) And Ray Deshler asserts, without any support, that
he believes he is only paid $7.75 an hour. (ECF 8-2, at 11.) Again, Capitals payroll
records show that Mr. Deshlers allegation is false. (K.Z. Decl. Ex. 19.)
II.
EXPLANATION OF SETTLEMENT.
A.
The Parties Stipulate to Class Certification Under Fed. R. Civ. P. 23

for the Purpose of Settlement.
The Parties agree, as part of the settlement, to stipulate to Rule 23 class

certification of the MFLSA and PWA claims in this case for the purpose of notice and
settlement. Specifically, the Parties stipulate to certification under Fed. R. Civ. P.
23(b)(3) of a class defined as follows:
All individuals employed by Defendant as cleaners (including crew leads)
in Minnesota from May 20, 2012, through January 15, 2016.
The legal basis for certification is set forth below.
B.
Allocation and Distribution of Settlement Funds.
The Parties agree to settle all claims in this case for $425,000 (hereinafter referred
to as Settlement Payment).
(See Hansen Decl, Ex. 1, II(B))
The settlement
contemplates an award of attorneys fees of one-third, or $141,666.66, an award of

litigation costs (including settlement administration costs) capped at $10,000, incentive
awards totaling $25,000, and individual awards for certain named Plaintiffs totaling
$33,000. (See Hansen Decl. Ex. 1.)
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After accounting for attorneys fees, costs, individual awards, and incentive
payments, the remaining portion of the Settlement Payment, which totals $215,333.34,
shall be distributed among the Settlement Class according to a formula devised by Class
Counsel, which shall primarily be based on (1) the weeks worked by each member of the
Settlement Class, and (2) the compensation earned by each member of the Settlement
Class. (See Hansen Decl. Ex. 1 II(D)(9).) Each member of the Settlement Class will
receive a minimum payment from the Settlement in the amount of $100.00. (See Hansen
Decl. Ex. 1 II(D)(9).)
The individual settlement payments to Participating Class Members will be
allocated in the following manner: (1) fifty percent (50%) of the total payment to each
Participating Class Member shall be allocated to wage claims and will be reported to
taxing authorities on Forms W-2; (2) fifty percent (50%) of the total payment to each
Participating Class Member will be allocated to all non-wage claims, including liquidated
damages, interest and other applicable penalties payable to the Participating Class
Member under federal and state law and will be reported to taxing authorities on Form
1099. (See Hansen Decl. Ex. 1II(D)(13)(i)(a).) Defendant will be responsible for
calculating and paying the employers share of payroll taxes on all settlement amounts
subject to payroll taxation. (Id.) Such employer payroll tax payments will not be
deducted from the settlement fund. (Id.)
The settlement employs a claims made claims process. Under this procedure,
class members must submit a claim form in order to participate in the settlement. (See
Hansen Decl. Ex. 1 II(D)(6).) Consistent with Rule 23(c), all class members who wish
18
to exclude themselves may do so. (See Hansen Decl. Ex. 1 II(D)(7).) Those who exclude
themselves will not have their legal rights affected in any way. (See Hansen Decl. Ex. 1.)
However, class members who fail to respond will have their share of the settlement reallocated to participating class members on a pro rata basis. (See Hansen Decl. Ex. 1
II(D)(9).) Under this procedure, there is no possible reversion of funds to Defendant nor
any possible change in the funds allocated to Plaintiffs counselboth in absolute terms
and relative to the amount going to the class members. (See Hansen Decl. Ex. 1 II(D).)
The scope of the release in this case is precisely tailored to the claims raised in the
Complaint. Class members who participate in the settlement will release only the class
claims asserted in the Complaint. (See Hansen Decl. Ex. 1 II(C).) Further, the release is
limited in temporal scope. The release will not affect any claims that accrued (or will
accrue) on or after January 16, 2016. (See Hansen Decl. Ex. 1 II(C).) Class members
who fail to respond in a timely manner to the proposed notice will release only the state
law MFLSA and PWA claims alleged in the Complaint; class members who fail to
respond will not release any federal claims, including the FLSA claims raised in this case.
(See Hansen Decl. Ex. 1 II(C).) Five of the named Plaintiffs who are receiving
individual awards related to individualized grievances will execute a general release
against Capital. (See Hansen Decl. Ex. 1 II(C).)
The parties have agreed upon a procedure to ensure that the class notice reaches as
many class members as possible. Capital has provided the names, addresses, and last four
digits of the social security number for all class members. (Hansen Decl. 17.) Plaintiffs
counsel will utilize several public and private tools, including the U.S. Post Offices
19
National Change of Address database, LexisNexiss Accurint database, and Thompson

Wests People Finder database, to ensure that the class notice is directed to the correct
addresses. (See Hansen Decl. Ex. 1 II(D)(4).) As with Plaintiffs proposed conditional
certification notice that this Court adopted, Plaintiffs counsel will send out the class
notice in English, Spanish, and Somali. Plaintiffs counsel will maintain its case website,
http://www.nka.com/case/capital-building-services-group-inc/, and continue to direct
class members to contact Plaintiffs counsel if they have any questions about the
settlement or the case itself. (See Hansen Decl. Ex. 1 II(D)(3).)
The settlement contemplates a great measure of forward looking injunctive relief.
Under the terms of the settlement, Defendant is obligated to provide employees with
paper paystubs for a period of one year, and then follow Minnesota law (including the
provisions governing workplace access to electronic wage statements) thereafter. (See
Hansen Decl. Ex. 1 II(E)(2).) Defendant is obligated to draft a compliant pay card
disclosure form, and Defendant shall not commence paying employees with pay cards
until employees have signed the consent form. (See Hansen Decl. Ex. 1 II(E)(1).)
Defendant is obligated to designate a corporate representative to receive and address
wage complaints prospectively. (See Hansen Decl. Ex. 1 II(E)(3).) Defendant is
obligated to develop a form for employees to report employer-required time traveling
between stores on a prospective basis and pay employees for the travel time if required
by applicable law. (See Hansen Decl. Ex. 1 II(E)(4).) Defendant is obligated to provide
all employees with the option to be paid via paper check. (See Hansen Decl. Ex. 1
II(E)(5).) Defendant is obligated generally to comply with all state and federal labor
20
laws. (See Hansen Decl. Ex. 1 II(E)(8).) Finally, the settlement requires Defendant to
submit to the Court a signed declaration stating that Defendant has complied with all
injunctive relief contemplated by the settlement agreement within 60 days of the
settlement effective date. (See Hansen Decl. Ex. 1 II(E)(7)).
The Settlement agreement does not contain any confidentiality, nondisclosure, or
clawback provisions. (See Hansen Decl. Ex. 1.) All provisions in the agreement will
stand in the public record, and class members will not be barred from speaking about
their employment experiences.
Because the agreement contemplates a claims-made procedure, the parties
anticipate that the vast majority of the allocated funds will be directed to participating
class members. However, any portion of the Settlement Payment not negotiated by any
member of the Settlement Class within 90 days of being mailed shall be null and void and
shall be paid as a cy pres award to the Mid-Minnesota Legal Aid. (See Hansen Decl. Ex 1
II(B)(3).) The cy pres payment, if any, will be made by the parties no later than 220 days
after the Settlement Effective Date. (Id.)
C.
The Parties Stipulate to Distribution of Notice of Proposed Class

Settlement.
The Parties have drafted a Class Notice which will be distributed by Plaintiffs,
through the law firm of Nichols Kaster, PLLP and its attorneys, who through the instant
Motion request to be appointed Class Counsel and Settlement Administrator in this case.
(Hansen Decl. 18; see also Ex. 1) Class Notice will be distributed via First Class,
regular United States Mail using the most current mailing address information available
21
from Capitals and Plaintiffs counsels records. (See Hansen Decl. Ex. 1 II(D)(3))
Defendant will cooperate with Plaintiffs counsel in providing information from
Defendants records for purposes of mailing the Class Notice. (See Hansen Decl. Ex. 1
II(D)(1).)
The Class Notice will inform all Class Members that, if they wish to participate in
the settlement, they must fill out and sign the settlement participation form included with
the notice. (See Hansen Decl. Ex. 1.) The Class Notice will further explain that by
signing the form, they will release Defendant from all claims based upon any of the
matters brought in this litigation and receive settlement benefits. (Id.)
The Class Notice will inform all Class Members that, unless they send Plaintiffs
counsel a signed request for exclusion post-marked within forty-five (45) days from the
mailing of the Class Notice, they will release Defendant from all state law claims based
upon any of the matters brought in this litigation and receive settlement benefits. (Id.)
The Class Notice will explain that if the individual would like to be excluded from
the Class, he or she must send Plaintiffs counsel a written request and must: (1) provide
their name, the dates and locations where they worked for Capital, and (2) sign a
statement indicating I understand I am requesting to be excluded from the Parties
settlement and that I will receive no money from the Parties settlement. I understand that
if I am excluded from the Parties settlement, I may bring a separate legal action seeking
damages, but might recover nothing, or less than what I would have recovered if I had
remained in the Parties settlement in this case (the Opt-Out Notice). (Id.) Each OptOut Notice must be timely sent to Class Counsel, with a copy to the Defendants counsel.
22
(Id.) The Class Notice explains that a Class Member who asks to be excluded cannot
object to the settlement and cannot receive payment under the settlement, but also will
not be legally bound by anything that happens in this litigation and may sue Defendant in
the future about the claims in this litigation. (Id.)
The Class Notice will also inform all Class Members that even if they do not
exclude themselves from the Class, they have forty-five (45) days to send Plaintiffs
Counsel an objection explaining why they disagree with the settlement. (Id.) The Class
Notice also explains that Class Members who, within the forty-five day timeframe, mail
Plaintiffs Counsel a written notice of their intent to appear, may also speak to the Court
about the settlement at the Final Fairness Hearing. (Id.)1
ARGUMENT
Federal courts favor the voluntary resolution of litigation through settlement,
particularly in the class action context. See White, et al. v. Natl Football League, et al.,
822 F. Supp. 1389, 1417 (D. Minn. 1993) (citing Armstrong v. Board of Sch. Directors,
616 F.2d 305, 312-13 (7th Cir. 1980)); Holden v. Burlington Northern Inc., 665 F. Supp.
1398, 1405 (D. Minn. 1987). The Eighth Circuit Court of Appeals has held strong public
policy favors [settlement] agreements, and courts should approach them with a
presumption in their favor. Petrovic v. Amoco Oil Co., 200 F.3d 1140, 1148 (8th Cir.
1999) (citing Little Rock Sch. Dist. v. Pulaski Cty. Spec. Sch. Dist. No. 1, 921 F.2d 1371,
1383 (8th Cir. 1990)). It is the surety of settlement that makes it a favored policy for
Plaintiffs Counsel shall provide the Court and Defendant with all exclusions requests,
notices to appear, and objections prior to the Final Fairness Hearing.
23
dispute resolution as compared to the unknown dangers and unforeseen hazards of

litigation. See In re Charter Commn, Inc., No. 4:02-CV-1186 CAS, 2005 U.S. Dist.
LEXIS 14772 at *16, 2005 WL 4045741 at *4 (E.D. Mo. June 30, 2005) (internal
citations omitted). For the reasons set forth below, the Court should (1) certify the
proposed class for purposes of settlement, appointing Plaintiffs Counsel as Class
Counsel and Settlement Administrator and the Named Plaintiffs as Class Representatives;
(2) preliminarily approve the Parties proposed settlement; and (3) approve the Class
Notice for distribution, setting a date for the Final Fairness Hearing.
I.
CERTIFICATION OF PLAINTIFFS CLAIMS UNDER FED. R. CIV. P. 23

IS APPROPRIATE.
As a preliminary matter, the Parties request the Court certify this action as a class
action pursuant to Fed. R. Civ. P. 23 for purposes of settlement. As stated above, the
proposed Class includes:
All individuals employed by Defendant as cleaners (including crew leads)
in Minnesota from May 20, 2012, through January 15, 2016.
For purposes of this settlement only, Defendant consents to certification of the Class
under Fed. R. Civ. P. 23(a)(1-4) and 23(b)(3). As discussed in detail below, class
certification is appropriate because the four prerequisites under Fed. R. Civ. P. 23(a)
necessary to determine class certification are met: (1) numerosity; (2) commonality; (3)
typicality; and (4) adequacy of representation, as well as the predominance requirement
of Fed. R. Civ. P. 23(b)(3).2
Rules 23(a) and 23(b) apply equally in determining class certification for settlement
purposes except the judge need not determine whether a case, if tried, would present
24
A.
The Prerequisites of Rule 23(a) Are Met.

1.
The Proposed Class Meets the Numerosity Requirement.
Fed. R. Civ. P. 23(a)(1) requires a proposed class be so numerous that joinder of

all members is impracticable. No arbitrary or rigid rules regarding the required size of
a class have been established by the courts, and what constitutes impracticability depends
on the facts of each case. Cooper v. Miller Johnson Steichen Kinnard, Inc., No. Civ. 021236(RHK/AJB), 2003 U.S. Dist. LEXIS 6946 at *6, 2003 WL 1955169 at *2 (D. Minn.
April 21, 2003) (internal citations omitted); see also Gen Tel. Co. of the Nw., Inc. v.
EEOC, 446 U.S. 318, 330 (1980) (stating that when analyzing the numerosity
requirement, examination of the specific facts of each case [is required] and imposes no
absolute limitations on size). When analyzing whether Rule 23(a)(1) has been met,
courts consider the type of action, the size of individual claims, inconvenience of trying
individual claims and other relevant factors to show the practicability of joining all class
members. See Paxton v. Union Natl Bank, 688 F.2d 552, 559-60 (8th Cir. 1982).
Notably, the burden is not to show joinder is impossible. In re Charter Communications,
Inc., No. 4:02-CV-1186 CAS, 2005 U.S. Dist. LEXIS at *36, 2005 WL 4045741 at *11
(E.D. Mo. June 30, 2005) (internal citations omitted).
This District has held that a class of forty individuals should raise a presumption
that joinder is impracticable and should meet the test of Rule 23(a)(1). Lockwood
Motors v. Gen. Motors Corp., 162 F.R.D. 569, 574 (D. Minn. 1995) (internal citations
intractable management problems. Amchem Products, Inc. v. Windsor, 521 U.S. 591,
620 (1997); MANUAL FOR COMPLEX LITIGATION, Section 21.132 (4th Ed. 2004).
25
omitted).
Capitals records identified 650 individuals who met the class definition.
(Hansen Decl. 19.) Thus, the requirements for Fed. R. Civ. P. 23(a)(1) are met in this
case.
2.
The Class Shares Common Questions of Law and Fact.
Fed. R. Civ. P. 23(a)(2) requires the parties to show there is a question of law or
fact common to the class.
While not every question of law or fact must be common to the entire class,
the Plaintiffs must show that the course of action giving rise to their cause
of action affects all putative class members, or that at least one of the
elements of that cause of action is shared by all of the putative class
members.
See Cooper, 2003 U.S. Dist. LEXIS 6946 at *8 (internal citations omitted). Common
questions about the defendants liability are appropriate for class-wide treatment even
when the damages among the class members might be different. See In re Select Comfort
Corp. Sec. Litig., 202 F.R.D. 598, 603 (D. Minn. 2001).
Here, the commonality requirement is met because the proposed Class Members
claims all derive from the same common theories: that Plaintiffs were systematically
denied minimum wage, gap time, and overtime pay through a series of common methods.
(See supra pp. 4-9.) Moreover, Plaintiffs have alleged that class membersas a group
did not receive pay stubs and were denied the chance to provide authorization to be paid
by pay card. To maintain a wage-and-hour case as a class action, [s]howing a unified
policy of violations is not required. OBrien v. Ed Donnelly Enters., Inc., 575 F.3d 567,
584 (6th Cir. 2009). Rather, where the employers records are inaccurate or inadequate,
employees may show the amount and extent of [their] work as a matter of just and
26
reasonable inference. Id. at 779 (citing Anderson v. Mt. Clemens Pottery Co., 328 U.S.
680, 688 (1946)). Nevertheless, several common questions of law and fact are common to
the class:
a.
whether Defendant paid class members proper minimum wage, gap

time, and overtime compensation;
b.
whether Defendant maintained accurate records that are necessary

and appropriate to enforce Minn. Stat. 177.21 to 177.35;
c.
whether Defendant complied with Minnesota law regarding

providing wage statements;
d.
whether Defendant failed to obtain authorization prior to requiring

employees to use payroll cards, and whether Defendant used payroll
cards to make improper deductions, in violation of Minn. Stat.
177.255, subd. 5 and 6;
e.
whether Defendant provided rest and meal breaks as required by the

MFLSA; and
f.
The proper measure of damages sustained by the Rule 23 Class.
These common questions of law and fact apply and must be answered for each and every
Class Member and, therefore, demonstrate that the commonality requirement under Rule
23(a)(2) is met in this case.
3.
The Plaintiffs Claims are Typical of the Class Claims.
Rule 23(a)(3) requires the claims or defenses of the representative parties are
typical of the claims or defenses of the class. The typicality requirement presumes the
members of the class have claims or defenses typical to the representative parties. In
other words, the representative parties claims have the same or similar grievances to
the class. See Cooper, 2003 U.S. Dist. LEXIS at *7-8. Typicality is satisfied when the
claims of the named plaintiffs emanate from the same event or are based on the same
27
legal theory as the claims of the class members. Lockwood Motors, 162 F.R.D. at 575.
Courts liberally apply the typicality requirement when the representative claims come
from the same event or based on the same legal theory as the class members claims. See
Alpern v. UtiliCorp. United, Inc., 84 F.3d 1525, 1540 (8th Cir. 1996). Slight factual
differences are allowed so long as the claims arise from the same event.
Here, Named Plaintiffs claims are typical to the Class Members in that they were
or are all cleaners employed by Capital and working at Macys or Herbergers stores and
were subject to the same unlawful practices described in the Complaint.
If these
practices should be found lawful or unlawful, the Named Plaintiffs claims will be
affected in the exact same way as those of the other Class Members. Thus, here, the
typicality requirement under Rule 23(a)(3) is met.
4.
The Class Representatives Are Adequate.
Fed. R. Civ. P. 23(a)(4) requires Plaintiffs show that the representative parties
will fairly and adequately protect the interests of the class. Courts find the adequacy
requirement is met when: (1) the representatives and their attorneys are able and willing
to prosecute the action competently and vigorously and (2) each representatives interests
are sufficiently similar to those of the class that it is unlikely that their goals and
viewpoints will diverge. See In re Potash Antitrust Litig., 159 F.R.D. 682, 692 (D.
Minn. 1995). Moreover, class counsel must be qualified, competent and diligent. In re
Acceptance Ins. Cos. Secs.Litig., No. 8:99-CV-00547, 2001 U.S. Dist. Lexis. 25829 (D.
Neb. Aug. 6, 2001) (citing Bishop v. Committee Prof. Ethics, 686 F.2d 1278, 1288 (8th
Cir. 1982). Here, the adequacy requirements are met by the Named Plaintiffs, who seek
28
to be appointed Class Representatives, and Plaintiffs Counsel, who seek to be appointed

Class Counsel.
First, the Named Plaintiffs are current and former cleaners who work or worked
for Capital. Moreover, each of the Named Plaintiffs has diligently participated in this
caseincluding undergoing detailed interviews, producing documents, and participating
in a lengthy mediation processand has assisted his or her attorneys in the drafting of
the Complaint and prosecution of this litigation. (Hansen Decl. 20.) Further, the
Named Plaintiffs have no known conflicts of interest that would compromise their
representation of the class in their best interest. (Hansen Decl. 21.)
Second, Plaintiffs Counsel is a qualified firm with extensive experience in class
action and wage and hour litigation. Nichols Kaster, PLLP (Nichols Kaster) started in
1974, and presently employs twenty-six attorneys, as well as twelve additional staff and
contract attorneys, and has been representing employees almost exclusively for 16 years.
(Hansen Decl., 22.) A large portion of Nichols Kasters practice is concentrated on
representing employees in wage-and-hour class and collective actions. (Id.)The firm is
currently lead or co-counsel in approximately 84 class or collective actions in state and
federal courts across the country. (Id. 23.)
Paul Lukas is a partner with Nichols Kaster and an experienced employment
litigator who has been practicing law for twenty-one years. (Id. 24.) Mr. Lukas has
authored numerous articles, participated in numerous legal seminars and conventions on
employment and trial practice issues, and is a frequent lecturer on current employment
29
related topics. (Id.) Adam Hansen is an Associate at Nichols Kaster. (Id. 25.) After
graduating from the University of Minnesota Law School, Mr. Hansen clerked for the
Minnesota Supreme Court and the United States Court of Appeals for the Eighth Circuit.
(Id.) Mr. Hansen joined Nichols Kaster in 2011, and since then his practice has focused
almost exclusively on the representation of employees in high-impact individual and
class litigation. (Id.) Carl Engstrom is an associate at Nichols Kaster. (Id. 26.) Mr.
Engstroms practice is focused exclusively on class-action litigation devoted to protecting
workers lost wages and benefits. (Id.)
For these reasons, the adequacy requirement is met under Fed. R. Civ. P. 23(a)(4).
B.
The Prerequisites of Rule 23(b)(3) Are Met.
In addition to satisfying the requirements of Fed. R. Civ. P. 23(a), Plaintiffs must

establish that one of the subsections of Fed. R. Civ. P. 23(b) are also met. Here, the
proposed Class satisfies the requirements of Fed. R. Civ. P. 23(b)(3) which requires: (1)
questions of law or fact common to the class members predominate over questions
affecting individual class members; and (2) a showing the class action is a superior
method of adjudication for the fair and efficient adjudication of the controversy. See
Lockwood, 162 F.R.D. at 580. The predominance factor exists when there is
generalized evidence which proves or disproves an element on a simultaneous, classwide basis, since such proof obviates the need to examine each class members individual
position. Lockwood, 162 F.R.D. at 580 (citing In re Workers Compensation, 130
F.R.D. at 108). The common questions need only predominate; they do not need to be
dispositive of the litigation. Id. (internal citations omitted). The fundamental question
30
is whether the group aspiring to class status is seeking to remedy a common legal
grievance. Id. (internal citations omitted).
Here, common issues bind the proposed Class Plaintiffs assert Defendant used a
series of common methods to underpay wages in violation of the MNFLSA. Further,
Plaintiffs allege a series of discrete statutory violations, including failure to provide wage
statements and failure to secure authorization prior to paying employees via pay card.
These issues common to the class predominate over any individual issues, satisfying the
Rule 23(b)(3) standard. And because this Court need not consider trial manageability
concerns, any individualized issues in the case are only further diminished.
Further, class treatment is appropriate because it is the superior method of
adjudicating these claims especially when considering the cost and time involved in
individual litigation. Paxton, 688 F.2d at 559-60. Class actions are more economically
feasible for all class members to seek remedy. See Deposit Guar. Natl Bank v. Roper,
445 U.S. 326, 339 (1980). In this case, it would be uneconomical and inefficient for the
class members to flood the courts, pursuing claims individually in more than 650
individual lawsuits, each resulting in a relatively small recovery. For these reasons, the
requirements of Rule 23(b) are also met, and the class should be certified for settlement
purposes.
31
II.
THE COURT SHOULD GRANT PRELIMINARY APPROVAL OF THE

PROPOSED SETTLEMENT BECAUSE THE TERMS MEET THE FAIR,
REASONABLE, AND ADEQUATE REQUIREMENTS SET FORTH
UNDER FED. R. CIV. P 23(e).
Federal Rule of Civil Procedure 23(e) requires judicial approval for the
compromise of claims brought on a class basis. Fed. R. Civ. P. 23(e). Court approval of
a class action settlement is necessary to assure the interests of absent class members, as
well as those of the named plaintiffs, have been protected. See Holden, 665 F. Supp. at
1406 (citing Grunin v. Intl House of Pancakes, 513 F.2d 114, 123 (8th Cir. 1975)); see
also In re Wireless Tele., 396 F.3d 922, 932 (8th Cir. 2005). In analyzing whether to
approve a class action settlement, courts review the parties jointly submitted proposal to
determine, preliminarily, if it is fair to the persons whose interests the court is required to
protect and to provide notice and an opportunity to be heard to those affected by
scheduling a fairness hearing. MANUAL FOR COMPLEX LITIGATION, FOURTH, 13.14
(2004). For the reasons set forth below, the proposed settlement meets the requirements
of Fed. R. Civ. P. 23(e) and should be preliminarily approved.
A.
The Proposed Settlement Was Negotiated After Arms-Length

Negotiations Between Experienced Counsel After Two Mediation
Sessions and Detailed Discovery.
In determining whether preliminary approval is appropriate, courts consider the

extent of the informed, arms-length negotiations between the parties in reaching the
settlement terms. See Holden, 665 F. Supp. at 1402. Courts have held terms of a
settlement are appropriate where the parties have engaged in extensive negotiations at an
appropriate stage in the litigation when they can intelligently evaluate the strengths and
32
weaknesses of the case and the propriety of the settlement. See e.g., In re Employee
Benefit Plans Sec. Litig., No. 3-92-708, 1993 U.S. Dist. LEXIS 21226 at *18, 1993 WL
330595 at *5 (D. Minn. June 2, 1993) ([I]ntensive and contentious negotiations likely
result in meritorious settlements.).
In the present case, the Parties reached the proposed settlement after conducting
adequate investigation and discovery on the merits of the claims and potential damages.
As discussed in detail above, Defendant produced detailed records, and responded to a
series of informal interrogatories prior to mediation.
Plaintiffs provided detailed
declarations from the eight named Plaintiffs. Capital responded to Plaintiffs motions by
submitting voluminous records and testimony explaining Capitals various defenses.
Sufficient evidence existed for the Plaintiffs to evaluate what Capitals policies and
practices are with respect to its pay practices in Minnesota, how large the potential class
is, and how much money those potential class members earned during the class period.
See Holden, 66 F. Supp. at 1404 (approving settlement where parties engaged in
extensive written and oral discovery).
Furthermore, the Parties conducted rigorous arms-length negotiations in a
mediation session. Where, as is here, the parties are represented by experienced counsel
and no evidence of collusion or bad faith exists, the judgment of the litigants and their
counsel concerning the adequacy of the settlement is entitled deference. Petrovic, 200
F.3d at 1149; DeBoer v. Mellon Mortg.Co., 64 F.3d 1171, 1178 (8th Cir. 1995). The
arms-length negotiations conducted by counsel for both Parties, experienced
33
employment-law litigation firms, weighs in favor of preliminarily approving the

settlement.
B.
The Proposed Settlement Is Fair, Reasonable and Adequate As

Required Under Fed. R. Civ. P. 23(e).
In addition to evaluating the propriety of the negotiations, courts consider four

factors in determining whether a proposed settlement is fair, reasonable and adequate:
(1) the merits of the plaintiffs case weighed against the settlement terms; (2) the
defendants financial condition; (3) the complexity and expense of further litigation; and
(4) the amount of opposition to the settlement.3 Grunin v. Intl House of Pancakes, 513
F.2d 114, 124 (8th Cir. 1975); Van Horn v. Trickey, 840 F.2d 604, 607 (8th Cir. 1988); In
re Wireless Tel. Fed. Cost Recovery Fees Litig., 396 F.3d 922, 932 (8th Cir. 2005);
Zilhaver et al. v. United Health Group, Inc., et al., 646 F. Supp. 2d 1075, 1079 (D. Minn.
2009).
In the present case, these factors are all met and the Court should grant
preliminary approval of the settlement.

1.
The Merits of Plaintiffs Case and Defendants Defenses Weigh

In Favor of Settlement Approval.
The single most important factor in determining whether a settlement is fair,

reasonable and adequate is a balancing of the strength of the plaintiffs case against the
terms of the settlement. Zilhaver, 646 F. Supp. 2d at 1079 (quoting Van Horn, 840 F.2d
at 607); see also In re Wireless, 396 F.3d at 933. The Court must balance the risks and
At the preliminary stage, the Court need only analyze the first three factors because,
ideally, the potential Class Members have not had an opportunity to make objections
through the class settlement process. That said, at this time, the Parties are unaware of
any opposition to this settlement. (Hansen Decl. 27.)
34
benefits of litigation against immediate recovery for the class members. Grunin, 513
F.2d at 124; Petrovic, 200 F.3d at 1150. In evaluating this factor, however, courts are
not to reach any conclusions as to the meritsnor substitute its opinion for that of
class counsel or class members. In re Empl. Bens., 1993 U.S. Dist. LEXIS 21226 at *14
(citing Holden, 665 F. Supp. at 1407).
The facts alleged by Plaintiffs amount to a violation of state and federal wage and
hour laws, but Plaintiffs acknowledge that there is risk in establishing liability and
damages in this case. Although Plaintiffs believe the claims asserted in this case have
merit, Defendant believes that its case is strong and is supported by the evidence
developed to date. Based on the existing record, Plaintiffs believe they have demonstrated
that Defendant did not comply with Minnesota law governing wage statements and pay
cards. Further, Plaintiffs assert that the undisputed evidence shows that Defendant
maintained an illegal formal policy of failing to pay cleaners for time spent traveling
between stores in a single workday. Plaintiffs further believe that their evidence of offthe-clock work is strong, but recognize that Defendant strongly disputes Plaintiffs offthe-clock allegations and that recovery at trial is not assured.
Furthermore, the Parties contest the potential damages available to Plaintiffs and
their ability to prove the Class Members are entitled to those damages.
Damages
available for violations of the MFLSAs provisions include the amount of overtime
unlawfully withheld from the employee, liquidated damages (twice the amount of the
actual damages), civil penalties and attorneys fees. Minn. Stat. 177.24, subd.3; Minn.
Stat. 177.27. Employers who repeatedly and willfully violate the WPA, Minn. Stat.
35
181.032, shall be subject to a civil penalty of up to $1,000 for each violation for each
employee. Minn. Stat. 177.27, subds. 4, 7, 8. Civil penalties assessed under the PWA
are payable to the employee. Minn. Stat. 181.101, 181.171, subd. 1. However, the
parties dispute the extent of penalties available in this case. The Parties dispute whether
punitive damages may be recovered.
Last, the injunctive relief secured by the settlement weighs in favor of approving
the settlement. Here, the value of the injunctive relief . . . weighs strongly in favor of
approval. In re Netflix Privacy Litigation, No. 5:11CV00379, 2013 WL 1120801, at
*5 (N.D. Cal. Mar. 18, 2013). The settlement here contemplates several crucial and
valuable measures of forward-looking injunctive relief. Under the terms of the settlement,
Defendant must provide employees with paper paystubs for a period of one year, and
then follow Minnesota law (including the provisions governing workplace access to
electronic wage statements) thereafter; must draft a compliant pay card disclosure form,
and must not commence paying employees with pay cards until employees have signed
the consent form; must designate a corporate representative to receive and address wage
complaints prospectively; must develop a form for employees to report employerrequired time traveling between stores on a prospective basis and pay employees for the
travel time if required by applicable law; must provide all employees with the option to
be paid via paper check; and must comply with all state and federal labor laws. These
components of relief, secured under the terms of the settlement, bring a great measure of
value to the class members, many of whom are still employed by Capital. Even from the
perspective of the many class members who no longer work for Defendant, the proposed
36
settlement is consistent with the public interest. United States v. Jones & Laughlin
Steel Corp., 804 F.2d 348, 351 (6th Cir. 1986).
Based on the foregoing, the Parties believe the adequacy of the settlement is
reasonable when balanced against the strength of the Plaintiffs case and Defendants
defenses, paucity of controlling case law, and disputed methods of calculating damages.
2.
Capitals Financial Situation.
Courts also examine the compensation provided in the settlement and the
defendants ability to pay when determining whether the settlement is fair, reasonable
and adequate. See Petrovic, 200 F.3d at 1152 (citing Grunin, 513 F.2d at 124).
Here, the factor strongly supports approving the settlement. During the course of
the litigation, Defendant stated that it would likely declare bankruptcy rather than bear
the continued litigation costs and exposure to a significant adverse judgement. Plaintiffs
demanded detailed financial records to independently verify Defendants claims.
Defendant complied, producing detailed financial records. Based on the Plaintiffs
counsels examination of the records, Plaintiffs learned that Defendant, while financially
stable, lacks sufficient funds to pay a substantial judgment. In the cleaning industry,
Defendant is a smaller company. Defendant counts only Macys and Herbergers as its
clients, and only contracts to clean stores in the Midwest. Further, Defendant owed
significant money to secured creditors, indicating that Plaintiffs and class members would
likely recover little or nothing if the company filed for bankruptcy.
The factor strongly supports approval of the settlement.
3.
Expense of Further Litigation Supports Settlement.

37
Finally, at this preliminary stage, the Court must evaluate whether the expense and
complexity of further litigation weighs in favor of approving the settlement. Here, the
complexity of this case, together with the cost of litigation in completing class discovery,
arguing certification, further discovery if the class were certified, summary judgment and
thereafter trial, weighs in favor of approval.
If the case were certified, the discovery relating to class claims would have been
extensive especially as it relates to damages. Furthermore, the Parties would have
engaged in further debate regarding electronic discovery, numerous depositions of
managers, employees, and potentially, clients of Capital, and expert witness debates. The
trial of this case would have likely lasted more than two weeks and the calculation of
damages, if there was a jury verdict, would have been complicated and prolonged. Under
this proposed settlement, the Class Members are guaranteed money instead of prolonged
litigation during which time the class members would receive nothing. See In re
Wireless, 396 F.3d at 933 (affirming settlement, in part, because barring settlement, this
case would likely drag on for years.) (quoting district court).
4.
Plaintiffs Proposed Allocations for Fees, Costs, and Incentive

Awards Are Reasonable.
Prior to final approval, Plaintiffs will file a motion for fees, costs, and incentive
awards. As a preliminary matter, however, Plaintiffs proposed allocations are fair and
reasonable. First, Plaintiffs counsel anticipates seeking one-third of the total settlement
amount as attorneys fees, or $141,666.66. (See Hansen Decl. Ex. 1 II(D)(4).) Courts
typically calculate fees by one of two methods: (1) the lodestar method (i.e., multiplying
38
the hours reasonably expended by a reasonable hourly rate and adjusting by a multiplier);
or (2) awarding fees as a percentage of the total settlement amount. Carlson, 2006 WL
2671105 at *7 (citing Petrovic, 200 F.3d at 1157 and Johnston v. Comerica Mortgage
Corp., 83 F.3d 241, 244 (8th Cir. 1996)). Here, either method justifies the award.
Plaintiffs counsels current lodestar exceeds $141,666.66. (Hansen Decl. 28) Further,
Plaintiffs counsel seeks $10,000 in litigation costs, including all future costs associated
with administering the settlement. At present, Plaintiffs counsel has expended
approximately $7,800 in litigation costs. (Hansen Decl. 29) Given that the total costs,
including settlement administration costs, will assuredly exceed $10,000, Plaintiffs
request is reasonable. Finally, as a preliminary matter, the $25,000 Plaintiffs seek in
incentive compensation is reasonable. Incentive awards are fairly typical in class action
cases. See 4 William B. Rubenstein et al., Newberg on Class Actions 11:38 (4th
ed.2008); Theodore Eisenberg & Geoffrey P. Miller, Incentive Awards to Class Action
Plaintiffs: An Empirical Study, 53 U.C.L.A. L. Rev. 1303 (2006) (finding twenty-eight
percent of settled class actions between 1993 and 2002 included an incentive award to
class representatives). Incentive awards are intended to compensate class representatives
for work done on behalf of the class, to make up for financial or reputational risk
undertaken in bringing the action, and, sometimes, to recognize their willingness to act as
a private attorney general. Rodriguez v. West Publishing Corp., 563 F.3d 948, 958-59
(9th Cir. 2009). Here, the modest incentive awards sought by Plaintiffs vindicate the
purpose of such awards.
39
As this is the preliminary stage of settlement approval, there are no objections to

consider. Therefore, for the reasons set forth above, the parties believe the relevant
factors to be considered weigh in favor of approving settlement at this preliminary stage.
III.
THE COURT SHOULD APPROVE THE PROPOSED NOTICE FOR THE

CLASS MEMBERS.
If the Proposed Rule 23 Class is certified, notice must be served on all Class
Members who are identified through reasonable effort in a manner that is practical
under the circumstances. Fed. R. Civ. P. 23(c)(2)(B). Fed. R. Civ. P. 23(e) directs the
Court to direct notice in a reasonable manner to all class members who would be bound
by the proposal. A settlement notice need only be reasonably calculated, under all of
the circumstances, to apprise interested parties of the pendency of the settlement
proposed and to afford them an opportunity to present their objections. See In re
BankAmerica Corp. Sec. Litigation., 210 F.R.D. 694, 707 (E.D. Mo. 2002) (citing
Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950)). Indeed,
notice must only satisfy the broad reasonableness standards imposed by due process.
See Petrovic, 200 F.3d at 1153 (citing Grunin, 513 F.2d at 121). There is no requirement
that the notice provide a complete source of information or an exact amount of
recovery for each Class Member. Id. (citing DeBoer, 64 F.3d at 1176).
As set forth in detail above and as demonstrated in Exhibit A to the Parties
Settlement Agreement (Hansen Decl. Ex. 1); and the Parties proposed Class Notice,
modeled after notices recommended by the Federal Judicial Center;4 meets the
Notice templates available online at www.fjc.gov.

40
requirements set forth in Fed. R. Civ. P. 23(e)(1) as it is reasonable. Specifically, the

Class Notice:
1) Informs the Class of the claims in this lawsuit;
2) Informs the Class of the settlement amount and how the Parties propose the
amounts be allocated and distributed;
3) Informs all Rule 23 Class Members of the consequences for not returning a
settlement claims form;
4) Informs all Rule 23 Class Members of the consequences for not sending a
signed exclusion request and the specific steps the individual must take if
he or she wants to be excluded from the class;
5) Explains that even if the individual does not exclude him or herself from
the Class, he or she can file an objection, the process and potential
consequences for which are described in the notice;
6) Explains the consequences for a Rule 23 Class Member who does not opt
out of the settlement; and
7) Provides contact information for Class Counsel both by phone and
Internet if there are questions relating to the Notice.
The proposed Class Notice and means of distribution of the Notice meets the standards
set forth in Rule 23(e). See Petrovic, 200 F.3d at 1153.
Further, a claims-made process is a reasonable method for providing fair, prompt,
and substantial relief to the classparticularly where, as here, there is no possibility of
reversion of funds to the defendant. Hamilton v. SunTrust Mortg. Inc., No. 1360749
CIV, 2014 U.S. Dist. LEXIS 41668, 2014 WL 1285859 (S.D. Fla. Mar. 25, 2014).
41
Requiring class members to file claim forms also maximizes the relief available to class
members who opt to submit a claim. Id. A settlements fairness is judged by the
opportunity created for the class members, not by how many submit claims. Id. Indeed,
district courts routinely approve reasonable claims-made settlements, including those
involving lender-placed insurance where the notice provisions and the actual relief to
class members is fair and reasonable. Id.; see, e.g., Small v. Target Corp., 53 F.Supp.3d
1141, 1142 (D. Minn. 2014 (recognizing that principal disk is combining a claims-made
process with a reversion to defendant); Casey, 2014 U.S. Dist. LEXIS 118252, 2014 WL
4120599; Trombley v. Natl City Bank, 826 F.Supp.2d 179, 201 (D.D.C. 2011)
(approving claims-made settlement and observing that a claims process is often used to
ensure that money is fairly distributed for valid claims); Wahl v. Am. Sec. Ins. Co., No.
C0800555 (N.D.Cal.) (claims-made settlement was entered into in good faith and ...
fair, reasonable, and adequate).
Here, the claims-made procedure ensures that the settlement funds will end up in
the hands of class members who want to participate. Unclaimed funds will be
redistributed to participating class members. Class members who do not wish to
participate can exclude themselves. The parties proposed notice procedure takes steps to
make sure all class members receive accurate and timely notice. And in the event a class
member does not receive notice, her FLSA claims will be preserved, as will all claims
arising from allegations not raised in the Complaint, as well as all claims accruing after
January 15, 2016.
42
CONCLUSION
For the reasons set forth above, the Parties respectfully request that the Court: (1)
certify the Proposed Rule 23 Class for settlement purposes; (2) appoint Plaintiffs
Counsel Class Counsel; (3) appoint the Named Plaintiffs Class Representatives; (4)
preliminarily approve the Parties settlement; (5) appoint Plaintiffs Counsel Settlement
Administrator; (6) approve the Class Notice for distribution; and (7) schedule a Final
Fairness Hearing for a date approximately three (3) months following the granting of this
Motion.
Dated: February 16, 2016

NICHOLS KASTER, PLLP
BRIGGS AND MORGAN, P.A.
s/Adam W. Hansen
Paul J. Lukas (#22084x)
Adam W. Hansen (#391704)
Carl F. Engstrom (#0396298)
4600 IDS Center
80 South 8th Street
Minneapolis, MN 55402
Telephone (612) 256-3200
s/Ellen A. Brinkman
David A. Schooler (#0225782)
Ellen A. Brinkman (#0386578)
Michael C. Wilhelm (#387655)
80 South 8th Street
Minneapolis, MN 55402
Telephone: (612) 977-8400
ATTORNEYS FOR DEFENDANT

ATTORNEYS FOR PLAINTIFFS
43

DKT 063 Memo in Supp of JNT MTN For Prelim Approval

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CASE 0:15-cv-02498-SRN-BRT Document 63 Filed 02/16/16 Page 1 of 43

UNITED STATES DISTRICT COURT

Civil No. 15-CV-2498 (SRN/BRT)

CASE 0:15-cv-02498-SRN-BRT Document 63 Filed 02/16/16 Page 2 of 43

LITIGATION, DISCOVERY, MEDIATION AND SETTLEMENT.

Litigation Procedural History.

CASE 0:15-cv-02498-SRN-BRT Document 63 Filed 02/16/16 Page 3 of 43

CASE 0:15-cv-02498-SRN-BRT Document 63 Filed 02/16/16 Page 4 of 43

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The Parties have engaged in limited discovery. (Hansen Decl. 5) In anticipation

CASE 0:15-cv-02498-SRN-BRT Document 63 Filed 02/16/16 Page 6 of 43

On December 11, 2015, the Parties participated in a full-day mediation session

Summary of Plaintiffs Claims And Defendants Defenses

Defendant is in the business of providing commercial cleaning services to retail,

CASE 0:15-cv-02498-SRN-BRT Document 63 Filed 02/16/16 Page 7 of 43

CASE 0:15-cv-02498-SRN-BRT Document 63 Filed 02/16/16 Page 8 of 43

Plaintiffs Allegations Regarding Earnings Statements

CASE 0:15-cv-02498-SRN-BRT Document 63 Filed 02/16/16 Page 9 of 43

Plaintiffs Allegations Regarding Section 181.032

CASE 0:15-cv-02498-SRN-BRT Document 63 Filed 02/16/16 Page 10 of 43

CASE 0:15-cv-02498-SRN-BRT Document 63 Filed 02/16/16 Page 11 of 43

Plaintiffs Recordkeeping Allegations

CASE 0:15-cv-02498-SRN-BRT Document 63 Filed 02/16/16 Page 12 of 43

CASE 0:15-cv-02498-SRN-BRT Document 63 Filed 02/16/16 Page 13 of 43

Finally, Defendant alleges Capitals meal break policy is completely legal.

Plaintiffs Allegations Regarding Wage Payment Methods

CASE 0:15-cv-02498-SRN-BRT Document 63 Filed 02/16/16 Page 14 of 43

CASE 0:15-cv-02498-SRN-BRT Document 63 Filed 02/16/16 Page 15 of 43

Plaintiffs Allegation Regarding Overtime and Minimum Wage

CASE 0:15-cv-02498-SRN-BRT Document 63 Filed 02/16/16 Page 16 of 43

CASE 0:15-cv-02498-SRN-BRT Document 63 Filed 02/16/16 Page 17 of 43

The Parties Stipulate to Class Certification Under Fed. R. Civ. P. 23

The Parties agree, as part of the settlement, to stipulate to Rule 23 class

Allocation and Distribution of Settlement Funds.

(See Hansen Decl, Ex. 1, II(B))

contemplates an award of attorneys fees of one-third, or $141,666.66, an award of

CASE 0:15-cv-02498-SRN-BRT Document 63 Filed 02/16/16 Page 18 of 43

CASE 0:15-cv-02498-SRN-BRT Document 63 Filed 02/16/16 Page 19 of 43

CASE 0:15-cv-02498-SRN-BRT Document 63 Filed 02/16/16 Page 20 of 43

National Change of Address database, LexisNexiss Accurint database, and Thompson

CASE 0:15-cv-02498-SRN-BRT Document 63 Filed 02/16/16 Page 21 of 43

The Parties Stipulate to Distribution of Notice of Proposed Class

CASE 0:15-cv-02498-SRN-BRT Document 63 Filed 02/16/16 Page 22 of 43

CASE 0:15-cv-02498-SRN-BRT Document 63 Filed 02/16/16 Page 23 of 43

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dispute resolution as compared to the unknown dangers and unforeseen hazards of

CERTIFICATION OF PLAINTIFFS CLAIMS UNDER FED. R. CIV. P. 23

CASE 0:15-cv-02498-SRN-BRT Document 63 Filed 02/16/16 Page 25 of 43

The Prerequisites of Rule 23(a) Are Met.

The Proposed Class Meets the Numerosity Requirement.

Fed. R. Civ. P. 23(a)(1) requires a proposed class be so numerous that joinder of

CASE 0:15-cv-02498-SRN-BRT Document 63 Filed 02/16/16 Page 26 of 43

The Class Shares Common Questions of Law and Fact.

CASE 0:15-cv-02498-SRN-BRT Document 63 Filed 02/16/16 Page 27 of 43

whether Defendant paid class members proper minimum wage, gap

whether Defendant maintained accurate records that are necessary

whether Defendant complied with Minnesota law regarding

whether Defendant failed to obtain authorization prior to requiring

whether Defendant provided rest and meal breaks as required by the

The proper measure of damages sustained by the Rule 23 Class.

The Plaintiffs Claims are Typical of the Class Claims.

CASE 0:15-cv-02498-SRN-BRT Document 63 Filed 02/16/16 Page 28 of 43

The Class Representatives Are Adequate.