Case 8:03-cv-00623-AW Document 46-4 Filed 03/27/2006 Page 1 of 29

UNITED STATES DISTRICT COURT DISTRICT OF MARYLAND SOUTHERN DIVISION

JOHN O’BANNON, 8830 Walutes Circle, Alexandria, VA 22309, SANDRA F. MOORE, 194 Detour Road, #3, Seabrook, SC 29940, RONALD HAMPTON, 1248 Congaree Road, Hopkins, SC 29061, on behalf of themselves and all others similarly situated; and RONDALL MITCHELL, 11543 Hoofbeat Trail, Lusby, Calvert County, MD 20657, individually,

Case No. AW-03-623
AMENDED CLASS ACTION COMPLAINT WITH JURY DEMAND

Plaintiffs,

v.

FRIEDMAN’S, INC., 4 W. State Street, Savannah, GA 31401, Registered agent for service of process – The Corporation Trust, Inc., 300 E. Lombard St., Baltimore, MD 21202; FEDERAL INSURANCE COMPANY, 15 Mountain View Road, Warren, NJ 07059, Registered agent for service of process – Maryland Insurance Commissioner, 525 St. Paul Place, Baltimore, MD 21202; ST. PAUL MERCURY INSURANCE COMPANY, 385 Washington Street, St. Paul, Minnesota 55102, Registered agent for service of process – Maryland Insurance Commissioner, 525 St. Paul Place, Baltimore, MD 21202,

Defendants.

Case 8:03-cv-00623-AW Document 46-4 Filed 03/27/2006 Page 2 of 29
Plaintiffs John O’Bannon, Sandra F. Moore, and Ronald Hampton (“Representative Plaintiffs”) bring this class action on behalf of themselves and all other similarly situated persons against Friedman’s, Inc. (“Friedman’s” or “the Company”) under federal law prohibiting discrimination in employment on the basis of race. Plaintiff Rondall Mitchell brings a related individual claim of unlawful retaliation under federal law by Friedman’s for his opposition to the Company’s racially discriminatory policies and practices. In addition, Plaintiffs bring this action against Federal Insurance Company and St. Paul Mercury Insurance Company (collectively the “Insurers”) to obtain declaratory judgment that the Insurers are contractually liable for, and obligated to indemnify Friedman’s on, Plaintiffs’ claims for monetary relief on behalf of themselves and a class of similarly situated persons, pursuant to insurance contracts between Friedman’s and the Insurers.
This race discrimination in employment class action is brought by one African American applicant for employment, John O’Bannon, and two African American former employees, Sandra Moore and Ronald Hampton. Rondall Mitchell, who is white, brings an individual claim of retaliation for opposing Friedman’s racially discriminatory policies and practices while he worked as a manager for Friedman’s. Friedman’s has engaged, and continues to engage, in a companywide policy, pattern or practice of race discrimination in hiring, promotion, compensation and other terms, conditions and privileges of employment and has maintained a hostile environment for African American employees in violation of 42 U.S.C. § 1981. This action seeks equitable and injunctive relief, including an end to the discriminatory practices described herein, rightful place relief for all class members, and monetary relief including back pay and front pay; compensatory and punitive damages; and reasonable costs and attorneys’ fees. This action also seeks to establish the Insurers’ liability to pay the judgment for all such monetary relief.
I. JURISDICTION 1. This Court has jurisdiction over this action pursuant to 28 U.S.C. §§1331 and 1343(4), to adjudicate plaintiffs’ claims against Friedman’s pursuant to 42 U.S.C. § 1981 (“§ 1981”).

Case 8:03-cv-00623-AW Document 46-4 Filed 03/27/2006 Page 3 of 29

2. This Court has jurisdiction to adjudicate the claim for declaratory judgment against the Insurers pursuant to 28 U.S.C. §1367(a) and 28 U.S.C. § 2201(a).

II. VENUE AND INTRA-DISTRICT ASSIGNMENT 3. Venue is proper in this Court pursuant to 28 U.S.C. § 1391(b) and the Standing Order of the United States District Court for the District of Maryland concerning the assignment of civil cases to the Southern Division § (B)(1) and (2). Plaintiffs John O’Bannon and Rondall Mitchell resided in Prince George’s and Calvert counties, within the Southern Division, respectively, at the time this action was brought. Many of the discriminatory acts suffered by plaintiffs O’Bannon and Mitchell and class members also have occurred at Friedman’s stores in the Southern Division of the District of Maryland.

A. Plaintiffs

III. PARTIES

4. Plaintiff John O’Bannon (“O’Bannon”) is an African American citizen who resided in

Prince George’s County, Maryland. In May 2000, O’Bannon was recruited by an African American

manager for a retail sales or entry level management job with Friedman’s in Prince George’s County,

Maryland, but was rejected by Friedman’s higher management. On January 19, 2001, O’Bannon filed a

Charge of Discrimination with the Equal Employment Opportunity Commission (“EEOC”) alleging that

Friedman’s discriminated against him and a class of similarly situated African American employees and

applicants. A copy of O’Bannon’s EEOC Charge is attached to this Complaint as Exhibit 1A. On

January 28, 2003, the EEOC found reasonable cause to believe that Friedman’s discriminated against

O’Bannon and African Americans as a class. A copy of the EEOC’s Letter of Determination is attached

to this Amended Complaint as Exhibit 1B.

5. Plaintiff Sandra F. Moore (“Moore”) is an African American citizen who resides in

Beaufort County, South Carolina. Moore worked for Friedman’s from January 1995 until July 1997 and

again from March 1998 until her termination on or about July 29, 2001. During her time at Friedman’s,

2

Case 8:03-cv-00623-AW Document 46-4 Filed 03/27/2006 Page 4 of 29
Moore was repeatedly turned down for promotional opportunities, was not allowed to hire African American sales staff if it would affect the racial “mix” in her store, and was terminated due to her repeated interest in promotion. A copy of Moore’s EEOC Charge is attached to this Complaint as Exhibit 2A. On March 13, 2003, the EEOC found reasonable cause to believe that Friedman’s discriminated against Moore and African Americans as a class. A copy of the EEOC’s Letter of Determination is attached to this Amended Complaint as Exhibit 2B.
6. Plaintiff Ronald Hampton (“Hampton”) is an African American citizen who resides in Richland County, South Carolina. Hampton worked for Friedman’s from June 1995 until August 2001 as a Store Partner. During his tenure, Friedman’s upper management denied Hampton terms, conditions, and advantages of employment equal to those afforded to his white counterparts, and refused to allow Hampton to hire African Americans if it would affect the racial “mix” in his store. He was terminated for discriminatory reasons. A copy of Hampton’s EEOC Charge is attached to this Complaint as Exhibit 3A. On March 13, 2003, the EEOC found reasonable cause to believe that Friedman’s discriminated against Hampton and African Americans as a class. A copy of the EEOC’s Letter of Determination is attached to this Amended Complaint as Exhibit 3B.
7. Plaintiff Rondall M. Mitchell (“Mitchell”) is a white citizen who resides in Calvert County, Maryland. He worked for Friedman’s from late 1995 to 1996 and again from September 1998 until November 2000. He worked for Friedman’s as a Senior Partner in charge of twelve retail stores in the Maryland area from March 1999 until he was demoted on or about March 16, 2000, and then was constructively discharged in or around November 2000 in retaliation for opposing Friedman’s racially discriminatory policies and practices. On January 19, 2001, Mitchell filed a Charge of Discrimination with the EEOC alleging that Friedman’s discriminated and retaliated against him and a class of similarly situated persons. A copy of Mitchell’s Charge of Discrimination is attached as Exhibit 4A to this Complaint. On February 10, 2003, the EEOC issued its Second Amended Determination, finding reasonable cause to believe that Friedman’s has discriminated against African Americans as a class and
3

Case 8:03-cv-00623-AW Document 46-4 Filed 03/27/2006 Page 5 of 29
retaliated against Mitchell for opposing those discriminatory policies. A copy of the EEOC’s Letter of Determination is attached as Exhibit 4B to this Complaint. B. Defendants
8. Defendant Friedman’s is a Delaware Corporation, headquartered in Savannah, Georgia. In 2003, Friedman’s was the third largest specialty retailer of fine jewelry in the United States, and had approximately 650 retail stores in twenty-two states, mostly in the Southeast, Midwest and Mid-Atlantic regions, including approximately seventeen stores in Maryland. In 2002, Friedman’s had net sales of $436.1 million, and net income of $23.2 million. Friedman’s has grown consistently over the last decade. It increased its store count from fifty-five stores in fiscal 1992 to 662 stores in 2002 and became the largest specialty jewelry retailer in the twenty-two states in which it operates.
9. Defendant Federal Insurance Company (“Federal”) is an insurance company organized under the laws of the State of Indiana and doing business nationally, including in the State of Maryland.
10. Federal provides and sells, among other insurance products, Employment Practices Liability Insurance (“EPLI”) to insure employers, such as Friedman’s, against liabilities based on claims of employment discrimination by employees or applicants for employment, like plaintiffs. Federal provided and sold such insurance to Friedman’s for portions of the period covered by Plaintiffs’ claims against Friedman’s.
11. Defendant St. Paul Mercury Insurance Company (“St. Paul”) is an insurance company organized under the laws of the State of Minnesota and doing business nationally, including in the State of Maryland.
12. St. Paul provides and sells, among other insurance products, excess liability policies over EPLI to insure employers, such as Friedman’s, against liability based on claims of employment discrimination by employees or applicants for employment, like plaintiffs, in excess of the policy limits of such EPLI policies. Federal provided and sold such insurance to Friedman’s for portions of the period covered by Plaintiffs’ claims against Friedman’s.
4

Case 8:03-cv-00623-AW Document 46-4 Filed 03/27/2006 Page 6 of 29
13. Defendant Friedman’s entered into a series of EPLI and excess liability insurance policies with Federal and St. Paul Mercury which contractually obligate the Insurers to defend and insure Friedman’s against this action by plaintiffs and any judgment or liability resulting therefrom.
IV. STATEMENT OF FACTS A. Friedman’s Practices of Racial Discrimination Against African Americans
as a Class 14. Each of Friedman’s stores operates under the direction of a Store Partner. Each Store Partner is assisted by an assistant manager and two to five sales associates and in some stores a collector. At the time of the original Complaint in this action, 61 Senior Partners, each responsible for approximately twelve stores, oversaw the operations of the stores and evaluate the performance of the Store Partner. Previously, within the liability period, Friedman’s employed District Partners who supervised Store Partners and were also responsible for approximately four stores including their own. Senior Partners report, and District Partners reported, to Regional Vice Presidents, 12 in number at the time of the original Complaint in this action, each responsible for approximately forty to sixty stores. Regional Vice Presidents reported at the same time to three Division Vice Presidents, each of whom was responsible for approximately 200 to 225 stores. Due to reductions in the number of stores and the scope of Friedman’s operations after the filing of this action, the numbers of stores, Senior Partners, District Partners, and/or Vice Presidents may have decreased. The Division Vice Presidents are based in the Company’s home office in Savannah, Georgia and report to the Senior Vice President of Store Operations. Senior Partners, Regional Vice Presidents and Division Vice Presidents interact on a daily basis with senior management and review individual store performance and operations. 15. Friedman’s racially discriminatory policies and patterns or practices emanate from the upper echelons of Friedman’s management. Friedman’s management employed an explicit quota policy limiting the number of African Americans hired in the sales associate and entry-level management positions. Hiring at the store level below Store Partner must be approved by Senior Partners and often by Regional Vice Presidents as well. Senior Partners and Regional Vice Presidents routinely direct
5

Case 8:03-cv-00623-AW Document 46-4 Filed 03/27/2006 Page 7 of 29
Store Partners to make sure that there are not too many African Americans working at any one store. Given the close working relationship between Senior Partners, Regional Vice Presidents, Division Vice Presidents and the most senior managers who interact on a daily basis, the racially discriminatory directives given to Store Managers are, on information and belief, known to and ratified by Friedman’s senior management.
16. Friedman’s discriminatory policy has been graphically articulated by Jack Steele, former Division President for Friedman’s Mid-Atlantic Division. For instance, on a visit to the Bowie, Maryland store, Steele told Mitchell the store was a disgrace because it was staffed by three black women. Steele also told Mitchell that a banner which hung over the entrance “looks like it was hung by a goddamned nigger.” Plaintiff Mitchell also recorded some of Steele’s crude and racially biased language on an audiotape, during the regular course of his job at Friedman’s and with Steele’s knowledge. Because Steele knew he was being taped, he was much more temperate in expressing his racial attitudes than he typically was “off-the-record.” Nonetheless, Steele stated on tape:
Largo [Maryland store] is a piece of shit. We got to get a staff in there and get rid of all those, get rid of half the black people in there and just transfer their ass. It’s not that I’m mad about, not the black people. … It is that the standard set there it’s just like hiring 18 year olds. I don’t want the god damn 18 year olds hired and you go turn right around and hire 18 years olds as if I’ll slide this one by on him. It ain’t gonna slide by. I don’t know what the fuck has happened.
* * * *
We don’t have any bench. We got this yoyo guy that can’t even speak fucking English in Owings Mill [Maryland store]. He can’t even go to lunch with all of you. Does he have the ability to do it? I don’t know if he has the ability. Does he have the talent to do it? I don’t know. What are we going to do with him? We got this, this Shondra or whatever her name is, this little pregnant black chick. She can’t even smile and hold a fucking conversation. We hired her from the Pizza Hut. We can do better than that Ron. You’ve got to raise your standards. And if that’s the only kind of people you can communicate with then I got a hell of a problem. Now I don’t believe that’s the only kind of people you can communicate with. But why is it it’s the only thing we attract? Look at that girl, this, this Valerie or Val or whatever she was. Squirrelly hair, whatever you call that mess, real professional looking in a jewelry store. And then the other black girl comes in and she, she looks like Miss Piggy. Shit!
6

Case 8:03-cv-00623-AW Document 46-4 Filed 03/27/2006 Page 8 of 29
Steele did not limit his racist instructions to Mitchell, but told various other Store Partners not to hire too many African Americans as well.
17. Friedman’s racially discriminatory policies were also articulated by other management officials of Friedman’s. On information and belief, a current Division President, Don Mertz, referred to black prospective employees as “chocolate chips.” Mertz told Mitchell that blacks were to be like “chocolate chips sprinkled throughout the district.” Another Division President, Tim Murray, also ordered a Store Partner to hire more whites and fewer blacks in his stores, and told then-Company President Bob Morris that Friedman’s had hired “too many blacks” for the Maryland stores. District and Senior Partners in (at least) the States of Florida, Maryland and Virginia also instructed their Store Partners to limit the number of blacks in their stores.
18. Friedman’s explicit and pervasive policy and/or pattern or practice of race discrimination in employment has existed continually. The Company has created and maintained a system-wide policy and/or pattern or practice of race-based disparate treatment that limits the employment opportunities of African American employees. In addition, the Company has created and maintained a system-wide policy and/or pattern or practice of wholly subjective decision-making that adversely impacts the employment opportunities of African American employees. The Company’s racially biased policies and practices have also created a hostile environment for its African American employees.
19. The Company has pursued a policy and/or pattern or practice of race discrimination on a continuing basis, which has had the intent and effect of denying African Americans equal job opportunities and conditions of employment. Such discriminatory policies and/or patterns or practices include, without limitation:
a. Explicitly limiting the number of African Americans hired; b. Relying upon subjective, discriminatory criteria utilized by a nearly all white managerial workforce in making compensation, hiring and promotional decisions;
7

Case 8:03-cv-00623-AW Document 46-4 Filed 03/27/2006 Page 9 of 29
c. Failing and refusing to implement and follow a uniform posting procedure to ensure that all employees have equal notice of management and more desirable job openings and promotions, which adversely affects the ability of African American employees to advance. For example, the Company routinely fails to post available management positions or otherwise publicize the availability of promotional opportunities. This prevents African American employees at Friedman’s from learning when a promotion or more desirable position becomes available;
d. Failing and refusing to establish a uniform and unbiased process by which all employees can apply and compete equally for promotions and management positions. For example, the Company routinely fills open positions from its pool of current employees, typically using a “tap on the shoulder” system under which the predominately white management workforce makes subjective and race-biased pre-selection decisions regarding promotions and assignments. As a result, many promotions, vacancies or advancement opportunities are unknown to African Americans and are filled by whites;
e. Discouraging and deterring African American employees from applying for promotions and management positions for which they are qualified;
f. Paying African American employees less than similarly-situated white employees. For example, the amount of compensation an employee receives is not determined by any objective criteria or standards, but rather is determined by subjective, arbitrary and capricious decisionmaking by Friedman’s nearly all-white management workforce. This subjective system results in African American employees receiving lower compensation than similarly-situated white employees;
g. Maintaining and fostering a reputation for discriminatory conduct that deters African American employees from pursuing hiring and promotional opportunities with Friedman’s;
h. Failing and refusing to take reasonable and adequate steps to eliminate the continuing effects of Friedman’s past discriminatory policy and/or patterns or practices;
8

Case 8:03-cv-00623-AW Document 46-4 Filed 03/27/2006 Page 10 of 29

i. Denying African American employees other terms and conditions of employment

on the same basis applied to white employees.

j. Maintaining a work environment that is hostile to African American employees.

20. As a result of Friedman’s continued policies and pattern or practices of intentional

discrimination, African Americans are denied hiring, promotions and compensation on terms equal to

those afforded to similarly situated white applicants and employees.

21. Numerous Friedman’s employees and applicants, in addition to the plaintiffs herein, have

also filed EEOC Charges alleging that Friedman’s discriminated against them and similarly situated

African Americans as a class, on the basis of their race. Among these Charging Parties are the

following, listed with the dates of their Charges and the locations in which they alleged Friedman’s

discriminated against them on the basis of race.

a. Willie Johnson

March 15, 2003

Georgia

b. Kadisha Khadjif

April 17, 2003

North Carolina

c. Jacqueline Murray

May 28, 2003

Louisiana

d. Maketha Radden

April 17, 2003

South Carolina

In the case of each of the above-listed Charges, the EEOC, after investigation, determined there was

reasonable cause to find discrimination against the Charging Parties listed above and a class of similarly

situated African Americans. These cause determinations were issued by the EEOC on July 3, 2003

(Johnson Charge), July 3, 2003 (Khadjif Charge), February 11, 2004, (Murray Charge), and December

2, 2003 (Radden Charge).

B. Friedman’s Acts Of Discrimination Against The Individual Plaintiffs

John O’Bannon 22. Friedman’s denied Plaintiff John O’Bannon employment because of his race. In about
May 2000, O’Bannon was recruited for a part-time retail sales position at Friedman’s by an African American Friedman’s store manager, Constance Givens-Jones, whom he met when he made a sales

9

Case 8:03-cv-00623-AW Document 46-4 Filed 03/27/2006 Page 11 of 29
presentation to her. Givens-Jones interviewed O’Bannon and offered him a part-time sales position in her store making $7.50 an hour. She advised O’Bannon that his employment was subject to the approval of her District Partner, Don Mertz, and she would arrange an interview for him with Mertz.
23. Mertz interviewed O’Bannon on or around June 9, 2000. During the interview, Mertz reviewed O’Bannon’s educational background, professional experiences and personal interests. Mertz questioned O’Bannon at length about his career aspirations and appeared to be particularly interested in O’Bannon’s previous sales experience. At the conclusion of the interview, Mertz told O’Bannon he was going to place him in Friedman’s Manassas, Virginia retail store as a management trainee with a base pay of $10 an hour, plus incentives. Mertz told O’Bannon he would schedule a time for O’Bannon to meet the Manassas store manager before his official start date. Mertz also informed O’Bannon that he would have to run the employment offer by his supervisor, Jack Steele.
24. The following week, O’Bannon called Mertz regarding the employment offer. Mertz was vague, evasive and non-committal about hiring O’Bannon. Mertz told O’Bannon he had not spoken with Steele yet. O’Bannon did not hear from Mertz again after several more days, so O’Bannon tried calling Mertz on several occasions, but each time was told that Mertz was not available. Mertz never responded to the phone messages O’Bannon left him.
25. Subsequently, O’Bannon called Givens-Jones who indicated she was shocked to learn Friedman’s had not officially hired O’Bannon. Givens-Jones told O’Bannon that Mertz had told her that he was impressed with O’Bannon and was going to assign him to the Manassas store.
26. On information and belief, Friedman’s hired less or equally qualified white applicants for the retail sales and entry level management positions after O’Bannon interviewed with and was told by Givens-Jones and Mertz that he would be offered such positions.
Sandra F. Moore 27. Plaintiff Moore was hired as temporary, part-time sales help at Friedman’s during the Christmas season of 1993 in Hilton Head, South Carolina. In January 1995, Moore began working at
10

Case 8:03-cv-00623-AW Document 46-4 Filed 03/27/2006 Page 12 of 29
Friedman’s full time. Moore voluntarily left Friedman’s in July 1997. In March 1998, the district manager offered Moore a raise if she would return to Friedman’s, which she did. The last position Moore had at Friedman’s was Store Partner. Moore’s employment at Friedman’s ended on or about July 29, 2001, when her employment was terminated due to her race.
28. As a Friedman’s Store Partner, Moore was required to discriminate against African American job applicants. Moore had to tell her Senior Partners including Dennis Slaughter and Stephen Motes (both of whom are white), the race of job applicants so they could decide, based on the applicants’ race, if Moore could hire them. Moore was not allowed to hire an African American if it would negatively affect the racial “mix” in the store. The fact that the applicants were approximately 85% black made it difficult to keep the racial mix as Friedman’s wanted it.
29. Moore was also discriminatorily denied promotion. During her employment at Friedman’s, Moore expressed her interest in promotional opportunities on numerous occasions. Despite her repeated expressions of interest, Friedman’s frequently promoted or hired whites into positions for which Moore was equally or more qualified.
30. For example, when she was an Assistant Manager, Ms. Moore was passed over for Store Partner positions that were given to white individuals instead. Yet, Ms. Moore would have to train the white Store Partners who were hired instead of her.
31. Beginning in approximately October 2000, Moore expressed her interest in the position of District Partner, the next step up from Store Partner, to her supervisors. She was continually passed over for promotion to District Partner and white individuals were promoted into the District Partner positions.
32. Prior to seeking a promotion above the store level, Ms. Moore had performed well as a Store Partner for Friedman’s and her good performance was recognized by Friedman’s. However, after she began seeking a promotion above the store level, Ms. Moore began receiving extra critical scrutiny from her supervisors. That scrutiny was not based on her performance but was in response to her
11

Case 8:03-cv-00623-AW Document 46-4 Filed 03/27/2006 Page 13 of 29
persistent attempts to obtain what is, at Friedman’s, a position from which African Americans are excluded. In addition, Friedman’s manipulated the store’s numbers so that Ms. Moore’s performance would appear to be inadequate. Friedman’s asserted that Ms. Moore was terminated for failure to meet the sales quota it set, but that reason was a pretext for discrimination. Moreover, unlike other white Store Partners who did not meet sales quotas, Ms. Moore was not offered a demotion and retraining.
Ronald Hampton 33. Plaintiff Hampton was hired as a Store Partner at Friedman’s in Columbia, South Carolina in June 1995. At that time, Hampton had twenty-five years experience working in the retail jewelry business. In August 2001, Hampton was discriminatorily discharged by Friedman’s. 34. Hampton began working at Friedman’s because, as he informed Friedman’s Regional Vice President Lisa Logan when she interviewed him, he was interested in promotional opportunities. 35. However, not long after beginning to work at Friedman’s, Hampton realized that the individuals in the management positions above the store level were virtually all white and concluded that pursuing his goals of promotion would be fruitless and possibly detrimental to his career. 36. Friedman’s subjected Hampton to terms and conditions of employment that were different from and harsher than those it offered to similarly situated white employees. Unlike white Store Partners, decisions that Hampton made in running the store were constantly scrutinized and questioned by District and Regional managers. For example, throughout his tenure at Friedman’s, Hampton’s District Manager regularly undermined Hampton’s proper exercise of his authority to discipline store employees. 37. As a Store Partner, Hampton was prevented from giving equal consideration to African American job applicants. Hampton was responsible for conducting interviews of job applicants, but was required to relate the race of job applicants to District and Regional managers (all of whom were white) before he could obtain their final approval to hire applicants and set their pay rate.
12

Case 8:03-cv-00623-AW Document 46-4 Filed 03/27/2006 Page 14 of 29
38. After being asked “are they white or black?” by District Manager Billie Welch several times, Hampton asked her what difference it made. Welch responded that Hampton was to “keep the mix right” in his store, which Hampton understood to mean having as few African Americans in the store as possible. Hampton was frequently told to “keep the mix right” over the period of his employment by higher level white managers.
39. Friedman’s constantly undermined Hampton’s authority as Store Partner and harassed him in the performance of his duties. On information and belief, higher level white managers told well qualified applicants they would not want to work for him and would not allow him to hire qualified applicants who were later placed in other Friedman’s stores in his district. Because Friedman’s prevented Hampton from hiring adequate qualified staff, it was harder for him to meet the store’s sales and collections quotas.
40. Hampton was terminated because of his race, rather than the pretextual reason given to him – that he did not make the sales quota for the store.
Rondall M. Mitchell 41. Plaintiff Mitchell worked for Friedman’s from late 1995 until 1996 and again from September 1998 until November 2000. Mitchell returned to Friedman’s employ as a Store Partner in part because he was promised that he would be promoted quickly above the level of store manager. In January 1999, Friedman’s promoted Mitchell to the position of Senior Partner in charge of ten Friedman’s stores in the Richmond, Virginia area. Approximately one month later, Friedman’s requested that Mitchell transfer to Maryland as Senior Partner over twelve stores. Mitchell transferred to Maryland on March 1, 1999. 42. As Senior Partner, Mitchell was subjected to Friedman’s explicit policy of limiting the number of African American employees hired in its stores. During the first month of Mitchell’s return to Friedman’s in February 1999, when Mitchell spent extensive time with Steele traveling throughout the Richmond area meeting store managers, Steele, who is white, spoke often of his disapproval of
13

Case 8:03-cv-00623-AW Document 46-4 Filed 03/27/2006 Page 15 of 29
blacks as store managers and stated that Friedman’s had a strict policy of limited the number of black employees in any one store.
43. For example, Steele told Mitchell that the “problem” with hiring black managers is “the first thing they want to do is hire a bunch more like ‘em. Then you’ve got a whole goddamn black store.” Steele singled out Friedman’s Willow Lawn, Virginia retail store as an example of “what you get when you fill a whole goddamn store with blacks.” He called the Willow Lawn store a “fucking disaster,” and ordered Mitchell to “find some white people and clean that rat’s nest out.” Steele also used the “n” word when referring to African American employees and often referred to them as “goddamnblacks,” as one word.
44. Subsequently, Steele refused to allow Mitchell to hire several qualified African Americans for Friedman’s Glen Allen store in Richmond, Virginia. For example, when Mitchell requested to hire one particularly well-qualified black applicant for a sales position in the Glen Allen store, Steele refused saying “you already have a black in that store, Ron. We’re not gonna build another fuckin’ Willow Lawn.” On another occasion after Mitchell transferred to Maryland, Mitchell discovered a manager of one of Friedman’s Maryland stores had been entering fraudulent sales to reach his sales quota. When Mitchell brought this to Steele’s attention, Steele commented that “theft is always a problem when you have a bunch of ‘goddamnblacks’ in your stores.”
45. As he had in Virginia, Steele also refused to approve Mitchell’s hiring of a number of well qualified black applicants for positions in Friedman’s Maryland stores. In fact, by the end of 1999, Steele was rebuking Mitchell regularly for his failure to recruit more white and fewer black employees.
46. Steele’s refusal to allow Mitchell to hire the best qualified candidates regardless of race created difficulties for Mitchell with the Store Partners he managed.
47. In July 1999, Mitchell hired a well qualified African American woman, Constance Givens-Jones, to manage Friedman’s Largo, Maryland store. Although Mitchell knew Steele would not
14

Case 8:03-cv-00623-AW Document 46-4 Filed 03/27/2006 Page 16 of 29
approve of him hiring Ms. Givens-Jones because of her race, she was a good fit for the store and there had been no white applicants for the position.
48. Over the next several months, Givens-Jones sent Mitchell numerous well qualified black candidates to fill several vacancies in her understaffed store. Under the compulsion of Steele’s discriminatory orders, Mitchell either had to reject those applicants or had to place them in other stores in which there were no black employees. As a result, Givens-Jones’ store was consistently understaffed and she had to work unreasonably long hours. When Mitchell attempted to place qualified black employees into the understaffed store, Steele discovered the new hires and accused Mitchell of “building” an all black store.
49. In 1999, Mitchell and Steele met in Mitchell’s office to discuss staffing changes Steele wanted to implement in Friedman’s Maryland stores. Mitchell recorded the conversation with a microcassette tape recorder which was in Steele’s plain view. During this meeting, Steele issued the directive regarding the Largo store, which was staffed and managed exclusively by blacks and was consistently one of the top producing Friedman’s stores in Maryland, that is quoted in paragraph 11 above.
50. Steele also frequently told Mitchell to fire black employees. However, Steele never articulated a race-neutral justification for the firings. Instead, on information and belief, his directives were based on a stereotype held by Steele that all blacks are lazy or thieves who attract bad credit risks and scare off white customers.
51. During his employment at Friedman’s, Mitchell complained about Steele’s racist statements to Everett Black, a current Division Vice President, Christine Cregar, another Senior Partner, and to Steele himself. Mitchell also played the above tape recording for Stephen Hunt, Friedman’s Credit Manager and Jim Wasley, Division Finance Officer.
52. In February 2000, Mitchell recommended to Steele and Don Mertz, Division Vice President, that they interview an experienced and well-qualified African American named Mohammed Abdur-Rahman, whom he recruited for a manager position in Friedman’s White Marsh, Maryland store.
15

Case 8:03-cv-00623-AW Document 46-4 Filed 03/27/2006 Page 17 of 29
Steele and Mertz never interviewed Mr. Abdur-Rahman and instead placed a less experienced and less qualified white female in the position.
53. On March 16, 2000, Steele and Mertz informed Mitchell his performance was unacceptable because he had failed to recruit the “right kind of people” and he could either quit immediately or accept a two level demotion to Store Partner, with a $10,000 pay cut. Mitchell accepted the demotion.
54. Mitchell subsequently informed Friedman’s through counsel that he believed his demotion was in retaliation for his refusal to implement Friedman’s racially discriminatory hiring and promotion practices. Thereafter, Friedman’s managers continued to take adverse employment actions against him and otherwise made the terms and conditions of his employment intolerable, including actions deliberately designed to cause Mitchell further financial hardship. Because of Friedman’s continuing unlawful harassment and retaliation against him, Mitchell was forced to leave his employment with Friedman’s in November 2000. C. Friedman’s Bankruptcy and Discharge, and the Preservation of Plaintiffs’ Claims Made in
the Bankruptcy Proceedings 55. On January 14, 2004, after this action was originally filed, Friedman’s filed a Petition for Relief under Chapter 11 of the Bankruptcy Code, in the United States Bankruptcy Court for the Southern District of Georgia (the “Bankruptcy Court”). During the pendency of its bankruptcy proceedings, Friedman’s was operated by its own management as a Debtor in possession, under supervision of the Bankruptcy Court, pursuant to the Bankruptcy Code. After extensive proceedings before the Bankruptcy Court, Friedman’s debts, with pertinent exceptions listed below, were discharged and Friedman’s regained control of its own operations pursuant to a Plan of Reorganization confirmed by the Court on December 9, 2005. 56. Plaintiffs, on behalf of themselves and the putative class they represent herein, filed claims against Friedman’s in the Bankruptcy Court. In addition, the four other Charging Parties named in paragraph 21 above and Lillian Bush, a putative class member, also filed such claims. The relief that
16

Case 8:03-cv-00623-AW Document 46-4 Filed 03/27/2006 Page 18 of 29
Plaintiffs sought in their bankruptcy claims was the same as the relief they sought in their original Complaint in this action, namely, comprehensive declaratory, injunctive, and equitable monetary relief, compensatory and punitive damages, costs and attorneys’ fees.
57. On November 7, 2005, prior to Friedman’s discharge from the Bankruptcy Court proceedings, the Bankruptcy Court issued an Order granting plaintiffs relief from the automatic stay of litigation applicable in bankruptcy proceedings. That Order specified that:
Relief from the automatic stay imposed by Bankruptcy Code Section 362 is hereby GRANTED to allow the Movants [plaintiffs here] to continue their Proceedings [this action] against the Debtors [Friedman’s] … subject to the following conditions…: Among the pertinent conditions were the following:
a. Relief from the stay shall be limited, as to the Debtors, to allowing the Movants … to liquidate their monetary claims and recover from any applicable insurance coverage, and … the Movants … may seek to enforce any monetary award obtained against any asset of the Debtors, or property of the Debtors’ estates, other than their applicable insurance coverage; provided however, the Movants shall not be precluded from seeking injunctive relief against the Debtors for conduct occurring on or after the effective date of any plan of reorganization confirmed by the Court. …
c. Upon the entry of this Order, the Movants’ Proofs of Claim against the Debtors shall be deemed WITHDRAWN.
58. As a result of the Bankruptcy Court’s Order of November 7, 2005, plaintiffs are authorized, notwithstanding Friedman’s bankruptcy proceedings, the discharge of its debts, and the confirmation of a reorganization plan by the Bankruptcy Court, to (1) seek injunctive relief against Friedman’s for ongoing discriminatory employment practices, (2) seek monetary relief against Friedman’s which would be liquidated and paid from any applicable insurance coverage, and (3) assert additional claims for monetary and other relief based on claims of discrimination occurring after the bankruptcy proceedings.
59. The insurance coverage provided by the Insurers to Friedman’s under the insurance contracts alleged in paragraph 13 above is properly available to, and within the terms of, the Bankruptcy
17

Case 8:03-cv-00623-AW Document 46-4 Filed 03/27/2006 Page 19 of 29
Court’s Order permitting liquidation of and recovery on plaintiffs’ individual and class claims for monetary relief in this action. Therefore, the Insurers are real parties in interest to this action, they have a concrete financial stake in its outcome, and their presence as parties defendant is necessary to assure that plaintiffs may obtain monetary relief for discrimination against themselves and the class alleged herein, as provided by law. D. The Insurers’ Refusal to Accept their Obligations for Friedman’s Monetary Liability in
this Action 60. Neither one of the Insurers has been willing to acknowledge or accept its full responsibility and liability, under its insurance contracts with Friedman’s, for the liability and potential judgment for monetary relief that Friedman’s has incurred to plaintiffs and the class, and that may result in a judgment in this action. 61. Federal has acknowledged and accepted its responsibility and liability only on one of several EPLI contracts it entered into with Friedman’s, covering not only this action but a number of other claims that have been made against Friedman’s. The amount of coverage available under that single contract is insufficient to pay Friedman’s liability, or the monetary relief to which plaintiffs and the class are entitled, in this action. Federal has denied responsibility and liability under other applicable EPLI contracts which would, and are properly required to, provide additional monetary coverage on plaintiffs’ claims and Friedman’s liability for those claims. 62. St. Paul has refused to acknowledge or accept any responsibility or liability on either of the two excess insurance policies it provided over Friedman’s EPLI coverage with Federal. The amount of coverage available under all of the applicable Federal policies would be insufficient to provide full coverage to Friedman’s for plaintiffs’ individual and class claims, and to provide the full monetary relief to which plaintiffs and the class are entitled. Therefore, the St. Paul excess policies provide necessary monetary coverage on plaintiffs’ claims and Friedman’s liability for those claims, which St. Paul refuses to make available in this action.
18

Case 8:03-cv-00623-AW Document 46-4 Filed 03/27/2006 Page 20 of 29
V. CLASS ACTION ALLEGATIONS 63. Representative Plaintiffs seek class certification of this action under Fed. R. Civ. P. 23(b)(2) and/or 23(b)(3). The class Representative Plaintiffs seek to certify satisfies the numerosity, commonality, typicality and adequacy of representation prerequisites for certification under Fed. R. Civ. P. 23(a). Friedman’s has both acted and refused to act on grounds generally applicable to the class, making appropriate final injunctive relief for Representative Plaintiffs and the class as a whole, thus satisfying the requirements of Fed. R. Civ. P. 23(b)(2). Common issues of law and fact predominate over individual issues, making a class action procedure superior to the litigation of hundreds and possibly thousands of individual claims throughout the federal and state judiciary, thereby satisfying the requirements of Fed. R. Civ. P. 23(b)(3). 64. Class Definition. The class consists of past, present, and future African American employees of Friedman’s and applicants for employment at Friedman’s, who are, have been, or may in the future be adversely affected by the continuing policies and/or patterns and practices of race discrimination that have denied them equal hiring, promotion, advancement, career opportunities, and other terms and conditions of employment. Representative Plaintiffs are members of the class they seek to represent. 65. Numerosity: Fed. R. Civ. P. 23(a)(1). The members of the class are so numerous and geographically dispersed that joinder of all members is impractical. While the precise number of class members is indeterminate at the present time, on information and belief, there are hundreds of current African American employees of Friedman’s. There are hundreds or thousands more past and future Friedman’s employees and applicants for employment. These present, past and future African American employees and applicants are dispersed throughout at least twenty two states. Joinder of this many geographically dispersed class members is impracticable, thus satisfying the numerosity requirement of Fed. R. Civ. P. 23(a)(1). 66. Commonality: Fed. R. Civ. P. 23(a)(2). This suit poses numerous questions of law and fact that are common to and affect the rights of all members of the class. The answers to these questions
19

Case 8:03-cv-00623-AW Document 46-4 Filed 03/27/2006 Page 21 of 29
will be determined on the basis of common evidence that is applicable to each class member. Specific examples of factual and legal commonality include, but are not limited to:
67. Common Questions of Fact. a. Whether the Company discriminatorily refuses to hire and promote qualified
African American employees for retail sales and management positions? b. Whether the Company has attempted to maintain, and has maintained, a “racial
mix” among its store employees by limiting the number of African Americans hired in the stores and by discharging African American employees at stores perceived to have “too many” African American employees?
c. Whether the Company has intentionally discriminated against African Americans in selecting individuals for management positions, resulting in an almost exclusively white management workforce?
d. Whether the Company has totally excluded African American employees from its high level managerial positions?
e. Whether the Company’s employment selection policies are vague and subjective with few, if any objective criteria?
f. Whether the employment selection policies used by the Company’s almost exclusively white managers are issued by corporate headquarters and/or applied company-wide?
g. Whether company-wide statistics evidence the under-representation of African Americans in selection of employees for the Company’s hiring and promotional opportunities?
h. Whether Plaintiffs’ statistical and anecdotal evidence demonstrate that African Americans are denied compensation and other terms and conditions of work on the same basis as are the Company’s white employees?
i. Whether the Company has a policy and/or practice of not using job postings and/or of preselecting candidates prior to any formal job announcement?
20

Case 8:03-cv-00623-AW Document 46-4 Filed 03/27/2006 Page 22 of 29
j. Whether African American employees are excluded from and/or overlooked in the preselection process used to make promotion and advancement decisions?
k. Whether the Company has created a racially hostile work environment for African American employees?
68. These numerous questions of fact common to Representative Plaintiffs and the class satisfy the factual commonality requirement of Rule 23(a)(2).
69. Common Questions of Law. Representative Plaintiffs and the class as a whole raise one overriding common legal question: whether the Company discriminates against African American employees and applicants for employment in its hiring, compensation, promotion, advancement and career development policies and/or patterns and practices based on their race? Numerous common questions of law are subsumed in this key legal issue including, without limitation:
a. Whether the Company has violated § 1981, as alleged herein? b. Whether the Company has created and/or maintained a hostile environment for African American employees? c. The significance and legal effect of the Company’s failure to use job postings and/or its practice of pre-selecting promotion candidates prior to any formal job announcement or bidding process? d. The significance and legal effect of the Company’s failure to use objective selection criteria and/or to have its selection criteria or job requirements validated regarding their jobrelatedness? e. The significance and legal effect of the Company's reliance on almost exclusively white managers to implement its hiring, promotion, advancement and career development policies and/or patterns and practices in light of their conscious and unconscious consideration of race rather than individual qualifications in their evaluation of African American candidates?
21

Case 8:03-cv-00623-AW Document 46-4 Filed 03/27/2006 Page 23 of 29
f. The significance and legal effect of the statistical evidence showing underrepresentation of African Americans in management, supervisory, and higher-level positions and in promotions to such positions?
g. What is the appropriate declaratory and injunctive relief for the class? and h. Whether the Company is liable for punitive damages? 70. The presence of numerous central questions of law that are common to Representative Plaintiffs and to each class member satisfies Rule 23(a)(2)’s legal commonality requirement. 71. Typicality: Fed. R. Civ. P. 23(a)(3). Representative Plaintiffs’ claims are typical of the claims of the class members as a whole. Representative Plaintiffs possess the same interest and suffer the same injury as the class members. The relief Representative Plaintiffs seek will benefit the class. The claims of Representative Plaintiffs and the class arise from similar legal or remedial theories. This shared interest in remedying a shared injury through similar legal and remedial theories satisfies the typicality requirement of Rule 23(a)(3). 72. Adequacy of Representation: Fed. R. Civ. P. 23(a)(4). Representative Plaintiffs and their counsel will fairly and adequately protect the interests of the class. Representative Plaintiffs’ interests are coextensive with those of the class. Representative Plaintiffs are able and willing to represent the class fairly and vigorously. Representative Plaintiffs’ counsel similarly will represent the class fairly and zealously. Representative Plaintiffs’ counsel are qualified, experienced, and able to conduct the litigation and to meet the time and fiscal demands required to litigate an employment discrimination class action of this size and complexity. The combined interest, experience and resources of Representative Plaintiffs and their counsel will enable them to litigate competently the individual and class claims of race-based employment discrimination at issue here, thereby satisfying the adequacy requirement of Rule 23(a)(4). 73. Fed. R. Civ. P. 23(b)(2): The Company has acted or refused to act in a manner generally applicable to the class. As described above, the Company maintains a system-wide policy and/or pattern
22

Case 8:03-cv-00623-AW Document 46-4 Filed 03/27/2006 Page 24 of 29
or practice of treating African American employees and applicants for employment less favorably than their white counterparts in its hiring, promotion, advancement and career development opportunities. This constitutes intentional class-wide discrimination in violation of § 1981. The Company's nearly allwhite supervisory and management personnel use a subjective and race-biased system for selecting employees for hire, promotion, advancement and career development. This system of subjective decision-making has resulted in the Company’s disparate treatment of its African American employees including Representative Plaintiffs and the class as a whole. The Company’s well-known reputation for discrimination against African Americans also deters African American employees from applying for jobs, seeking promotions, desirable job assignments, management positions, and other terms and conditions of employment. The Company’s discriminatory treatment of African American employees has created a hostile environment and has been ongoing. These continuing policies and/or patterns or practices of disparate treatment are common to and typical of the claims of all Plaintiffs and class members and satisfy Rule 23(b)(2)’s requirement that the Company has acted or refused to act in a manner generally applicable to the class.
74. Fed. R. Civ. P. 23(b)(2): The Appropriateness of Injunctive and Declaratory Relief to the Class. Plaintiffs seek declaratory relief that the Company’s discriminatory employment practices violate § 1981. Plaintiffs also seek injunctive relief designed to remedy the effect of Friedman’s ongoing discriminatory practices, including, but not limited to: a) rightful place relief for the Representative Plaintiffs and other victims of the Company’s policy or practice of race discrimination; b) appropriate affirmative relief requiring Friedman’s to provide a fair and unbiased system for both informing employees about job opportunities and permitting employees to request and obtain such opportunities, and a system to hire, compensate and promote African Americans in a non-discriminatory manner; and c) provisions for monitoring, reporting, and retention of jurisdiction to ensure equal employment opportunity and that the injunctive relief is properly implemented. Such relief by its nature is applicable
23

Case 8:03-cv-00623-AW Document 46-4 Filed 03/27/2006 Page 25 of 29
to the class as a whole and satisfies Rule 23(b)(2)’s requirement that injunctive and declaratory relief be appropriate.
75. Fed. R. Civ. P. 23(b)(3) Requirements. Class certification is also appropriate pursuant to Fed. R. Civ. P. 23(b)(3) in this case because, as set forth in more detail above, common questions predominate over those affecting class members individually, and a class action is superior to other available methods of resolving this controversy. The alternative to class treatment is potentially hundreds of individual suits in an equal number of federal and state administrative and judicial fora. Such a multiplicity of actions would defeat the economies of scale inherent in the class action procedure and result in substantial waste of judicial resources. Thus, from the standpoint of public policy, transactional costs and judicial economy, multiple litigation would be manifestly inferior to a class action, thereby satisfying Fed. R. Civ. P. 23(b)(3).
VI. CLAIMS FOR RELIEF A. Declaratory, Injunctive, and Monetary Relief Against Defendant Friedman’s (42
U.S.C. § 1981) 76. Plaintiffs incorporate Paragraphs 1 through 70. 77. This claim is brought on behalf of all Plaintiffs and members of the class defined in paragraph 64 above. 78. The foregoing conduct of Friedman’s violates the rights of Plaintiffs and members of the class under 42 U.S.C. § 1981. 79. Friedman’s has engaged in the discriminatory conduct as alleged herein with malice, fraud, or oppression, and/or in reckless disregard of the rights of Plaintiffs and class members under § 1981. Plaintiffs and class members are thus entitled to recover punitive damages in an amount according to proof. 80. Plaintiffs request relief on behalf of themselves, individually, and the class, as hereinafter provided.
24

Case 8:03-cv-00623-AW Document 46-4 Filed 03/27/2006 Page 26 of 29
B. Declaratory Relief Against the Insurers (28 U.S.C. § 2201(a)) 81. Plaintiffs incorporate paragraphs 1 through 75. 82. This claim is brought on behalf of plaintiffs for themselves and on behalf of the class of
similarly situated African American employees and applicants for employment of Friedman’s, as defined in paragraph 64 above.
83. Pursuant to their contractual obligations to Friedman’s and the Order of the Bankruptcy Court entered November 7, 2005, the Insurers are liable for, and required to provide Friedman’s coverage on, Friedman’s liability for monetary relief as claimed and prayed for in this action. However, the Insurers have refused, and continue to refuse, to acknowledge or accept their contractual liability, and obligation to provide Friedman’s coverage for its liability, for plaintiffs’ monetary relief claims.
84. There is an actual controversy between plaintiffs and the Insurers, as well as between Friedman’s and the Insurers, with respect to the Insurers’ obligation to assume liability, and indemnify Friedman’s, for plaintiffs’ monetary relief claims. Plaintiffs seek a declaratory judgment with respect to their rights on this matter.
VII. PRAYER FOR RELIEF Wherefore, Representative Plaintiffs, on behalf of themselves and the class members whom they seek to represent, and Plaintiff Mitchell, request the following relief: A. Certification of the case as a class action pursuant to Fed. R. Civ. P. 23(b)(2) and 23(b)(3) on behalf of the proposed plaintiff class, and designation of the Representative Plaintiffs as representatives of the class and their counsel of record as Class Counsel; B. A declaratory judgment that the Insurers are liable on, and required to provide coverage to Friedman’s for, and to pay plaintiffs and the class for, the monetary liability of Friedman’s to plaintiffs and the class, as prayed for below; C. A declaratory judgment that Friedman’s practices complained of herein are unlawful and in violation of the rights of Plaintiffs and class members secured by 42 U.S.C. § 1981;
25

Case 8:03-cv-00623-AW Document 46-4 Filed 03/27/2006 Page 27 of 29
D. An injunction against Friedman’s and its officers, agents, successors, employees, representatives and any and all persons acting in concert with them, from engaging in each of the unlawful practices, policies, customs and usages set forth herein;
E. An order requiring Friedman’s to institute and carry out policies, practices and programs that assure equal employment opportunities for African American applicants and employees and that remedy the effect of Friedman’s past and present unlawful employment practices;
F. An order restoring or placing Plaintiffs and members of the class they seek to represent in those jobs they would now occupy but for the Company’s discriminatory practices, or in lieu of reinstatement or in the event class members cannot be placed immediately in their rightful positions, an order for front pay and benefits;
G. An order directing Friedman’s to adjust the wage rates and benefits for Plaintiffs and the class they seek to represent to the level that they would have attained but for Friedman’s discriminatory practices;
H. An award of back pay, front pay, and damages for lost compensation and job benefits that the individual Plaintiffs and class members would have received but for Friedman’s discriminatory practices, including pre-judgment interest, in an amount to be proved at trial;
I. Compensatory damages for emotional distress, humiliation, embarrassment and anguish, in an amount to be proved at trial, for Plaintiffs and class members;
J. An award of back pay, front pay, and compensatory and punitive damages to Plaintiff Mitchell for the Company’s retaliation against him for exercising his rights under § 1981, in an amount to be proved at trial;
K. An award of exemplary and punitive damages commensurate with the Company’s ability to pay and sufficient to deter future discriminatory conduct, for Plaintiffs and the class, in an amount to be proved at trial;
26

Case 8:03-cv-00623-AW Document 46-4 Filed 03/27/2006 Page 28 of 29

L. Plaintiffs’ reasonable attorneys' fees and costs and expenses of suit, including expert witness fees to the extent allowable by law;
M. Prejudgment and postjudgment interest; N. An order that any and all amounts awarded pursuant to paragraphs H, I, J, K. L, or M of this Prayer for Relief shall be paid by the Insurers or out of the proceeds of insurance policies provided by the Insurers to Friedman’s, and, O. Such other and further relief as the Court may deem just and proper.
VIII. JURY DEMAND Plaintiffs demand trial by jury in this action for all issues so triable under law.

Dated: March __, 2006

Respectfully submitted,
/s/ DANIEL B. EDELMAN (U.S. Dist. Ct. Bar No. 2906) YABLONSKI, BOTH & EDELMAN 1140 Connecticut Avenue, NW, Suite 800 Washington, DC 20036 (202) 833-9060 (202) 463-6688 (facsimile) (Local Counsel)
BARRY GOLDSTEIN MORRIS J. BALLER LAURA L. HO GOLDSTEIN, DEMCHAK, BALLER, BORGEN &
DARDARIAN A Professional Corporation 300 Lakeside Drive, Suite 1000 Oakland, CA 94612 (510) 763-9800 (510) 835-1417 (facsimile)

27

Case 8:03-cv-00623-AW Document 46-4 Filed 03/27/2006 Page 29 of 29
THOMAS A. WARREN LAW OFFICES OF THOMAS A WARREN P.O. Box 1657 Tallahassee, FL 32302 (850) 385-1551 (850) 385-6008 (facsimile) KEENAN NIX NIX & GRADDOCK 124 Church Street Decatur, GA 30030-3325 (404) 377-7600 (404) 377-8700 (facsimile) ATTORNEYS FOR PLAINTIFFS AND THE PUTATIVE CLASS
28

 
 CasCea8s:0e38-:c0v3-0-c0v6-2030-6A2W3-AWDoDcuomcuemnte4n6t -642 FFiilleedd 0063//2287//026006PagPea1goef129of 29

UNITED STATES DISTRICT COURT DISTRICT OF MARYLAND SOUTHERN DIVISION

JOHN O’BANNON, 8830 Walutes Circle, Alexandria, VA 22309, SANDRA F. MOORE, 194 Detour Road, #3, Seabrook, SC 29940, RONALD HAMPTON, 1248 Congaree Road, Hopkins, SC 29061, on behalf of themselves and all others similarly situated; and RONDALL MITCHELL, 11543 Hoofbeat Trail, Lusby, Calvert County, MD 20657, individually,

Case No. AW-03-623
AMENDED CLASS ACTION COMPLAINT WITH JURY DEMAND

Plaintiffs,

v.

FRIEDMAN’S, INC., 4 W. State Street, Savannah, GA 31401, Registered agent for service of process – The Corporation Trust, Inc., 300 E. Lombard St., Baltimore, MD 21202; FEDERAL INSURANCE COMPANY, 15 Mountain View Road, Warren, NJ 07059, Registered agent for service of process – Maryland Insurance Commissioner, 525 St. Paul Place, Baltimore, MD 21202; ST. PAUL MERCURY INSURANCE COMPANY, 385 Washington Street, St. Paul, Minnesota 55102, Registered agent for service of process – Maryland Insurance Commissioner, 525 St. Paul Place, Baltimore, MD 21202,

Defendants.

CasCea8s:0e38-:c0v3-0-c0v6-2030-6A2W3-AWDoDcuomcuemnte4n6t -642 FFiilleedd 0063//2287//026006PagPea2goef229of 29
Plaintiffs John O’Bannon, Sandra F. Moore, and Ronald Hampton (“Representative Plaintiffs”) bring this class action on behalf of themselves and all other similarly situated persons against Friedman’s, Inc. (“Friedman’s” or “the Company”) under federal law prohibiting discrimination in employment on the basis of race. Plaintiff Rondall Mitchell brings a related individual claim of unlawful retaliation under federal law by Friedman’s for his opposition to the Company’s racially discriminatory policies and practices. In addition, Plaintiffs bring this action against Federal Insurance Company and St. Paul Mercury Insurance Company (collectively the “Insurers”) to obtain declaratory judgment that the Insurers are contractually liable for, and obligated to indemnify Friedman’s on, Plaintiffs’ claims for monetary relief on behalf of themselves and a class of similarly situated persons, pursuant to insurance contracts between Friedman’s and the Insurers.
This race discrimination in employment class action is brought by one African American applicant for employment, John O’Bannon, and two African American former employees, Sandra Moore and Ronald Hampton. Rondall Mitchell, who is white, brings an individual claim of retaliation for opposing Friedman’s racially discriminatory policies and practices while he worked as a manager for Friedman’s. Friedman’s has engaged, and continues to engage, in a companywide policy, pattern or practice of race discrimination in hiring, promotion, compensation and other terms, conditions and privileges of employment and has maintained a hostile environment for African American employees in violation of 42 U.S.C. § 1981. This action seeks equitable and injunctive relief, including an end to the discriminatory practices described herein, rightful place relief for all class members, and monetary relief including back pay and front pay; compensatory and punitive damages; and reasonable costs and attorneys’ fees. This action also seeks to establish the Insurers’ liability to pay the judgment for all such monetary relief.
I. JURISDICTION 1. This Court has jurisdiction over this action pursuant to 28 U.S.C. §§1331 and 1343(4), to adjudicate plaintiffs’ claims against Friedman’s pursuant to 42 U.S.C. § 1981 (“§ 1981”).

CasCea8s:0e38-:c0v3-0-c0v6-2030-6A2W3-AWDoDcuomcuemnte4n6t -642 FFiilleedd 0063//2287//026006PagPea3goef329of 29

2. This Court has jurisdiction to adjudicate the claim for declaratory judgment against the Insurers pursuant to 28 U.S.C. §1367(a) and 28 U.S.C. § 2201(a).

II. VENUE AND INTRA-DISTRICT ASSIGNMENT 3. Venue is proper in this Court pursuant to 28 U.S.C. § 1391(b) and the Standing Order of the United States District Court for the District of Maryland concerning the assignment of civil cases to the Southern Division § (B)(1) and (2). Plaintiffs John O’Bannon and Rondall Mitchell resided in Prince George’s and Calvert counties, within the Southern Division, respectively, at the time this action was brought. Many of the discriminatory acts suffered by plaintiffs O’Bannon and Mitchell and class members also have occurred at Friedman’s stores in the Southern Division of the District of Maryland.

A. Plaintiffs

III. PARTIES

4. Plaintiff John O’Bannon (“O’Bannon”) is an African American citizen who resided in

Prince George’s County, Maryland. In May 2000, O’Bannon was recruited by an African American

manager for a retail sales or entry level management job with Friedman’s in Prince George’s County,

Maryland, but was rejected by Friedman’s higher management. On January 19, 2001, O’Bannon filed a

Charge of Discrimination with the Equal Employment Opportunity Commission (“EEOC”) alleging that

Friedman’s discriminated against him and a class of similarly situated African American employees and

applicants. A copy of O’Bannon’s EEOC Charge is attached to this Complaint as Exhibit 1A. On

January 28, 2003, the EEOC found reasonable cause to believe that Friedman’s discriminated against

O’Bannon and African Americans as a class. A copy of the EEOC’s Letter of Determination is attached

to this Amended Complaint as Exhibit 1B.

5. Plaintiff Sandra F. Moore (“Moore”) is an African American citizen who resides in

Beaufort County, South Carolina. Moore worked for Friedman’s from January 1995 until July 1997 and

again from March 1998 until her termination on or about July 29, 2001. During her time at Friedman’s,

2

CasCea8s:0e38-:c0v3-0-c0v6-2030-6A2W3-AWDoDcuomcuemnte4n6t -642 FFiilleedd 0063//2287//026006PagPea4goef429of 29
Moore was repeatedly turned down for promotional opportunities, was not allowed to hire African American sales staff if it would affect the racial “mix” in her store, and was terminated due to her repeated interest in promotion. A copy of Moore’s EEOC Charge is attached to this Complaint as Exhibit 2A. On March 13, 2003, the EEOC found reasonable cause to believe that Friedman’s discriminated against Moore and African Americans as a class. A copy of the EEOC’s Letter of Determination is attached to this Amended Complaint as Exhibit 2B.
6. Plaintiff Ronald Hampton (“Hampton”) is an African American citizen who resides in Richland County, South Carolina. Hampton worked for Friedman’s from June 1995 until August 2001 as a Store Partner. During his tenure, Friedman’s upper management denied Hampton terms, conditions, and advantages of employment equal to those afforded to his white counterparts, and refused to allow Hampton to hire African Americans if it would affect the racial “mix” in his store. He was terminated for discriminatory reasons. A copy of Hampton’s EEOC Charge is attached to this Complaint as Exhibit 3A. On March 13, 2003, the EEOC found reasonable cause to believe that Friedman’s discriminated against Hampton and African Americans as a class. A copy of the EEOC’s Letter of Determination is attached to this Amended Complaint as Exhibit 3B.
7. Plaintiff Rondall M. Mitchell (“Mitchell”) is a white citizen who resides in Calvert County, Maryland. He worked for Friedman’s from late 1995 to 1996 and again from September 1998 until November 2000. He worked for Friedman’s as a Senior Partner in charge of twelve retail stores in the Maryland area from March 1999 until he was demoted on or about March 16, 2000, and then was constructively discharged in or around November 2000 in retaliation for opposing Friedman’s racially discriminatory policies and practices. On January 19, 2001, Mitchell filed a Charge of Discrimination with the EEOC alleging that Friedman’s discriminated and retaliated against him and a class of similarly situated persons. A copy of Mitchell’s Charge of Discrimination is attached as Exhibit 4A to this Complaint. On February 10, 2003, the EEOC issued its Second Amended Determination, finding reasonable cause to believe that Friedman’s has discriminated against African Americans as a class and
3

CasCea8s:0e38-:c0v3-0-c0v6-2030-6A2W3-AWDoDcuomcuemnte4n6t -642 FFiilleedd 0063//2287//026006PagPea5goef529of 29
retaliated against Mitchell for opposing those discriminatory policies. A copy of the EEOC’s Letter of Determination is attached as Exhibit 4B to this Complaint. B. Defendants
8. Defendant Friedman’s is a Delaware Corporation, headquartered in Savannah, Georgia. In 2003, Friedman’s was the third largest specialty retailer of fine jewelry in the United States, and had approximately 650 retail stores in twenty-two states, mostly in the Southeast, Midwest and Mid-Atlantic regions, including approximately seventeen stores in Maryland. In 2002, Friedman’s had net sales of $436.1 million, and net income of $23.2 million. Friedman’s has grown consistently over the last decade. It increased its store count from fifty-five stores in fiscal 1992 to 662 stores in 2002 and became the largest specialty jewelry retailer in the twenty-two states in which it operates.
9. Defendant Federal Insurance Company (“Federal”) is an insurance company organized under the laws of the State of Indiana and doing business nationally, including in the State of Maryland.
10. Federal provides and sells, among other insurance products, Employment Practices Liability Insurance (“EPLI”) to insure employers, such as Friedman’s, against liabilities based on claims of employment discrimination by employees or applicants for employment, like plaintiffs. Federal provided and sold such insurance to Friedman’s for portions of the period covered by Plaintiffs’ claims against Friedman’s.
11. Defendant St. Paul Mercury Insurance Company (“St. Paul”) is an insurance company organized under the laws of the State of Minnesota and doing business nationally, including in the State of Maryland.
12. St. Paul provides and sells, among other insurance products, excess liability policies over EPLI to insure employers, such as Friedman’s, against liability based on claims of employment discrimination by employees or applicants for employment, like plaintiffs, in excess of the policy limits of such EPLI policies. Federal provided and sold such insurance to Friedman’s for portions of the period covered by Plaintiffs’ claims against Friedman’s.
4

CasCea8s:0e38-:c0v3-0-c0v6-2030-6A2W3-AWDoDcuomcuemnte4n6t -642 FFiilleedd 0063//2287//026006PagPea6goef629of 29
13. Defendant Friedman’s entered into a series of EPLI and excess liability insurance policies with Federal and St. Paul Mercury which contractually obligate the Insurers to defend and insure Friedman’s against this action by plaintiffs and any judgment or liability resulting therefrom.
IV. STATEMENT OF FACTS A. Friedman’s Practices of Racial Discrimination Against African Americans
as a Class 14. Each of Friedman’s stores operates under the direction of a Store Partner. Each Store Partner is assisted by an assistant manager and two to five sales associates and in some stores a collector. At the time of the original Complaint in this action, 61 Senior Partners, each responsible for approximately twelve stores, oversaw the operations of the stores and evaluate the performance of the Store Partner. Previously, within the liability period, Friedman’s employed District Partners who supervised Store Partners and were also responsible for approximately four stores including their own. Senior Partners report, and District Partners reported, to Regional Vice Presidents, 12 in number at the time of the original Complaint in this action, each responsible for approximately forty to sixty stores. Regional Vice Presidents reported at the same time to three Division Vice Presidents, each of whom was responsible for approximately 200 to 225 stores. Due to reductions in the number of stores and the scope of Friedman’s operations after the filing of this action, the numbers of stores, Senior Partners, District Partners, and/or Vice Presidents may have decreased. The Division Vice Presidents are based in the Company’s home office in Savannah, Georgia and report to the Senior Vice President of Store Operations. Senior Partners, Regional Vice Presidents and Division Vice Presidents interact on a daily basis with senior management and review individual store performance and operations. 15. Friedman’s racially discriminatory policies and patterns or practices emanate from the upper echelons of Friedman’s management. Friedman’s management employed an explicit quota policy limiting the number of African Americans hired in the sales associate and entry-level management positions. Hiring at the store level below Store Partner must be approved by Senior Partners and often by Regional Vice Presidents as well. Senior Partners and Regional Vice Presidents routinely direct
5

CasCea8s:0e38-:c0v3-0-c0v6-2030-6A2W3-AWDoDcuomcuemnte4n6t -642 FFiilleedd 0063//2287//026006PagPea7goef729of 29
Store Partners to make sure that there are not too many African Americans working at any one store. Given the close working relationship between Senior Partners, Regional Vice Presidents, Division Vice Presidents and the most senior managers who interact on a daily basis, the racially discriminatory directives given to Store Managers are, on information and belief, known to and ratified by Friedman’s senior management.
16. Friedman’s discriminatory policy has been graphically articulated by Jack Steele, former Division President for Friedman’s Mid-Atlantic Division. For instance, on a visit to the Bowie, Maryland store, Steele told Mitchell the store was a disgrace because it was staffed by three black women. Steele also told Mitchell that a banner which hung over the entrance “looks like it was hung by a goddamned nigger.” Plaintiff Mitchell also recorded some of Steele’s crude and racially biased language on an audiotape, during the regular course of his job at Friedman’s and with Steele’s knowledge. Because Steele knew he was being taped, he was much more temperate in expressing his racial attitudes than he typically was “off-the-record.” Nonetheless, Steele stated on tape:
Largo [Maryland store] is a piece of shit. We got to get a staff in there and get rid of all those, get rid of half the black people in there and just transfer their ass. It’s not that I’m mad about, not the black people. … It is that the standard set there it’s just like hiring 18 year olds. I don’t want the god damn 18 year olds hired and you go turn right around and hire 18 years olds as if I’ll slide this one by on him. It ain’t gonna slide by. I don’t know what the fuck has happened.
* * * *
We don’t have any bench. We got this yoyo guy that can’t even speak fucking English in Owings Mill [Maryland store]. He can’t even go to lunch with all of you. Does he have the ability to do it? I don’t know if he has the ability. Does he have the talent to do it? I don’t know. What are we going to do with him? We got this, this Shondra or whatever her name is, this little pregnant black chick. She can’t even smile and hold a fucking conversation. We hired her from the Pizza Hut. We can do better than that Ron. You’ve got to raise your standards. And if that’s the only kind of people you can communicate with then I got a hell of a problem. Now I don’t believe that’s the only kind of people you can communicate with. But why is it it’s the only thing we attract? Look at that girl, this, this Valerie or Val or whatever she was. Squirrelly hair, whatever you call that mess, real professional looking in a jewelry store. And then the other black girl comes in and she, she looks like Miss Piggy. Shit!
6

CasCea8s:0e38-:c0v3-0-c0v6-2030-6A2W3-AWDoDcuomcuemnte4n6t -642 FFiilleedd 0063//2287//026006PagPea8goef829of 29
Steele did not limit his racist instructions to Mitchell, but told various other Store Partners not to hire too many African Americans as well.
17. Friedman’s racially discriminatory policies were also articulated by other management officials of Friedman’s. On information and belief, a current Division President, Don Mertz, referred to black prospective employees as “chocolate chips.” Mertz told Mitchell that blacks were to be like “chocolate chips sprinkled throughout the district.” Another Division President, Tim Murray, also ordered a Store Partner to hire more whites and fewer blacks in his stores, and told then-Company President Bob Morris that Friedman’s had hired “too many blacks” for the Maryland stores. District and Senior Partners in (at least) the States of Florida, Maryland and Virginia also instructed their Store Partners to limit the number of blacks in their stores.
18. Friedman’s explicit and pervasive policy and/or pattern or practice of race discrimination in employment has existed continually. The Company has created and maintained a system-wide policy and/or pattern or practice of race-based disparate treatment that limits the employment opportunities of African American employees. In addition, the Company has created and maintained a system-wide policy and/or pattern or practice of wholly subjective decision-making that adversely impacts the employment opportunities of African American employees. The Company’s racially biased policies and practices have also created a hostile environment for its African American employees.
19. The Company has pursued a policy and/or pattern or practice of race discrimination on a continuing basis, which has had the intent and effect of denying African Americans equal job opportunities and conditions of employment. Such discriminatory policies and/or patterns or practices include, without limitation:
a. Explicitly limiting the number of African Americans hired; b. Relying upon subjective, discriminatory criteria utilized by a nearly all white managerial workforce in making compensation, hiring and promotional decisions;
7

CasCea8s:0e38-:c0v3-0-c0v6-2030-6A2W3-AWDoDcuomcuemnte4n6t -642 FFiilleedd 0063//2287//026006PagPea9goef929of 29
c. Failing and refusing to implement and follow a uniform posting procedure to ensure that all employees have equal notice of management and more desirable job openings and promotions, which adversely affects the ability of African American employees to advance. For example, the Company routinely fails to post available management positions or otherwise publicize the availability of promotional opportunities. This prevents African American employees at Friedman’s from learning when a promotion or more desirable position becomes available;
d. Failing and refusing to establish a uniform and unbiased process by which all employees can apply and compete equally for promotions and management positions. For example, the Company routinely fills open positions from its pool of current employees, typically using a “tap on the shoulder” system under which the predominately white management workforce makes subjective and race-biased pre-selection decisions regarding promotions and assignments. As a result, many promotions, vacancies or advancement opportunities are unknown to African Americans and are filled by whites;
e. Discouraging and deterring African American employees from applying for promotions and management positions for which they are qualified;
f. Paying African American employees less than similarly-situated white employees. For example, the amount of compensation an employee receives is not determined by any objective criteria or standards, but rather is determined by subjective, arbitrary and capricious decisionmaking by Friedman’s nearly all-white management workforce. This subjective system results in African American employees receiving lower compensation than similarly-situated white employees;
g. Maintaining and fostering a reputation for discriminatory conduct that deters African American employees from pursuing hiring and promotional opportunities with Friedman’s;
h. Failing and refusing to take reasonable and adequate steps to eliminate the continuing effects of Friedman’s past discriminatory policy and/or patterns or practices;
8

CasCea8s:0e38-:c0v3-0-c0v6-2030-6A2W3-AWDoDcuomcuemnte4n6t -642 FFiilleedd 0063//2287//026006PagPea1g0eo1f029of 29

i. Denying African American employees other terms and conditions of employment

on the same basis applied to white employees.

j. Maintaining a work environment that is hostile to African American employees.

20. As a result of Friedman’s continued policies and pattern or practices of intentional

discrimination, African Americans are denied hiring, promotions and compensation on terms equal to

those afforded to similarly situated white applicants and employees.

21. Numerous Friedman’s employees and applicants, in addition to the plaintiffs herein, have

also filed EEOC Charges alleging that Friedman’s discriminated against them and similarly situated

African Americans as a class, on the basis of their race. Among these Charging Parties are the

following, listed with the dates of their Charges and the locations in which they alleged Friedman’s

discriminated against them on the basis of race.

a. Willie Johnson

March 15, 2003

Georgia

b. Kadisha Khadjif

April 17, 2003

North Carolina

c. Jacqueline Murray

May 28, 2003

Louisiana

d. Maketha Radden

April 17, 2003

South Carolina

In the case of each of the above-listed Charges, the EEOC, after investigation, determined there was

reasonable cause to find discrimination against the Charging Parties listed above and a class of similarly

situated African Americans. These cause determinations were issued by the EEOC on July 3, 2003

(Johnson Charge), July 3, 2003 (Khadjif Charge), February 11, 2004, (Murray Charge), and December

2, 2003 (Radden Charge).

B. Friedman’s Acts Of Discrimination Against The Individual Plaintiffs

John O’Bannon 22. Friedman’s denied Plaintiff John O’Bannon employment because of his race. In about
May 2000, O’Bannon was recruited for a part-time retail sales position at Friedman’s by an African American Friedman’s store manager, Constance Givens-Jones, whom he met when he made a sales

9

CasCea8s:0e38-:c0v3-0-c0v6-2030-6A2W3-AWDoDcuomcuemnte4n6t -642 FFiilleedd 0063//2287//026006PagPea1g1eo1f129of 29
presentation to her. Givens-Jones interviewed O’Bannon and offered him a part-time sales position in her store making $7.50 an hour. She advised O’Bannon that his employment was subject to the approval of her District Partner, Don Mertz, and she would arrange an interview for him with Mertz.
23. Mertz interviewed O’Bannon on or around June 9, 2000. During the interview, Mertz reviewed O’Bannon’s educational background, professional experiences and personal interests. Mertz questioned O’Bannon at length about his career aspirations and appeared to be particularly interested in O’Bannon’s previous sales experience. At the conclusion of the interview, Mertz told O’Bannon he was going to place him in Friedman’s Manassas, Virginia retail store as a management trainee with a base pay of $10 an hour, plus incentives. Mertz told O’Bannon he would schedule a time for O’Bannon to meet the Manassas store manager before his official start date. Mertz also informed O’Bannon that he would have to run the employment offer by his supervisor, Jack Steele.
24. The following week, O’Bannon called Mertz regarding the employment offer. Mertz was vague, evasive and non-committal about hiring O’Bannon. Mertz told O’Bannon he had not spoken with Steele yet. O’Bannon did not hear from Mertz again after several more days, so O’Bannon tried calling Mertz on several occasions, but each time was told that Mertz was not available. Mertz never responded to the phone messages O’Bannon left him.
25. Subsequently, O’Bannon called Givens-Jones who indicated she was shocked to learn Friedman’s had not officially hired O’Bannon. Givens-Jones told O’Bannon that Mertz had told her that he was impressed with O’Bannon and was going to assign him to the Manassas store.
26. On information and belief, Friedman’s hired less or equally qualified white applicants for the retail sales and entry level management positions after O’Bannon interviewed with and was told by Givens-Jones and Mertz that he would be offered such positions.
Sandra F. Moore 27. Plaintiff Moore was hired as temporary, part-time sales help at Friedman’s during the Christmas season of 1993 in Hilton Head, South Carolina. In January 1995, Moore began working at
10

CasCea8s:0e38-:c0v3-0-c0v6-2030-6A2W3-AWDoDcuomcuemnte4n6t -642 FFiilleedd 0063//2287//026006PagPea1g2eo1f229of 29
Friedman’s full time. Moore voluntarily left Friedman’s in July 1997. In March 1998, the district manager offered Moore a raise if she would return to Friedman’s, which she did. The last position Moore had at Friedman’s was Store Partner. Moore’s employment at Friedman’s ended on or about July 29, 2001, when her employment was terminated due to her race.
28. As a Friedman’s Store Partner, Moore was required to discriminate against African American job applicants. Moore had to tell her Senior Partners including Dennis Slaughter and Stephen Motes (both of whom are white), the race of job applicants so they could decide, based on the applicants’ race, if Moore could hire them. Moore was not allowed to hire an African American if it would negatively affect the racial “mix” in the store. The fact that the applicants were approximately 85% black made it difficult to keep the racial mix as Friedman’s wanted it.
29. Moore was also discriminatorily denied promotion. During her employment at Friedman’s, Moore expressed her interest in promotional opportunities on numerous occasions. Despite her repeated expressions of interest, Friedman’s frequently promoted or hired whites into positions for which Moore was equally or more qualified.
30. For example, when she was an Assistant Manager, Ms. Moore was passed over for Store Partner positions that were given to white individuals instead. Yet, Ms. Moore would have to train the white Store Partners who were hired instead of her.
31. Beginning in approximately October 2000, Moore expressed her interest in the position of District Partner, the next step up from Store Partner, to her supervisors. She was continually passed over for promotion to District Partner and white individuals were promoted into the District Partner positions.
32. Prior to seeking a promotion above the store level, Ms. Moore had performed well as a Store Partner for Friedman’s and her good performance was recognized by Friedman’s. However, after she began seeking a promotion above the store level, Ms. Moore began receiving extra critical scrutiny from her supervisors. That scrutiny was not based on her performance but was in response to her
11

CasCea8s:0e38-:c0v3-0-c0v6-2030-6A2W3-AWDoDcuomcuemnte4n6t -642 FFiilleedd 0063//2287//026006PagPea1g3eo1f329of 29
persistent attempts to obtain what is, at Friedman’s, a position from which African Americans are excluded. In addition, Friedman’s manipulated the store’s numbers so that Ms. Moore’s performance would appear to be inadequate. Friedman’s asserted that Ms. Moore was terminated for failure to meet the sales quota it set, but that reason was a pretext for discrimination. Moreover, unlike other white Store Partners who did not meet sales quotas, Ms. Moore was not offered a demotion and retraining.
Ronald Hampton 33. Plaintiff Hampton was hired as a Store Partner at Friedman’s in Columbia, South Carolina in June 1995. At that time, Hampton had twenty-five years experience working in the retail jewelry business. In August 2001, Hampton was discriminatorily discharged by Friedman’s. 34. Hampton began working at Friedman’s because, as he informed Friedman’s Regional Vice President Lisa Logan when she interviewed him, he was interested in promotional opportunities. 35. However, not long after beginning to work at Friedman’s, Hampton realized that the individuals in the management positions above the store level were virtually all white and concluded that pursuing his goals of promotion would be fruitless and possibly detrimental to his career. 36. Friedman’s subjected Hampton to terms and conditions of employment that were different from and harsher than those it offered to similarly situated white employees. Unlike white Store Partners, decisions that Hampton made in running the store were constantly scrutinized and questioned by District and Regional managers. For example, throughout his tenure at Friedman’s, Hampton’s District Manager regularly undermined Hampton’s proper exercise of his authority to discipline store employees. 37. As a Store Partner, Hampton was prevented from giving equal consideration to African American job applicants. Hampton was responsible for conducting interviews of job applicants, but was required to relate the race of job applicants to District and Regional managers (all of whom were white) before he could obtain their final approval to hire applicants and set their pay rate.
12

CasCea8s:0e38-:c0v3-0-c0v6-2030-6A2W3-AWDoDcuomcuemnte4n6t -642 FFiilleedd 0063//2287//026006PagPea1g4eo1f429of 29
38. After being asked “are they white or black?” by District Manager Billie Welch several times, Hampton asked her what difference it made. Welch responded that Hampton was to “keep the mix right” in his store, which Hampton understood to mean having as few African Americans in the store as possible. Hampton was frequently told to “keep the mix right” over the period of his employment by higher level white managers.
39. Friedman’s constantly undermined Hampton’s authority as Store Partner and harassed him in the performance of his duties. On information and belief, higher level white managers told well qualified applicants they would not want to work for him and would not allow him to hire qualified applicants who were later placed in other Friedman’s stores in his district. Because Friedman’s prevented Hampton from hiring adequate qualified staff, it was harder for him to meet the store’s sales and collections quotas.
40. Hampton was terminated because of his race, rather than the pretextual reason given to him – that he did not make the sales quota for the store.
Rondall M. Mitchell 41. Plaintiff Mitchell worked for Friedman’s from late 1995 until 1996 and again from September 1998 until November 2000. Mitchell returned to Friedman’s employ as a Store Partner in part because he was promised that he would be promoted quickly above the level of store manager. In January 1999, Friedman’s promoted Mitchell to the position of Senior Partner in charge of ten Friedman’s stores in the Richmond, Virginia area. Approximately one month later, Friedman’s requested that Mitchell transfer to Maryland as Senior Partner over twelve stores. Mitchell transferred to Maryland on March 1, 1999. 42. As Senior Partner, Mitchell was subjected to Friedman’s explicit policy of limiting the number of African American employees hired in its stores. During the first month of Mitchell’s return to Friedman’s in February 1999, when Mitchell spent extensive time with Steele traveling throughout the Richmond area meeting store managers, Steele, who is white, spoke often of his disapproval of
13

CasCea8s:0e38-:c0v3-0-c0v6-2030-6A2W3-AWDoDcuomcuemnte4n6t -642 FFiilleedd 0063//2287//026006PagPea1g5eo1f529of 29
blacks as store managers and stated that Friedman’s had a strict policy of limited the number of black employees in any one store.
43. For example, Steele told Mitchell that the “problem” with hiring black managers is “the first thing they want to do is hire a bunch more like ‘em. Then you’ve got a whole goddamn black store.” Steele singled out Friedman’s Willow Lawn, Virginia retail store as an example of “what you get when you fill a whole goddamn store with blacks.” He called the Willow Lawn store a “fucking disaster,” and ordered Mitchell to “find some white people and clean that rat’s nest out.” Steele also used the “n” word when referring to African American employees and often referred to them as “goddamnblacks,” as one word.
44. Subsequently, Steele refused to allow Mitchell to hire several qualified African Americans for Friedman’s Glen Allen store in Richmond, Virginia. For example, when Mitchell requested to hire one particularly well-qualified black applicant for a sales position in the Glen Allen store, Steele refused saying “you already have a black in that store, Ron. We’re not gonna build another fuckin’ Willow Lawn.” On another occasion after Mitchell transferred to Maryland, Mitchell discovered a manager of one of Friedman’s Maryland stores had been entering fraudulent sales to reach his sales quota. When Mitchell brought this to Steele’s attention, Steele commented that “theft is always a problem when you have a bunch of ‘goddamnblacks’ in your stores.”
45. As he had in Virginia, Steele also refused to approve Mitchell’s hiring of a number of well qualified black applicants for positions in Friedman’s Maryland stores. In fact, by the end of 1999, Steele was rebuking Mitchell regularly for his failure to recruit more white and fewer black employees.
46. Steele’s refusal to allow Mitchell to hire the best qualified candidates regardless of race created difficulties for Mitchell with the Store Partners he managed.
47. In July 1999, Mitchell hired a well qualified African American woman, Constance Givens-Jones, to manage Friedman’s Largo, Maryland store. Although Mitchell knew Steele would not
14

CasCea8s:0e38-:c0v3-0-c0v6-2030-6A2W3-AWDoDcuomcuemnte4n6t -642 FFiilleedd 0063//2287//026006PagPea1g6eo1f629of 29
approve of him hiring Ms. Givens-Jones because of her race, she was a good fit for the store and there had been no white applicants for the position.
48. Over the next several months, Givens-Jones sent Mitchell numerous well qualified black candidates to fill several vacancies in her understaffed store. Under the compulsion of Steele’s discriminatory orders, Mitchell either had to reject those applicants or had to place them in other stores in which there were no black employees. As a result, Givens-Jones’ store was consistently understaffed and she had to work unreasonably long hours. When Mitchell attempted to place qualified black employees into the understaffed store, Steele discovered the new hires and accused Mitchell of “building” an all black store.
49. In 1999, Mitchell and Steele met in Mitchell’s office to discuss staffing changes Steele wanted to implement in Friedman’s Maryland stores. Mitchell recorded the conversation with a microcassette tape recorder which was in Steele’s plain view. During this meeting, Steele issued the directive regarding the Largo store, which was staffed and managed exclusively by blacks and was consistently one of the top producing Friedman’s stores in Maryland, that is quoted in paragraph 11 above.
50. Steele also frequently told Mitchell to fire black employees. However, Steele never articulated a race-neutral justification for the firings. Instead, on information and belief, his directives were based on a stereotype held by Steele that all blacks are lazy or thieves who attract bad credit risks and scare off white customers.
51. During his employment at Friedman’s, Mitchell complained about Steele’s racist statements to Everett Black, a current Division Vice President, Christine Cregar, another Senior Partner, and to Steele himself. Mitchell also played the above tape recording for Stephen Hunt, Friedman’s Credit Manager and Jim Wasley, Division Finance Officer.
52. In February 2000, Mitchell recommended to Steele and Don Mertz, Division Vice President, that they interview an experienced and well-qualified African American named Mohammed Abdur-Rahman, whom he recruited for a manager position in Friedman’s White Marsh, Maryland store.
15

CasCea8s:0e38-:c0v3-0-c0v6-2030-6A2W3-AWDoDcuomcuemnte4n6t -642 FFiilleedd 0063//2287//026006PagPea1g7eo1f729of 29
Steele and Mertz never interviewed Mr. Abdur-Rahman and instead placed a less experienced and less qualified white female in the position.
53. On March 16, 2000, Steele and Mertz informed Mitchell his performance was unacceptable because he had failed to recruit the “right kind of people” and he could either quit immediately or accept a two level demotion to Store Partner, with a $10,000 pay cut. Mitchell accepted the demotion.
54. Mitchell subsequently informed Friedman’s through counsel that he believed his demotion was in retaliation for his refusal to implement Friedman’s racially discriminatory hiring and promotion practices. Thereafter, Friedman’s managers continued to take adverse employment actions against him and otherwise made the terms and conditions of his employment intolerable, including actions deliberately designed to cause Mitchell further financial hardship. Because of Friedman’s continuing unlawful harassment and retaliation against him, Mitchell was forced to leave his employment with Friedman’s in November 2000. C. Friedman’s Bankruptcy and Discharge, and the Preservation of Plaintiffs’ Claims Made in
the Bankruptcy Proceedings 55. On January 14, 2004, after this action was originally filed, Friedman’s filed a Petition for Relief under Chapter 11 of the Bankruptcy Code, in the United States Bankruptcy Court for the Southern District of Georgia (the “Bankruptcy Court”). During the pendency of its bankruptcy proceedings, Friedman’s was operated by its own management as a Debtor in possession, under supervision of the Bankruptcy Court, pursuant to the Bankruptcy Code. After extensive proceedings before the Bankruptcy Court, Friedman’s debts, with pertinent exceptions listed below, were discharged and Friedman’s regained control of its own operations pursuant to a Plan of Reorganization confirmed by the Court on December 9, 2005. 56. Plaintiffs, on behalf of themselves and the putative class they represent herein, filed claims against Friedman’s in the Bankruptcy Court. In addition, the four other Charging Parties named in paragraph 21 above and Lillian Bush, a putative class member, also filed such claims. The relief that
16

CasCea8s:0e38-:c0v3-0-c0v6-2030-6A2W3-AWDoDcuomcuemnte4n6t -642 FFiilleedd 0063//2287//026006PagPea1g8eo1f829of 29
Plaintiffs sought in their bankruptcy claims was the same as the relief they sought in their original Complaint in this action, namely, comprehensive declaratory, injunctive, and equitable monetary relief, compensatory and punitive damages, costs and attorneys’ fees.
57. On November 7, 2005, prior to Friedman’s discharge from the Bankruptcy Court proceedings, the Bankruptcy Court issued an Order granting plaintiffs relief from the automatic stay of litigation applicable in bankruptcy proceedings. That Order specified that:
Relief from the automatic stay imposed by Bankruptcy Code Section 362 is hereby GRANTED to allow the Movants [plaintiffs here] to continue their Proceedings [this action] against the Debtors [Friedman’s] … subject to the following conditions…: Among the pertinent conditions were the following:
a. Relief from the stay shall be limited, as to the Debtors, to allowing the Movants … to liquidate their monetary claims and recover from any applicable insurance coverage, and … the Movants … may seek to enforce any monetary award obtained against any asset of the Debtors, or property of the Debtors’ estates, other than their applicable insurance coverage; provided however, the Movants shall not be precluded from seeking injunctive relief against the Debtors for conduct occurring on or after the effective date of any plan of reorganization confirmed by the Court. …
c. Upon the entry of this Order, the Movants’ Proofs of Claim against the Debtors shall be deemed WITHDRAWN.
58. As a result of the Bankruptcy Court’s Order of November 7, 2005, plaintiffs are authorized, notwithstanding Friedman’s bankruptcy proceedings, the discharge of its debts, and the confirmation of a reorganization plan by the Bankruptcy Court, to (1) seek injunctive relief against Friedman’s for ongoing discriminatory employment practices, (2) seek monetary relief against Friedman’s which would be liquidated and paid from any applicable insurance coverage, and (3) assert additional claims for monetary and other relief based on claims of discrimination occurring after the bankruptcy proceedings.
59. The insurance coverage provided by the Insurers to Friedman’s under the insurance contracts alleged in paragraph 13 above is properly available to, and within the terms of, the Bankruptcy
17

CasCea8s:0e38-:c0v3-0-c0v6-2030-6A2W3-AWDoDcuomcuemnte4n6t -642 FFiilleedd 0063//2287//026006PagPea1g9eo1f929of 29
Court’s Order permitting liquidation of and recovery on plaintiffs’ individual and class claims for monetary relief in this action. Therefore, the Insurers are real parties in interest to this action, they have a concrete financial stake in its outcome, and their presence as parties defendant is necessary to assure that plaintiffs may obtain monetary relief for discrimination against themselves and the class alleged herein, as provided by law. D. The Insurers’ Refusal to Accept their Obligations for Friedman’s Monetary Liability in
this Action 60. Neither one of the Insurers has been willing to acknowledge or accept its full responsibility and liability, under its insurance contracts with Friedman’s, for the liability and potential judgment for monetary relief that Friedman’s has incurred to plaintiffs and the class, and that may result in a judgment in this action. 61. Federal has acknowledged and accepted its responsibility and liability only on one of several EPLI contracts it entered into with Friedman’s, covering not only this action but a number of other claims that have been made against Friedman’s. The amount of coverage available under that single contract is insufficient to pay Friedman’s liability, or the monetary relief to which plaintiffs and the class are entitled, in this action. Federal has denied responsibility and liability under other applicable EPLI contracts which would, and are properly required to, provide additional monetary coverage on plaintiffs’ claims and Friedman’s liability for those claims. 62. St. Paul has refused to acknowledge or accept any responsibility or liability on either of the two excess insurance policies it provided over Friedman’s EPLI coverage with Federal. The amount of coverage available under all of the applicable Federal policies would be insufficient to provide full coverage to Friedman’s for plaintiffs’ individual and class claims, and to provide the full monetary relief to which plaintiffs and the class are entitled. Therefore, the St. Paul excess policies provide necessary monetary coverage on plaintiffs’ claims and Friedman’s liability for those claims, which St. Paul refuses to make available in this action.
18

CasCea8s:0e38-:c0v3-0-c0v6-2030-6A2W3-AWDoDcuomcuemnte4n6t -642 FFiilleedd 0063//2287//026006PagPea2g0eo2f029of 29
V. CLASS ACTION ALLEGATIONS 63. Representative Plaintiffs seek class certification of this action under Fed. R. Civ. P. 23(b)(2) and/or 23(b)(3). The class Representative Plaintiffs seek to certify satisfies the numerosity, commonality, typicality and adequacy of representation prerequisites for certification under Fed. R. Civ. P. 23(a). Friedman’s has both acted and refused to act on grounds generally applicable to the class, making appropriate final injunctive relief for Representative Plaintiffs and the class as a whole, thus satisfying the requirements of Fed. R. Civ. P. 23(b)(2). Common issues of law and fact predominate over individual issues, making a class action procedure superior to the litigation of hundreds and possibly thousands of individual claims throughout the federal and state judiciary, thereby satisfying the requirements of Fed. R. Civ. P. 23(b)(3). 64. Class Definition. The class consists of past, present, and future African American employees of Friedman’s and applicants for employment at Friedman’s, who are, have been, or may in the future be adversely affected by the continuing policies and/or patterns and practices of race discrimination that have denied them equal hiring, promotion, advancement, career opportunities, and other terms and conditions of employment. Representative Plaintiffs are members of the class they seek to represent. 65. Numerosity: Fed. R. Civ. P. 23(a)(1). The members of the class are so numerous and geographically dispersed that joinder of all members is impractical. While the precise number of class members is indeterminate at the present time, on information and belief, there are hundreds of current African American employees of Friedman’s. There are hundreds or thousands more past and future Friedman’s employees and applicants for employment. These present, past and future African American employees and applicants are dispersed throughout at least twenty two states. Joinder of this many geographically dispersed class members is impracticable, thus satisfying the numerosity requirement of Fed. R. Civ. P. 23(a)(1). 66. Commonality: Fed. R. Civ. P. 23(a)(2). This suit poses numerous questions of law and fact that are common to and affect the rights of all members of the class. The answers to these questions
19

CasCea8s:0e38-:c0v3-0-c0v6-2030-6A2W3-AWDoDcuomcuemnte4n6t -642 FFiilleedd 0063//2287//026006PagPea2g1eo2f129of 29
will be determined on the basis of common evidence that is applicable to each class member. Specific examples of factual and legal commonality include, but are not limited to:
67. Common Questions of Fact. a. Whether the Company discriminatorily refuses to hire and promote qualified
African American employees for retail sales and management positions? b. Whether the Company has attempted to maintain, and has maintained, a “racial
mix” among its store employees by limiting the number of African Americans hired in the stores and by discharging African American employees at stores perceived to have “too many” African American employees?
c. Whether the Company has intentionally discriminated against African Americans in selecting individuals for management positions, resulting in an almost exclusively white management workforce?
d. Whether the Company has totally excluded African American employees from its high level managerial positions?
e. Whether the Company’s employment selection policies are vague and subjective with few, if any objective criteria?
f. Whether the employment selection policies used by the Company’s almost exclusively white managers are issued by corporate headquarters and/or applied company-wide?
g. Whether company-wide statistics evidence the under-representation of African Americans in selection of employees for the Company’s hiring and promotional opportunities?
h. Whether Plaintiffs’ statistical and anecdotal evidence demonstrate that African Americans are denied compensation and other terms and conditions of work on the same basis as are the Company’s white employees?
i. Whether the Company has a policy and/or practice of not using job postings and/or of preselecting candidates prior to any formal job announcement?
20

CasCea8s:0e38-:c0v3-0-c0v6-2030-6A2W3-AWDoDcuomcuemnte4n6t -642 FFiilleedd 0063//2287//026006PagPea2g2eo2f229of 29
j. Whether African American employees are excluded from and/or overlooked in the preselection process used to make promotion and advancement decisions?
k. Whether the Company has created a racially hostile work environment for African American employees?
68. These numerous questions of fact common to Representative Plaintiffs and the class satisfy the factual commonality requirement of Rule 23(a)(2).
69. Common Questions of Law. Representative Plaintiffs and the class as a whole raise one overriding common legal question: whether the Company discriminates against African American employees and applicants for employment in its hiring, compensation, promotion, advancement and career development policies and/or patterns and practices based on their race? Numerous common questions of law are subsumed in this key legal issue including, without limitation:
a. Whether the Company has violated § 1981, as alleged herein? b. Whether the Company has created and/or maintained a hostile environment for African American employees? c. The significance and legal effect of the Company’s failure to use job postings and/or its practice of pre-selecting promotion candidates prior to any formal job announcement or bidding process? d. The significance and legal effect of the Company’s failure to use objective selection criteria and/or to have its selection criteria or job requirements validated regarding their jobrelatedness? e. The significance and legal effect of the Company's reliance on almost exclusively white managers to implement its hiring, promotion, advancement and career development policies and/or patterns and practices in light of their conscious and unconscious consideration of race rather than individual qualifications in their evaluation of African American candidates?
21

CasCea8s:0e38-:c0v3-0-c0v6-2030-6A2W3-AWDoDcuomcuemnte4n6t -642 FFiilleedd 0063//2287//026006PagPea2g3eo2f329of 29
f. The significance and legal effect of the statistical evidence showing underrepresentation of African Americans in management, supervisory, and higher-level positions and in promotions to such positions?
g. What is the appropriate declaratory and injunctive relief for the class? and h. Whether the Company is liable for punitive damages? 70. The presence of numerous central questions of law that are common to Representative Plaintiffs and to each class member satisfies Rule 23(a)(2)’s legal commonality requirement. 71. Typicality: Fed. R. Civ. P. 23(a)(3). Representative Plaintiffs’ claims are typical of the claims of the class members as a whole. Representative Plaintiffs possess the same interest and suffer the same injury as the class members. The relief Representative Plaintiffs seek will benefit the class. The claims of Representative Plaintiffs and the class arise from similar legal or remedial theories. This shared interest in remedying a shared injury through similar legal and remedial theories satisfies the typicality requirement of Rule 23(a)(3). 72. Adequacy of Representation: Fed. R. Civ. P. 23(a)(4). Representative Plaintiffs and their counsel will fairly and adequately protect the interests of the class. Representative Plaintiffs’ interests are coextensive with those of the class. Representative Plaintiffs are able and willing to represent the class fairly and vigorously. Representative Plaintiffs’ counsel similarly will represent the class fairly and zealously. Representative Plaintiffs’ counsel are qualified, experienced, and able to conduct the litigation and to meet the time and fiscal demands required to litigate an employment discrimination class action of this size and complexity. The combined interest, experience and resources of Representative Plaintiffs and their counsel will enable them to litigate competently the individual and class claims of race-based employment discrimination at issue here, thereby satisfying the adequacy requirement of Rule 23(a)(4). 73. Fed. R. Civ. P. 23(b)(2): The Company has acted or refused to act in a manner generally applicable to the class. As described above, the Company maintains a system-wide policy and/or pattern
22

CasCea8s:0e38-:c0v3-0-c0v6-2030-6A2W3-AWDoDcuomcuemnte4n6t -642 FFiilleedd 0063//2287//026006PagPea2g4eo2f429of 29
or practice of treating African American employees and applicants for employment less favorably than their white counterparts in its hiring, promotion, advancement and career development opportunities. This constitutes intentional class-wide discrimination in violation of § 1981. The Company's nearly allwhite supervisory and management personnel use a subjective and race-biased system for selecting employees for hire, promotion, advancement and career development. This system of subjective decision-making has resulted in the Company’s disparate treatment of its African American employees including Representative Plaintiffs and the class as a whole. The Company’s well-known reputation for discrimination against African Americans also deters African American employees from applying for jobs, seeking promotions, desirable job assignments, management positions, and other terms and conditions of employment. The Company’s discriminatory treatment of African American employees has created a hostile environment and has been ongoing. These continuing policies and/or patterns or practices of disparate treatment are common to and typical of the claims of all Plaintiffs and class members and satisfy Rule 23(b)(2)’s requirement that the Company has acted or refused to act in a manner generally applicable to the class.
74. Fed. R. Civ. P. 23(b)(2): The Appropriateness of Injunctive and Declaratory Relief to the Class. Plaintiffs seek declaratory relief that the Company’s discriminatory employment practices violate § 1981. Plaintiffs also seek injunctive relief designed to remedy the effect of Friedman’s ongoing discriminatory practices, including, but not limited to: a) rightful place relief for the Representative Plaintiffs and other victims of the Company’s policy or practice of race discrimination; b) appropriate affirmative relief requiring Friedman’s to provide a fair and unbiased system for both informing employees about job opportunities and permitting employees to request and obtain such opportunities, and a system to hire, compensate and promote African Americans in a non-discriminatory manner; and c) provisions for monitoring, reporting, and retention of jurisdiction to ensure equal employment opportunity and that the injunctive relief is properly implemented. Such relief by its nature is applicable
23

CasCea8s:0e38-:c0v3-0-c0v6-2030-6A2W3-AWDoDcuomcuemnte4n6t -642 FFiilleedd 0063//2287//026006PagPea2g5eo2f529of 29
to the class as a whole and satisfies Rule 23(b)(2)’s requirement that injunctive and declaratory relief be appropriate.
75. Fed. R. Civ. P. 23(b)(3) Requirements. Class certification is also appropriate pursuant to Fed. R. Civ. P. 23(b)(3) in this case because, as set forth in more detail above, common questions predominate over those affecting class members individually, and a class action is superior to other available methods of resolving this controversy. The alternative to class treatment is potentially hundreds of individual suits in an equal number of federal and state administrative and judicial fora. Such a multiplicity of actions would defeat the economies of scale inherent in the class action procedure and result in substantial waste of judicial resources. Thus, from the standpoint of public policy, transactional costs and judicial economy, multiple litigation would be manifestly inferior to a class action, thereby satisfying Fed. R. Civ. P. 23(b)(3).
VI. CLAIMS FOR RELIEF A. Declaratory, Injunctive, and Monetary Relief Against Defendant Friedman’s (42
U.S.C. § 1981) 76. Plaintiffs incorporate Paragraphs 1 through 70. 77. This claim is brought on behalf of all Plaintiffs and members of the class defined in paragraph 64 above. 78. The foregoing conduct of Friedman’s violates the rights of Plaintiffs and members of the class under 42 U.S.C. § 1981. 79. Friedman’s has engaged in the discriminatory conduct as alleged herein with malice, fraud, or oppression, and/or in reckless disregard of the rights of Plaintiffs and class members under § 1981. Plaintiffs and class members are thus entitled to recover punitive damages in an amount according to proof. 80. Plaintiffs request relief on behalf of themselves, individually, and the class, as hereinafter provided.
24

CasCea8s:0e38-:c0v3-0-c0v6-2030-6A2W3-AWDoDcuomcuemnte4n6t -642 FFiilleedd 0063//2287//026006PagPea2g6eo2f629of 29
B. Declaratory Relief Against the Insurers (28 U.S.C. § 2201(a)) 81. Plaintiffs incorporate paragraphs 1 through 75. 82. This claim is brought on behalf of plaintiffs for themselves and on behalf of the class of
similarly situated African American employees and applicants for employment of Friedman’s, as defined in paragraph 64 above.
83. Pursuant to their contractual obligations to Friedman’s and the Order of the Bankruptcy Court entered November 7, 2005, the Insurers are liable for, and required to provide Friedman’s coverage on, Friedman’s liability for monetary relief as claimed and prayed for in this action. However, the Insurers have refused, and continue to refuse, to acknowledge or accept their contractual liability, and obligation to provide Friedman’s coverage for its liability, for plaintiffs’ monetary relief claims.
84. There is an actual controversy between plaintiffs and the Insurers, as well as between Friedman’s and the Insurers, with respect to the Insurers’ obligation to assume liability, and indemnify Friedman’s, for plaintiffs’ monetary relief claims. Plaintiffs seek a declaratory judgment with respect to their rights on this matter.
VII. PRAYER FOR RELIEF Wherefore, Representative Plaintiffs, on behalf of themselves and the class members whom they seek to represent, and Plaintiff Mitchell, request the following relief: A. Certification of the case as a class action pursuant to Fed. R. Civ. P. 23(b)(2) and 23(b)(3) on behalf of the proposed plaintiff class, and designation of the Representative Plaintiffs as representatives of the class and their counsel of record as Class Counsel; B. A declaratory judgment that the Insurers are liable on, and required to provide coverage to Friedman’s for, and to pay plaintiffs and the class for, the monetary liability of Friedman’s to plaintiffs and the class, as prayed for below; C. A declaratory judgment that Friedman’s practices complained of herein are unlawful and in violation of the rights of Plaintiffs and class members secured by 42 U.S.C. § 1981;
25

CasCea8s:0e38-:c0v3-0-c0v6-2030-6A2W3-AWDoDcuomcuemnte4n6t -642 FFiilleedd 0063//2287//026006PagPea2g7eo2f729of 29
D. An injunction against Friedman’s and its officers, agents, successors, employees, representatives and any and all persons acting in concert with them, from engaging in each of the unlawful practices, policies, customs and usages set forth herein;
E. An order requiring Friedman’s to institute and carry out policies, practices and programs that assure equal employment opportunities for African American applicants and employees and that remedy the effect of Friedman’s past and present unlawful employment practices;
F. An order restoring or placing Plaintiffs and members of the class they seek to represent in those jobs they would now occupy but for the Company’s discriminatory practices, or in lieu of reinstatement or in the event class members cannot be placed immediately in their rightful positions, an order for front pay and benefits;
G. An order directing Friedman’s to adjust the wage rates and benefits for Plaintiffs and the class they seek to represent to the level that they would have attained but for Friedman’s discriminatory practices;
H. An award of back pay, front pay, and damages for lost compensation and job benefits that the individual Plaintiffs and class members would have received but for Friedman’s discriminatory practices, including pre-judgment interest, in an amount to be proved at trial;
I. Compensatory damages for emotional distress, humiliation, embarrassment and anguish, in an amount to be proved at trial, for Plaintiffs and class members;
J. An award of back pay, front pay, and compensatory and punitive damages to Plaintiff Mitchell for the Company’s retaliation against him for exercising his rights under § 1981, in an amount to be proved at trial;
K. An award of exemplary and punitive damages commensurate with the Company’s ability to pay and sufficient to deter future discriminatory conduct, for Plaintiffs and the class, in an amount to be proved at trial;
26

CasCea8s:0e38-:c0v3-0-c0v6-2030-6A2W3-AWDoDcuomcuemnte4n6t -642 FFiilleedd 0063//2287//026006PagPea2g8eo2f829of 29

L. Plaintiffs’ reasonable attorneys' fees and costs and expenses of suit, including expert witness fees to the extent allowable by law;
M. Prejudgment and postjudgment interest; N. An order that any and all amounts awarded pursuant to paragraphs H, I, J, K. L, or M of this Prayer for Relief shall be paid by the Insurers or out of the proceeds of insurance policies provided by the Insurers to Friedman’s, and, O. Such other and further relief as the Court may deem just and proper.
VIII. JURY DEMAND Plaintiffs demand trial by jury in this action for all issues so triable under law.

Dated: March __, 2006

Respectfully submitted,
/s/ DANIEL B. EDELMAN (U.S. Dist. Ct. Bar No. 2906) YABLONSKI, BOTH & EDELMAN 1140 Connecticut Avenue, NW, Suite 800 Washington, DC 20036 (202) 833-9060 (202) 463-6688 (facsimile) (Local Counsel)
BARRY GOLDSTEIN MORRIS J. BALLER LAURA L. HO GOLDSTEIN, DEMCHAK, BALLER, BORGEN &
DARDARIAN A Professional Corporation 300 Lakeside Drive, Suite 1000 Oakland, CA 94612 (510) 763-9800 (510) 835-1417 (facsimile)

27

CasCea8s:0e38-:c0v3-0-c0v6-2030-6A2W3-AWDoDcuomcuemnte4n6t -642 FFiilleedd 0063//2287//026006PagPea2g9eo2f929of 29
THOMAS A. WARREN LAW OFFICES OF THOMAS A WARREN P.O. Box 1657 Tallahassee, FL 32302 (850) 385-1551 (850) 385-6008 (facsimile) KEENAN NIX NIX & GRADDOCK 124 Church Street Decatur, GA 30030-3325 (404) 377-7600 (404) 377-8700 (facsimile) ATTORNEYS FOR PLAINTIFFS AND THE PUTATIVE CLASS
28

 
 Case 8:03-cv-00623-AW Document 85 Filed 09/11/06 Page 1 of 5

IN THE UNITED STATES DISTRICT COURT DISTRICT OF MARYLAND SOUTHERN DIVISION

JOHN O’BANNON, et al. Plaintiffs,
v. FRIEDMAN’S, INC., et al.
Defendants.

) )
) Civil Action )
) No. AW-03-623 ) )
) )

FEDERAL INSURANCE COMPANY’S MOTION TO DISMISS

COMES NOW Defendant Federal Insurance Company

(“Federal”), and through its undersigned counsel, hereby moves

to dismiss all claims against it in Plaintiffs’ “Amended Class

Action Complaint With Jury Demand,” pursuant to Federal Rule of

Civil Procedure 12(b)(6). Plaintiffs lack standing to pursue a

claim against Friedman’s insurers and have failed to identify a

justiciable controversy. In addition, a declaration as to

coverage is unnecessary and inappropriate because (1) the class

of plaintiffs and their claims are only hypothetical at this

time and no dispute exists between the parties to the contract,

and (2) no determination of liability has been made against

Friedman’s on any claim, real or hypothetical, so no basis

exists for a determination of the issues plaintiffs purport to

present.

Case 8:03-cv-00623-AW Document 85 Filed 09/11/06 Page 2 of 5

A memorandum of law, request for a hearing and oral argument, and proposed order are submitted contemporaneously in support of this motion for the Court’s consideration.
Respectfully submitted, this 11th of September 2006.

/s/ Jonahtan T. Rees_____________

Jonathan T. Rees

Maryland Bar No. 22949

Office:

202.637.5600

Facsimile: 202.637.5910

E-mail: jtrees@hhlaw.com

HOGAN & HARTSON, LLP

555 Thirteenth Street, NW

Washington, DC 20004

/s/ David M. Leonard____________

David M. Leonard

Admitted Pro Hac Vice

Office:

404.870.4676

Facsimile: 404.806.5676

E-mail: dleonard@lordbissell.com

Amy B. Doorley

Admitted Pro Hac Vice

Office:

404.870.4627

Facsimile: 404.806.5627

e-mail: adoorley@lordbissell.com

LORD, BISSELL & BROOK LLP

Suite 1900, The Proscenium

1170 Peachtree Street, N.E.

Atlanta, Georgia 30309-4675

Attorneys for

Federal Insurance Company

- 2 -

Case 8:03-cv-00623-AW Document 85 Filed 09/11/06 Page 3 of 5

IN THE UNITED STATES DISTRICT COURT DISTRICT OF MARYLAND SOUTHERN DIVISION

JOHN O’BANNON, et al. Plaintiffs,
v. FRIEDMAN’S, INC., et al.
Defendants.

) )
) Civil Action )
) No. AW-03-623 ) )
) )

CERTIFICATE OF SERVICE

I hereby certify that on this date I electronically

filed FEDERAL INSURANCE COMPANY’S MOTION TO DISMISS with the

Clerk of Court using the CM/ECF system which will automatically

send e-mail notification of such filing to the following

attorneys of record:

Daniel B. Edelman, Esq. Katz Marshall & Banks 1718 Connecticut Ave. NW Sixth Floor Washington, DC 20009 (Attorneys for Plaintiffs)

Morris J. Baller, Esq. Goldstein, Demchak, Baller, Borgen & Dardarian 300 Lakeside Drive, Suite 1000 Oakland, California 94612-3534 (Attorneys for Plaintiffs)

Thomas A. Warren, Esq. Law Offices of Thomas A. Warren 2032 D Thomasville Road Tallahassee, Florida 32308 (Attorneys for Plaintiffs)

- 3 -

Case 8:03-cv-00623-AW Document 85 Filed 09/11/06 Page 4 of 5
Gerald S. Hartman, Esq. Gregory W. Homer, Esq. Alisa H. Reff, Esq. Drinker Biddle & Reath LLP 1500 K Street, NW, Suite 1100 Washington, DC 20005 (Attorneys for Friedman’s, Inc.)
Jonathon F. Sher, Esq. Daar & Newman PC 865 S. Figueroa St., Suite 2300 Los Angeles, California 90017 (Attorney for St. Paul)
Eugene J. Comey, Esq. Suzanne Rigby, Esq. Comey & Rigby PC 1025 Thomas Jefferson St NW Suite 525 East Washington, DC 20007-5201 (Attorneys for St. Paul)
I hereby certify that I have caused to be placed in
the United States Postal Service the document to the following
non-CM/ECF participants:
Barry Goldstein, Esq. Laura L. Ho, Esq. Goldstein, Demchak, Baller, Borgen & Dardarian 300 Lakeside Drive, Suite 1000 Oakland, California 94612-3534 (Attorneys for Plaintiffs)
Keenan R.S. Nix, Esq. Nix & Graddock PC 124 Church Street Decatur, Georgia 30030-3325 (Attorneys for Plaintiffs)
- 4 -

Case 8:03-cv-00623-AW Document 85 Filed 09/11/06 Page 5 of 5

This 11th day of September 2006.

LORD, BISSELL & BROOK LLP

Suite 1900, The Proscenium

1170 Peachtree Street, N.E.

Atlanta, Georgia 30309-4675

Office:

404.870.4676

Facsimile:

404.806.5676

/s/ David M. Leonard David M. Leonard Georgia Bar No. 446625

- 5 -

 
 Case 8:03-cv-00623-AW Document 87 Filed 09/11/06 Page 1 of 4

UNITED STATES DISTRICT COURT DISTRICT OF MARYLAND SOUTHERN DIVISION

JOHN O’BANNON, et al.,

)

)

Plaintiffs,

)

)

v.

)

)

FRIEDMAN’S, INC., et al.,

)

)

Defendants.

)

)

____________________________________)

Case No. AW-03-623

ST. PAUL MERCURY INSURANCE COMPANY’S MOTION TO DISMISS

COMES NOW Defendant St. Paul Mercury Insurance Company (“St. Paul”), and through its undersigned counsel, hereby moves to dismiss all claims against it in Plaintiffs’“Amended Class Action Complaint With Jury Demand,”pursuant to Federal Rule of Civil Procedure 12(b)(6). Plaintiffs lack standing to pursue a claim against Friedman’s insurers and have failed to identify a justiciable controversy. In addition, a declaration as to coverage is unnecessary and inappropriate because (1) the class of plaintiffs and their claims are only hypothetical at this time; no dispute exists between the parties to the contract, and (2) no determination of liability has been made against Friedman’s on any claim, real or hypothetical, so no basis exists for a determination of the issues plaintiffs purport to present.
In support thereof, St. Paul joins in the Memorandum of Law submitted by Federal Insurance Company that was filed contemporaneously in support of Federal Insurance Company’s Motion to

Case 8:03-cv-00623-AW Document 87 Filed 09/11/06 Page 2 of 4

Dismiss.

Dated:

September 11, 2006

Respectfully submitted, COMEY & RIGBY, P.C.

By:______________________________ Suzanne Rigby (USDC MD Bar No. 16832) 1025 Thomas Jefferson Street, NW Suite 525 East Washington, DC 20007-5201

Telephone: (202) 625-1200

Facsimile: (202) 625-1230

Email Address:

rigby@comeyrigby.com

DAAR & NEWMAN P.C.

/s/ Jonathon F. Sher Jonathon F. Sher Admitted Pro Hac Vice Daar & Newman, P.C. 865 S. Figueroa St., Suite 2300 Los Angeles, CA 90017
Telephone: (213) 892-0999 Facsimile: (213) 892-1066 Email Address: jsher@daarnewman.com
ATTORNEYS FOR DEFENDANT ST. PAUL MERCURY INSURANCE COMPANY

Case 8:03-cv-00623-AW Document 87 Filed 09/11/06 Page 3 of 4

UNITED STATES DISTRICT COURT DISTRICT OF MARYLAND SOUTHERN DIVISION

JOHN O’BANNON, et al.,

)

)

Plaintiffs,

)

)

v.

)

)

FRIEDMAN’S, INC., et al.,

)

)

Defendants.

)

)

___________________________________)

Case No. AW-03-623

CERTIFICATE OF SERVICE
I hereby certify that on September 11, 2006, I electronically filed ST. PAUL MERCURY
INSURANCE COMPANY’S MOTION TO DISMISS with the Clerk of Court using the CM/ECF
system which will automatically send e-mail notification of such filing to the following attorneys of
record:
Morris J. Baller Goldstein Demchak Baller Borgen & Dardarian 300 Lakeside Dr., Suite 1000 Oakland, CA 94612 (Attorneys for Plaintiffs)
Daniel B. Edelman Yablonski, Both & Edelman 1140 Connecticut Avenue, NW, Suite 800 Washington, DC 20036 (Attorneys for Plaintiffs)
Thomas A. Warren Law Offices of Thomas A. Warren Post Office Box 1657

Case 8:03-cv-00623-AW Document 87 Filed 09/11/06 Page 4 of 4

Tallahassee, FL 32302 (Attorneys for Plaintiffs)
Gregory W. Homer Gerald S. Hartman Alisa H. Reff George Macdonald Drinker, Biddle & Reath, LLP 1500 K Street, NW, Suite 1100 Washington, DC 20005 (Attorneys for Friedman’s)
Jonathan T. Rees Hogan & Hartson, LLP 555 Thirteenth Street, NW Washington, DC 20004 (Attorneys for Federal Insurance Company)
David M. Leonard Amy B. Doorley Lord, Bissell & Brook LLP Suite 1900, The Proscenium 1170 Peachtree Street, N.E. Atlanta, GA 30309-4675 (Attorneys for Federal Insurance Company)
COMEY & RIGBY, P.C.

Dated:

September 11, 2006

By:______________________________ Suzanne Rigby (USDC MD Bar No. 16832) 1025 Thomas Jefferson Street, NW Suite 525 East Washington, DC 20007-5201

Telephone: (202) 625-1200

Facsimile: (202) 625-1230

Email Address:

rigby@comeyrigby.com

ATTORNEYS FOR DEFENDANT ST. PAUL MERCURY INSURANCE COMPANY

 
 Case 8:03-cv-00623-AW Document 128 Filed 04/30/07 Page 1 of 1

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND SOUTHERN DISTRICT

JOHN O’BANNON, et al.,

*

Plaintiffs,

*

v.

* Civil Action No. AW-03-623

FRIEDMAN’S, INC., et al.,

*

Defendants.

*

* * * * * * * * * * * * * * * * * * * * * * * * * ** ORDER

Currently pending before the Court are a Motionto Dismiss [85], filed by Defendant Federal

Insurance Company (“Federal”), and a separate Motion to Dismiss [87], filed by Defendant St. Paul

Mercury Insurance Com pany (“St. Paul”) (coll ectively “Defendants”). Plaintiffs oppose both

motions. The Court has revi ewed the entire recor d, as well as the pleadings with respect to the

instant motions. On April 30, 2007, the Court helda hearing concerning the motions and heard from

all the parties. Accordingly, upon consideration ofthe instant motions, the parties’ representations

at the motions hearing, and the reasons articulated at the hearing, IT IS this 30th day of April, 2007,

by the United States District Court for the District of Maryland, hereby ORDERED:

1. That Defendant Federal Insurance Com pany’s Motion to Dism iss [85] BE, and

hereby, IS DENIED;

2. That Defendant St. Paul Mercury Insurance Company’s Motion to Dismiss [87] BE,

and hereby, IS DENIED; AND

3. That the Clerk of the Court shall mail copies of this Order to counsel of record.

/s/ Alexander Williams, Jr. United States District Judge

 
 Case 8:03-cv-00623-AW Document 141 Filed 08/16/07 Page 1 of 3 DRAFT 8/16/2007 9:45 AM

John O’Bannon, et al., Plaintiffs,
v. Friedman’s, Inc.
Defendant.

IN THE UNITED STATES DISTRICT COURT DISTRICT OF MARYLAND SOUTHERN DIVISION Case No. AW-03-623
PLAINTIFFS’ NOTICE OF MOTION AND MOTION FOR SUMMARY JUDGMENT DENYING DEFENDANTS’ AFFIRMATIVE DEFENSES REGARDING INTERRELATED WRONGFUL ACTS

TO EACH PARTY AND ATTORNEY OF RECORD IN THIS ACTION: YOU ARE HEREBY NOTIFIED THAT Plaintiffs will move the Court for an order granting summary judgment denying Defendants Federal Insurance Company’s (“Federal”) Fifth Affirmative Defense and St. Paul Mercury Insurance Company’s (“St. Paul”) (collectively “Defendants” or “Insurers”) Affirmative Defense Number Three, as described below. Plaintiffs seek an order, applicable to all Plaintiffs, granting summary judgment against Defendants and rejecting their affirmative defenses that deny insurance coverage to Friedman’s, which are based on the theory that the underlying claims to the present class action are interrelated. The basis for this motion is that Defendants, as a matter of law, cannot carry their burden of proof for their affirmative defense and establish that the named Plaintiffs’ (O’Bannon, Mitchell, Moore, and Hampton) claims are interrelated because these claims do not allege causally connected wrongful acts. Both the plain meaning of the policy definition and available case law require that wrongful acts have a cause and effect relationship on each other or a mutual interdependence in order to be considered causally connected. This mutuality cannot be proven here because these claims involve different types and acts of discrimination, carried out by different employees of Friedman’s, in different cities and states, during different time periods, and directed towards different victims. Viewed as separate claims alleging distinct wrongful acts, these claims therefore trigger coverage under the policies during which they were first made. As a result, Defendants must provide further coverage for these claims under Federal’s Second Policy (2001-2002) and St. Paul’s First and Second Policies (2001-2001 and 2001-2002).

Case 8:03-cv-00623-AW Document 141 Filed 08/16/07 Page 2 of 3

This motion is supported by Plaintiffs’ Memorandum of Points and Authorities in Support of Motion for Summary Judgment Denying Defendants’ Affirmative Defenses Regarding Interrelated Wrongful Acts, the Declaration of Morris J. Baller in Support of Motion for Summary Judgment Denying Defendants’ Affirmative Defenses Regarding Interrelated Wrongful Acts, the Stipulation of Undisputed Facts, Plaintiffs’ Proposed Order Granting Summary Judgment Denying Defendants’ Affirmative Defenses Regarding Interrelated Wrongful Acts, Plaintiffs’ Request for Hearing and Oral Argument in Connection With Their Motion for Summary Judgment Denying Defendants’ Affirmative Defenses Relating to Interrelated Wrongful Acts, and Notice of Filing of Lengthy Exhibits all filed herewith.

Dated: August 16, 2007

/s/ Morris J. Baller BARRY GOLDSTEIN (admitted pro hac vice) bgoldstein@gdblegal.com MORRIS J. BALLER (admitted pro hac vice) mballer@gdblegal.com LAURA L. HO (admitted pro hac vice) lho@gdblegal.com JAMES KAN (pro hac vice application pending) jkan@gdblegal.com GOLDSTEIN, DEMCHAK, BALLER, BORGEN & DARDARIAN 300 Lakeside Drive, Suite 1000 Oakland, CA 94612-3534 (510) 763-9800 (510) 835-1417 (facsimile)
DANIEL B. EDELMAN (U.S. Dist. Ct. Bar No. 2906) edelman@kmblegal.com KATZ, MARSHALL & BANKS, LLP 1718 Connecticut Ave., N.W., Sixth Floor Washington, DC 20009 (202) 299-1140; (202) 299-1148 (facsimile) (Local Counsel)
THOMAS A. WARREN (admitted pro hac vice) tw@nettally.com LAW OFFICES OF THOMAS A WARREN P.O. Box 1657 Tallahassee, FL 32302 (850) 385-1551 (850) 385-6008 (facsimile)

2

Case 8:03-cv-00623-AW Document 141 Filed 08/16/07 Page 3 of 3 KEENAN NIX (admitted pro hac vice) krsn@nixgraddock.com NIX & GRADDOCK 124 Church Street Decatur, GA 30030-3325 (404) 377-7600 (404) 377-8700 (facsimile) ATTORNEYS FOR PLAINTIFFS AND THE PUTATIVE CLASS
3

 
 Case 8:03-cv-00623-AW Document 142 Filed 08/16/07 Page 1 of 5

IN THE UNITED STATES DISTRICT COURT DISTRICT OF MARYLAND SOUTHERN DIVISION

JOHN O'BANNON, et al. Plaintiffs,
v. FRIEDMAN'S, et al.
Defendants.

}

}

}

CIVIL ACTION

}

}

NO. AW-03-623

}

}

}

}

FEDERAL INSURANCE COMPANY'S MOTION FOR SUMMARY JUDGMENT COMES NOW Federal Insurance Company ( "Federal II ) and moves this Court, pursuant to Fed. R. Civ. P. 56, for an order granting summary judgment in its favor on all counts against Federal in Plaintiffs' Amended Class Action Complaint on the grounds that there is no genuine issue of material fact and that Federal is entitled to judgment as a matter of law. In support of its Motion, Federal relies upon the accompanying Memorandum in Support of Motion for Summary Judgment, the Stipulation of Undisputed Facts, including all exhibits attached thereto, and all matters of record. WHEREFORE, Federal requests that its Motion be granted, and that the Court grant summary judgment in its favor.

Case 8:03-cv-00623-AW Document 142 Filed 08/16/07 Page 2 of 5

2007.

Respectfully submitted this 16th day of August

LORD, BISSELL & BROOK LLP

The Proscenium, Suite 1900

1170 Peachtree Street, N.E

Atlanta, Georgia 30309

Office:

404.870.4676

Facsimile: 404.806.5676

HOGAN & HARTSON, LLP

555 Thirteenth Street, NW

Washington, DC 20004

Office:

202.637.5600

Facsimile: 202.637.5910

/s/ David M. Leonard David M. Leonard
/s/ Jonathan T. Rees Jonathan T. Rees
Attorneys For Defendant Federal Insurance Company

-2-

Case 8:03-cv-00623-AW Document 142 Filed 08/16/07 Page 3 of 5

IN THE UNITED STATES DISTRICT COURT DISTRICT OF MARYLAND SOUTHERN DIVISION

JOHN O'BANNON, et al. Plaintiffs,
v. FRIEDMAN'S, et al.
Defendants.

)

)

)

CIVIL ACTION

)

)

NO. AW-03-623

)

)

)

)

CERTIFICATE OF SERVICE
I hereby certify that on this date I
electronically filed FEDERAL INSURANCE COMPANY'S MOTION FOR
SUMMARY JUDGMENT with the Clerk of Court using the CM/ECF
system which will automatically send e-mail notification of
such filing to the following attorneys of record:
Daniel B. Edelman, Esq. Katz Marshall & Banks 1718 Connecticut Ave. NW Sixth Floor Washington, DC 20009 (Attorneys for Plaintiffs)
Morris J. Baller, Esq. Laura L. Ho, Esq. Goldstein, Demchak, Baller, Borgen & Dardarian 300 Lakeside Drive, Suite 1000 Oakland, California 94612-3534 (Attorneys for Plaintiffs)

Case 8:03-cv-00623-AW Document 142 Filed 08/16/07 Page 4 of 5
Thomas A. Warren, Esq. Law Offices of Thomas A. Warren 2032 D Thomasville Road Tallahassee, Florida 32308 (Attorneys for Plaintiffs)
Gerald S. Hartman, Esq. Gregory W. Homer, Esq. Alisa H. Reff, Esq. Drinker Biddle & Reath LLP 1500 K Street, NW, Suite 1100 Washington, DC 20005 (Attorneys for Friedman's, Inc.)
Jonathon F. Sher, Esq. Daar & Newman PC 865 S. Figueroa St., Suite 2300 Los Angeles, California 90017 (Attorney for St. Paul)
Eugene J. Corney, Esq. Suzanne Rigby, Esq. Corney & Rigby PC 1025 Thomas Jefferson St NW Suite 525 East Washington, DC 20007-5201 (Attorneys for St. Paul)
I hereby certify that I have caused to be placed
in the united States Postal Service the document to the
following non-CM/ECF participants:
Barry Goldstein, Esq. Goldstein, Demchak, Baller, Borgen & Dardarian 300 Lakeside Drive, Suite 1000 Oakland, California 94612-3534 (Attorneys for Plaintiffs)
Keenan R.S. Nix, Esq. Nix & Graddock PC 124 Church Street Decatur, Georgia 30030-3325 (Attorneys for Plaintiffs)

Case 8:03-cv-00623-AW Document 142 Filed 08/16/07 Page 5 of 5

This 16th day of August 2007.

LORD, BISSELL & BROOK LLP

Suite 1900, The Proscenium

1170 Peachtree Street, N.E.

Atlanta, Georgia 30309-4675

Office:

404.870.4676

Facsimile:

404.806.5676

/s/ David M. Leonard David M. Leonard Georgia Bar No. 446625

 
 Case 8:03-cv-00623-AW Document 144 Filed 08/16/07 Page 1 of 2

UNITED STATES DISTRICT COURT DISTRICT OF MARYLAND SOUTHERN DIVISION

JOHN O’BANNON, et al., Plaintiffs,
v. FRIEDMAN’S, INC., et al.
Defendants

Case No. AW-03-623
ST. PAUL MERCURY INSURANCE COMPANY’S NOTICE OF MOTION AND MOTION FOR SUMMARY JUDGMENT

TO ALL PARTIES AND TO THEIR ATTORNEYS OF RECORD HEREIN: PLEASE TAKE NOTICE THAT Defendant St. Paul Mercury Insurance
Company (“St. Paul”) will and hereby does move this Court, pursuant to Federal Rule of Civil Procedure 56, to enter an O rder granting St. Paul Summ ary Judgment on the Complaint herein against Plaintiffs John O’Bannon et al.
This Motion is m ade on the grounds th at Friedman’s breached th e policy by giving St. Paul late notice of the subject claims, and that the Class Action Com plaint claim was first m ade after expiration of both of the St. Paul polic ies or the claims relate to a claim first made prior to St. Paul’s policy.
This Motion is based on this Notice, the accompanying Memorandum of Points and Authorities, the Stipu lation of Facts, the D eclarations of Mark S. Bentley and C arole Lofness, St. Paul’s Statem ent of Undisputed Facts, all of the reco rds and papers file d herein, and upon such oral and docum entary evidence as may be presented at the hearing of this matter.

Case 8:03-cv-00623-AW Document 144 Filed 08/16/07 Page 2 of 2

Dated: August 16, 2007
A
Jonathon Adm 865 Los Telephone: Facsim

Respectfully submitted,
DAAR & NEWMAN Professional Law Corporation
/s/ Jonathon F. Sher F. Sher
itted Pro Hac Vice Daar & Newman, P.C.
S. Figueroa St., Suite 2300 Angeles, CA 90017
(213) 892-0999 ile: (213_892-1066 Email Address: jsher@daarnewman.com
COMEY & RIGBY, P.C.

Telephone: Facsim

(202) 625-1200 ile: (202) 625-1230 Email Address: rigby@comeyrigby.com
ATTORNEYS FOR DEFENDANT ST. PAUL MERCURY INSURANCE COMPANY

 
 Case 8:03-cv-00623-AW Document 154 Filed 03/26/08 Page 1 of 2

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND SOUTHERN DIVISION

JOHN O’BANNON, et al.,

*

*

Plaintiffs,

*

*

v.

* Civil Action No. AW-03-623

*

FRIEDMAN’S, INC., et al.,

*

*

Defendants.

*

******************************************************************************

ORDER

On October 19, 2007, Plaintiffs and Defendants Friedman’s Inc. and Federal Insurance

Company notified the Court that the parties have reached a tentative agreement to settle this action

in its entirety. 1 However, bef ore settlement was c onsummated, Defendant Friedman’s, Inc.

(“Friedman’s”) sent notice to the Court on February 1, 2008, inform ing the Court that it filed a

voluntary petition under Chapter 11 of the United States Bankruptcy Code in the United States

Bankruptcy Court for the Districtof Delaware. Consequently, thisCourt must stay all proceedings

against Defendant Friedman’s, and Defendants Federal Insurance Company and St. Paul Mercury

Insurance Company will remain in this action.

On February 25, 2008, the Court held a telephonic status conference with all parties in this

action to briefly discuss the pending bankruptcy proceeding and the pending motions before this

Court (Doc. Nos. 141, 142, & 144) . Based on the Court’s discussion with the parties and the

tentative settlement agreement, it appears to the Court that it would not be prudent for this action

to proceed without Defendant Friedman’s, considering that Friedman’s is an integral party to this

1 Defendant St. Paul was not mentioned in this notice of a tentative settlement agreement. However, during the Court’s telephonic status conference call with the parties on February 25, 2008, the parties informed the Court that St. Paul will no longer be involved in further litigation if the settlement is approved.
1

Case 8:03-cv-00623-AW Document 154 Filed 03/26/08 Page 2 of 2 action. Theref ore, the Court will stay this entir e action pending resolution of the bankruptcy proceeding.
Accordingly, IT IS this 25th day of March, 2008, by the United States District Court for the District of Maryland, hereby ORDERED:
1. That this action BE, and the sam e hereby IS, STAYED pending resolution of the Bankruptcy proceeding; and
2. That the Clerk of the Court transmit a copy of this Order to all counsel and parties of record. /s/ Alexander Williams, Jr. United States District Judge
2

 
 Case 8:03-cv-00623-AW Document 157 Filed 09/25/08 Page 1 of 25

IN THE UNITED STATES DISTRICT COURT DISTRICT OF MARYLAND SOUTHERN DIVISION

John O’Bannon, et al.,

Case No. AW-03-623

Plaintiffs, v. Friedman’s, Inc.
Defendant.

PLAINTIFFS’ NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL OF CONSENT DECREE, CONDITIONAL CERTIFICATION OF SETTLEMENT CLASS, APPOINTMENT OF CLASS COUNSEL, DESIGNATION OF CLASS REPRESENTATIVES, APPROVAL OF CLASS NOTICE, AND SCHEDULING OF FINAL FAIRNESS HEARING; AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION

10743-13

Case 8:03-cv-00623-AW Document 157 Filed 09/25/08 Page 2 of 25
TABLE OF CONTENTS
TABLE OF AUTHORITIES. ................................................................................................... ii NOTICE OF MOTION AND MOTION ...................................................................................1 RELIFE SOUGHT.....................................................................................................................1 MEMORANDUM OF POINTS AND AUTHORITIES ...........................................................1 I. PRELIMINARY STATEMENT ...................................................................................1 II. FACTUAL BACKGROUND........................................................................................4 III. THE PROPOSED SETTLEMENT SATISFIES ALL OF THE REQUIREMENTS
FOR PRELIMINARY APPROVAL UNDER RULE 23(E). ........................................8 A. Legal Standard for Preliminary Approval..........................................................8 B. The Proposed Consent Decree is Fair Because it is the Result of Arm’s
Length Negotiations By Experienced Class Counsel After Substantial Discovery and Exchange of Information. ..........................................................9 C. The Proposed Consent Decree is Adequate Because it Provides Substantial Relief and Avoids the Risk of Delay and Protracted Litigation. .....................11 IV. CERTIFICATION OF THE SETTLEMENT CLASS PURSUANT TO RULE 23(A),(B)(2) AND (B)(3) IS PROPER........................................................................13 A. Certification is Appropriate Under Rule 23(a). ...............................................14 1. Numerosity...........................................................................................14 2. Commonality........................................................................................14 3. Typicality .............................................................................................15 4. Adequacy of Representation ................................................................16 B. Hybrid Certification Under Fed.R.Civ.P.23(b)(2) and (b)(3) is Apporpriate to Protect Class Members Who Wish to Assert Individual Monetary Relief ..16 1. Rule 23(b)(2) Treatment is Appropriate for Equitable Relief .............17 2. Rule 23(b)(2) Treatment is Appropriate for Monetary Relief .............18 V. THE proposed CLASS ACTION SETTLEMENT NOTICE PROCEDURE SATISFIES DUE PROCESS AND Rule 23(C) and (E). ............................................19 VI. CONCLUSION............................................................................................................20

10743-13

i

Case 8:03-cv-00623-AW Document 157 Filed 09/25/08 Page 3 of 25
TABLE OF AUTHORITIES
FEDERAL CASES
Albermarle Paper Co. v. Moody 422 U.S. 405, 416-17 (1975) .................................................................................17
Amchem Products, Inc. v. Windsor 521 U.S. 591 (1997)...................................................................................13, 16, 17
Armstrong v. Bd. of Sch. Dirs. 616 F.2d 305 (7th Cir. 1980) ...................................................................................8
Buchanan v. Consolidated Stores Corp. 217 F.R.D. 178 (D. Md. 2003).........................................................................14, 15
Chisholm v. U.S. Postal Serv. 665 F.2d 482 (4th Cir. 1981) .................................................................................17
Curtis v. Loether 415 U.S. 189, 197 (1974).......................................................................................18
Diaz v. Hillsborough County Hosp. Auth. 165 F.R.D. 689 (M.D. Fla. 1996)...........................................................................17
Eubanks v. Billington 110 F.3d 87 (D.C. Cir. 1997) .................................................................................17
Flinn v. FMC Corp. 528 F.2d 1169 (4th Cir. 1975) ...........................................................................8, 10
Gunnells v. Healthplan Services Inc. 348 F.3d 417 (4th Cir. 2003) .................................................................................13
Hewlett v. Premier Salons Int’l, Inc. 185 F.R.D. 211 (D. Md. 1997)...................................................................15, 16, 17
Hubbard v. Rubbermaid, Inc. 78 F.R.D. 631 (D. Md. 1978).................................................................................17
Jefferson v. Ingersoll International, Inc. 195 F.3d 894 (7th Cir. 1999) .................................................................................17
In re Jiffy Lube Sec. Litig. 927 F.2d 155 (4th Cir. 1991) .................................................................................10
Lemon v. International Union of Operating Eng’rs. 216 F.3d 577 (7th Cir. 2000) .................................................................................17
In re Mid-Atlantic Toyota Antitrust Litigation 564 F. Supp. 1379 (D. Md. 1983) ................................................................9, 10, 11

10743-13

ii

Case 8:03-cv-00623-AW Document 157 Filed 09/25/08 Page 4 of 25
Miller v. Baltimore Gas & Electric Co. 202 F.R.D. 195 (D. Md. 2001).........................................................................17, 18
Newsome v. Up-To-Date Laundry, Inc. 219 F.R.D. 356 (D. Md. 2004)...................................................................14, 16, 18
Phillips Petroleum Co. v. Shutts 472 U.S. 797 (1985)...............................................................................................19
Robinson v. Lorillard Corp. 444 F. 2d 791, 802 (4th Cir. 1971) ........................................................................17
In re Serzone Products Liab. Litig. 231 F.R.D. 231 (S.D.W.Va. 2005).....................................................................8, 18
South Carolina Nat’l Bank v. Stone 749 F. Supp. 1419 (D. S.C. 1990)............................................................................8
STATE CASES
Grice v. PNC Mortgage Corp. of America 1998 WL. 350581 (D. Md. May 21, 1998)............................................9, 11, 14, 19
FEDERAL STATUTES
Federal Rule of Civil Procedure § 23.....................................................................................................................4, 13 § 23(a) ..........................................................................................................4, 13, 14 § 23(a)(1) ...............................................................................................................14 § 23(a)(3) .........................................................................................................15, 16 § 23(a)(4) ...............................................................................................................16 § 23(b)....................................................................................................................16 § 23 (b)(2) ...................................................................................................... passim § 23(b)(3) ....................................................................................................... passim § 23(c) ....................................................................................................................19 § 23(c)(2)(B) ..........................................................................................................20 § 23(e) ....................................................................................................1, 4, 8, 9, 19 § 23(e)(1)(C) ............................................................................................................8 § 23(g)..........................................................................................................1, 16, 21 § 23(g)(1)(C)(i) ......................................................................................................16 § 23(h)................................................................................................................4, 12
42 U.S.C. § 1981.......................................................................................................................2 §2000e......................................................................................................................2 § 2000e-5(g)...........................................................................................................18
MISCELLANEOUS
Manual for Complex Litigation .................................................................................8, 9

10743-13

iii

Case 8:03-cv-00623-AW Document 157 Filed 09/25/08 Page 5 of 25

NOTICE OF MOTION AND MOTION

Plaintiffs respectfully move the Court for an order certifying a settlement class,

preliminarily approving the Consent Decree (including the award of individual and class

monetary relief, attorneys’ fees and costs), designating Plaintiffs John O’Bannon, Ronald

Hampton, and Sandra Moore as Class Representatives, appointing Plaintiffs’ attorneys as

counsel for the class, approving class notice, and setting a final Rule 23(e) hearing. In support of

their motion, Plaintiffs rely upon this motion, the accompanying declarations of Morris J. Baller

and Hon. Edward Panelli, the exhibits submitted with this motion, and any further arguments of

counsel at the hearing on this motion. Defendants Friedman’s, Inc. (“Friedman’s”), and Federal

Insurance Company (“Federal”) do not oppose this motion.

RELIEF SOUGHT

Plaintiffs request that this Court: (1) grant Plaintiffs’ motion for preliminary approval of

the Consent Decree, including an award of individual and class monetary relief, notice and

administration costs (of which $232,250 is for Plaintiffs’ litigation costs, $286,250 is for

Plaintiffs’ attorneys’ fees, and approximately $80,000 is for notice and administration costs);

(2) certify a settlement class for equitable relief pursuant to Fed. R. Civ. P. (“Rule”) 23(b)(2) and

for monetary relief pursuant to Rule 23(b) (3); (3) appoint Plaintiffs’ attorneys to serve as

counsel for the class under Rule 23(g); (4) approve the proposed notice for mailing to the class,

together with dates and procedures for class members to opt out of or object to the settlement, as

specified in the notice; and (5) and set a final fairness hearing, as the Court’s calendar permits,

for the week of February 9, 2009, or as soon thereafter as possible.

MEMORANDUM OF POINTS AND AUTHORITIES

I.

PRELIMINARY STATEMENT

Plaintiffs seek certification of a settlement class and preliminary approval of a settlement

that will provide equitable and monetary relief to a class of African American current and former

employees of Friedman’s. Final approval of the settlement will resolve Plaintiffs’ allegations

that Friedman’s engaged in a nationwide policy, pattern, or practice of racial discrimination in

10743-13

1

Case 8:03-cv-00623-AW Document 157 Filed 09/25/08 Page 6 of 25

promotions, compensation, store assignments, and other terms, conditions and privileges of employment, in violation of 42 U.S.C. § 1981, as amended (“Section 1981”),1 before its discharge from bankruptcy.2
Counsel for Plaintiffs, Friedman’s, and Federal (the “parties”) have agreed to the
proposed Consent Decree submitted with this motion (attached hereto as Exhibit 1) as a full and complete settlement of the action.3 The proposed Consent Decree identifies the settlement class,
for purposes of equitable and compensatory monetary relief as:
A. All African American employees who are or were employed by the Company in
any retail store or in the store Field Organization, for any length of time, between March 6, 1999
and December 9, 2005; and
B. All African American applicants who applied for employment at the Company in
any retail store or in the store Field Organization between March 6, 1999 and December 9, 2005,
who were not hired on such application.
The portion of the Settlement Class that is eligible to seek to participate in the
compensatory damages component of the monetary relief provided in the proposed Consent
Decree consist of:
1. All African American employees who were employed by Friedman’s in any retail
store or in the store Field Organization who were employed in a full-time position for at least six
1 This settlement would also resolve Plaintiffs’ potential, but not yet filed, Title VII claims. See footnote 3, infra. 2 Friedman’s first filed for bankruptcy protection on January 14, 2005 and was discharged from that bankruptcy on December 9, 2005. 3 In connection with the proposed Consent Decree, the potential claims of the Equal Employment Opportunity Commission (“EEOC”), which found cause on the plaintiffs’, and other charging parties’, Charges of Discrimination, and which could potentially have sued Friedman’s under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e, et seq., has also terminated its proceedings by the issuance of Notices of Right to Sue to each of the Plaintiffs and Charging Parties on August 27, 2008. The 90-day right to sue period on those notices will expire on or about November 26, 2008. Plaintiffs and Charging Parties have promised, of course, not to sue on those Notices. See Declaration of Morris J. Baller, filed herewith (“Baller Decl.”), ¶ 40.

10743-13

2

Case 8:03-cv-00623-AW Document 157 Filed 09/25/08 Page 7 of 25

full consecutive months, between March 6, 1999 and December 9, 2005, except those who file a
timely request to opt out of and be excluded from the compensatory damages component of the
monetary relief provisions of the Consent Decree; and
2. All African American applicants who applied for employment at Friedman’s in
any retail store or in the store Field Organization between March 6, 1999 and December 9, 2005,
who were not hired on such application, except those who file a timely request to opt out and be
excluded from the compensatory damages component of the monetary relief provisions of the
Consent Decree.
The proposed Consent Decree provides for recovery of $1,150,000 plus interest accruing
on that amount until payout, for monetary relief for plaintiffs, class members, the expenses of
notice and administration of the settlement, and plaintiffs’ litigation expenses and attorneys’ fees.4
The litigation as it has developed presented severe and intractable difficulties for
Plaintiffs, most of them arising out of Friedman’s unexpected bankruptcy after the filing of the
complaint and the severely limiting conditions upon which Plaintiffs’ claims were preserved
from discharge when Friedman’s emerged from bankruptcy. The achievement of significant and
beneficial relief for the class in these circumstances is worthy of note and warrants approval of
the proposed settlement.
4 The monetary relief will accrue interest from the week after preliminary approval until it is disbursed, for the purpose of providing individual monetary awards to Plaintiffs and other eligible members of the settlement class, and paying notice and administration expenses and Plaintiffs’ attorneys’ fees and costs. (Consent Decree § VIII.) Of this amount, $203,500 will be paid to the named Plaintiffs and 22 other Charging Parties and persons who provided declarations relied on by the Plaintiffs in negotiating a settlement of the case; $518,500 will be allocated to payment of Plaintiffs’ attorneys’ fees and costs, see subsection III.3 below, and approximately $80,000 will be used to pay for administration of the settlement fund and publication and mailing of the class notice. (Id. § XI.B.1-2, 4-5.) The remainder of the settlement fund, amounting to approximately $350,000 (the “net settlement fund”) will be distributed to eligible members of the settlement class who file timely claims for monetary recovery. (Id. § VII.B.) Plaintiffs anticipate that many hundreds of class members will recover hundreds of dollars each. (See Baller Decl., ¶ 43.)

10743-13

3

Case 8:03-cv-00623-AW Document 157 Filed 09/25/08 Page 8 of 25

The Consent Decree is based on discovery and exchanges of information, and is the

product of arm’s length negotiations in which the parties were represented by experienced and

competent counsel, treats class members fairly, provides for payment of reasonable attorneys’

fees and expenses, and easily falls within the range of possible approval. In addition, the

proposed settlement class satisfies the class certification requirements of Rule 23, including

numerosity, commonality, typicality, and adequacy of representation under Rule 23(a);

maintainability under Rule 23(b)(2) for equitable relief; and predominance of common issues

and superiority under Rule 23(b)(3) for compensatory damages. Therefore, Plaintiffs

respectfully request that the Court preliminarily approve the Consent Decree, including payment

of Plaintiffs’ attorneys’ fees and costs, pursuant to Rule 23(h), certify a settlement class pursuant

to Rule 23, designate Plaintiffs John O’Bannon, Ronald Hampton and Sandra Moore as Class

Representatives, appoint Plaintiffs’ counsel as class counsel, approve the proposed notice

(attached hereto as Exhibit 2), and set a fairness hearing pursuant to Rule 23(e).

II.

FACTUAL BACKGROUND5

The class representative plaintiffs, all African Americans, are a rejected applicant for, and two employees in, covered store management positions with Friedman’s.6 They filed the

complaint on March 26, 2003, alleging a pattern of intentionally discriminatory employment

practices of Friedman’s against African American employees and applicants. Plaintiffs seek to

represent a class of both applicants for, and employees in, store positions between a date four

years prior to filing of the complaint (based on the applicable statute of limitations for §1981

5 The relevant prior proceedings have been summarized in pleadings and documented in declarations and exhibits filed on a number of prior motions in this case. Therefore, in the interest of brevity, in this Memorandum, Plaintiffs will not detail, but only highlight, the relevant background, and will omit citations of the special evidence that substantiates this summary. Those citations and that evidence are, however, in the record.
6 The additional plaintiff, Rondall Mitchell, is a white former manager of Friedman’s who witnessed, and was subjected to, racist instructions by higher-level Friedman’s management to restrict and limit the employment opportunities of African American applicants and employees in store staff and management positions. He is not a class representative.

10743-13

4

Case 8:03-cv-00623-AW Document 157 Filed 09/25/08 Page 9 of 25

claims), and December 9, 2005, when Friedman’s emerged from bankruptcy. No motion for class certification was filed in this case.
In 2003, Plaintiffs and Friedman’s agreed to, and did, conduct initial discovery, then engaged in more extensive informal information exchanges with an eye to early settlement. These efforts, assisted by mediator John Bates of JAMS at a series of three mediation conferences in January through April 2004, resulted in a tentative settlement including extensive injunctive relief of the type outlined above, plus $9,325,000 in monetary relief (Declaration of Morris J. Baller in Support of Plaintiffs’ Motion for Preliminary Approval of Consent Decree (“Baller Decl.”), filed herewith, ¶ 17.) Of that monetary amount, Friedman’s, which was by then already teetering on the edge of bankruptcy, was to pay $1,525,000, while its insurers were to pay $7,800,000. (Id.) The monetary portion of the settlement was, however, contingent on acceptance and funding by Friedman’s insurers, who although they participated in the mediations ultimately declined to approve the settlement. (Id.)
Friedman’s rapidly unraveled. On January 14, 2005, it filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code in the United States District Court for the Southern District of Georgia. This filing triggered an automatic stay of this case and deprived Plaintiffs of the ability to continue litigating it. Friedman’s continued to operate its business as debtor-inpossession. Plaintiffs and their counsel filed Proofs of Claim in the bankruptcy proceedings, but Friedman’s at all times during those proceedings possessed the ability to rescind the contractual agreements it had made for injunctive relief, and to discharge all claims for monetary relief made by Plaintiffs on behalf of themselves and the class. In these difficult circumstances, Plaintiffs successfully obtained a stipulated order of the Bankruptcy Court, entered on November 8, 2005, which permitted them to continue prosecution of the action in this Court on the condition that plaintiffs could not recover any monetary relief from Friedman’s, but only from any available proceeds of its applicable insurance policies. An additional provision of that order required Plaintiffs to indemnify Friedman’s for any costs it incurred in participating in the litigation, as specified in language that later came under dispute between the parties. Shortly thereafter, the

10743-13

5

Case 8:03-cv-00623-AW Document 157 Filed 09/25/08 Page 10 of 25

parties spent a long day in mediation of the claims before Hon. Erwin Katz (Ret.) of the U.S. Bankruptcy Court for the Northern District of Illinois, in November 2005; the mediation failed to produce a settlement. With these severe limitations on Plaintiffs’ right to proceed, the stay was dissolved at about the same time that Friedman’s emerged from bankruptcy as a reorganized company.
Friedman’s insurers had disputed coverage under all but one of the potentially applicable policies. The one policy, a “wasting policy” on which a defense was tendered, had a $5 million limit of coverage, but had already been substantially used in the defense of other covered claims and defense of the present action, and continued to be consumed as the litigation continued. It soon became clear to all parties that if this litigation ran its course the entire policy limits amount would be used for defense costs, and no insurance proceeds would remain available for payment of any eventual judgment, unless Friedman’s other policies were determined to be available.
Friedman’s at first pursued its coverage dispute with its carriers by demanding arbitration of the coverage issues. However, when arbitration discovery and proceedings heated up in the months immediately before the scheduled arbitration hearing, Friedman’s elected to drop its arbitration claim entirely in January 2006. This left Plaintiffs to attempt to assert Friedman’s interest in the disputed policies as well as to litigate their own substantive discrimination claims.
Plaintiffs undertook substantial, expensive, and time-consuming motions and discovery in pursuit of the increasingly complex claims that they had to make in order to have any chance of monetary recovery. Plaintiffs successfully moved to compel responses to discovery (Order granted September 7, 2006). They also successfully moved to amend the complaint to add Friedman’s two insurers as defendants (Order granted June 28, 2006, over Defendants’ opposition). Then Plaintiffs successfully withstood the insurance company Defendants’ respective motions to dismiss (Order entered April 30, 2007) and obtained a stay of proceedings on the discrimination claims while they litigated the insurance coverage claims (Order entered April 11, 2007). Meanwhile, ruling on a dispute growing out of discovery in the resumed action, the Court interpreted the Bankruptcy Court’s Order dissolving the litigation stay as requiring

10743-13

6

Case 8:03-cv-00623-AW Document 157 Filed 09/25/08 Page 11 of 25

Plaintiffs to bear Friedman’s litigation costs, at least for discovery initiated by Plaintiffs, and ordered Plaintiffs to reimburse Friedman’s for certain reasonable costs incurred in the case (Order entered March 3, 2007). Plaintiffs’ counsel, the putative Class Counsel, eventually paid Friedman’s defense counsel’s firm over $ 20,000 for just its first invoice pursuant to this Order. The Court further ordered the parties to file cross-motions for summary judgment, which were filed but not heard before the presently proposed settlement was reached. Throughout this process, the amount of funds remaining available on the single insurance policy on which a defense had been tendered to Friedman’s has continued to dwindle.
Against this forbidding litigation background, Plaintiffs mediated their claims with Friedman’s and Federal Insurance Company on October 16, 2007, under the auspices of JAMS. Hon. Edward Panelli (Ret.), of the California Court of Appeal and Supreme Court, served as the mediator. As a result of that mediation session, counsel for Plaintiffs, Friedman’s and Federal agreed to a full monetary settlement of all individual and class claims in the amount of $1,150,000 to be funded solely by the one Federal policy which has been providing the costs of Friedman’s defense. It was agreed that the settlement was to be consummated by a Consent Decree incorporating the earlier Partial Settlement Agreement on the injunctive relief and the above-stated monetary settlement.
On January 22, 2008 – as the parties neared completion of the settlement papers – some of Friedman’s creditors filed a petition to declare it bankrupt in the United States Bankruptcy Court in Delaware (Bankruptcy Petition No. 08-10161-CSS). Notice of this bankruptcy petition and the automatic stay resulting thereby was given to the United States District Court in Maryland on February 1, 2008. As a result of this petition and subsequent proceedings in the Bankruptcy Court, the petition has been converted to a Chapter 7 proceeding and Friedman’s is in the process of liquidation. Given these dire circumstances, the non-monetary injunctive relief set forth in the Partial Settlement Agreement, which was to be incorporated in the Consent Decree originally agreed to by the parties, is now rendered moot and no longer able to be effectuated.

10743-13

7

Case 8:03-cv-00623-AW Document 157 Filed 09/25/08 Page 12 of 25

On July 8, 2008, the Bankruptcy Court entered an order lifting the stay to permit the parties to submit this Consent Decree to the District Court and to consummate their settlement of this Civil Action upon the terms set forth herein.
Plaintiffs request that the Court initiate the settlement approval process by granting preliminary approval of the proposed Consent Decree, including payment of Plaintiffs’ attorneys’ fees and costs; certifying a settlement class for equitable relief pursuant to Rule 23(b)(2) and compensatory damages pursuant to Rule 23(b)(3); appointing Plaintiffs’ attorneys as counsel for the class; approving and authorizing the sending to class members of the notice submitted herewith; and setting a Rule 23(e) final fairness hearing.
III. THE PROPOSED SETTLEMENT SATISFIES ALL OF THE REQUIREMENTS FOR PRELIMINARY APPROVAL UNDER RULE 23(e). A. Legal Standard for Preliminary Approval. Rule 23(e)(1)(C) requires court approval of a class action settlement after the court determines that it is fair, reasonable, and adequate. Federal courts, including courts in the Fourth Circuit, recognize “‘an overriding public interest in favor of settlement’” of class action litigation. South Carolina Nat’l Bank v. Stone, 749 F. Supp. 1419, 1423 (D. S.C., 1990) (quoting Armstrong v. Bd. of Sch. Dirs., 616 F. 2d 305, 312-13 (7th Cir. 1980)); see also In re Serzone Products Liab. Litig., 231 F.R.D. 221, 241 (S.D.W.Va. 2005) (“compromise and settlement are favored by the law”). Likewise, the Fourth Circuit requires a district court to bear in mind “the clearly expressed intent of [Title VII] to encourage settlements” when reviewing a proposed employment discrimination class action settlement. Flinn v. FMC Corp., 528 F. 2d 1169, 1174 (4th Cir. 1975), cert. denied, 424 U.S. 967 (1976). The Manual for Complex Litigation describes the procedure for judicial review and approval of proposed class action settlements:
Approval of class action settlements involves a two-step process. First, counsel submit the proposed terms of settlement and the court makes a preliminary fairness evaluation. In some cases this initial evaluation can be made on the basis of information already known to the court,

10743-13

8

Case 8:03-cv-00623-AW Document 157 Filed 09/25/08 Page 13 of 25
supplemented as necessary by briefs, motions, or informal presentations by the settling parties. . . . If the preliminary evaluation of the proposed settlement does not disclose grounds to doubt its fairness or other obvious deficiencies, such as unduly preferential treatment of class representatives or of segments of the class, or excessive compensation for attorneys, and appears to fall within the range of possible approval, the court should direct that notice under Rule 23(e) be given to the class members of a formal fairness hearing, at which arguments and evidence may be presented in support of and in opposition to the settlement. Manual for Complex Litigation, Third (Fed. Jud. Center 1995) § 30.41. This two-step procedure has been specifically embraced by this Court. See In re Mid-Atlantic Toyota Antitrust Litig., 564 F. Supp. 1379, 1384 (D. Md. 1983); Grice v. PNC Mortgage Corp. of Am., No. CIV. A. PJM-973084, 1998 WL 350581 (D. Md. May 21, 1998). At this first stage of the process, the Court does not determine, as a final matter, whether the proposed Consent Decree should be approved, but only engages in a preliminary assessment of the fairness and adequacy of the proposed terms of settlement. In re Mid-Atlantic, 564 F. Supp. at 1384. This preliminary analysis examines the elements of “fairness” and “adequacy” separately. Id. at 1383. The Court’s determination at this stage is simply whether “there is, in effect, ‘probable cause’ to submit the proposal to members of the class and hold a full-scale hearing on its fairness, at which all interested parties will have an opportunity to be heard and after which a formal finding on the fairness of the proposal will be made.” Id. at 1384. As more fully explained below, the Court should preliminarily approve the proposed Consent Decree because “probable cause” exists that: (1) it is fair as a result of arm’s length negotiations by experienced, qualified attorneys after substantial discovery and litigation, and (2) it is adequate because it provides substantial equitable and monetary relief, awards fair and reasonable attorneys’ fees, and avoids the risk of delay and protracted litigation. B. The Proposed Consent Decree is Fair Because it is the Result of Arm’s Length Negotiations By Experienced Class Counsel After Substantial Discovery and Exchange of Information.
The Court must consider the following factors in evaluating the fairness of a proposed class action settlement: (1) the posture of the case; (2) the extent of discovery conducted; (3) the

10743-13

9

Case 8:03-cv-00623-AW Document 157 Filed 09/25/08 Page 14 of 25

circumstances surrounding the negotiations; and (4) the experience of counsel. In re Jiffy Lube Sec. Litig., 927 F. 2d 155, 158-59 (4th Cir. 1991); Flinn, 528 F. 2d at 1173. The Court’s task at this juncture is to determine that “probable cause exists that the Settlement was arrived at in an appropriate manner.” In re Mid-Atlantic, 564 F. Supp. at 1385.
Such a finding is warranted here based on application of the four fairness factors. The posture of the case and the discovery and informal exchanges of statistical and other information by the parties has afforded experienced class counsel a more than adequate opportunity to evaluate its strengths and weaknesses. Plaintiffs engaged in extensive efforts to resolve this matter through litigation and mediation since March 2003, including overcoming motions to dismiss, filing cross-motions for summary judgment, participating in Friedman’s bankruptcy proceedings, and arbitrating and litigating insurance coverage claims that were not contemplated at the outset of the action. Plaintiffs’ counsel undertook an extensive investigation of the class claims. They obtained and reviewed thousands of pages of documents about Friedman’s store positions, personnel policies and practices, and workforce employment and compensation data; interviewed dozens of putative class members and other witnesses with information relevant to the claims; drafted declarations, conducted discovery, and retained expert witnesses to analyze Friedman’s’ statistical workforce data; retained bankruptcy counsel to guide them through the Bankruptcy Court proceedings, and worked to preserve Plaintiffs’ and the Class members’ claims through those proceedings; reviewed numerous Friedman’s insurance policies and researched applicable insurance coverage law; and continued to litigate Plaintiffs’ and the Class Members’ claims vigorously throughout this lengthy and difficult case.
The circumstances surrounding settlement negotiations also weigh in favor of a preliminary finding of fairness. Plaintiffs’ decision to settle the case at this juncture is informed by the severe, if not unprecedented, difficulties in their litigation situation, all of which flow in one way or another from Friedman’s bankruptcy and the conditions on dissolution of the litigation stay and avoidance of the discharge of all claims that would otherwise have accompanied it. Plaintiffs’ counsel participated in at least four separate days of in-person

10743-13

10

Case 8:03-cv-00623-AW Document 157 Filed 09/25/08 Page 15 of 25

mediation plus numerous other days of negotiations of injunctive and monetary relief provisions with defense counsel over a period of several years. (Baller Decl., ¶¶ 19-23) The ultimate settlement resulted from intensive negotiations supervised by a renowned and highly experienced mediator. (Baller Decl., ¶ 17; see also Declaration of Hon. Edward A. Panelli (Ret.) (“Panelli Decl.”), ¶¶ 3-8.)
Finally, the experience of counsel weighs in favor of the proposed settlement’s fairness. The proposed Consent Decree is the result of extensive, informed, arm’s length negotiations by attorneys with substantial litigation and trial experience, who are fully familiar with the legal and factual issues of this case, and who have experience in litigation and settlement of complex and/or class action employment discrimination cases. See Baller Decl., ¶¶ 28-32; Panelli Decl., ¶¶ 3-8. Plaintiffs’ counsel informed opinion is that the proposed Consent Decree is fair, adequate, and reasonable. (Baller Decl., ¶ 45.)
Accordingly, the posture of the case, extent of discovery, circumstances surrounding settlement negotiations, and experience of counsel warrant a preliminary determination of fairness.
C. The Proposed Consent Decree is Adequate Because it Provides Substantial Relief and Avoids the Risk of Delay and Protracted Litigation. The Court’s assessment of the Consent Decree’s adequacy should consider the class
recovery in light of the following factors: (1) the relative strength of plaintiffs’ case and probability for success at trial; (2) the anticipated duration and expense of additional litigation; (3) the solvency of defendants and likelihood of recovery on a litigated judgment; and (4) the degree of any opposition to the settlement. See Grice, 1998 WL 350581 at *6 (citing In re MidAtlantic, 564 F. Supp. at 1384). The proposed relief should fall within “the range of ‘possible approval’” when weighed against these factors. See In re Mid-Atlantic, 564 F. Supp. at 1385.
The proposed Consent Decree provides equitable and compensatory monetary relief that is fair and reasonable under the difficult circumstances of this case, and further supports the Court’s preliminarily approval of the proposed Consent Decree. The relief achieved by Plaintiffs

10743-13

11

Case 8:03-cv-00623-AW Document 157 Filed 09/25/08 Page 16 of 25

in the Decree includes compensation for class members who are or were subject to the practices
and policies Plaintiffs allege are unlawful, from a settlement fund in the amount of $1,150,000
available to those class members who submit a claim of having been the victims of racial discrimination by Friedman’s.7 The Consent Decree also requires Friedman’s to pay Plaintiffs’
counsel, out of that fund, attorneys’ fees, litigation expenses, and costs in the amount of
approximately $518,500 for work performed and costs and expenses incurred through the date of final approval of the Decree.8
The proposed relief falls well within the range of possible approval when weighed
against the first three adequacy factors (the probability of success, duration and expense of additional litigation, and solvency of defendant).9 While Plaintiffs believe their case on the
merits is theoretically strong, continued litigation would present potentially insurmountable
practical barriers to recovery. Lying ahead, before Plaintiffs could hope for any monetary
recovery, were the following hurdles: (1) to win Plaintiffs’ two motions for summary judgment
on the insurance coverage issues; or at least (2) to defeat Defendants’ two motions for summary
judgment on those issues and then prevail at a trial on the coverage issues; (3) to sustain their
hoped-for victory on coverage issues on an interlocutory appeal that the insurance company
defendants would make, which on the procedural efficiency logic previously urged by Plaintiffs
7 Those equitable and monetary relief terms, which are summarized in section I. above, will not be repeated here. 8 Included in this amount is approximately $235,250 for litigation costs and expenses incurred by Plaintiffs’ counsel, leaving only approximately $286,250 for attorneys’ fees. (Id. § VIII.) This amount of fees is little more than 10% of the value of the time expended by Class Counsel on the case, at their usual hourly billing rates. (Baller Decl., ¶ 37.) Such an amount is fair and reasonable in light of the substantial discovery, litigation, and mediation tasks undertaken by Class Counsel to prosecute and resolve Plaintiffs’ claims, as detailed in section II. Pursuant to Rule 23(h), Plaintiffs will include a request for approval of the final award of their fees and costs, including all legal fees and expenses in connection with counsel’s prosecution of this litigation for review by the Court, at the Final Fairness Hearing. 9 The fourth factor, the degree of opposition to the settlement, is not as relevant at the preliminary approval stage because class members have not yet been given notice of the proposed Consent Decree. At this stage, the named plaintiffs’ support of the settlement weighs in favor of preliminary approval.

10743-13

12

Case 8:03-cv-00623-AW Document 157 Filed 09/25/08 Page 17 of 25

and adopted by the Court would be procedurally appropriate; (4) to obtain class certification of the employment discrimination claims, which Friedman’s has consistently promised to vigorously, and expensively, defend against; (5) to win on the merits of the discrimination case at trial; (6) to obtain affirmance of a trial court judgment on appeal to the Fourth Circuit, which all Defendants have also promised; and (7) to complete with success any necessary remand proceedings and subsequent appeals. (See Baller Decl., ¶ 44.) By the end of this process, there would to a certainty be no money left in the single tendered policy, and much of the other policies’ funds – the availability of which was hotly contested as a matter of insurance coverage law – would also, if available at all, have been spent in defense costs.
The proposed settlement, on the other hand, makes equitable and monetary relief available to class members in a prompt and efficient manner. The benefits of the Decree’s substantial recovery, when balanced against the risks and delay of protracted litigation, weigh heavily in favor of the reasonableness of the proposed settlement. It bears repeating that, in the absence of a settlement, the arduous, years-long course of litigation that would ensue would almost certainly exhaust both Plaintiffs’ and Friedman’s available financial resources and make any monetary recovery improbable.
IV. CERTIFICATION OF THE SETTLEMENT CLASS PURSUANT TO RULE 23(a), (b)(2) AND (b)(3) IS PROPER.
The proposed Consent Decree provides for certification of a settlement class pursuant to Rule 23(a), (b)(2), and (b)(3). The practice in the Fourth Circuit is to “give Rule 23 a liberal rather than restrictive construction, adopting a standard of flexibility in application [that] will in the particular case best serve the ends of justice for affected parties and . . . promote judicial efficienc[ies].” Gunnells v. Healthplan Servs. Inc., 348 F. 3d 417, 424 (4th Cir. 2003) (quotation omitted). Certification of a settlement-only class is routine and proper in circumstances such as these. See, e.g., Amchem Products, Inc. v. Windsor, 521 U.S. 591, 618 (1997) (“the ‘settlement only’ class has become a stock device”). In addition, the Decree provides for notice to the class and the right of class members to opt out of the monetary settlement. The proposed Decree

10743-13

13

Case 8:03-cv-00623-AW Document 157 Filed 09/25/08 Page 18 of 25

contemplates that class members who opt out will still be bound by the class injunctive relief provisions of the Decree, but will not be eligible to participate in, or be bound by, the class monetary relief provisions. Thus, individual class members who wish to pursue their own monetary claims will be able to do so. A. Certification is Appropriate Under Rule 23(a).
In determining if class certification is appropriate, a court must first look to Rule 23(a). The putative class in question easily meets the standards set forth in Rule 23(a) for numerosity, commonality, typicality, and adequacy of class representation.
1. Numerosity Under Rule 23(a)(1), the class must be “so numerous that joinder of all members is impracticable.” Rule 23(a)(1). Generally, fewer than 20 employees will not satisfy numerosity, while more than 40 will. Newsome v. Up-To-Date Laundry, Inc., 219 F.R.D. 356, 360-61 (D. Md. 2004). In addition to numbers, geographic diversity tends to establish the impracticability of joinder. See Grice, 1998 WL 350581 (class members residing in four states). Joinder would be impracticable, and numerosity thus satisfied, here because of the size and geographic diversity of the class. The parties estimate that Friedman’s employed approximately 4,000 African Americans in the covered store positions from the beginning of the class period in March 1999 through the date of its discharge from bankruptcy in December 2005. (Baller Decl., ¶ 41.) These class members worked for Friedman’s in approximately 20 states. (Id.) Thus, the proposed class meets the numerosity requirement even considering only employee class members, as joinder of all putative class members would be impracticable. There are in addition an unknown, but no doubt large number (in the thousands) of members of the applicant class. 2. Commonality Rule 23(a)(2) requires questions of law or fact common to the class. “The commonality requirement is relatively easy to satisfy, and very few cases have been dismissed for failing to meet it.” Buchanan v. Consolidated Stores Corp., 217 F.R.D. 178, 187 (D. Md. 2003).

10743-13

14

Case 8:03-cv-00623-AW Document 157 Filed 09/25/08 Page 19 of 25

“Commonality does not require class members to share all issues in the suit, but simply a single common issue.” Id. (emphasis in the original). Thus, factual differences among the class members will not preclude certification if they share the same legal theory. Id. at 188. In the discrimination context, this Court has focused its inquiry on whether the claims involve the employer’s centralized decisionmaking. Id. at 187 (citing Hewlett v. Premier Salons Int’l, Inc., 185 F.R.D. 211, 215 (D. Md. 1997)).
Here, Plaintiffs allege that Friedman’s engaged in a policy and/or pattern or practice of race-based discrimination against African American employees with regard to hiring, compensation and promotions in covered store positions. The disputed practices occurred within the framework of a companywide set of policies, procedures, and practices – in particular, a policy of intentionally limiting employment and advancement of African Americans that emanated from upper executive management ranks and that affected all class members and in all stores and regions.10 Thus, Plaintiffs’ class claims arise from centralized decisionmaking and do not depend on the terms of employment circumstances or particular claims of individual class members. Thus, the commonality requirement is satisfied here.
3. Typicality Rule 23(a)(3) requires the Court to determine whether the claims of the representative parties are typical of the claims of the class. Typicality is satisfied where the named plaintiffs’ claims rest on the same legal theory and arise “from the same event or practice. . . that gives rise to the claims of the other class members.” Buchanan, 217 F.R.D. at 187-88. Here, the Class Representatives collectively worked in several of the store positions at issue, and in that capacity were affected by Friedman’s allegedly discriminatory hiring practices, in different states and regions of the company; and all of them allege that they were subject to intentionally discriminatory practices.11 They allege that the conduct they challenge was not
10 See Amended Complaint (Dkt. 62) ¶¶ 14-21. 11 See Amended Complaint ¶¶ 22-54.

10743-13

15

Case 8:03-cv-00623-AW Document 157 Filed 09/25/08 Page 20 of 25

unique to them, and other class members were subjected to the same course of conduct. The EEOC, in its determinations of cause on all four of the Plaintiffs’ charges, credited those allegations both as to them individually and as to the class. Plaintiffs thus satisfy the typicality requirement.
4. Adequacy of Representation The adequacy of representation requirement of Rule 23(a)(4) mandates that the court look to whether the named plaintiffs “will fairly and adequately protect the interests of the class.” Named plaintiffs are deemed an adequate class representative if: (1) their counsel are qualified, experienced, and capable of conducting the litigation, and (2) their interests do not conflict with the class. Newsome, 219 F.R.D. at 362-63; Hewlett, 185 F.R.D. at 218 (D. Md. 1997). Plaintiffs and their counsel have tenaciously pursued this litigation in the interests of the class. They have engaged in discovery, motion practice, and settlement negotiations for over four years, in increasingly difficult circumstances. Plaintiffs are represented by experienced counsel with a proven track record of success in employment discrimination and class action litigation.12 The named Plaintiffs and proposed Class Representatives have cooperated with their counsel in prosecuting this action by providing information to support the allegations, and participating as necessary in the proceedings. Moreover, no conflicts of interest exist between the named Plaintiffs and proposed Class Representatives and the class members. Accordingly, the Court should find that the proposed Class Representatives and their counsel have satisfied the adequacy of representation requirements Rule 23(a)(3). B. Hybrid Certification Under Rule 23(b)(2) and (b)(3) is Appropriate to Protect Class Members Who Wish to Assert Individual Monetary Relief. In addition to meeting the requirements of Rule 23(a), a class action must also satisfy the requirements of at least one of the subdivisions of Rule 23(b). See Amchem Products, Inc., 521
12 See Baller Decl., ¶¶ 28-32. The declaration of counsel submitted herewith provides the Court with sufficient information to appoint Plaintiffs’ counsel as Class Counsel under Rule 23(g). See id. and factors listed in Rule 23(g)(1)(C)(i).

10743-13

16

Case 8:03-cv-00623-AW Document 157 Filed 09/25/08 Page 21 of 25
U.S. at 614. Here, Plaintiffs seek to have the classes certified for equitable monetary relief under Rule 23(b)(2) and for compensatory damages under Rule 23(b)(3).
Where, as here, a class action involving allegations of a pattern and practice of racial discrimination that involves both equitable and monetary relief, courts have specifically recognized the availability of “hybrid certification” – certification of the equitable aspects of the case under Rule 23(b)(2) and the damages aspects under Rule 23(b)(3). See Miller v. Baltimore Gas & Elec. Co., 202 F.R.D. 195, 199-200 (D. Md. 2001) (citing Jefferson v. Ingersoll Int’l., Inc., 195 F.3d 894, 899-900 (7th Cir. 1999), Lemon v. Int’l. Union of Operating Eng’rs., 216 F.3d 577 (7th Cir. 2000), Eubanks v. Billington, 110 F.3d 87, 96 (D.C. Cir. 1997), and Diaz v. Hillsborough County Hosp. Auth., 165 F.R.D. 689, 695 (M.D. Fla. 1996)). Under these authorities, a claim for damages does not preclude class certification, although it may require that such claims be certified under Rule 23(b)(3) and notice and opt-out procedures be used to protect class members who wish to assert individual monetary relief. See Jefferson, 198 F.3d at 898; Lemon, 216 F.3d at 580-82. The proposed Consent Decree meets these requirements.
1. Rule 23(b)(2) Treatment is Appropriate for Equitable Relief. Class certification is appropriate under Rule 23(b)(2) where defendant “acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief. . . .” The propriety of Rule 23(b)(2) certification for suits challenging discriminatory policies, and thereby requiring systemic relief, has been widely acknowledged throughout the Fourth Circuit. See Chisholm v. U.S. Postal Serv., 665 F. 2d 482, 492 (4th Cir. 1981); Hewlett, 185 F.R.D. at 222; Hubbard v. Rubbermaid, Inc., 78 F.R.D. 631, 644 (D. Md. 1978); see also Amchem Products, Inc., 521 U.S. at 614 (“[c]ivil rights cases against parties charged with unlawful, class-based discrimination are prime examples” of Rule 23(b)(2) class actions). Back pay, including lost wages, is considered equitable relief and can therefore be awarded in a case certified under Rule 23(b)(2). See Albermarle Paper Co. v. Moody, 422 U.S. 405, 416-17 (1975); Robinson v. Lorillard Corp., 444 F. 2d 791, 802 (4th Cir. 1971).

10743-13

17

Case 8:03-cv-00623-AW Document 157 Filed 09/25/08 Page 22 of 25

The Rule 23(b)(2) requirement that the action be appropriate for equitable relief applicable to the class as a whole is plainly met here. The parties had completed negotiations on injunctive relief provisions that were to have been included in the final Consent Decree, when Friedman’s second bankruptcy and the conversion of that case to a liquidation proceeding made injunctive relief moot. The injunctive relief agreed to was comprehensive, detailed and farreaching, and addressed each of the practices Plaintiffs alleged were responsible for racial disparities in hiring, promotions, and compensation. The Consent Decree in its final form requires payment of lost wages, in the form of back pay, to class members. Such back pay is an equitable remedy, not a form of damages available at law. Curtis v. Loether, 415 U.S. 189, 197 (1974); see 42 U.S.C. § 2000e-5(g).
2. Rule 23(b)(3) Treatment is Appropriate for Monetary Relief. Class certification is appropriate under Rule 23(b)(3) where “common issues predominate over individual claims” and where “class certification is a superior method of resolving the controversy.” Newsome, 219 F.R.D. at 365. Claims for monetary relief are subject to certification under Rule 23(b)(3). Miller, 202 F.R.D. at 198. The “predominance” requirement is met when liability “turns on common employer practices rather than individual employee reactions.” Newsome, 219 F.R.D. at 365. Here, common issues predominate because the Plaintiffs’ claims implicate systemic policies and practices implemented uniformly throughout Friedman’s, which the Consent Decree addresses on a classwide basis through monetary (as well as equitable) relief. A class action is also superior to other methods of adjudication of this case. Judicial economy and consistent judgments would be achieved through certification of the class. The alternative would be the filing of additional cases and piecemeal litigation. See In re Serzone, 231 F.R.D. at 240. Classwide litigation and settlement of these claims are clearly superior to the alternative of thousands of separate lawsuits in that such class treatment will save judicial resources and preclude inconsistent judgments by various courts. See id. Furthermore, the Consent Decree’s notice and opt-out procedures will assure fairness and due process to class

10743-13

18

Case 8:03-cv-00623-AW Document 157 Filed 09/25/08 Page 23 of 25

members who wish to assert separate individual claims for monetary relief. Accordingly, the compensatory damages claims are eminently suitable for certification under Rule 23(b)(3).
V. THE PROPOSED CLASS ACTION SETTLEMENT NOTICE PROCEDURE SATISFIES DUE PROCESS AND RULE 23(c) AND (e).
To satisfy due process, notice of a proposed class action settlement must be “reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.” Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 812 (1985) (quotation omitted); see also Grice, 1998 WL 350581 at *8. Under Rule 23(c)(2)(B), class members are entitled to the “best notice practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort.” Additionally, Rule 23(e) mandates that notice of a compromise of a class action must “be given to all members of the class in such manner as the court directs.”
The notice procedure proposed by the parties provides for a mutually selected third party Settlement Administrator to mail the proposed notice, in the form attached as Exhibit 2 to this motion, to all class members of the employee class via first class U.S. Mail to their last known addresses as obtained from Friedman’s’ personnel records and updated by the Settlement Administrator through search of a national change of address database.13
In addition, the parties propose to give notice to the applicant class, consisting of rejected or unsuccessful job applicants during the Class Period, by publication, since Friedman’s has not retained application records sufficient to identify the members of that class or their addresses. That notice will be given by publication in a weekday edition of USA Today, in the form attached as Exhibit 3 to this motion. Based on the extensive experience of Class Counsel and the
13 The parties as part of the settlement the services of an experienced and well qualified settlement administrator, Settlement Services, Inc. of Tallahassee, Florida to prepare and mail the notice of settlement and notice of individual monetary awards to the class members. (Baller Decl. ¶ 27.) Settlement Services, Inc.’s principal, Thomas A. Warren, is one of the Class Counsel.

10743-13

19

Case 8:03-cv-00623-AW Document 157 Filed 09/25/08 Page 24 of 25

Settlement Administrator chosen for this action, this is the most cost-effective and reliable way of giving notice to such a class of persons who cannot be individually identified from company records. (Baller Decl., ¶ 27.)
Rule 23(c)(2)(B) requires that the notice state, in plain, easily understood language: the nature of the action, the class definition, class claims, class members’ right to be heard pro se or through counsel, class members’ right to opt out, and the binding effect of a class judgment. The proposed notices attached to this motion include all of this information in plain and clear language, and also include: a summary of the terms of the Consent Decree, including the procedures by which monetary relief will be distributed to all eligible class members who do not opt out; deadlines and procedure for objecting or opting out, and rescinding an opt out; the date, time and location of the final fairness hearing;14 the names and addresses of counsel for the parties; and an invitation to class members to contact the Settlement Administrator or Plaintiffs’ counsel with any questions regarding the settlement; and the number for a toll-free 800 telephone line so that class members may ask any questions they may have.15
In sum, the notice provisions more than adequately meet Rule 23 and due process requirements and should be approved by the Court.
VI. CONCLUSION For the foregoing reasons, Plaintiffs respectfully request that this Court grant Plaintiffs’ motion for preliminary approval of the proposed Consent Decree, including an award of Plaintiffs’ attorneys’ fees and costs; certify a settlement class for equitable monetary relief pursuant to Rule 23(b)(2) and for compensatory monetary relief pursuant to Rule 23(b)(3);
14 For the Court’s convenience, a summary of the proposed schedule for class members to file opt-out statements, rescissions, and objections, and for the final approval and payout of the settlement, is attached as Exhibit 4 to this motion. 15 Because of the high and size-determined cost of nationally published notice, and the likelihood that a shorter notice is more likely to be read by the intended recipients than a longer, more complex notice would be, the notice proposed for the applicant class is less detailed than the notice to be mailed to members of the employee class.

10743-13

20

Case 8:03-cv-00623-AW Document 157 Filed 09/25/08 Page 25 of 25

designate Plaintiffs O’Bannon, Hampton and Moore as Class Representatives; appoint Plaintiffs’

counsel to serve as counsel to the class under Rule 23(g); approve the proposed notice for

mailing to the class; and set a final fairness hearing, as the Court’s calendar permits, on or soon

after February 9, 2008. A proposed Order is submitted herewith.16

Dated: September 25, 2008

Respectfully Submitted,

/s/ BARRY GOLDSTEIN (admitted pro hac vice) bgoldstein@gdblegal.com MORRIS J. BALLER (admitted pro hac vice) mballer@gdblegal.com JOSEPH E. JARAMILLO (admitted pro hac vice) jjaramillo@gdblegal.com GOLDSTEIN, DEMCHAK, BALLER, BORGEN &
DARDARIAN 300 Lakeside Drive, Suite 1000 Oakland, CA 94612-3534 (510) 763-9800; (510) 835-1417 (Facsimile)
THOMAS A. WARREN (admitted pro hac vice) tw@nettally.com LAW OFFICES OF THOMAS A WARREN P.O. Box 1657 Tallahassee, FL 32302 (850) 385-1551; (850) 385-6008 (facsimile)
DANIEL B. EDELMAN (U.S. Dist. Ct. Bar No. 2906) Katz, Marshall and Banks 1718 Connecticut Avenue NW, Sixth Floor Washington, DC 20009 (202) 299-1140; (202) 299-1148 (Facsimile)
KEENAN R.S. NIX (admitted pro hac vice) Nix, Graddock & Crumpler 191 Peachtree Street N.E. Suite 4200 Atlanta, Georgia 30303 (404) 377-7600; (404) 377-8700 (Facsimile)
ATTORNEYS FOR PLAINTIFFS AND THE CLASS

16 That Order specifies that the Final Approval hearing be held more than a month after the end of the 90 day period in which plaintiffs could – but will not – file a Title VII action based on their EEOC-issued right to sue letters. Plaintiffs understand and agree that, if any of them or other charging parties represented by plaintiffs’ counsel were to file such an action, contrary to their agreement in settling this case, the Court should and would deny final approval.

10743-13

21

 
 Case 8:03-cv-00623-AW Document 164 Filed 10/29/08 Page 1 of 8

- __IFIlEO

ENTERED

_lODGED -r_RECEIVED

John O'Bannon, et aI.,

IN THE UNITED STATES DISTRICT COURT DISTRICT OF MARYLAND SOUTHERN DIVISION
QV
Case No. AW-03-623

OCT 2 !c) 2008
AT (3;"i- '.:. '.J '.LI cu:rll< U.£. L'13TBI T COURT
DISTRICT OF MA YlAND
DEPlfTV

Plaintiffs,

[Frs I!IItNPrslD) ORDER

GRANTING PRELIMINARY APPR VAL

v.

OF CONSENT DECREE, CONDITI NAL

CERTIFICATION OF SETTLEME T

Friedman's, Inc.

CLASS, APPOINTMENT OF CLAS

COUNSEL, DESIGNATION OF CL SS

Defendant.

REPRESENTATIVES, APPROVAL OF

CLASS NOTICE, AND SCHEDUL G OF

FINAL FAIRNESS HEARING;

MEMORANDUM OF POINTS AND

AUTHORITIES IN SUPPORT OF _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _~MOTION

Plaintiffs John Q'Bannon, Rondall Mitchell, Sandra Moore, and Ronald Hampton ("Plaintiffs") request that this Court: (I) grant Plaintiffs' motion for preliminary approva of the Consent Decree, including an award of individual and class monetary relief, notice and administration costs; (2) certifY a settlement class for equitable relief pursuant to Fed. R. iv. P. ("Rule") 23(b)(2) and for monetary relief pursuant to Rule 23(b) (3); (3) appoint Plaintiff:' attorneys to serve as counsel for the class under Rule 23(g); (4) approve the proposed not ce for mailing to the class, together with dates and procedures for class members to opt out of 0 object to the settlement, as specified in the notice; and (5) and set a final fairness hearing.
Plaintiffs filed the complaint on March 26, 2003, alleging a pattern of intentionall discriminatory employment practices of Friedman's against African American employees and applicants. Plaintiffs seek to represent a class of both applicants for, and employees in, 5t re positions between a date four years prior to filing ofthe complaint (based on the applicab e statute oflimitations for §1981 claims), and December 9, 2005, when Friedman's emerge from bankruptcy. No motion for class certification was filed in this case.
In 2003, Plaintiffs and Friedman's conducted initial discovery and engaged exten ive informal information exchanges in an attempt to settle the case. With the assistance of m diator

28344-4

Case 8:03-cv-00623-AW Document 164 Filed 10/29/08 Page 2 of 8

John Bates of JAMS at a series of three mediation conferences in January through April 004, the parties reached a tentative settlement including extensive injunctive relief and moneta relief, with Friedman's insurers paying the lion's share. The monetary portion ofthe sett ement was, however, contingent on acceptance and funding by Friedman's insurers, who ultima ely declined to approve the settlement.
On January 14, 2005, Friedman's filed a voluntary petition for relief under Chap 11 of the Bankruptcy Code in the United States District Court for the Southern District ofGeor ia. This filing triggered an automatic stay ofthis case. Friedman's continued to operate its b siness as debtor-in-possession. Plaintiffs and their counsel filed Proofs ofClaim in the bankrup proceedings, but Friedman's at all times during those proceedings possessed the ability to rescind the contractual agreements it had made for injunctive relief, and to discharge all claims f< r monetary relief made by Plaintiffs on behalf of themselves and the class.
On November 8, 2005, Plaintiffs successfully obtained a stipulated order of the Bankruptcy Court that permitted them to continue prosecution of the action in this Court n the condition that plaintiffs could not recover any monetary relief from Friedman's, but only om any available proceeds of its applicable insurance policies. An additional provision of th t order required Plaintiffs to indemnifY Friedman's for any costs it incurred in participating in th litigation, as specified in language that later came under dispute between the parties. On November 2005, the parties engaged in mediation before Hon. Erwin Katz (Ret.) of the .S. Bankruptcy Court for the Northern District ofIllinois, but the mediation failed to produc a settlement that included the insurers.
The stay on this litigation was subsequently dissolved at about the same time that Friedman's emerged from bankruptcy as a reorganized company, in December 2005. Th t left Plaintiffs free to pursue recovery on their monetary claims from Friedman's insurers, in t is Court.
The only insurance policy under which Friedman's insurers did not dispute cover ge had a $5 million limit that had already been substantially used in the defense of other covered claims

28344·4

2

Case 8:03-cv-00623-AW Document 164 Filed 10/29/08 Page 3 of 8

and defense ofthe present action. That policy continued to be consumed as the litigation continued. Friedman's pursued its coverage dispute with its carriers by demanding arbitr tion of the coverage issues. However, just a few weeks before the scheduled arbitration hearing, Friedman's elected to drop its arbitration claim for insurance coverage entirely in Janua 2006. This left Plaintiffs to assert Friedman's interest in the disputed policies as well as to litiga e their own substantive discrimination claims.
On June 28, 2006, the Court granted Plaintiffs' motion to amend the complaint to dd Friedman's two insurers, Federal Insurance Company and St. Paul Mercury Insurance Co pany, as defendants. The Court granted Plaintiffs' motion to compel discovery responses by th insurers on September 7, 2006. The insurance company Defendants moved to dismiss the amended complaint, but the Court denied their motions on April 30, 2007. Then Plainti obtained a stay of proceedings on the discrimination claims so that they could first litigat insurance coverage claims to determine whether there would be a non-judgment proof pa against which to proceed on the monetary claims for employment discrimination. (Order entered Apri111, 2007).
On March 3, 2007, the Court entered an order that interpreted the Bankruptcy Co rt's Order dissolving the litigation stay as requiring Plaintiffs to bear Friedman's litigation co ts, at least for discovery initiated by Plaintiffs, and ordered Plaintiffs to reimburse Friedman's or certain costs incurred in the case (Order entered March 3, 2007). Plaintiffs had to pay Friedman's over $20,000 for costs of responding to their first, preliminary written discov ry pursuant to that order. The Court further ordered the parties to file cross-motions for s ary judgment, which were filed but not heard before the presently proposed settlement was re ched. Throughout this process, the amount of funds remaining available on the single insurance policy on which a defense had been tendered to Friedman's continued to dwindle.
Plaintiffs mediated their claims with Friedman's and Federal Insurance Company n October 16, 2007, under the auspices of JAMS. Hon. Edward Panelli (Ret.), of the Calif! mia Court of Appeal and Supreme Court, served as the mediator. As II result of that mediatio

28344-4

3

Case 8:03-cv-00623-AW Document 164 Filed 10/29/08 Page 4 of 8

session, counsel for Plaintiffs, Friedman's and Federal Insurance Company agreed to a fu I monetary settlement of all individual and class claims in the amount of$I,150,000 to be ded solely by the one Federal policy which has been providing the costs of Friedman's defens . The parties agreed that the settlement was to be consummated by a Consent Decree incorpora ing the earlier Partial Settlement Agreement providing for injunctive relief as well as the above-s ated monetary settlement.
Before the papers incorporating and presenting this settlement could be complete and filed with this Court, on January 22,2008 some of Friedman's creditors filed a petition to declare it bankrupt in the United States Bankruptcy Court in Delaware (Bankruptcy Petition No. 810161-CSS). Notice of this bankruptcy petition and the automatic stay resulting thereby as given to this Court on February 1,2008. This petition has been converted to a Chapter 7 proceeding and Friedman's is in the process ofJiquidation. Given these dire circumstanc s, the non-monetary injunctive relief set forth in the Partial Settlement Agreement, which was t be incorporated in the Consent Decree originally agreed to by the parties, is now rendered m ot and no longer able to be effectuated.
On July 8, 2008, the Bankruptcy Court entered an order lifting the stay to permit t e parties to submit the proposed Consent Decree to this Court. The Consent Decree provid s for recovery of $1,150,000 plus interest accruing on that amount until payout, for monetary r lief for plaintiffs and class members in the form ofequitable back pay and compensatory damage, the expenses of notice and administration of the settlement, and plaintiffs' litigation expense and attorneys' fees, in exchange for a release of claims, including those alleged in the operati e complaint and any other claim that could be brought for employment discrimination on t e basis of race against Friedman's, by Plaintiffs and class members who do not exclude themselv s from the settlement.
All parties were represented by counsel at the October 23, 2008 hearing on this m tion. Upon review of the proposed Consent Decree, the Preliminary Approval Motion, the dec1 ations in support of the Motion, the statements of counsel for the parties, and the entire record i this

28344-4

4

Case 8:03-cv-00623-AW Document 164 Filed 10/29/08 Page 5 of 8

matter, and in recognition of the Court's duty (I) to make a preliminary determination as 0 the certification of the case as a class action, (2) to make a preliminary determination ofthe reasonableness of the proposed class action settlement, (3) to give notice to class member of the settlement and their rights to opt out or object to it, and (4) to conduct a hearing on the fa' ess, adequacy and reasonableness of a proposed class action settlement before making any fin I determination on the settlement, the Court makes the following findings and orders:

I.

ORDER CONDITIONALLY CERTIFYING A SETTLEMENT

CLASS AND APPOINTMENT OF CLASS REPRESENTATIVES AND

CLASS COUNSEL

The Court finds that certification of this case as a class action is appropriate under Fed. R.

Civ. P. 23(b)(2) and (b)(3). The Court finds that certification of the equitable backpay as ects of

the case under Fed. R. Civ. P. 23(b)(2) and the compensatory damages aspects under Fed. R.

Civ. P. 23(b)(3) is appropriate for settlement purposes only. The foHowing Settlement C ass is

certified (solely for the purpose of implementing this Consent Decree) pursuant to Fed. R Civ.

P. 23(b)(2) and 23(b)(3):

A. All African American employees who are or were employed by th Company in any retail store or in the store Field Organization, for any length of time, between March 6, 1999 and December 9, 2005; and
B. All African American applicants who applied for employment at the Company in any retail store or in the store Field Organization between March 6, 1999 and December 9, 2005, who were not hired on such application.

The Court finds that the class meets the requirements of numerosity, commonali and typicality to justify certification; that common questions of fact and law predominate ave individual questions; and that resolution of this matter through a class action is superior t other available methods. The Court finds that Plaintiffs John O'Bannon, Sandra Moore, and R nald Hampton are adequate class representatives and appoints them as such.
The Court further finds, pursuant to Fed. R. Civ. P. 23(g), that Plaintiffs' counsel Goldstein, Demchak, Baller, Borgen & Dardarian and the Law Offices of Thomas A. Wa ren have thoroughly investigated potential class claims, have extensive experience in handlin class

28344-4

5

Case 8:03-cv-00623-AW Document 164 Filed 10/29/08 Page 6 of 8

actions and employment discrimination claims ofthe type asserted in the action, and hav committed substantial resources to representing the class, and therefore have more than adequately represented the class and are appointed as "Class Counsel."
II. PRELIMINARY APPROVAL OF PROPOSED CONSENT DECRE The Court has reviewed the proposed Consent Decree and the settlement terms an payments incorporated therein. The Court finds on a preliminary basis that it appears to e within the range of reasonableness ofa settlement that could ultimately be given final ap by the Court. The Court further finds on a preliminary basis that the equitable and monet relief provided under the settlement is fair to all potential class members, particularly in t e difficult circumstances presented by Friedman's two bankruptcy proceedings and ultimat liquidation. The Court finds that the enhanced awards for persons who were named plain iffs, filed charges, or provided testimony in the case is warranted considering those individual 'time, effort, and service to the class. The Court further finds on a preliminary basis that the am unt for Plaintiffs' attorneys' fees and costs as provided under the settlement is fair and reasonabl . It further appears that the parties have conducted extensive investigation, discovery, and su lcient litigation of the issues such that counsel for the parties are able at this time to make info reasonable assessments of their respective positions. It further appears that settlement at is time will avoid additional substantiailitigation costs, as well as the delay, risk and unce further prosecution of the litigation would present. It further appears that the proposed settlement is the result ofextensive, non-collusive, arm's-length negotiations between experienced and well qualified counsel, assisted by three well-qualified and experienced mediators. It further appears that continued litigation of this case would likely result in diminishing amounts offunds available by Defendants for resolution of this case. The C urt therefore preliminarily approves the Consent Decree as fair, adequate, and reasonable.
III. APPROVAL OF CLASS NOTICE PROCEDURES The Court has reviewed the proposed Class Notice forms, which are attached as E ibits 6a (Notice to former Friedman's employees for whom Friedman's has last known addres

28344-4

6

Case 8:03-cv-00623-AW Document 164 Filed 10/29/08 Page 7 of 8

be given by mail) and 6b (Notice to rejected applicants and others for whom accurate add ess information is unavailable, to be given by publication in USA Today nationally) to the M tion for Preliminary Approval, and finds that the proposed Class Notice fairly and adequately the class ofthe terms ofthe proposed settlement and the process available to class memb obtain monetary relief provided by the settlement, the rights of class members to object to the settlement and/or to opt out ofthe monetary settlement class, and to appear at the Final F irness Hearing the Court will conduct in this matter on the date set forth below. Settlement Clas members may opt out of the monetary relief settlement by mailing a notice of intent to op out which must be mailed to the O'Bannonv. Friedman's Settlement Administrator, Post 0 Ice Box 471, Tallahassee, Florida 32302·0471 and postmarked no later than thirty (30) days rior to the scheduled Final Fairness Hearing. The Court further finds that the proposed distributi n of the Class Notice by first class mail to each identified class member at her last known addr S8 (with a database search for additional addresses and remailing of any initially undeliverab e notices) and by publication to rejected applicants and other class members for whom no a curate address information exists is reasonable, fair and adequate, and complies with due proces requirements.
Accordingly, the Court approves the Notice presented by the parties and the meth ds and time periods for giving notice and permitting class members to opt out of the settlement a d/or object to the settlement as reasonable, adequate, and consistent with due process.
IV. FINAL FAIRNESS HEARING The Court hereby sets a Hearing on February 11,2009, at 1:30 p.m. (by telephone if there are no objections; Class Counsel to arrange the conference call)(the "Final Fairness Heari g") to determine whether the Consent Decree shall be given final approval. Settlement Class members who object to the proposed settlement may appear and such objections at the Final Fairness Hearing in person or through counsel, provided that e objecting class member submits a written statement containing the name and address oft e objecting class member and the basis of that person's objections, together with a notice 0 the

28344-4

7

Case 8:03-cv-00623-AW Document 164 Filed 10/29/08 Page 8 of 8

intention to appear, if appropriate, which must be mailed to by the Settlement Administra or, c/o

Settlement Services, Inc., Post Office Box 471, Tallahassee, Florida 32302-2523 and pos arked

no later than thirty (30) days prior to the scheduled Final Fairness Hearing. No member

Settlement Class or hislher counsel, will be heard, nor will any objection be received or

considered, except for good cause shown, ifthe Settlement Class member or hislher coun el fails

to timely submit hislher objection in writing in the manner prescribed above.

Class Counsel shall file Plaintiffs' motion for final approval of the settlement, inc

the proposed award of attorneys' fees and costs, including evidentiary support therefore, d

their responses to any objections, no later than January 30, 2009.

Counsel for Friedman's also may file a memorandum in support oflhe settlement

than the date set for Plaintiffs' submission.

If the Court for any reason does not grant final approval of the Consent Decree, al

evidence and proceedings held in connection with this settlement approval process shall e

without prejudice to the rights of the parties and the parties to this case will be returned t

positions they were in prior to the submission of the proposed Consent Decree, as more

specifically set forth in the Consent Decree.

ruUei:z , IT IS SO ORDERED, this a,#'dayof

2008.

28344-4

8

 
 Case 8:03-cv-00623-AW Document 167 Filed 01/30/09 Page 1 of 6

John O’Bannon, et al., Plaintiffs,
v. Friedman’s, Inc.
Defendant.

IN THE UNITED STATES DISTRICT COURT DISTRICT OF MARYLAND SOUTHERN DIVISION
Case No. AW-03-623
NOTICE OF MOTION AND MOTION FOR ORDER GRANTING FINAL APPROVAL OF CLASS ACTION SETTLEMENT

TO ALL PARTIES AND ATTORNEYS OF RECORD:
Please take notice that on February 11, 2009 at 1:30 p.m., by telephonic appearance prearranged with the Court, Plaintiffs will move the Court for final approval of the Consent Decree previously submitted to the Court herein and granted preliminary approval on October 29, 2008 (Doc. 164).
This Motion is based upon this Notice of Motion, Motion and Memorandum of Points and Authorities; the Declaration of Loree Kovach (“Kovach Decl.”) submitted with the Motion, the pleadings and papers submitted with Plaintiffs’ Motion for Preliminary Approval filed September 25, 2008 (Doc. 160), and the entire record in the matter, and on such arguments or evidence as the Court may receive at the noticed hearing.
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT A. The Court’s Preliminary Approval Order Has Been Carried Out With Results That Confirm That the Settlement Is Fair, Adequate, and Reasonable.
In their Motion for Preliminary Approval (“Prelim. App. Motion”), Plaintiffs set out (1) the class definition incorporated in the settlement (Prelim. App. Motion at 2), the definition of those class members eligible to claim a share of the monetary relief made available through the settlement (Id. at 2-3); the history of this litigation, as relevant to approval of the settlement (Id. at 3-8); and the relief

58034-2

1

Case 8:03-cv-00623-AW Document 167 Filed 01/30/09 Page 2 of 6

provided by the settlement (Id. at 3 and n. 4). It is not necessary to repeat these showings here, and Plaintiffs incorporate them by reference.
The Court granted preliminary approval to the settlement on October 29, 2008, after a telephonic hearing. Its Order Granting Preliminary Approval of Consent Decree [etc.] (“Prelim. App. Order”) (Doc. 164) reviewed the history of the case and the difficult circumstances in which the settlement occurred, including the two bankruptcy proceedings and ultimate liquidation of Friedman’s (Prelim. App. Order. at 1-4) and the terms of the proposed settlement (Id. at 4). The Court preliminarily found the settlement terms and the proposed Consent Decree to be “fair, adequate, and reasonable,” and specifically found that the monetary relief, enhancement awards for the named plaintiffs, class representatives, and other charging parties represented by class counsel, and the attorneys’ fees and costs to be paid to class counsel were likewise “fair,” “warranted,” and/or “fair and reasonable” (Id. at 6). The Court preliminarily certified and defined the class and found that its certification of the class and appointment of class counsel met the applicable standards of Fed. R. Civ. P. 23(a), (b)(2) and (b)(3) and (g) (Id. at 5). The Court further approved and ordered into effect certain proposed procedures for giving class members notice of the proposed settlement and an opportunity to opt out or object to the settlement (Id. at 6-7), and set the present Final Fairness Hearing at which objectors would have an opportunity to appear (Id. at 7-8).
The two classes each received notice following the procedures approved and ordered by the Court; that notice program was administered by Settlement Services, Inc. (“SSI”), a Settlement Administrator appointed by the Court. See generally Kovach Decl. at ¶¶ 1-5. Notice was effectively given to 6,539 employee class members by first class mail; for those returned with forwarding addresses or as undeliverable, SSI obtained updated addresses through a mail address trace and re-mailed notices to the updated addresses (Id. at ¶¶ 2, 4-5). Since no addresses or other records were available for members of the applicant class, notice to that class was published in a widely read national newspaper, USA Today (Id. at 3). Of the employee class members to whom notice was sent, 2,832 met the qualifications to participate in the monetary recovery under the settlement. The eligible employee class

58034-2

2

Case 8:03-cv-00623-AW Document 167 Filed 01/30/09 Page 3 of 6

members’ notice packages contained claim forms, and the published notice to applicant class members contained instructions for class members to obtain claim forms from SSI. All claim forms had to be postmarked by January 16, 2009 (Id. at ¶6). Both notices advised class members of their right to opt out or object to the settlement in writing postmarked by January 6, 2009 (Id. at ¶¶7-8).
The results of the notice and claims procedure indicate nearly universal acceptance of the settlement by class members. No class member objected to the settlement, and no class member opted out of it (Kovach Decl. at ¶¶ 7-8). A total of 632 employee class members submitted claim forms to participate in the monetary relief provided by the settlement, and a total of 22 persons submitted rejected applicant claim forms. (Id. at ¶6). B. The Settlement Terms Are Fair, Adequate and Reasonable and Should Be Given Final
Approval.
Plaintiffs’ Preliminary Approval Motion laid out the applicable standards and authorities, particularly in the Fourth Circuit and the District of Maryland, that guide a District Court’s determination whether to approve a class action settlement under Rule 23(e). See Prelim. App. Motion at 8-10. We will not repeat that discussion here and incorporate it by reference. Under those standards and authorities, and in light of the results of carrying out the Court’s Preliminary Approval Order, it is clear that the parties’ settlement – including its provisions for enhancement awards, attorneys’ fees and costs, as well as the equitable and monetary relief for the class - warrants final approval.
First, the class members by not objecting and not opting out, but rather in large numbers seeking to participate in the settlement’s relief, have strongly indicated that they regard the settlement as sufficient to protect their interests. In class counsel’s experience, it is unusual in a settlement class of this size that not a single class member has objected or opted out. Moreover, in class counsel’s experience - given that the class consists mostly of relatively modest or low wage workers spread thinly over a large geographical area who worked for or may have applied to Friedman’s a number of years in the past - the submission of claim forms by approximately one-fourth of the eligible employee class members, and more than a small handful of applicants, is surprising in a positive sense. In the opinion

58034-2

3

Case 8:03-cv-00623-AW Document 167 Filed 01/30/09 Page 4 of 6

of class counsel, these facts are strongly indicative of the acceptance of the settlement terms as fair, adequate and reasonable by class members.
Second, the monetary relief to be paid to over 650 class members who have submitted timely and proper claims is not de minimis, and should even be considered as substantial given the grim financial realities of a bankrupt and liquidating defendant that constrained the settlement. SSI calculates that eligible and claiming employee class members will receive on average approximately $525-$535 each (Kovach Decl. ¶9). Eligible applicant claimants’ awards are anticipated to amount to $300 each (Id.). A total of $203,500 in enhanced awards will be paid to four named plaintiffs, four other charging parties, and 18 other class members who provided declarations and assisted in the prosecution of the litigation to the benefit of the class. The entire amount of money available for payment to plaintiffs and class members under the settlement will be distributed to them; there will be no reversion to Friedman’s or its insurer. These are more than reasonable recoveries in the difficult circumstances. No class member has objected or commented that these recoveries are inadequate.
Third, the attorneys’ fees and costs awarded by the settlement – already preliminarily approved by the Court – have drawn no criticism from any class member. Since the costs awarded will merely repay class counsel for costs advanced on an at-risk basis over many years, and the attorneys’ fees will amount to approximately 10% of class counsel’s lodestar amounts, it is clear that neither component is a windfall to counsel or unfairly deprives class members of amounts that should be allocated to them.
Fourth, the universal acceptance of the settlement by the class members confirms that no person contends s/he was improperly excluded from the class or the portion thereof eligible to participate in the monetary recovery, and that class counsel have done a good job in attaining what relief they could in this case, and that both they and the three class representatives – O’Bannon, Hampton and Moore – have adequately and effectively represented the class members’ interests. Therefore, the Court should confirm and give final approval to the class definition, class certification, and appointment of class representatives and class counsel.

58034-2

4

Case 8:03-cv-00623-AW Document 167 Filed 01/30/09 Page 5 of 6

Finally, the Administrator, SSI, has confirmed that it is on track to complete the notice, claims administration, and QSF administration duties assigned to it by the Consent Decree in a timely and successful manner, and at a cost (approximately $80,000 including out of pocket advertising and mailing expenses, see Kovach Decl. at 10) within the budget anticipated for those services by class counsel when SSI was named as the administrator in the Consent Decree. C. Additional Questions and Issues, If Any, Will Be Addressed at the Final Approval Hearing.
The Court has indicated that, in light of the successful completion of all notice and claims procedures, plaintiffs may submit an abbreviated brief in support of final approval. We have done so, including all of the relevant facts and information the Court needs to consider final approval, in class counsel’s judgment, but omitting extensive citation to legal authorities (already cited in the Motion for Preliminary Approval) or discussion of the application of those authorities to the facts presented at the time of preliminary approval or in the present motion. Should the Court deem discussion of such authorities or the application of governing legal standards to the facts presented to be necessary, class counsel will be prepared to address those matters at the telephonic final approval hearing.
///
///
///
///
///
///
///
///

58034-2

5

Case 8:03-cv-00623-AW Document 167 Filed 01/30/09 Page 6 of 6

D. Conclusion For the reasons set forth in Plaintiffs’ Motion for Preliminary Approval and in this
Motion for Final Approval, the Court should grant final approval to the proposed Consent Decree. A proposed Order is submitted herewith.

Dated: January 30, 2009

Respectfully Submitted,
/s/ Morris J. Baller BARRY GOLDSTEIN (admitted pro hac vice) bgoldstein@gdblegal.com MORRIS J. BALLER (admitted pro hac vice) mballer@gdblegal.com LAURA L. HO (admitted pro hac vice) lho@gdblegal.com GOLDSTEIN, DEMCHAK, BALLER, BORGEN &
DARDARIAN 300 Lakeside Drive, Suite 1000 Oakland, CA 94612-3534 (510) 763-9800 DANIEL B. EDELMAN (U.S. Dist. Ct. Bar No. 2906) edelman@kmblegal.com YABLONSKI, BOTH & EDELMAN 1140 Connecticut Avenue, NW, Suite 800 Washington, D.C. 20036 (202) 833-9060 (202) 463-6688 (facsimile) (Local Counsel)
THOMAS A. WARREN (admitted pro hac vice) tw@nettally.com LAW OFFICES OF THOMAS A WARREN P.O. Box 1657 Tallahassee, FL 32302 (850) 385-1551 (850) 385-6008 (facsimile)

KEENAN NIX (admitted pro hac vice) krsn@nixgraddock.com NIX & GRADDOCK 124 Church Street Decatur, GA 30030-3325 (404) 377-7600
(404) 377-8700 (facsimile)

ATTORNEYS FOR PLAINTIFFS AND THE PUTATIVE CLASS

58034-2

6

 
 Case 8:03-cv-00623-AW Document 169 Filed 02/12/09 Page 1 of 24

-_.JFIUD ~
- _ _.lOOG£D .J£CEMD

IN THE UNITE D STAT ES DI STRICT COU RT

DISTRlCT OF MARYLAND

Jo hn 0 ' 8 :11111011 , ct a l. ,

SOUT HERN DIVIS ION
BY
Case No. AW· 03·623

FEB 1 2 2009
CLERKAuT.sG.IDilEISETNRBICETlTCOURT OISTRICT Of ~RYLANO OEP\IIY

Plaintifrs,
\'.

..f4vJ
(FINAL l'R21WiMl ( CONSENT DEC REE

Friedma n's, Inc., ct aI.,

Defendant s.

I.

I NTRODUCT ION

A. This is a class action race di scrim ination lawsui t brought pursuant to Fedeml

Rules of Civil Procedu re 23(b)(2) and 23(b)(3). It was origi nally filed on March 6, 2003 , against

Friedman 's, Inc. (herei nafter " Fried man 's") by fo ur plaint iITs - John O' Bannon, Sandra Moore.

and Ronald I-lampton, individua ll y and as rcprcsclllUlivcs ora cla ss of Afric·an Amcricnll

employees, former employees, und rejected applicants of Friedman 's (hcrei naOer

"Representative Plain tiITs"), and Rondall Mitchell, a non-member of the class (" Mitchcll") (the

Re presentative Plaintins and Mitchell are collecti ve ly referred to herein as "Plai ntiITs') In the ir

complaint, the Plaintiffs alleged thaI Friedman'S had engaged in unlawful employment practices

in violation of 42 U.S.C. § 1981 on a class-wide basis by, among other things, denyi ng A frican-

American employees equal cons ideration and opportuni ties lor hiring, promoti on, and

compcnsmion. In addit ion. parti cular Pla intiffs stated various ind iv idua l claims based on a lleged

den ia ls o r hiring, promotion, compen sation opportunities, harassment, host il e environment.

retaliation. demotion, and discharge.

After initial discovery, the Plaintiffs and Friedman' s agreed, in September of2004. to

engage in settlement di sc ussions. Although then remaining apart on the issue o r a monetary

sett lemen t, the Plaintiffs and Fried man 's had essentia lly reached agreement on the terms ornon-

23999·2

Case 8:03-cv-00623-AW Document 169 Filed 02/12/09 Page 2 of 24
monetary. inj unctive relief when. on January 14, 2005, Friedman' s tiled a petiti on for reorganizati on in bankruptcy. This filing automatically stayed the litigation. The four PlaintifTs and fiv e oth er individual, putative members o f the class ' each filcd proofs of claim in the l3ankruptcy Court. On Nove mber 7, 2005, upon a mot ion by the Plai nt ifTs, the Ban kruptcy Court lined thc stay o f this litigat ion but. in so doi ng. limited the Plaintiffs and the fi ve putative class members, any class. and the Equal Employment Opportunity Commission ("EEOC") to the proceed s of app licable EPLI in surance, mainta ined by Friedman's, for the recovery o f any monetary damages to which they might prove entitlement. On December 9, 2005. the Ban kruptcy Court approved Friedman's reorganization plan.
On Ju ne 28 , 2006, the Court granted Plaintiffs' moti on to amend their complaint to add the Federulln surancc Company (hereina ncr " Federal") and the 51. Pau l Mercury Insurance Company (hereinafter "SI. Paul") as Defendants for the purpose o f seeki ng declaratory judgme nts as to the in surance cove rage ava il ab le for any liability of Friedman 's rcsulting from Ihis race discrimination action.
On Novembe r J. 2006, Friedman 's and the Plai ntiffs en tered into a Part inl Settleme nt Agreemen t resolv ing the term s o f all prospective, non·m onetary, class injunctive relie f without any admission of wrongdoing or liability by Friedman's. Friedm an 's implemented and has adhered to the terms of this Partial Settlement Agreement. On Octobe r 16,2007. counsel fo r PlaintifTs. Friedman 's und Pederal. via mediation, agrccd to a full monetary settlement of all individual and class claims in the amoun t ors 1. 150,000 to be funded so lely by Ihe one Federal po licy which has been providing the costs of Friedman 's defense. It was agreed thm the 1 These. fi ve included four "Chargi ng Parties" who arc also represented by Class Counsel and as to whom the EEOC issued probabl e cause determinati ons upon the discriminati on charges they filed under Title VII oflhe Civi l Rights Act of 1964.
2

Case 8:03-cv-00623-AW Document 169 Filed 02/12/09 Page 3 of 24

sculcmellt was to be consummated by a Consent Decree incorporating the carlier Partial Seulcmcnt Agreement all injunctive rclief and the above-stated monetary settlement.
On January 22, 2008. some of Fricdrnan 's creditors filed a petition to declare it bankrupt in the United States Bankruptcy Court in Delaware (Bank ruptcy Petition No. 08-10 161-CSS).
otice of thi s bankruptcy peti tion and the automatic stay resulting thereby was given to the United States Di stri ct Co urt in Maryland on February 1,2008. I\s the result of this petition and subsequent proceedings in the Bankruptcy Co urt, the petiti on has been converted to a Chaptcr 7 proceeding and Friedman 's is in the process of liquidation. Given that circumstance, the nonmonetary injunctive relicf sct forth in the Pmtial Settlement Agreemen t, which was to be incorporatcd in the COllsent Decree originally agreed to by the parties. is now rendered moot and no longer able to be effectuated.
On July 8, 2008, the Bankruptcy Court entered an order lifting the stay to permit the parties to submit thi s Consent Decree to thc Di strict Court and to consummiltc their settlement of thi s Civil Action upon the term s set forth herein.
13. Friedman 's makes no admi ss ion o f liab ili ty by agreeing to the entry of this Conscnt Decree. Friedman ' s has denied , and continues to deny, all of tile allegations made by the Plaint iffs individuall y and on behalf o f the C lass. Friedman 's spec ifica lly denies that it has engaged in any form of unlawful discriminatory conduct wi th regard to the Plain ti ffs or anyone in the Class. Friedman 's consent to certification of the Class defined in Sectio n IV of this Decree is for settlement purposes only. Friedman' s conscntto the cert ification of the above Class does not constitute an admission by it that a class should or could otherwise have been certified in this case.

2]999·)

3

Case 8:03-cv-00623-AW Document 169 Filed 02/12/09 Page 4 of 24

C. Thro ugho ut the negotiat io ns leading to thi s Consent Dec ree, the Pla intins , the
Class, and Friedma n's have at all times bee n represented by competent co unsel ex perienced in emp loyment disc rimi nation class actions. Both prior to, and after. the fi rst bank ruptcy stay, the
Plaintiffs and Friedman 's have exc hanged tho usands of docume nts regardi ng the claims of the Pl ai nt iffs and the C I,ISS in fo rma l di scovery a nd mandato ry d isclosures. Additio na l information regard ing Friedman' s employment practices and Pla int ifTs' individual and class cl aims has bee n informa lly exchanged d uring the negot iat ions a r both the Part ial Settlement o n injuncti ve relie f and thc negotiat io ns lead ing up to thc monetary scu iemcn l embodied in this Consent Decree. Computerized personnel info rmation has becn produced by Friedman's and ana lyses thereof exchanged by the Pla intiffs and Friedman 's. In·depth d iscussio ns regard ing the elai ms and de fenses of the Plai nt iffs and Fried man's have occ urred. As these facts refl ect. this Conscnt Decree has been negotiated at arms length. in good fai th. with the assistan ce of ex perienced and know ledgeab le co unsel and an ex perienced, impart ia l med iator and with the best interests of the Plai ntiffs and Friedman's in mind based o n an adeq uate know ledge o f a ll the fa ctual and lega l issues presented by the complaint.
D. Based upo n thei r knowledge of the case and the extensive negoti ations which ha ve preceded thi s Co nsent Decree, the Plaint iffs, Friedman ' s and Federal2 a ll arc no w des iro lls o f implement ing a negotiated resolu tio n o rall the issues rai sed in the amended compluinl in this C ivil Action and of entering into a settlement which is fin a l and binding upon al l parties to thi s C ivil Actio n, in orde r to avo id the burden. ex pense, and uncerwinty o f further li tigation. Thi s

2 A lthough SI. Paul was not a parti cipa nt in th e mediati on lead ing to thi s Consen t Dec ree, it is the intent o rF riedm nn's. Plai ntiffs and Federal that the release of all claim s by Plai ntiffs and the C lass against Friedman 's and Federal sha ll extend to and encompass any and all claim s by Pl ainti ffs and the C lass against 51. Paul.

23999·3

4

Case 8:03-cv-00623-AW Document 169 Filed 02/12/09 Page 5 of 24
Consen t Decree has bee n jointl y negotiated and drafted by coun sel for Friedman's and the Plai ntiffs. who, along with Fedorn l, consem to the entry of th is Consell t Decree, as a final and bi nding selllclllcnt of th is Civil Action in the belief that this Consent Decree is fair, reasonable. and adequate to reso lve this casc in its entirelY. and Ihat Ihis settlement is in the best interests of the Plainl iITs, the Class, Fried man 's and Fedcrn!. In rcaching this conclu sion, all counscl and their respectivc clients have considcred, among other things, the expense, inconvenience, and the continuing demand s of burdensome and protracted litigation, the ri sks inherent th erei n, a nd the benefits provided by the terms of this Consent Decree.
The agrcement by Fricd rmUl ' s and Federa l to cnt er into thi s Consent Dec ree is contin gen t upon the EEO ' s acceptance of the rcliefprovided herein as full and complete resolution and se lll ell1ent of all charges of individual and class discrimination tiled with it by the fou r Plainti fTs, the four Charging Parties, and any other member o f the Class covcred by this Consent Dec ree ; the EEOC's agreemcntto close its fi les and terminate further action by it as to all such charges: and the EEOC's providing Lo Friedman' s of a leHer confirm in g its ngreementto these term s.
E. I>ursuant to the COllrt 'S Order Granting Prelimi nary Approva l o f this Consent Decree and the Proposed Notice to the Class submined therew ith (Ex hibits 601 and 6b), olice of this Consen t Dccree and of this compromi se and sett lement has been given to the members o f the Class. The Court find s Ihat the Notice satis fies the requirements of Ru le 23(e) o f the Federal Rules of Civil Procedure. This Court has considered the settlement and the terms of this Consent Decree and find s that they arc fair. reasonable and just; that the rights o f the PlaintifTs, the Class, and such oth er persons as may be afTected th ereby arc fully protected; th:lI the due process righls o f the Class to adequate representation, notice of senlcmcnl. the right to request exclusion from th e sett lement's release of indi vidual claim s, and opportuni ty to be heard on the settlement' s
5

Case 8:03-cv-00623-AW Document 169 Filed 02/12/09 Page 6 of 24

npproval have bee n s<lt isfied; tha t npproval of th is Consent Decree is in conformi ty with the

Federal Rules of Civil Procedure, and in particular with Rule 23(e) thereof; and Ihot thi s Consent

Decree is in no wny a deprivation orany rights, priv ileges or term s a nd conditions of emp loymellt ofany persall.

F. Therefore, UPOIl due considera tion o f the prov isions of th is Consen t Decree, the

procedures followed in negolialing. giving not ice, and protecting Closs members' rights thereunder. ond of all of the record and proceedin gs in Ihi s case, it is hereby ORDE ltED, ADJUDG ED and DECREED thai this Consent Decree shall be entered as a Judgment oflhis

Court and that the parties shalt comply wit h its terms, and tuke all actions requ ired by this

Consen t Decree, as speci fi ed below.

II.

I' URI'OSES OF HIE CONSENT DECREE

The purposes of this Consent Decree are:

A. To estob li sh an ex pedited and fair proced ure fo r im ple mentin g reli cf pursliant to

the term s of this Consent Decree and for distribllting a monetary settlement to eligible members

of the Settlement Class;

B. To avoid further expe nsive and protrac ted litigation: a nd

C, To provide fina lity to the resolu tion of all claims and defenses asserted in this

action. III . IJ EF INITIONS
The rollowing terms used in the Consent Decree shall have the rollowing meanings:

" Approva l Date" means the date upon which the Court signs lhis Consent Decree aner

having conduc ted a fairness heari ng, if requi red, and determined thnt it is fair, adequate and

reasonable.

23999-3

6

Case 8:03-cv-00623-AW Document 169 Filed 02/12/09 Page 7 of 24

"C harging Parties" means Willie Johnson , Khadijah Kashif, Jacqueline Murray, and Maketha Radden (n ow deceased).
"Civ il Act ion"mean s thi s action , 0 ' D311110n, et al. v. Friedman ' s. Inc.. et aL, Civil Action No. A\V~03 -623 (U. S. Di stri ct Court fo r the District o f Maryland).
"Class" is used herein interchangeably with Settlement Class and has the same meaning . "Settlement Class" is defined in Sectio n IV.
"Class Counsel" means the law finn of Gold stein. Demchak. Baller, Borgen & Dnrdarian and thc Law Office of Thomas A. Warren and the indi vi dual attorneys o f record for the Plaintiffs in this Civil Action .
"C lass Fund" l11cans that portion o flhe Seul ement Fund designated for payments to PlaintifTs and Class membcrs under Scctio n VII . below .
"Class Representatives" means John O'Dannon , Sandra Moore and Ronald 1·lampton . " Field Organizati on" means that part o rthe Friedman 'S organization comprised o f employees working in the stores as well as those empl oyees who have direct superv isory responsibi lity for the stores. " Field Posit ions" mean the positions o f Di strict Manager, Store Manager, Assistant Siore Manager, and Sales Assoc iate. " Fina l Approval" mcans the entry of lhi s Consent Decree on the Approva l Dale and either: ( I) the expiration o f the time for fi ling o fa direct appeal from the Court' s approval o f the Consenl Decree without a notice ofappcfli havin g been filed , or (2) if a limel y di reci appeal is filed, the fin al reso luti on of that appeal resultin g in finol j udicia l approval of Ihe Consent Decree . " Friedman' s Counse l" means the law firm of Drinker Biddle & Reath .

239'}9· )

7

Case 8:03-cv-00623-AW Document 169 Filed 02/12/09 Page 8 of 24
"Insurers" shal l mean the Federal In su rance Company (" Federal ") and the Sl. Paul Mercury Insurance Com pany ("51. Paul ").
"Preliminary Approval Date" mean s Ihe date on which Ih e COllrt en tered un Order preliminaril y approving this Consent Decree. pending noti ce, and giving members of the class an opportunity to o pt out or the Sett lement Class or submit objections to the Consent Decree, aOcr holding a preliminary fairn ess hearing. if required .
"Settlement Fund" is defined and desc ribed in Secti on VII below, and includes amounts to be made avai lable both for monetary payme nts to Plai ntiITs and C lass members, and for payments o f attorneys' fee s and costs.
"Settlement Fund Adm ini strator" shall mean Sett lement Services, Inc. of Tallahassee, Fl orida.
"Statcmcnt of Claim Form" means the forms thaI must be submilled by C lass members pursuant to Sec ti on Vl I below in order to qual ify for participati on in payments from thc Senlement Fu nd.
IV. CLASS DEFINITION AN D CE RT IFICAT ION A. The Civi l Action is ce rtified (solel y for the purpose of implementing thi s Consent Decree and Ihe parties' settlement embodied in it) purslIantt o Federa l Ruleo f C ivil Procedure 23(b)(2) and 23 (b)(3). Certification is granted pursuant to Rule 23(b)(2) for purposes of the equitable payment of lost wages to class mcmbcrs, and pursuant to Rulc23 (b)(3) for the compensatory damages co mponent of thc rclicf'providcd in thc Conscnt Dccrcc.

2)9Q9·)

8

Case 8:03-cv-00623-AW Document 169 Filed 02/12/09 Page 9 of 24

B. The Sett lement Class consists of: I. All African American emp loyees who were cmp loyed by Friedman 's in
any retail store or in the store Field Organ ization , for any length ortimc. bctwcen March 6. 1999 and December 9. 2005; and
2. Alt Arrican American applicants who applied for employment at Friedman's in any retail store or in the store Field Organization between March 6, 1999 and December 9, 2005, an d who were not hired on sllch application.
C. The portion of the Settlement Class that is eligible to seek to participate in the compensatory damages component of the monetary rclicfprovided in thi s Decrec. consists of:
I. All African American employees \\ho were employed by Friedman's in any retail store or in the store Field Organization fo r at least s ix full consecu tive months betwecn March 6, 1999 and December 9. 2005, except those who fi le a timely request to opt out of and be excluded from the compensatory damages component o fthc monetary re lief provi sions of the Consent Decree; and
2. Al l Africa n American app licants who appl ied ror employ ment at Friedman 's in any retail store or in the store Field Organization between March 6. 1999 and December 9, 2005, and who were nol hired. exceptlhose who file a timely request to opt out of and be excluded from the compensatory damages component of monetary relier provisions o rthe Consen t Decr(..'C.
D. Pursuant to Rule 23(b){2), all Settlement Class members are bound by the prov isions of the lost wages component of the monetary relief provided in this Co nsent Decrec and arc deemed to ha\le waived and released any and all claims for such Class relief upon the Final Approval of thi s Consent Decree.

"999-1

9

Case 8:03-cv-00623-AW Document 169 Filed 02/12/09 Page 10 of 24
E. Settlement Class members who have filed a timely request 10 opt ou t o flhe compensatory damages component of the monetary relief provi sions of thi s Consent Decree (as provided for in Section VII below) shall not be deemed, pursua nt to Scction VI B be low, to release any claims for individual compensatory damages (as distinguished frol11 the lost wages portio n of the relief as 10 whic h they arc bound) and remain subject to the Bankruptcy Court Order of November 7. 2005.
Pursuant to Rule 23(b)(3), Settlem ent Class Members wllo do not file a timely request 10 opt OUI o f the compensatory damages component of the monetary rel ief provisions of this Consent Dec ree sha ll be deemed, pursuant to Section VI B below, to release all cluims for individual monetary relief whether or not they file a statement o f claim form or whether or nol they are determined to be eligible to receive a settlement paymenl pursuanllo Sectio n VII .
F. This Civil Action and all claims made therein by or on behal foft he Plaintiffs and the Class against each, any, and all oflhe Defe ndants (Friedmnn 's, Federal, SI. I)aul) are settled and shall be dismissed with prejudice upon Final Approval of this Consent Dec ree.
G. In the evcnlthat Final Approval of this Consent Decree is not obta ined , the fac t that certification o fa Settlement Class was sought herein or that PlaintiOs. Friedman 's and Federal entered into this Consent Decree shall not be deemed a wa iver or assertion of any pos ition or defense by Pluintiffs, Friedmnn 's. or Federal in further proceedi ngs in this case including. but not limited to. the question of the appropriateness o f class certification, and Ihis Consen i Decree shall not then be adm issible in any coun regard ing the proprielYof class certificat ion. in this or any other aClion.
10

Case 8:03-cv-00623-AW Document 169 Filed 02/12/09 Page 11 of 24

V. JU IUSD ICT ION AND TERM OF DECREE A. The Court has ju risdict ion over the part ics and the subject matter of lhis act ion. The amended complaint in Ihis action asserts claims that. if proved, would authorize the Court to grant the relief sc! forth in this Co nsent Decree. Venue is pro per in this Court. The Court shal l retain j uri sd ictio n of this Civil Action for the purpose of entering all orders which may be necessary to implement th e reli e f provided by thi s Consent Decree. B. This Conse nt Decree and the Court 's jurisdicli on or tile case shall terminate upon the final distribution o rthe settlement payments required in Seelian VII. VI. LIMITATION AND RELEA SE OF MONETARY RELIEF C LAIMS A. Each or the Plaintiffs (the three C lass RcprcscllIalives and Mitchel l) and the four Charg ing Parties represen ted by Class Counsel {Class Members Willie Johnson, Khadijah Kashif, Jacque li ne Murray, and Maketha R:'lddcn (now deceased) who receive individual mo netary payments fro m the Sell iement Fund as provided in Section VU of thi s Consent Decree sha ll be required to sign a form of Release auached hereto as Ex hibit I as a condition precedent to rece ipt o f payment. Upon signing the Release and as set forth more fully therein . each such Plaintirrand Charging Part y (or estate thereof) shall be deemed to Imve thereby waived, and released rriedrnan' s and its Insurers from, any and all claims including, but not limited to, any claims for monetary relief of any type and alto rncys' fee s and costs that they made in this C iv il Action, or that the y might ha ve asserted or could in the future assert under an y cause of action agai nst Friedman's and its Insurers arising o ut o f the ir employment with Friedman' s or the temlinmio n thcreofand/or their fa ilure to be hired by Friedman's including. but not limi ted to, any claim under any federal, state or loca l statute including. but not lim ited to, Tille VII of the Civ il Rights Act of 1964. as amended, 42 U.S.C. § 2000e £! ~ and the Civil Rights Act of

2)999.)

11

Case 8:03-cv-00623-AW Document 169 Filed 02/12/09 Page 12 of 24

1866,42 U.S.C, § 1981 , As part o f sllch Release, Plaintiffs and th e Charging Parties furt her
agree never to seck employment or re-employment with Friedman's or any company with which it is affili;;lted.
B. All C lass Members who do no t opt o ut of thi s Civ il Action in the manner spec ified in Sec fi o n VII below shall be deemed to have thereby waived, and released Friedman 's and its Insurers from, any and all clai ms, including, but not limited to, all claims for monetary reliefofany type (including attorneys' fees and costs), for alleged race di scrimination that were made in this C ivi l Action, or that Ihey might have asserted or that mi ght have been asserted on their beha lfor that they cou ld in the future assert against Friedman 's and its Insurers arising out of thei r em ploymen t with Friedman's or the termination thereof and/or their failure to be hi red by Friedman 's including any race discrimination claim under any federal , slate or local statute including, bu t not limited 10, Title VII of thc C ivil Righls Act o f 1964, as amended, 42 U.S.C. § 2000e ct.li£,9.. <md the Civ il Rights Act of 1866. 42 U.S.c. § 1981. However, as to Friedman's. the foregoing release and waiver of claims sha ll not extend to claims based on incidents occ urring after the Final Approval Date or to matters which were not and could not have been asserted by o r o n bchalfofthc C lass Mcmber in the Ci vil Action. For C lass Members who do opt out of this Civil Action. the limitati on periods ror any claims by them wh ich wcre neither asserted nor could ha\'c been asserted in this Civil Action were not tolled during the pendency of thi s Civil Acti on.
C. Failure to obtain an individual Release from any Plaintiff, Charging Party or other Class Member shall. in no respect. undermine the full force and cfTect of the settlement and dismissal of the claims asserted in thi s Civil Action.

23999.)

12

Case 8:03-cv-00623-AW Document 169 Filed 02/12/09 Page 13 of 24

D. Upon the making of the payment described in Sectio n VII A by Federal to the

Settlement Fund Administrator, alt claims made by the Plaintiffs and Class against Friedman 's

Insurers includi ng, but not limited 10, a ll c la ims fo r the re lief set fo rth in paragraphs 60-62 and

81-84 of the amended complaint in thi s Civit Action, all clailll s for monetary o r other relief o f

any type (including attorneys' fees and costs) that were made in this Civil Acti on, and all cla ims

tha t Pla intifTs or the C lass might have asserted or that migh t have been asserted on their behalf or

could in the future be asserted llnder any cause ofacli on by them against Friedman 's Insurers

shall be dismi ssed with prejudice pursuant to the Stipulati on of Di smi ssal of such claims attached

hereto ..IS Exhibit 2.

VII . MON ETARY RELIEF - PAYMENT, C LAIM S PROC ESS IN G AND DI STRIB UT IO N O F S ETTL EM ENT FUND

A. Monelan' Pnvmenl

Within seven (7) di.lYs aner Preliminary Approval by the Court of this Con sent Decree,

but no sooner than December l. 2008 (and provided that as of s uch date no Plaintiff or Charging

Party has filed a Tit le VII suit pursuant to the Notice of Righi to Sue issued 10 him or her by the

EEOC on August 27. 2008), Federal. on behi.l lf of Friedman's, shall pay the gross sum of one

mi llio n, One hundred and 110y thousand dollars ($ 1,150,000.00) (the "Settlement Fund" or

"Fund") into an interest-bearing acco unt established by the Settlement Fund Administrator to be

distribu ted in accordance with the provisio ns ofth is Consent Decree. The Sett lement Fund

Admin istrator, Sett lement Serv ices. [nc ., has been selected by C lass Counsel. The Settlement

Fund account shall accrue interest at the customary rale paid by the commercial bank where the

fund s orc deposited. Until all moneys have been pa id out or that account, the accrued interest

shall be lIsed to pay the costs ror the administration orthe Settlement Fund including the

distributio n of the monetary paymeOis. requi red tax reporting, and other charges as SCI forth in

23999.)

13

Case 8:03-cv-00623-AW Document 169 Filed 02/12/09 Page 14 of 24

this Section. CI<lss Counse l may di rect the Settlement Fund Administrator to pay only the costs

of the notice and the administrat ion of the claim and approval process out of the Settlement

Fund, and no other costs for any Dlher pu rposes, unti l the Final Approval o f the Consent Decree.

If Final Approva l o f the Consent Decree is not obtained, the Sett lement Fund Admini strator shall

return the balance of the Sett lement Fund, plus accrued interest. and less actua l costs or notice

and admin istration incurred , to Federal. The obligation of Federal and Friedman's with respect

to thi s Settlement Fund will be mel in full upon reccipt by the SClllemcnt Fund Admin istrator of

the above·stated sett leme nt amount. On ly wi thdrawal s authorized by thi s Consent Decree may be

made from the account.

The Sett lement Fund shall be the sole source o f all o f the following payments pursuant to

this Consent Decree:

(a) monetary relief for the four Plaint iffs and the four Charging Parties represented by

Class Counsel. each o f whom shall execute a general release (as to Maketha Radden, Class

Counsel will obtain a release from her estate);

(b) monetary relief for the class;

(e) all allorneys' fees and costs;

(d) all costs of notice, admin istration of the claims process, in clu ding any necessary

mailing or tracing o f addresses; and

(e) the employee and employer share of any employment taxes (it is anticipated that any

monetary re ller, consistent with the allegations and fact s. will be allocmed 85 % ror

compensatory damu gcs and 15% for lost wages).

B. Prncc.~.. Fo r Allocatin g Monetary Relid and Distrihuting the Sclllemcllt Fund
I. Participation in SCll lemc nt

2J~·J

14

Case 8:03-cv-00623-AW Document 169 Filed 02/12/09 Page 15 of 24

All Class members who wish to seek monetary rc liefby payment from the Sett lement Fund under Seelion VII B 3 below must complete and return the appropriate Statement of Claim Form(s) (in Ihe form ofExhi bil s 3 and 4 attached to this Consen t Decree) to the Settlement Fund Admini strator, postmarked on or before the postmark dead line established by the Court in its order preliminarily approving this Consent Decree. Class members whose Claim Forms arc not received by the Settlement Fund Admini strator postmarked by the filing deadline wilinot be en titled to receive Dny mOl1el<lry rel ief under this Consent Decree.
2. Determi na ti on of Eligi ble Cla im a nt Stat us The Settlement Fund Administrator is the sole determiner of eligibility for Class Member monetary relief under the terms of this Decree. Friedman's wili not participate in, seck to influence or object to eligibi lity determinations. All such determinat ions by the Sett lement Fund Administrator sha ll be final and non-reviewable. Definition of an "E li gible Claimant": "E ligi ble Claimants" arc only those Class Members who sat isfy ALL of the fol lowing criteria in either (a) or (b) below, and the criteria in (c) be low: (a) The Class Member was employed by Friedman's ill any o f its retail stores in a fu ll time position at any time betwecn March 6, 1999 and Dccember 9, 2005 fo r at least six (6) fu ll consec utive months. (b) The Class Member applied for employment at any of Friedman's retail operations a t any time between March 6. 1999 and December 9, 2005 and was not hired , (c) The Settlement Fund Ad min istrator receives from sllch Class Member, postmarked by the filing deadline in accordance wit h the procedures set forth in thi s Consent Decree, an

23999-]

15

Case 8:03-cv-00623-AW Document 169 Filed 02/12/09 Page 16 of 24
appropr iate and completed Stmement ofCluim Form (s) in the form o f Exhibi ts J (for emp loyees) o r 4 (for applicants) ulI,lched to this Consent Decree.
3. Determin ation or th e Amollnt or Awards Once the Settlement Fund Admini strato r has made a determination that a Class Member is eligible for mo netary relier, it will make a determinatio n of the amoun! oreach Eligible C laiman t's award as follows:
a. Rnh anecd AWll rds fo r Perso ns Wh o \Vere Na mcd Pl aintirfs. Filcd Char ges. or Provid ed Testim onv.
Persons \\ ho are entitled to an enhanced monetary award are listed o n Ex hibi t S. Each of these persons has (I) served as a PlaintiO' in thi s Civil Action; (2) filed a charge of race discrimination aga inst Friedman' s, Inc. with the EEOC o n or before December 9. 2005; o r (3) signed a declarat ion for liSC by Class Counsel in this C ivil Action. T he persons in subcategories (2) and (3) on Ex hi bi t 5 wi ll be entitled to receive both their enhanced award and any award to which thcy nrc entitled pu rsuan t to their claim form ; the persons in sub-category (I) shall receive only the amount listed on Ex hibit S.
b. Dis tr ihu tion ror Eligihle C la im ll nts with Pos l- I-Ii ring C lai ms All Eligib le C lai mants who sati sfy th e crite ria of Secti on VII B 2 (a) shall be entitled to a share of the Employee Settlement Pool. The Employee Settlement Pool shall be $250.000. Each Eligible Claimant, except Plain tiffs, see subparagraph 3 a above, shall be en titled to share in the Employee Settlemen t 1' 00 1. Each Eligib le Claimant's share o f the fu nd shall be proportional to herlhi s number o f points, 3wu rdcd as specified in this subsect ion, as a percen tage of the points awarded to all El igib le Cl aimants sharing in the Employee Settlement Poo l. Eac h individua l's point distribution sl13ll be based o n the Eligib le C lai man t's length ofcm ploYl1lent wit h
16

Case 8:03-cv-00623-AW Document 169 Filed 02/12/09 Page 17 of 24

Friedman's. Each full month o f full-t ime employment in any position in any of Friedman 's retail stores during the class period shall be counted as one point for these purposes.
c. Treatment nf Post-Hiring Points After the SClllcment Fund Admini strator assigns points to the claims of each Eligible C laim ant, the Senlemcnt Fund Adm ini strator shall total a ll the po ints assigned 10 DII claim s and divide the Employee Settl ement Pool by the total o f all points assi gned to all c laim s. The result o flhi s calculati on wilt be the mnount payable per point. Each Eligible C laimant' s ta laI ass igned poi nts shall be multiplied by thi s amoun t to determine his/hcr gross amo un t of monetary re lief. The final calc ulali on of Eligible C lilirmlllts' payments from Ihe Employee Sett lemen t Pool sha ll not be made until after the rcversion to that Poo l of any amount s not allocated to Eligible Claimants from the Appli cant Scttlement Pool pursuant to subsection e below.
d . Di st rihutio n fo r E li gib le C lai mants wit h Fai lu re to Hire C laims All Eligible Claimants who claim to have applied for employment by submitting a wrillcn applicat ion and not been hired by Friedman 's for a pos ition in a ny of the Friedman ' s retail stores, shall be entitled to a share of an Applicam Selliernen t Pool. That Pool shall consist
of $ 100,000 from the Settlcment Fund. Eac h such Eligible C laimant's share shall be based on the tota l number of points assigned to hi s!her claim using the following criteria :

Year of A llJ) li cnl io n
1999
2000 2001 2002 2003 2004 2005

Poi nl s 3 3 2 2 1

Eligible Claimants may receive compen sation for only onc failure to hire claim, even if

they applied and were not hired more than once. In the event that an Eligible C laimant has morc

23999·)

17

Case 8:03-cv-00623-AW Document 169 Filed 02/12/09 Page 18 of 24

than one fai lure to hire c laim, compensation sha ll be awurded based on the claim that produces the highest number of points.

e.

Trelltmenl of Failure to I-lire Points.

Aner the Settlemen t Fund Adm ini stralor assign s poims to the c laims of each fai lu re to

hire Eligible Claimant, the po ints ass igned to a ll fai lu re to hire claims will be added together and

di vi ded into the App lic.ant Settlemcnt Pool. The result of this calculation will be Ihe amount

payable per point to all f"il ure to hire claimants. Each Eli gible C laimant 's toWI assigned points

shall be multiplied by this amount to detem,ine hislher gross amount of monetary payment.

In no event shall a failure to hire Elig ible Clai mant recover in excess o f $300 from the

Applicant Settlement Pool. In the event that any balance remains in the Applicant Settlement

Poo l after a llocation of amounts fo r all claim s from thi s 1)001, such ba lance shall revert to the

Employee Settlement Pool and be distributed to post·hiring Eligible Claimants, pursuam to

Section VII B 3 c, above.

f.

Effect of Filing Bo th TVllC.'! o f Cia i III Fo rms

Elig ible C laimants may rece ive compensation for e ither a fai lure to hire c la im or a post-

hir ing claim, bU I nOI both types or cla ims. In the evelll that an Eligible Clai man t has fi led both a

post·h iring cla im fo rm find a failure to hire c laim form, compen sat ion shall be awarded based on

the claim form thm produces the largest compcnsation.

4.

Information Requests

In the event that the Settlement Fund Administralor requests that any Class Member or

claimant provide addi ti onal informati on in order to evaluate any Statemcnt of C laim Form , such

C lass Member or claimant shalllimely respond to the requcst by the dale determined by the

Sett le ment Fund Administrator. Fa ilure to respond timcly 10 a request for additiolllll informatio n

2)999-3

18

Case 8:03-cv-00623-AW Document 169 Filed 02/12/09 Page 19 of 24

may resu lt in the Class Membcr being determincd not e ligible to receive any monctary award, at

the Settlement Fund Admin istrator's sole d iscretion.

5. I)istrihulion of th e Settlement FUlld

II .

C hec ks

Within three (3) month s after Final Approval or as soon thereafter as practicablc, the

Settlement Fund Administrato r shall determine a llocati ons for each Eligible C la imant. The

Settlement Fund Administrator wi ll send by certified mai l to each PlaintifTand Charging Party

the Release form (Ex hibit t ) stating the g ross amount allocated 10 each such individual. Upon

return of lhe signed Release by the Plaint ifT o r Charging Pany, the Settlement Fund

Administrator shall send the originals of all such signed Releases to Counsel for Friedman's and

shall ma il a check forthe net amount of the Settlemen t Fund to which the Plain tifT or Charg ing

Pany is fina lly determined to be entitled (" Fimll Gross Selliement A llocation"). The back of the

selliement chec ks sem to a ll Eligible Claimants shall have printed upon them, above the line for

the endorsement signature. the fo llowing release language in conformance with Secli on VI B

above: " By signing and cashing this check. I release Fri edman's and its Insurers (Federal

Insurance Co mpany and SI. Paul Mercury Insurance Company) from a ll c laim s o rrace

discrimination made o n behalf of myself and the C lass of which I am a member in O'Bannon el

al. v. Friedman 's et al.. Ci vil Action No. A\\1·03·623 (U.S. D istrict COlin. Maryland):' The

SClllelllent Fund Admini strntor shall retain the cashed checks w ith the endorsed release language

and. upon request, wil l provide a copy of any individual' S check 10 Friedman' S, Federal o r their

respective Counsel at their expense.

b. Allocatio n

n999-1

19

Case 8:03-cv-00623-AW Document 169 Filed 02/12/09 Page 20 of 24

A ll Eligib le C laimants will be mailed a check re fl ec ting the net amount o f the ir

e ntit lement determined as fo llows: 15% o f the individll<ll's Fina l Gross Settleme nt Al location

wi ll be considered payme nt for lost wages su bject to withho ld ing for FICA and nny other lega lly

required wi thholdings o r ded uctions, and will be reported on Form \v·2; 85% of the individual 's

Final Gross Settlement Allocation will be considered payment for compensatory damages that is

nOt subject to any withho ld ing o r deductions, and will be reported on Fom, 1099·MISC.

c.

Deductions. Wifhhnidincs,ll lld Related Filings

In cluded with the check in the net amount due the Eligib le Claimant will be a statement

showing the gross (pre-tax) amount of the payment. along with an itemized statemen t of all

deductions made. Flat rate d educt ions from gross amount s wil l be made on ly for federa l and

state income taxes, the em ployee's share of social security and med icare tax for that port ion of a

Final Gross Settlemcnt A llocat ion that is for wages, and any local income tax that applies. Any

employer pay ro ll taxes or em ployer contri butions no rmally required to be paid by the employer

(including. but nOllimitcd la, FUTA, SUTA and thc employer's share of FICA and Medicare)

shall be calculatcd by thc Settlement Fund Administrator and shall also be paid o ut of the

Settl ement Fund with in the tim e required by the <lpp lieab le federa l <lnd state regulations. The

Settlement Fund Administrator wi ll be responsi ble for prepa rin g and ril ing \V·2 and 1099 forms

for all Eligible Claimants, Plaintiffs, and Charging Panies and wilt retain copies of same. Upon

the completion of the distribut ion of the Settlcmcnt Fu nd, the Settlement Fu nd Administrator

shall provide to Counsel for Fried man 's and r'lliintiffs a copy of its spreadsheet showing the

amount o f the gross paymcnts to each ind ividua l, all amounts wi thheld and re mitted to the taxing

authori ties for employee payroll taxes fro m suc h pay ments, and a ll employer payroll taxes and

contributio ns paid to the taxing authorities o ut of tile Setllcmcnt Fund in conncct ion with the

20

Case 8:03-cv-00623-AW Document 169 Filed 02/12/09 Page 21 of 24

applicable portion of each individual's payment. Thi s spreadsheet shall be Confidential , shall be

subject to the documcnt protective order in this Civi l Action, and may be disclosed only to the

Parties. appropriate taxing authorities such as the Internal Revenuc Service, or pursuant to valid

legal process. Each Plaintiff, Charging Party and Eli gible Claimant receiving a payment will be

solcly responsible for determining and paying any tax liability they incur IlS th e result of

receiving such payment plIfsuant to this Con sent Decree and Friedm an ' s shall have no

responsibility as to uny such tax liability.

6.

nc~id ll al F un ds a nd Adm inistrative Ex penses

All costs of lite Settlement Fund Admini strator. including expen ses related to the

c reati on, operation, ond cl osure of the Settlcm ent Fund. including prepa ration of tax return s,

nOlice, and c laims odministmtion, sha ll be paid Ollt of the Settlement Fund . Any monies

remaining in the SClllemcnt Fund at the end afthe Term o f the Consent Dccree, less all

applicable admini strative costs, shall be paid to C lass Counsel for monitoring the implementation

of this Consent Decree.

7. Miscell aneo us

Thi s Consent Decree contemplates thut there will be difTerences in amounts individually

received by Eligible C laimunls .

Claim Form s received by the Settlement Fund Administrator will bc treated as

confidential and not di sclosed to Friedman 's or any othcr person or entity, except that the

Settlement Fund Admini strator is authorized to di sclose to Friedman' s such information from

Stateme nt of C laim Form s as is necessary to per/o rm il s duties and responsibilities req uired by

this Consent Decree ,
c. Process for Opting O ut of In d ivid ua l MOlle'an' Reli ef

21

Case 8:03-cv-00623-AW Document 169 Filed 02/12/09 Page 22 of 24

When the Stateme nt of Clai m Form is sent to Class Members, a "Notice of Heari ng to

Consider and Approve Consent Decrec" (Exhibit 6a ) shall also bc mailed to each Class

Member. For a Class member to e ITect ively opt Olll of the com pensatory damages component of

the individua lmonclary rel ie f, hc/she mu st give not icc of lhe decision to opt oul to the

Settlement Fund Adm in istrator postmarked on or before the postmark deadline established by the

Court in ils order preliminarily approvi ng thi s Consent Dec:ree. The Sctt lemenl Fund

Administrtltor shall advi sc the Pa rties and the COLIft as \0 the ident ity ofanyonc filin g a noti ce of

opt out.

Ifmore than twenty (20) percent of the Class Members exercise the right to opt out under

thi s provision. Friedman's shall have the absolute option 10 declare thi s enti re Consent Decree to

be nul] and vo id .

VIII .

or I'AYMENT ATTORNEYS' FE ES ANI> COSTS TO PLAINTIFFS ' ANI>
C LASS CO UNSEL

A . Amount of PUVlllcnt

Class Counsel shal l receive the fo llow ing amounts as attorneys' fees, costs and li ligation

ex penses in the aggregate. in full and final paymen t or all claims for attorneys' fees, costs and

litigation expen ses in con nect ion with Ihis Civil Action:

Costs and liligation ex penses:

$ 235,250

Allorneys' fees:

$ 286,250

These amounts shall be awarded to all of the attorneys fo r Plaintiffs and the Class, and shall be

divided am ong them as they may agree.

11. Method :lIId Tim iug of Payment

The Settlement Fund Administrator sh311 disburse these fund s to CI3SS Counsel at the

same time that checks arc sent to the PlaintiITs and Eli gible Claimants. At the time of suc h

23999-3

22

Case 8:03-cv-00623-AW Document 169 Filed 02/12/09 Page 23 of 24

disbursements and payments it shalt be the sa le responsibil ity orthe Seltlement Fund

Admi ni mator to insure that there arc sufficient fund s in the Setlleme nt Fund to cover all the

admini strative. withholdin g and ot her amounts chargeable to the Sett lement Fund as set forth in

Sec tion VlI A. The Sett lement Fund Administrator sha ll distribute amo unts to the respective

aHomeys for Pla intins and the C lass as they sha ll j oin tly di rect in wri ting.

I X.

M ISCELLANEOUS PROVIS IONS

A, Outv 10 Defe nd Ihe I}cc rcc.

C lass Counse l, Friedman'S and Federal agree to use the ir best c ITorts to de rend this

Co nselll Decree from any legal challenge. whether by appeal or collateral attack .

B. Return o r Ocsl ru('tio n of DOClIlIl c nts .

Upon the consummation o f this Co nsent Decree and the expiration of the appeal period.

the Pl aintiffs and C lass Counsel shall expeditiously return to Co un sel fo r Friedman 'S all

docum ents (other than those filed wit h the Court or otherwi se matters of pub lic record),

including any computerized material s, that they received from Friedman 's during the course o f

di sco very o r settlement negotiations in this case. In the alternative. Class Counsel shall gather

all such document s and copi es thereo f, assure th at such documents arc destroyed, and prov ide

\Hitten verificatio n to Co unsel for Friedman 'S of such destructio n. The materials to be returned

or destroyed under this provisio n include any documenls and compu terized materials in the

possess io n o f any third party who received suc h material from Class Counsel.

C . T he P;,rlies Arc Bo und .

The te rms o f lhis Consent Decree shall be binding on the Plai ntiffs, fO llr Chargi ng

Parties. C lass members, Friedman' s, Federal and the ir respective successors and assigns.
D. COll se nt I>ec ree Is T he Co mrl ctc Understa ndin g of Pa rti es .

n m-J

23

Case 8:03-cv-00623-AW Document 169 Filed 02/12/09 Page 24 of 24
Th is Consent Decree constitutes the comp lete understanding among the parties wi th respect to the matters herein . The only obl igations that shall be imposed on uny party pursuant 10 th is Consent Decree arc those ex pressly sct forth herein . No add itiona l ob li gations are to be imposed or implied.
E. Intur rctll ii on of Co nse nt Decree. Whenever poss ible, eac h prov isio n und term of th is Consent Decree shall be interpreted in suc h a manner as to be valid and enforceable. In the eventlhm after Final Approval, any provision or term of this Consent Decree shou ld be determined unenforceable on collateral review, all other provisions and terms of this Consent Decree and the application of the Consent Decree to all persons and ci rcumstances as provided by the Consent Decree shall remain unafTecled 10 the extent perm itt ed by law. If the app lication of any provision or term o f this Consent Decree to any spcc iri c persoll or circum stance should be determined to be invalid or unenforceable, the application of such provision or tenn to other persons or circumstances sha ll remain unaffected to the cxtent permit1ed by law.

23999. )

24

 
 Case 8:03-cv-00623-AW Document 170 Filed 02/12/09 Page 1 of 4

John O'Bannon, CI aI.,
Plaintiffs, v. Friedman's, Inc.
Defendant.

-----r1ID

,

_ lOOGEo - --"T~

~C£MD

fEB 1 2 2009

IN THE UN ITED STATES D I STRICTCO U RT~'ftM't~;~fi~~2~1~
0 1 TRleT OF MARYLAND a'f OllTAIOT OH4AAVLANQRT

SOUTH ERN DI VISION

IlEPUlY

Case No_ A W-OJ-62J

4vV
[R EVI SW ~[ORDER GRANTING FINAL AI'I' ROVAL OF C LA SS ACTION SE-ITLEMENT

Upon the Moti on for Final Approval o f Class Action Sculcrncnt riled by Plaintiffs John O'Bannon. et aI., and the suppo rting papers filed w ith thaI MOl ion, and the Defendants having asserted no objection to the Court' s granting orlha! Moti on, and for good cause shown, pursuant to Rule 23(c) and (g) o r lhe Federal Ru les o(Civ il Procedure, the COllrl fi nds and orders as fo llows:
I. On October 29, 2008, the Court entered an Order Granting Motion for Preliminary Approva l ofConscnt Decree, Conditional Cert ificatio n of Settlement C lass. Appointment of Class Cou nsel , Designation of C lass Represe ntatives. Approval of C lass Notice, and Scheduling of Final Fairness Hearing (Doc. 164). That Orde r sets out in summary fash ion the hi story of thi s actio n. the basic sen lcmcnt terms, and the context in which the sett lemen t was nego tiated and presented .
2. The proposed Consent Decree ("Settlement") whose final Dpproval and entry is now sought by this Motion was attac hed as Exh ibit I to the letter to the court fil ed Octo ber 23, 2008 (Doc. 163). That Settlem ent is now before the Court for final approval.
3. The Preli minary Approva l Order conditional ly certified a c lass under Fed . R. C iv . P. 2J(b)(2) and 2J (b)(J) consisting of:

S822 1-1

Case 8:03-cv-00623-AW Document 170 Filed 02/12/09 Page 2 of 4

a.

All African A merican emp loyees who are or were employed by the Company in

any retail store or in the store Field Organization, for any length of lime, betwecn

March 6, 1999 and December 9, 2005 ; and

b. All Afri can American applicants who applied for employment at the Company in any retail store or in Ihe store Field Organization between March 6, 1999 and December 9, 2005, who were not hired on such applicatio n.

That Order further appointed the named plaintiffs O'Bannon, Moore and Hampton as class

representatives and Plaintiffs' counsel, Go ldstein , Demchak, Baller, Borgen & Dardarian, and Law

Offices o f Thomas A. Warren (collectively " Class Counsel"), as representatives and counsel,

respectively, o f the class .

4. The Preliminary Approval Order further approved and o rdered notice to be given to the

members of tile two parts o f the class (the "employee class" and the " applicant class"), informing class

members of their rights to opt out of or object to the Sett lement, to appear on their object ions at the final

approval hearing, and to submit claims to participate in the monetary relief provided by the Seulcment

subject to satisfying certain condit ions specified in the Settlement. ThaI Order also appointed a

Scttlement Administrator, Sett lement Serv ices, Inc. ("SSI"), to administer the notice and claims

procedure established by the Sett lement, as well as the Qualified Settlement Fund ("QSF") established

to fund the Sett lement 's specified payouts.

5. The nolice process ordered by the Court in the Preliminary Approval Order has been fully

and fairl y carried o ut. SS I has sent mail notice to all employee c lass members who could be located

using addresses provided by Friedman's, forwarding addresses provided by US PS, and updated

addresses that cou ld be found usin g standard address tracin g tools. SSI has caused written notice to

applicant class members, for whom the parties did not have names o r addresses, to be published in USA

Today. The Court find s the notice that was given to the class to bc the bcst practicable under the

circumstances, adequatc under Rule 23, and in compl iance with duc process.

6. The results of the notice and claims procedures admin istered by SS I arc ind icative of

broad support o f the class fo r the Sett lement. Of the over 6,500 employee class members to whom

notice was sent (and over 4,400 whose notices were sllccessfully delivered), not onc objected to the

5822 1- 1

2

Case 8:03-cv-00623-AW Document 170 Filed 02/12/09 Page 3 of 4

Sculcmcnt, and none asked to be heard by the Court at the Final Approva ll-leari ng. Nei ther did any

applicant class member object to the Senlemenl. No employee class member or applicant class member

opted out of the Settlcment. A tol'al of 654 class members filed claim fonns, the la rge majority of which

(632) were from cmployee class members. SS I will detenn ille whic h of thosc claim forms state va lid

claims; it apparent ly believes thc large majority of them are and on that basis projects per-employec

class membe r recoveries of over $500 and app li cant class member recoveries of up 10 $300. The Court

find s these projected recovery numbers to be indicative o f the fairness, adequacy, and rcasonabl eness o f

the Scttlement , in the ci rcumstances in which it occurred.

7. T he Court now confirm s and makes fin al the certifient ion of this case as a class act; on

under Rulc 23(b)(2) and (b)(3), and the appointment of Plainliffs O'Bannon, Moore and Hampton as

class rep resentatives; the appointment of Class Coun sel as the legal representati ves orthe class; and the

class definiti on set /brth ;n paragraph 3 above.

8. The Court now grants final approva l to the settlement and find s all of its prov isions fair,

adequatc and reasonable to the class and consistent with thc requirements of approva l of Rul c 23(e). In

particular. thc Cou rt finds thc Settlement's monetary relieflcrm s adequate to the cl ass; its provision fo r

enha ncement paymcn ts to the named Plaintiffs, olher Charging Parties, and cerlain olher individuals

whose eITorls assisted thc class recovery. and the amoun ts thereof, as set forth in Exhibit 5 to the

Scttlemcnt, 10 be fair; the amount ofatt omeys' fec s and costs to be paid to Class Counse l, as speci fied in

Section VIII.A of the Sett lement. to be fair; and the cost of settlement administration to be a COSI fairly

cha rgeable 10 the Q F establ ished through the Settlement.

9.

Upon the forego ing fi ndings and orders, the Court shall enter the Consent Decree nnd

ORDER S thot:

n. The parties shall comply with all provi sions of the Consent Decree and shall fully

implement all of its prov isions pursuant to its tenll s; and

b. T he Cou rt retains jurisdiction solely for the purpose o f assuri ng Ihat all provi sions

of th e Settlement arc carried Ollt.

)

Case 8:03-cv-00623-AW Document 170 Filed 02/12/09 Page 4 of 4

c. The parties shall inrorm the Court as soon as all payments required under the Settlement have been made and all or its provisions carried out, after which the Court shall dismiss the case with prejudice.

Jl...+h
Dated: February 2009

UN IT D STATES DISTRI CT J E

58221·1

4

 
 Case 8:03-cv-00623-AW Document 172 Filed 05/14/09 Page 1 of 2

IN THE UNITED STATES DISTRICT COURT DISTRICT OF MARYLAND SOUTHERN DIVISION

Jobn O'Bannon, et al.,

Case No. AW-03-623

Plaintiffs,

v.

Friedman's, Inc., et al.,

Defendants.

Stipulation ofDismissal with Prejudice of the Insurer Defendan!s
In consideration of the monetary payment made to the Settlement Fund Administrator by Defendant Federal Insurance Company ("Federal") on behalf of Friedman's, Inc., pursuant to Sections VII A and VI D of the Consent Decree entered on February II, 2009, in the above~aptioned matter, it is hereby stipulated and agreed among the parties that all claims made or which could have been made by the Plaintiffs and Class against the Insurer Defendants (Federal Insurance Company and the St. Paul Mercury Insurance Company) including, but not limited to, all claims for relief set forth in paragraphs 60-62 and 81-84 of the amended complaint in this Civil Action, all claims for monetary or other relief of any type (including attorneys' fees and costs) that were made in this Civil Action, and all claims by the Plaintiffs or the Class encompassed by this Civil Action against either Federal Insurance Company or St. Paul Mercury Insurance Company, shall be and are hereby DISMISSED WITH PREJUDICE. The Insurer Defendants are hereby fully discharged and Dismissed from this Civil Action.

Case 8:03-cv-00623-AW Document 172 Filed 05/14/09 Page 2 of 2

So Agreed by the parties:
~,~
MOrTiSlBaJ Esq. Barry Goldstein, Esq. Goldstein, Demchak, Baller, Borgen & Dardarian 300 Lakeside Drive Suite 1000 Oaklan ,CA 94612-3536 For th Plaintiffs and CI~
t'
!
JOe d . Hartman, sq. Drinker Biddle & Reath 1500 K St. N.W., Suite 1100 Washing ton, D.C. 2005 For Frie.dm1iin, Inc.
~~. ~s Leon rd, Carlton Fields One Atlantic Center, Suite 3000
1201 West Peachtree Street. NE Atlanta, GA 30309-3455 For Federal Insurance Company
Suzan Rigby, Esq. Corney Rigby, P.C. 11 0 I 30th Street, NW Suite 220 Washington, DC 20007-3769 For St. Paul Mercury Insurance Company

Date
~f
Date
:J./r3/(f(
Oat

Page 2 of2

 
 437 F.Supp.2d 490 (2006)
John O'BANNON, et al., Plaintiffs, v.
FRIEDMAN'S, INC., Defendant.
Civil Action No. AW-03-623.
United States District Court, D. Maryland, Southern Division.
June 28, 2006.
491 *491 Barry Goldstein, Laura L. Ho, Morris J. Baller, Goldstein Demchak Baller Borgen and Dardarian, Oakland, CA, Keenan R.S. Nix, Nix and Graddock PC, Decatur, GA, Thomas Andrew Warren, Law Offices of Thomas Warren, Tallahassee, FL, Daniel B. Edelman, Yablonski Both and Edelman, Washington, DC, for Plaintiffs.
Alisa H. Reff, Gerald S. Hartman, Gregory W. Homer, Drinker Biddle and Reath LLP, Washington, DC, for Defendant.
MEMORANDUM OPINION
WILLIAMS, District Court.
Before the Court is a motion for leave to amend a class action complaint filed by John O'Bannon ("O'Bannon"), Sandra Moore ("Moore"), Ronald Hampton ("Hampton"), and Rondall Mitchell ("Mitchell") (collectively, "Plaintiffs") against Friedman's, Inc. ("Friedman's" or "Defendant") alleging racial discrimination in employment under the Civil Rights Act of 1866. Plaintiffs seek to join Federal Insurance Company ("Federal") and St. Paul Mercury Insurance Company ("St. Paul") as defendants and to add separate claims against them for declaratory judgments as to coverage of Friedman's liabilities under its Employment Practices Liability Insurance ("EPLI") policies. For the reasons stated below, the Court will grant Plaintiffs' motion for leave to amend.
I. FACTUAL AND PROCEDURAL BACKGROUND
On March 6, 2003, Plaintiffs filed a class action lawsuit, No. AW-03-623, alleging racial discrimination in employment against Friedman's, Inc. under the Civil Rights Act of 1866. 42 U.S.C. § 1982 (2006). O'Bannon claims that Friedman's discriminated against him when it chose not to hire him, while Hampton and Moore claim that Friedman's discriminated against them by denying them promotions and compensation while they were employed by Friedman's. Mitchell claims that Friedman's demoted and constructively discharged him because he 492 refused to implement the company's allegedly discriminatory practices. Plaintiffs, excepting *492 Mitchell, also claim that the discrimination they experienced was part of a company-wide policy or trend of race discrimination that pervaded the company's employment practices and that Friedman's maintained an environment hostile to African-American employees.
On September 30, 2004, the proceedings were stayed and the case was administratively closed in order to allow parties to pursue settlement agreements. These negotiations resulted in the settlement of injunctive relief issues in the form of an Interim Partial Settlement Agreement, as well as a "tentative agreement of the parties on classwide monetary relief," which was conditioned on Friedman's obtaining funding for the settlement from Federal and St. Paul. (Pl.'s Mot. to Amend, at 1.)
On January 14, 2005, Friedman's filed a Chapter 11 Petition in the United States Bankruptcy Court for the Southern District of Georgia. During the bankruptcy reorganization process, Plaintiffs' claims in this case were preserved for further litigation. In December 2005, Friedman's emerged from bankruptcy. While recovery of monetary relief on claims against Friedman's is precluded, recovery is permitted against its insurers.

Meanwhile, Federal and St. Paul disputed their liability for coverage of the Plaintiffs' claims and the dispute was brought before the American Arbitration Association ("AAA") pursuant to the arbitration provisions of the policies. Friedman's pursued arbitration for over a year, but dismissed the arbitration proceeding in January of 2006, after the Georgia Supreme Court held that insurance coverage disputes were not subject to binding arbitration under Georgia law. See Love v. Money Tree, Inc., 279 Ga. 476, 614 S.E.2d 47 (Ga.2005). On February 21, 2006, this Court re-opened the case and on March 27, 2006, Plaintiffs filed this Motion for Leave to File an Amended Class Action Cornplaint to add Federal and St. Paul as defendants. Before filing the motion, Plaintiffs sought and were denied Friedman's consent to file their Motion for Leave to Amend.
II. ANALYSIS
Friedman's argues that Plaintiffs' Motion for Leave to File an Amended Class Action Complaint should be denied on several grounds, including lack of supplemental jurisdiction, failure to meet case or controversy requirements, and failure to meet standing requirements. The Court will address these issues in turn.
A. Plaintiffs' Declaratory Judgment Claims Are Subject to Supplemental Jurisdiction, As They Share a Common Nucleus of Operative Fact With The Underlying Claim.
This Court has supplemental jurisdiction over Plaintiffs' declaratory judgment claim under 28 U.S.C. § 1367 (2006). Section 1367, adopted by Congress in 1990, provides that, in cases over which a federal court has original jurisdiction, it also has "supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution." Id. Claims that share a "common nucleus of operative fact" such that it would ordinarily be expected that the plaintiff try the claims in the same proceeding form part of the same case or controversy. See United Mine Workers of America v. Gibbs, 383 U.S. 715, 725, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966); see also White v. County of Newberry, 985 F.2d 168, 171 (4th Cir.1993) (holding that district court has supplemental jurisdiction over state inverse condemnation claim, where original claim is cost-recovery action under CERCLA).
493 *493 In expounding upon the concept of a "common nucleus of operative fact," the Fourth Circuit has found that supplemental jurisdiction does not envelop claims when one count is "separately maintainable and determinable without any reference to the facts alleged or contentions stated in or with regard to the other count," Hales v. Winn-Dixie Stores, Inc., 500 F.2d 836, 848 & n. 12 (4th Cir.1974), but that supplemental jurisdiction may be found where the claims "revolve around a central fact pattern," White v. County, 985 F.2d at 172. Justification for federal courts to exercise such supplemental jurisdiction "lies in considerations of judicial economy, convenience, and fairness to litigants." Hales, 500 F.2d at 853.
In this case, it is undisputed that the Court has federal question jurisdiction over Plaintiffs' original employment discrimination claim, as the claim arises under the Civil Rights Act of 1866. Plaintiffs' declaratory judgment actions against Federal and St. Paul seek to establish indemnity for liability arising from the same facts as the underlying complaint, i.e. alleged instances of discrimination by Friedman's against African American employees and applicants to the company. While a declaratory judgment regarding coverage under Friedman's EPLI policies will focus also on the specific provisions of the policies, the facts regarding the alleged incidents of discrimination will be integral to a determination of whether or not liability on the part of Friedman's, if established, would be covered by its EPLI policies with Federal and St. Paul. The factual connections between the claims at issue and the underlying claim are sufficient, according to the Fourth Circuit's liberal interpretation of 28 U.S.C. § 1367, to constitute a "common nucleus of operative fact."
Moreover, it is expected that a plaintiff would bring these claims in the same proceeding. It is common practice for an insured party, who is a defendant in a case brought by an injured party, to implead her insurer (under Federal Rule of Civil Procedure 14(a)) in order to establish indemnity or to determine the scope of reimbursement. This is commonplace because it makes sense to determine within the same proceeding, not only liability and damages, but also the legal rights and obligations of involved parties with respect to the payment of those damages. Trying this latter issue separately in a different case or court system imposes an unnecessary burden on parties and on the courts. Although Plaintiffs in this case are not insured parties, but rather third-parties seeking declaratory

judgments against insurers, the same principles of efficiency and fairness apply. It would be incongruous to suggest that simultaneous resolution of the aforementioned issues makes sense in a case where an insured party has impleaded his insurer, but not in a case where an injured party has sought to join both the insured party and the insurer as defendants. This would be especially nonsensical in the case at bar, where Friedman's is immune from liability damages and Federal and St. Paul are Plaintiffs' only means for recovering on a successful claim.
Policy considerations underlying supplemental jurisdiction, namely judicial economy, convenience, and fairness, all weigh in favor of exercising supplemental jurisdiction. Given that the discrimination claim and the coverage claims will draw from a common set of facts for their resolution, principles of efficiency compel trial of the claims in a single court. In Mitcheson v. Harris, 955 F.2d 235, 239 (4th Cir.1992), the Fourth Circuit reiterated its preference for having "all litigation stemming from a single controversy resolved in a single court system." 494 Furthermore, if the issue of coverage is not promptly resolved, *494 parties may have no other option but to commence costly and time-consuming litigation (given that settlement talks cannot proceed without first resolving the coverage issue), without knowing, until a final judgment, whether or not payment may ultimately be secured. This route, which would be unnecessarily expensive, time-consuming, and inconvenient, would undermine the principles of efficiency and fairness that informed the creation of 28 U.S.C. § 1367. For the aforementioned reasons, the Court has, and chooses to exercise, supplemental jurisdiction over Plaintiffs' declaratory judgment actions against Federal and St. Paul.
B. Declaratory Relief Is Available To Plaintiffs Because Their Claims Present Justiciable Controversies, Relief Is Prudential, And Plaintiffs Meet Standing Requirements.
i. Plaintiffs' Claims Present Justiciable Cases or Controversies.
Defendant also argues that this Court lacks jurisdiction over Plaintiffs' Declaratory Judgment actions on the ground that these claims do not present justiciable controversies. The Federal Declaratory Judgment Act gives a federal district court the authority, in any "case of actual controversy within its jurisdiction," to "declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201(a) (2006). The test for whether a case or controversy exists is whether the dispute "is definite and concrete, touching the legal relations of parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment." Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 239-242, 57 S.Ct. 461, 81 L.Ed. 617 (1937).
The Supreme Court held in Maryland Casualty Co. that "a dispute between a liability insurer, its insured, and an injured third-party with a claim against the insured over the extent of the insurer's responsibility for that claim" does present an actual controversy for the purposes of the Federal Declaratory Judgment Act. Nautilus, 15 F.3d at 375 (citing Maryland Casualty Co. v. Pacific Coal and Oil Co., 312 U.S. 270, 61 S.Ct. 510, 85 L.Ed. 826 (1941) ). In this vein, the Fourth Circuit has found that a case or controversy exists between injured third-parties and liability insurers in actions for a declaratory judgment regarding coverage responsibilities, despite the lack of privity of contract between the insurer and the injured party. Aetna Casualty & Surety Co. v. Yeatts, 99 F.2d 665, 669 (4th Cir.1938) (finding that insurer properly joined insured and injured third-party as defendants in declaratory judgment action to resolve issue of coverage, specifying that action directly impacted the interests of both parties); White v. Nat'l Union Fire Ins. Co. of Pittsburgh, 913 F.2d 165 (4th Cir.1990) (finding that employee injured while driving a company car could bring suit against her employer's insurer regardless of fact that her liability claim against tortfeasor was still pending in state court).[1]
Similarly, the Fourth Circuit has upheld the right of an injured third-party to appeal from a dismissal of an action 495 for declaratory judgment brought by the insurer and the insured party. See Nautilus *495 Ins. Co. v. Winchester
Homes, Inc., 15 F.3d 371, 374 (4th Cir.1994) (holding that injured party, who had been assigned policy rights, by bankrupted insured party, was sufficiently aggrieved to appeal dismissal of declaratory judgment action by insurer).[2] Operating under the same principles, the Third and Seventh Circuits have held that a third-party retains standing and that a controversy still exists in a declaratory judgment action against an insurer, even when the insured is dismissed from the action. Federal Kemper Ins. Co. v. Rauscher, 807 F.2d 345 (3d Cir.1986); Hawkeye-Security Ins. Co. v. Schulte, 302 F.2d 174 (7th Cir.1962) (stating that it would be anomalous to hold that

there is an actual controversy between the third-party and the insurer and yet deny the third-party the right to participate in the controversy).
In the case at bar, similar to the situation in White v. Nat'l Union, Plaintiffs are third parties to an insurance policy and, prior to a final judgment in their pending liability case, they are seeking a declaratory judgment against insurers as to the scope of the provided coverage. The fact that Federal and St. Paul remain the only means by which Plaintiffs may recover under their claim, coupled with the fact that the coverage dispute remains a significant obstacle to a settlement agreement, presents the Court with a genuine controversy regarding the legal rights and responsibilities of Plaintiffs and Friedman's EPLI insurers. As was noted in Yeatts, that the liability of the insured or the tortfeasor has not yet been established does not diminish the real and concrete nature of the dispute. Yeatts, 99 F.2d at 669.
Furthermore, the controversy at hand is of sufficient immediacy to warrant declaratory relief, as settlement negotiations will not recommence without a resolution of the coverage issue and, as Plaintiffs have pointed out, if the case is fully litigated on the merits prior to a determination of coverage, the remaining balance of around $2.3 million of the $5 million policy for which coverage is acknowledged, will be almost entirely depleted by defense costs by the time a judgment is handed down. (Pl.'s Reply Memo. in Supp. of Mot. to Amend., at 2.) The declaratory judgment claims against Federal and St. Paul are sufficiently definite and pressing in nature so as to present justiciable controversies.
ii. Declaratory Relief Is Prudential
A federal court retains some discretion to decline to entertain a declaratory judgment action which is otherwise properly before the court. See Nautilus Ins. Co., 15 F.3d at 375. Courts have maintained that the statute providing for declaratory judgments should be liberally construed to accomplish its intended purposes, those being "to afford a speedy and inexpensive method of adjudicating legal disputes . . . and to settle legal rights and remove uncertainty and insecurity from legal relationships without awaiting a violation of the rights or a disturbance of the relationships." Aetna Casualty and Surety Co. v. Quarles, 92 F.2d 321 (4th Cir. 1937). Accordingly, the Fourth Circuit has held that district courts should normally consider a declaratory judgment action that is within its 496 jurisdiction if the relief sought (1) "will serve a useful purpose in clarifying and settling the legal *496 relations in issue," and (2) "will terminate and afford relief from the uncertainty, insecurity, and controversy giving rise to the proceeding." Id. at 325 (quoting E. Borchard, Declaratory Judgments 107-09 (1934)).
In the case at bar, Plaintiffs seek a declaration of the obligations of Friedman's insurers. Such declaratory relief would undoubtedly be useful in determining the parties' legal relationship by resolving the issue of whether or not St. Paul and Federal must indemnify Friedman's for monetary relief agreed to in a settlement or awarded in litigation. Resolution of this issue would dispel doubt among the parties, allowing them to reevaluate their legal posture and, in the case of a favorable judgment for the plaintiffs, allowing them to move forward with settlement talks. Given the history of the case, it seems almost certain that a favorable federal court decision regarding the issue of insurance coverage will expedite the resolution of the underlying complaint through a settlement agreement and, if the original intentions of the two parties remain the same, spare both parties the cost, in time and money, of a lengthy litigation process.
For the aforementioned reasons, the Court believes that declaratory relief is prudential in this case.
iii. Plaintiffs Have Standing To Bring A Declaratory Judgment Action.
The Supreme Court upheld the Declaratory Judgment Act of 1934 in Haworth, holding that "where there is such a concrete case admitting of an immediate and definite determination of the legal rights of the parties in an adversary proceeding upon the facts alleged, the judicial function may be appropriately exercised although the adjudication of the rights of litigants may not require the award of process or the payment of damages." Haworth, 300 U.S. at 241, 57 S.Ct. 461. With respect to such actions that seek only the determination of legal rights, the Court has applied less stringent standing requirements, holding that "allegations of threatened irreparable injury, which are material only if an injunction is asked, may likewise be dispensed with if, in other respects, the controversy presented is. . . . real and substantial." Nashville, Nashville, Chattanooga & St. Louis Ry. Co. v. Wallace, 288 U.S. 249, 264, 53 S.Ct. 345, 77 L.Ed. 730 (1933). A real and substantial controversy admits of

"specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts." Haworth, 300 U.S. at 241, 57 S.Ct. 461.
Plaintiffs in the case at bar meet these requirements for standing. Here, there exists an actual dispute regarding the legal relationship and responsibilities therein, between Plaintiffs and Federal and St. Paul. Due to Friedman's bankruptcy and resulting immunity from damages liability, along with the decision by Friedman's and its insurers to cease arbitration of the coverage dispute, Plaintiffs' settlement talks with Friedman's have been stalled, and Plaintiffs are presented with the real and imminent danger of having to proceed with lengthy and costly litigation despite looming uncertainty as to whether or not a judgment in their favor will prove to be at all fruitful. Because any recovery on the part of Plaintiffs is contingent upon coverage by Federal and St. Paul, and because a continued dispute over coverage will further delay settlement talks and breed continued uncertainty and insecurity with regards to prospective litigation, the Court finds a substantial controversy between Plaintiffs and 497 Friedman's insurers.[3] As *497 the Fourth Circuit noted in Nautilus, "to delay resolution of the controversy until the underlying suit against the insured proceeds to judgment . . . would prevent the litigants from shaping a settlement strategy and thereby avoiding unnecessary costs." Nautilus, 15 F.3d at 376.
A judgment by the Court would be of a "conclusive character," rather than an advisory opinion as to what the law is under hypothetical facts. The Court is asked to decide whether, if proven, the alleged incidents of discrimination would fall within the scope of coverage contemplated in each of the insurers' policies. The Court is not asked to take creative liberties to imagine a scenario in which incidents of discrimination may be covered, but to apply the policy provisions to actually alleged incidents for the purpose of resolving the issue of coverage. As the Fourth Circuit has held with regards to insurer coverage disputes, "the fact that an injured party has not obtained a judgment against an insured party does not make the action any less definite and concrete, nor does it vitiate the adversity of the parties' interests." White v. Nat'l Union, 913 F.2d at 168.
III. CONCLUSION
For all the aforementioned reasons, the Court will GRANT Plaintiffs' Motion For Leave to File an Amended Class Action Complaint [46]. An order consistent with this opinion will follow.
[1] The fact that White involves uninsured and underinsured motorist insurance does not alter or color the principles set forth therein, as Friedman's contends. In White, the Fourth Circuit held that "The fact that [an injured party] has not obtained judgment against [an insured party] does not make the action any less definite and concrete, nor does it vitiate the adversity of the parties' interests." White, 913 F.2d at 168. The court made no attempt at qualifying their holding with an explanation as to the peculiarity of cases involving uninsured and underinsured motorist insurance.
[2] The is not convinced, as Friedman's has attempted to argue, that the assigning of policy rights by the insured party to the injured party was the determinative factor in the dispute over justiciability in this case, but rather that this factor was emphasized in order to compensate for the fact that the injured party had not sought any affirmative relief on her own behalf prior to the dismissal of the declaratory judgment action.
[3] Although it is not known for certain that resolving the issue of coverage will prompt a return to settlement talks and expedite resolution of the case, prior communications between parties and representations made to this Court suggest that the unresolved issue of coverage remains the primary obstacle to arriving at a settlement agreement. (Letter from Def.'s Attorney to the Court, Dated 12/02/04).
Save trees - read court opinions online on Google Scholar.

 
 Case: 8:03-cv-00623-AW As of: 07/15/2010 10:45 PM EDT 1 of 17
CASREF, CLOSED, MAG−D, STAYED
U.S. District Court District of Maryland (Greenbelt) CIVIL DOCKET FOR CASE #: 8:03−cv−00623−AW

O'Bannon et al v. Friedman's, Inc. Assigned to: Judge Alexander Williams, Jr Referred to: Magistrate Judge William Connelly Cause: 42:1981 Civil Rights
Plaintiff
John O'Bannon

Date Filed: 03/06/2003 Date Terminated: 05/14/2009 Jury Demand: Both Nature of Suit: 442 Civil Rights: Jobs Jurisdiction: Federal Question
represented by Barry Goldstein Goldstein Demchak Baller Borgen and Dardarian 300 Lakeside Dr Ste 1000 Oakland, CA 94612−3534 15107639800 Fax: 15198351417 LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Keenan R S Nix Nix and Graddock PC 124 Church St Decatur, GA 30030−3325 14043777600 Fax: 14043778700 LEAD ATTORNEY ATTORNEY TO BE NOTICED

Laura L Ho Goldstein Demchak Baller Borgen and Dardarian 300 Lakeside Dr Ste 1000 Oakland, CA 94612−3534 15107639800 Fax: 15108351417 Email: lho@gdblegal.com LEAD ATTORNEY ATTORNEY TO BE NOTICED

Morris J Baller Goldstein Demchak Baller Borgen and Dardarian 300 Lakeside Dr Ste 1000 Oakland, CA 94612−3534 15107639800 Fax: 15108351417 LEAD ATTORNEY ATTORNEY TO BE NOTICED

Thomas Andrew Warren Law Offices of Thomas Warren 2032 D Thomasville Rd Tallahassee, FL 32308 18503851551 Fax: 18503856008 Email: tw@nettally.com LEAD ATTORNEY ATTORNEY TO BE NOTICED

Case: 8:03-cv-00623-AW
Plaintiff Sandra F. Moore on behalf of herself and all others similarly situated
Plaintiff Rondall Mitchell individually

As of: 07/15/2010 10:45 PM EDT 2 of 17
Daniel B Edelman Katz Marshall and Banks 1718 Connecticut Ave NW Sixth Fl Washington, DC 20009 12022991140 Fax: 12022991148 Email: edelman@kmblegal.com ATTORNEY TO BE NOTICED
represented by Barry Goldstein (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED
Keenan R S Nix (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Laura L Ho (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Morris J Baller (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Thomas Andrew Warren (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Daniel B Edelman (See above for address) ATTORNEY TO BE NOTICED
represented by Barry Goldstein (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED
Daniel B Edelman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Keenan R S Nix (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Laura L Ho (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Morris J Baller (See above for address)

Case: 8:03-cv-00623-AW
Plaintiff Ronald Hampton on behalf of himself and all others similarly situated

As of: 07/15/2010 10:45 PM EDT 3 of 17
LEAD ATTORNEY ATTORNEY TO BE NOTICED
Thomas Andrew Warren (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
represented by Barry Goldstein (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED
Daniel B Edelman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Thomas Andrew Warren (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

V. Defendant Friedman's, Inc.
Defendant Federal Insurance Company

represented by Alisa H Reff Drinker Biddle and Reath LLP 1500 K St NW Ste 1100 Washington, DC 20005 12028428852 Fax: 12028428465 Email: alisa.reff@dbr.com LEAD ATTORNEY ATTORNEY TO BE NOTICED
Gerald S Hartman Drinker Biddle and Reath LLP 1500 K St NW Ste 1100 Washington, DC 20005 12028428800 Fax: 12028428465 Email: gerald.hartman@dbr.com LEAD ATTORNEY ATTORNEY TO BE NOTICED
Gregory W Homer Drinker Biddle and Reath LLP 1500 K St NW Ste 1100 Washington, DC 20005 12028428800 Fax: 12028428465 Email: gregory.homer@dbr.com LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED
represented by Amy B Doorley Lord Bissell and Brook LLP

Case: 8:03-cv-00623-AW As of: 07/15/2010 10:45 PM EDT 4 of 17

1170 Peachtree St NE Ste 1900 Atlanta, GA 30309 14048704627 Fax: 14048065627 Email: adoorley@lordbissell.com ATTORNEY TO BE NOTICED

David M Leonard Carlton Fields, PA 1201 W. Peachtree St., Suite 3000 Atlanta, GA 30309 14048153380 Fax: 14048153415 Email: dleonard@carltonfields.com ATTORNEY TO BE NOTICED

Jonathan T Rees Hogan and Hartson LLP 555 13th St NW Washington, DC 20004 12026375600 Fax: 12026375910 ATTORNEY TO BE NOTICED

Defendant St. Paul Mercury Insurance Company

represented by Suzanne Rigby Comey Rigby PC 1101 30th St NW Ste 220 Washington, DC 20007−3769 12026251200 Fax: 12026251230 LEAD ATTORNEY ATTORNEY TO BE NOTICED

Eugene J Comey Comey Rigby PC 1101 30th St NW Ste 220 Washington, DC 20007−3769 12026251200 Fax: 12026251230 ATTORNEY TO BE NOTICED

Jonathon Frank Sher Daar and Newman PC 865 S Figueroa St Ste 2300 Los Angeles, CA 90017 12138920999 Fax: 12138921066 Email: jsher@daarnewman.com ATTORNEY TO BE NOTICED

Date Filed 03/06/2003
03/07/2003 03/10/2003

# Docket Text
1 COMPLAINT against Friedman's, Inc. ( Filing fee $ 150 receipt number 2291019.), filed by Rondall Mitchell, Sandra F. Moore, John O'Bannon. (Attachments: Exhibits # 1 # 2 # 3 # 4)(elt, Deputy Clerk) Additional attachment(s) added on 3/10/2003 (elt, Deputy Clerk). (Entered: 03/07/2003)
2 Summons Issued (20 days) as to Friedman's, Inc.. (elt, Deputy Clerk) (Entered: 03/07/2003)
3 MOTION of Keenan R. S. Nix to Appear Pro Hac Vice by Rondall Mitchell, Sandra F. Moore, John O'Bannon. (rank, Deputy Clerk) (Entered: 03/11/2003)

Case: 8:03-cv-00623-AW As of: 07/15/2010 10:45 PM EDT 5 of 17

03/10/2003

4 ORDER granting 3 Motion of Keenan R. S. Nix to Appear Pro Hac Vice. Signed by the Clerk on 3/10/03. (c/m 3/11/03 rk) (rank, Deputy Clerk) (Entered: 03/11/2003)

03/11/2003

MOTION for Morris J. Baller to Appear Pro Hac Vice by Rondall Mitchell, Sandra F. Moore, John O'Bannon. (lad, Deputy Clerk) Modified on 3/12/2003 (lad, Deputy Clerk). (Entered: 03/12/2003)

03/11/2003

5 ORDER granting [] Motion for Morris J. Baller to Appear Pro Hac Vice. Signed by Judge Unassigned on 3/11/03. (lad, Deputy Clerk) (Entered: 03/12/2003)

03/11/2003

MOTION for Laura L. Ho to Appear Pro Hac Vice by Rondall Mitchell, Sandra F. Moore, John O'Bannon. (lad, Deputy Clerk) (Entered: 03/12/2003)

03/11/2003

6 ORDER granting [] Motion for Laura Ho to Appear Pro Hac Vice. Signed by the Clerk on 3/11/03. (lad, Deputy Clerk) (Entered: 03/12/2003)

03/11/2003

7 MOTION of Thomas A. Warren to Appear Pro Hac Vice by plaintiffs (rank, Deputy Clerk) Modified on 3/19/2003 (rank, Deputy Clerk). (Entered: 03/19/2003)

03/11/2003

8 ORDER granting 7 Motion of Thomas A.Warren to Appear Pro Hac Vice for plaintiffs. Signed by Judge Alexander Williams Jr. on 3/11/03. (c/m 3/19/03) (rank, Deputy Clerk) (Entered: 03/19/2003)

03/14/2003

9 AFFIDAVIT of Service for Summons and Complaint served on Corporation Trust on 3/12/03, filed by Ronald Hampton, Rondall Mitchell, Sandra F. Moore, John O'Bannon and attachment. (lad, Deputy Clerk) (Entered: 03/20/2003)

03/14/2003

10 Local Rule 103.3 Statement of plaintiffs (rank, Deputy Clerk) (Entered: 03/21/2003)

04/01/2003

11 NOTICE of Appearance by Alisa H Reff on behalf of Friedman's, Inc. (Attachments: # 1 certificate of service)(Reff, Alisa) (Entered: 04/01/2003)

04/01/2003

12 Joint MOTION for Extension of Time to File Answer or Otherwise Respond to Complaint and for Order Setting Dates for Exchange of Local Rule 26(a)(1) Disclosures and Request for Scheduling Conference by Defendant Friedman's, Inc. and by Ronald Hampton, Rondall Mitchell, Sandra F. Moore, John O'Bannon. Responses due by 4/18/2003 (Edelman, Daniel) (Entered: 04/01/2003)

04/01/2003

13 CERTIFICATE OF SERVICE by Ronald Hampton, Rondall Mitchell, Sandra F. Moore, John O'Bannon re 12 Joint MOTION for Extension of Time to File Answer or Otherwise Respond to Complaint and for Order Setting Dates for Exchange of Local Rule 26(a)(1) Disclosures and Request for Scheduling Conference by Defendant Friedman's, Inc. and (Edelman, Daniel) (Entered: 04/01/2003)

04/02/2003

14 Paperless ORDER granting 12 Motion for Extension of Time for Defendant To Respond to Complaint and setting dates. The parties are to initiate a conference call regarding scheduling after May 16, 2003.. Signed by Judge Alexander Williams Jr. on 04/02/03. (Williams, Alexander) (Entered: 04/02/2003)

04/03/2003

15 MOTION to Appear Pro Hac Vice by Ronald Hampton, Rondall Mitchell, Sandra F. Moore, John O'Bannon. (rank, Deputy Clerk) (Entered: 04/03/2003)

04/03/2003

16 ORDER granting 15 Motion to Appear Pro Hac Vice. Signed by the Clerk on 3/26/03. (rec'd 3/26/03)b (rank, Deputy Clerk) (Entered: 04/03/2003)

04/03/2003

17 CERTIFICATE OF SERVICE by Ronald Hampton, Rondall Mitchell, Sandra F. Moore, John O'Bannon re 16 Order on Motion to Appear Pro Hac Vice (Edelman, Daniel) (Entered: 04/03/2003)

04/28/2003

18 ORDER "SCHEDULING" telephonic scheduling conference in this matter. Signed by Judge Alexander Williams Jr. on 4/28/03. (rank, Deputy Clerk) (Entered: 04/29/2003)

05/09/2003

19 ANSWER to Complaint by Friedman's, Inc.. (Attachments: # 1 Certificate of Service)(Reff, Alisa) (Entered: 05/09/2003)

05/13/2003

20 NOTICE by Friedman's, Inc. Fed. R. Civ. P. 7.1 Corporate Disclosure (Attachments: # 1 certificate of service)(Reff, Alisa) (Entered: 05/13/2003)

Case: 8:03-cv-00623-AW As of: 07/15/2010 10:45 PM EDT 6 of 17

05/15/2003

21 SCHEDULING ORDER: Status Report due by 9/29/2003.. Signed by Judge Alexander Williams Jr. on 5/15/03. (rank, Deputy Clerk) (Entered: 05/16/2003)

05/20/2003

22 Correspondence re: Clarification of Scheduling Orders entered April 28, 2003 and May 15,2003 (Baller, Morris) (Entered: 05/20/2003)

06/03/2003

23 NOTICE by Friedman's, Inc. Joint Scheduling Conference Statement (Attachments: # 1 certificate of service)(Reff, Alisa) (Entered: 06/03/2003)

06/06/2003

24 Correspondence re: submitting stipulated confidentiality order and preservation of records order (Attachments: # 1 stipulated confidentiality order# 2 stipuulated preservation of records order)(Reff, Alisa) (Entered: 06/06/2003)

06/09/2003

Telephone Conference held before Judge Alexander Williams Jr. (has, Deputy Clerk) (Entered: 06/27/2003)

06/10/2003

25 Paperless ORDER Granting Both [re 24 Stipulated Order For Preservation of Records and Stipulated Order Regarding Confidentiality of Discovery Material.. Signed by Judge Alexander Williams Jr. on 6/10/03. (gc, Chambers) (Entered: 06/10/2003)

06/11/2003

26 Joint Request for Hearing/Trial re Class Certification and Expanding Discovery (Attachments: # 1 Proposed Order)(Baller, Morris) (Entered: 06/11/2003)

06/12/2003

27 Paperless ORDER APPROVING re 26 Joint request and order expanding and setting pre−class certification discovery limits and setting a schedule for class certification discovery and the briefing schedule on the class certification motion filed by John O'Bannon, Sandra F. Moore, Rondall Mitchell, Ronald Hampton. Signed by Judge Alexander Williams Jr. on 06/12/03. (Williams, Alexander) (Entered: 06/12/2003)

10/23/2003

28 STATUS REPORT Joint Case Management Conference Statement by John O'Bannon. (Attachments: # 1 Text of Proposed Order Amending Schedule for Class Certification Discovery)(Baller, Morris) (Entered: 10/23/2003)

10/27/2003

29 Supplemental Correspondence re: submitting proposed order (Attachments: # 1 Text of Proposed Order Amending Schedule for Class Certification Discovery)(Baller, Morris) (Entered: 10/27/2003)

10/27/2003

30 Status /Telephone Conference held before Judge Alexander Williams Jr.. (rank, Deputy Clerk) (Entered: 10/29/2003)

10/27/2003

Telephone Conference held before Judge Alexander Williams Jr. (has, Deputy Clerk) (Entered: 11/04/2003)

10/30/2003

31 Paperless ORDER APPROVING re 29 Letter Request to Amend Scheduling Order as follows: To Join Parties/Admend Pleadings due February 5, 2004; Disclosure of Plaintiff's expert(s) re class certification issues and subject to their reports due March 18, 2004; Plaintiff's initial expert reports re: class certification issues due April 8, 2004; Disclosure of Defendant's expert(s) re class certification issues and subject of their reports due April 19, 2004; Non−expert discovery on class certification issues deadline April 22, 2004; Defendant's expert report(s) re class certification issues due May 24, 2004; Discovery of experts re: class certification issues deadline June 21, 2004; Plaintiff's rebuttal due June 28, 2004; Plaintiff's motion for class certification due August 2, 2004; Defendant's opposition due September 7, 2004; Plaintiff's reply due September 27, 2004; and Parties submission of proposed schedule to govern remaining discovery and pre−trial proceedings will be due 14 days after Court's order on class certification motion.. Signed by Judge Alexander Williams Jr. on 10/30/03. (Williams, Alexander) (Entered: 10/30/2003)

01/21/2004

32 STATUS REPORT Case Management Conference Statement by John O'Bannon. (Baller, Morris) (Entered: 01/21/2004)

03/01/2004

33 STATUS REPORT and Joint Request for Further Case Management Conference by Friedman's, Inc.. (Reff, Alisa) (Entered: 03/01/2004)

03/03/2004

34 Paperless ORDER APPROVING re 33 Joint Status Report and GRANTING Request for further case management conference via telephone, scheduled for April

Case: 8:03-cv-00623-AW As of: 07/15/2010 10:45 PM EDT 7 of 17

04/29/2004 06/16/2004 09/30/2004 01/27/2005 09/22/2005 09/23/2005 12/29/2005
12/29/2005 01/31/2006 02/14/2006 02/21/2006 02/27/2006 03/27/2006
04/05/2006 04/06/2006
04/13/2006
04/18/2006

29, 2004 at 10:30am to be initiated by the parties of record. Signed by Judge Alexander Williams Jr. on 03/03/04. (Williams, Alexander) (Entered: 03/03/2004)
Telephone Conference held before Judge Alexander Williams Jr.. (pkf, Deputy Clerk) (Entered: 04/30/2004)
35 STATUS REPORT by Plaintiffs and by Friedman's, Inc.. (Reff, Alisa) (Entered: 06/16/2004)
36 ORDER "STAYING" this proceedings; and "ADMINISTRATIVELY CLOSING" this case. Signed by Judge Alexander Williams Jr. on 9/30/04. (rank, Deputy Clerk) (Entered: 10/01/2004)
37 NOTICE by Friedman's, Inc. of Automatic Stay (Reff, Alisa) (Entered: 01/27/2005)
38 MOTION for Extension of Time for Ninety Days for Plaintiffs to Move to Reopen this Civil Action by John O'Bannon. Responses due by 10/11/2005 (Attachments: # 1 Text of Proposed Order)(Baller, Morris) (Entered: 09/22/2005)
39 PAPERLESS ORDER granting 38 Motion for Extension of Time To Reopen Case.. Signed by Judge Alexander Williams Jr. on 09/23/05. (gc, Chambers) (Entered: 09/23/2005)
40 MOTION for Extension of Time in which Plaintiffs May Move to Reopen the Case by John O'Bannon, Ronald Hampton, Sandra F. Moore, Rondall Mitchell. Responses due by 1/16/2006 (Attachments: # 1 Exhibit Order of Bankruptcy Court# 2 Text of Proposed Order Proposed Order)(Edelman, Daniel) (Entered: 12/29/2005)
41 PAPERLESS ORDER granting 40 Motion for Extension of Time in Which Plaintiffs May Move to Reopen case.. Signed by Judge Alexander Williams Jr. on 12/29/05. (gc, Chambers) (Entered: 12/29/2005)
42 STATUS REPORT re Status of Arbitration by John O'Bannon. (Baller, Morris) (Entered: 01/31/2006)
43 MOTION to Reopen Case by John O'Bannon. Responses due by 3/3/2006 (Attachments: # 1 Text of Proposed Order # 2 Exhibit A)(Baller, Morris) (Entered: 02/14/2006)
44 ORDER granting 43 Motion to Reopen Case ' "DIRECTING" the Clerk REOPEN this case. Signed by Judge Alexander Williams Jr. on 3/21/06. (rank, Deputy Clerk) (Entered: 02/21/2006)
45 ORDER "SETTING" a Scheduling and Status Conference Hearing for 4/10/06 a5 9:00 a.m.. Signed by Judge Alexander Williams Jr. on 2/27/06. (rank, Deputy Clerk) (Entered: 02/27/2006)
46 MOTION for Leave to File Amended Complaint by John O'Bannon. Responses due by 4/13/2006 (Attachments: # 1 Text of Proposed Order # 2 Memorandum of Points and Authorities# 3 Exhibit Amendend Complaint)(Baller, Morris) (Entered: 03/27/2006)
47 STATUS REPORT (Plaintiffs' Caes Management and Scheduling Conference Statement) by John O'Bannon. (Baller, Morris) (Entered: 04/05/2006)
48 STATUS REPORT Defendant's Statement Regarding Scheduling Conference by Friedman's, Inc.. (Attachments: # 1 Text of Proposed Order Proposed Order Amending Schedule for Class Certification Discovery and Motion)(Reff, Alisa) (Entered: 04/06/2006)
49 RESPONSE in Opposition re 46 MOTION for Leave to File Amended Complaint filed by Friedman's, Inc.. Replies due by 4/27/2006. (Attachments: # 1 Exhibit Exhibits 1 and 2)(Reff, Alisa) Additional attachment(s) added on 4/18/2006 (rank, Deputy Clerk). Modified on 4/18/2006 separating exhibits 1 and 2 (rank, Deputy Clerk). (Hard Copy rec'd 4/18/06 rk) (Entered: 04/13/2006)
50 NOTICE by Friedman's, Inc. of Joint Submission of Proposed Scheduling Order (Attachments: # 1 Text of Proposed Order)(Reff, Alisa) (Entered: 04/18/2006)

Case: 8:03-cv-00623-AW As of: 07/15/2010 10:45 PM EDT 8 of 17

04/20/2006

51 PAPERLESS ORDER Granting re 50 Notice (Other) of Joint Submission of Proposed Scheduling Order filed by Friedman's, Inc.,. Signed by Judge Alexander Williams Jr. on 04/20/06. (gc, Chambers) (Entered: 04/20/2006)

04/26/2006

52 REPLY to Response to Motion re 46 MOTION for Leave to File Amended Complaint filed by John O'Bannon. (Edelman, Daniel) (Entered: 04/26/2006)

05/01/2006

53 MOTION of Gregory W. Homer to Appear Pro Hac Vice by Friedman's, Inc.. (rank, Deputy Clerk) (Entered: 05/01/2006)

05/01/2006

ORDER granting 53 Motion of Gregory W. Homer to Appear Pro Hac Vice. Signed by the Clerk on 5/1/06. (c/m 5/1/06 rk) (rank, Deputy Clerk) (Entered: 05/01/2006)

05/01/2006

54 MOTION by Gerald S. Hartman to Appear Pro Hac Vice by Friedman's, Inc.. (rank, Deputy Clerk) (Entered: 05/01/2006)

05/01/2006

ORDER granting 54 Motion by Gerald S. Hartman to Appear Pro Hac Vice. Signed by the Clerk on 5/1/06. (c/m 5/1/06 rk) (rank, Deputy Clerk) (Entered: 05/01/2006)

06/09/2006

55 NOTICE of service of motion to compel discovery by John O'Bannon PLAINTIFFS' NOTICE OF MOTION TO COMPEL RESPONSES TO PLAINTIFFS' SECOND SET OF INTERROGATORIES AND SECOND REQUEST FOR PRODUCTION OF DOCUMENTS (Baller, Morris) (Entered: 06/09/2006)

06/09/2006

56 Notice of Service of MOTION to Compel PLAINTIFFS' MOTION TO COMPEL FRIEDMAN'S TO ANSWER PLAINTIFFS' SECOND SET OF INTERROGATORIES AND SECOND REQUEST FOR PRODUCTION OF DOCUMENTS by John O'Bannon. Responses due by 6/26/2006 (Baller, Morris) Modified on 6/12/2006 (rank, Deputy Clerk). (Hard Copy rec'd 6/12/06 rk) Modified on 8/21/2006 (rank, Deputy Clerk). (Entered: 06/09/2006)

06/09/2006

57 MOTION to Compel PLAINTIFFS' MEMORANDUM IN SUPPORT OF MOTION TO COMPEL FRIEDMAN'S TO ANSWER PLAINTIFFS' SECOND SET OF INTERROGATORIES AND SECOND REQUEST FOR PRODUCTION OF DOCUMENTS by John O'Bannon. Responses due by 6/26/2006 (Attachments: # 1 Exhibit LIST OF EXHIBITS &EXHIBIT 1# 2 Exhibit EXH 2# 3 Exhibit EXH 3# 4 Exhibit EXH 4# 5 Exhibit EXH 5# 6 Exhibit EXH 6# 7 Exhibit EXH 7# 8 Exhibit EXH 8# 9 Exhibit EXH 9# 10 Exhibit EXH 10# 11 Exhibit EXH 11)(Baller, Morris) (Entered: 06/09/2006)

06/09/2006

58 NOTICE by John O'Bannon re 55 Notice of service of motion to compel discovery [PROPOSED] ORDER COMPELLING RESPONSES TO PLAINTIFFS' SECOND SET OF INTERROGATORIES AND SECOND REQUEST FOR PRODUCTION OF DOCUMENTS (Baller, Morris) (Entered: 06/09/2006)

06/26/2006

59 RESPONSE in Opposition re 56 MOTION to Compel PLAINTIFFS' MOTION TO COMPEL FRIEDMAN'S TO ANSWER PLAINTIFFS' SECOND SET OF INTERROGATORIES AND SECOND REQUEST FOR PRODUCTION OF DOCUMENTS filed by Friedman's, Inc.. Replies due by 7/10/2006. (Attachments: # 1 Exhibit 1# 2 Exhibit 2# 3 Exhibit 3# 4 Exhibit 4# 5 Exhibit 5)(Reff, Alisa) Modified on 7/5/2006 (rank, Deputy Clerk).(Hard copy rec'd 6/29/06 rk) (Entered: 06/26/2006)

06/28/2006

60 MEMORANDUM OPINION. Signed by Judge Alexander Williams Jr. on 6/28/06. (rank, Deputy Clerk) (Entered: 06/28/2006)

06/28/2006

61 ORDER granting 46 Motion for Leave to File Amended Class Action Complaint. Signed by Judge Alexander Williams Jr. on 6/28/06. (rank, Deputy Clerk) (Entered: 06/28/2006)

06/28/2006

62 AMENDED CLASS ACTION COMPLAINT against Federal Insurance Company, St. Paul Mercury Insurance Company, Friedman's, Inc., filed by John O'Bannon, Ronald Hampton, Sandra F. Moore, Rondall Mitchell.(rank, Deputy Clerk) (Entered: 06/28/2006)

Case: 8:03-cv-00623-AW As of: 07/15/2010 10:45 PM EDT 9 of 17

06/30/2006

63 ORDER REFERRING CASE to Magistrate Judge William Connelly for Discovery. Signed by Judge Alexander Williams Jr. on 6/30/06. (jmw, Chambers) (Entered: 06/30/2006)

07/10/2006

64 REPLY to Response to Motion re 56 MOTION to Compel PLAINTIFFS' MOTION TO COMPEL FRIEDMAN'S TO ANSWER PLAINTIFFS' SECOND SET OF INTERROGATORIES AND SECOND REQUEST FOR PRODUCTION OF DOCUMENTS filed by John O'Bannon. (Baller, Morris) (Entered: 07/10/2006)

07/13/2006

65 ANSWER to Amended Complaint by Friedman's, Inc..(Reff, Alisa) (Entered: 07/13/2006)

07/13/2006

66 CERTIFICATE OF SERVICE by Friedman's, Inc. re 65 Answer to Amended Complaint Amended Certificate of Service (Reff, Alisa) (Entered: 07/13/2006)

07/24/2006

67 NOTICE of Change of Address by Daniel B Edelman (Edelman, Daniel) (Entered: 07/24/2006)

08/10/2006

68 WAIVER OF SERVICE Returned Executed by Ronald Hampton. Federal Insurance Company waiver sent on 7/11/2006, answer due 9/11/2006. (Baller, Morris) (Entered: 08/10/2006)

08/10/2006

69 WAIVER OF SERVICE Returned Executed by Ronald Hampton. St. Paul Mercury Insurance Company waiver sent on 7/11/2006, answer due 9/11/2006. (Baller, Morris) (Entered: 08/10/2006)

08/10/2006

70 CERTIFICATE OF SERVICE by John O'Bannon re 68 Waiver of Service Executed, 69 Waiver of Service Executed (Baller, Morris) (Entered: 08/10/2006)

08/17/2006

71 MOTION to Compel Discovery by John O'Bannon. Responses due by 9/5/2006 (Attachments: # 1 Certificate of Conference)(Baller, Morris) (Entered: 08/17/2006)

08/21/2006

72 NOTICE of Appearance by Suzanne Rigby on behalf of St. Paul Mercury Insurance Company (Rigby, Suzanne) (Entered: 08/21/2006)

08/21/2006

73 NOTICE of Appearance by Eugene J Comey on behalf of St. Paul Mercury Insurance Company (Comey, Eugene) (Entered: 08/21/2006)

08/21/2006

74 CERTIFICATE OF SERVICE by St. Paul Mercury Insurance Company re 72 Notice of Appearance Suzanne Rigby (Rigby, Suzanne) (Entered: 08/21/2006)

08/21/2006

75 CERTIFICATE OF SERVICE by St. Paul Mercury Insurance Company re 73 Notice of Appearance Eugene J. Comey (Rigby, Suzanne) (Entered: 08/21/2006)

08/22/2006

76 PAPERLESS ORDER SCHEDULING telephone conference on September 6, 2006 at 3:00 p.m. regarding Plaintiffs' Motion to Compel Discovery (Document No. 71) and scheduling matters. Signed by Judge William Connelly on 08/22/06. (Connelly, William) (Entered: 08/22/2006)

08/25/2006

77 MOTION of Jonathon F. Sher to Appear Pro Hac Vice by St. Paul Mercury Insurance Company. (rank, Deputy Clerk) (Entered: 08/28/2006)

08/25/2006

ORDER granting 77 Motion of Jonathon F. Sher to Appear Pro Hac Vice. Signed by the Clerk on 8/25/06. (c/m 8/28/06 rk) (rank, Deputy Clerk) (Entered: 08/28/2006)

09/01/2006

78 NOTICE of Appearance by Jonathan T Rees on behalf of Federal Insurance Company (Rees, Jonathan) (Entered: 09/01/2006)

09/05/2006

79 MOTION for David M. Leonard to Appear Pro Hac Vice by Federal Insurance Company. (elt, Deputy Clerk) (Entered: 09/05/2006)

09/05/2006

80 MARGINAL ORDER granting 79 Motion for David M. Leonard to Appear Pro Hac Vice. Signed by Clerk on 09/05/2006. (c/m 9/5/06) (elt, Deputy Clerk) (Entered: 09/05/2006)

09/05/2006

81 MOTION for Amy B. Doorley to Appear Pro Hac Vice by Federal Insurance Company. (elt, Deputy Clerk) (Entered: 09/05/2006)

Case: 8:03-cv-00623-AW As of: 07/15/2010 10:45 PM EDT 10 of 17

09/05/2006

82 ORDER granting 81 Motion for Amy B. Doorley to Appear Pro Hac Vice. Signed by Clerk on 09/05/2006. (c/m 9/5/06) (elt, Deputy Clerk) (Entered: 09/05/2006)

09/06/2006

Telephone Conference held on 9/6/2006 before Judge William Connelly. (FTR−3A) (clb, Deputy Clerk) (Entered: 09/06/2006)

09/07/2006

83 PAPERLESS ORDER GRANTING 71 Motion to Compel Discovery. Defendant must supplement or answer Plaintiffs' Second Set of Interrogatories and Second Request for Production of Documents by October 6, 2006. The April 20, 2006 Scheduling Order (Doc. No. 51) is hereby EXTENDED 120 days as follows: (a) Plaintiffs provide initial expert report(s) re class certification issues by January 29, 2007; (b) Cut−off date for non−expert discovery on class certification issues is February 27, 2007; (c) Defendant provides expert report(s) re class certification issues by April 16, 2007; (d) Plaintiffs' rebuttal expert report(s) re classification issues by May 28, 2007; (e) Cut−off for discovery of experts re class certification issues is June 18, 2007; (f) Plaintiffs' motion for class certification due July 9, 2007; (g) Defendant's opposition to motion for class certification due August 20, 2007; (h) Plaintiffs' reply on motion for class certification due September 18, 2007; and (i) Parties submit proposed schedule to govern remaining discovery and pre−trial proceedings due 14 days after Court's Order on class certification motion. Because Defendant interprets Bankruptcy Judge Davis' November 7, 2005 Order permitting Defendant to seek reimbursement of reasonable fees and expenses from Plaintiffs requesting Defendant's ongoing involvement (other than mediation), the court ORDERS the parties to brief this issue. The parties must simultaneously file briefs delineating their positions by September 20, 2006. The replies are due September 27, 2006. Finally, during the telephone conference an issue arose regarding how to structure the processing of the insurance coverage issue in this case. The court requested the parties to submit their proposals by September 28, 2006. Signed by Judge William Connelly on 09/07/06. (Connelly, William) (Entered: 09/07/2006)

09/11/2006

84 NOTICE by Federal Insurance Company Disclosure of Affiliation under L.R. 103.3 (Leonard, David) (Entered: 09/11/2006)

09/11/2006

85 MOTION to Dismiss by Federal Insurance Company. Responses due by 9/28/2006 (Attachments: # 1 Memorandum in Support of Motion to Dismiss)(Leonard, David) (Entered: 09/11/2006)

09/11/2006

86 Request for Hearing re 85 MOTION to Dismiss by Federal Insurance Company. (Leonard, David) (Entered: 09/11/2006)

09/11/2006

87 MOTION to Dismiss by St. Paul Mercury Insurance Company. Responses due by 9/28/2006 (Rigby, Suzanne) (Entered: 09/11/2006)

09/12/2006

88 Local Rule 103.3 Disclosure Statement by St. Paul Mercury Insurance Company identifying St. Paul Travelers Companies, Inc. as Corporate Parent.. (Rigby, Suzanne) (Entered: 09/12/2006)

09/20/2006

89 MOTION Reimbursement of Discovery Costs Pursuant to Bankruptcy Order by Friedman's, Inc.. Responses due by 10/10/2006 (Homer, Gregory) (Entered: 09/20/2006)

09/20/2006

90 MOTION in Opposition to Defendenants Interpretation that Bankruptcy Order Permits Defendants to Seek Reimbursment of Fees by John O'Bannon. Responses due by 10/10/2006 (Baller, Morris) (Entered: 09/20/2006)

09/27/2006

91 PAPERLESS ORDER PERMITTING parties to file one to three page letter briefs, outlining discovery disputes, in order to permit the Court to resolve them expeditiously. The formal "meet and confer" provisions of Local Rules 104.7 and 104.8(b) may be dispensed with; however, the parties are expected to discuss discovery disputes and make good faith efforts to resolve the disputes before presenting them to the Court. Signed by Judge William Connelly on 09/27/06. (Connelly, William) (Entered: 09/27/2006)

09/27/2006

92 RESPONSE to Motion re 89 MOTION Reimbursement of Discovery Costs Pursuant to Bankruptcy Order filed by John O'Bannon.Replies due by 10/11/2006. (Baller, Morris) (Entered: 09/27/2006)

Case: 8:03-cv-00623-AW As of: 07/15/2010 10:45 PM EDT 11 of 17

09/27/2006

93 RESPONSE in Support re 89 MOTION Reimbursement of Discovery Costs Pursuant to Bankruptcy Order filed by Friedman's, Inc..Replies due by 10/11/2006. (Homer, Gregory) (Entered: 09/27/2006)

09/27/2006

94 Memorandum re 90 MOTION in Opposition to Defendenants Interpretation that Bankruptcy Order Permits Defendants to Seek Reimbursment of Fees Memorandum in Connection with Briefing to Magistrate Judge Connelly on Issue of Reimbursement by Plaintiffs of Friedman's Fees and Expenses in Response to Discovery Requests From Plaintiffs; filed by Federal Insurance Company. (Attachments: # 1 Exhibit #1 − Lift Stay Order# 2 Exhibit #2 − Plaintiffs' Bankruptcy Court Motion to Lift Stay)(Leonard, David) (Entered: 09/27/2006)

09/28/2006

95 RESPONSE in Opposition re 87 MOTION to Dismiss, 85 MOTION to Dismiss filed by John O'Bannon.Replies due by 10/12/2006. (Baller, Morris) (Entered: 09/28/2006)

09/28/2006

96 Joint Correspondence re: schedule for litigation on insurance coverage issue (Baller, Morris) (Entered: 09/28/2006)

10/10/2006

97 REPLY to Response to Motion re 85 MOTION to Dismiss filed by Federal Insurance Company. (Leonard, David) (Entered: 10/10/2006)

10/12/2006

98 REPLY to Response to Motion re 87 MOTION to Dismiss, 85 MOTION to Dismiss filed by St. Paul Mercury Insurance Company. (Rigby, Suzanne) (Entered: 10/12/2006)

10/19/2006

99 PAPERLESS ORDER SCHEDULING telephonic hearing on October 26, 2006 at 3:30 p.m. (Eastern Time) regarding the Interpretation of the Bankruptcy Order concerning the Reimbursement of Discovery Costs [Documents Nos. 89 and 90] and the Schedule for the Litigation of the Declaratory Relief Cause of Action [Document No. 96]. Signed by Judge William Connelly on 10/19/06. (Connelly, William) (Entered: 10/19/2006)

10/26/2006

Motion Hearing VIA TELEPHONE held on 10/26/2006 re 89 MOTION Reimbursement of Discovery Costs Pursuant to Bankruptcy Order filed by Friedman's, Inc. held before Judge William Connelly. (FTR: Fosbroook −3B.) (pkf, Deputy Clerk) (Entered: 10/26/2006)

10/27/2006

100 PAPERLESS ORDER GRANTING IN PART AND DENYING IN PART 89 Motion re: Reimbursement of Discovery Costs Pursuant to Bankruptcy Order, and DENYING 90 Motion in Opposition to Defendant's Interpretation of Bankruptcy Order. This Court is bound by the November 7, 2005 Order of Bankruptcy Judge Davis. The critical provision is subsection D concerning reimbursement. It is clear the entire case could have been discharged in bankruptcy but that was not done. Bankruptcy Judge Davis granted the lift stay, limited the exposure to the confines of the applicable insurance policies, and also provided, with the exception of the mediation, there would be reimbursement for reasonable fees and expenses associated with the litigation. The Lift Stay Order was apparently negotiated. The Court interprets subsection D of the Lift Stay Order as follows: (1) fees of outside counsel as it relates to the defense of this employment discrimination case are reimbursable by Plaintiff; (2) with regard to expenses, out−of−pocket expenses are reimbursable by Plaintiff, but not in−house charges. The Court may have to determine at a later time what constitutes "reasonable fees and expenses." Regarding the Schedule for Litigation of Insurance Coverage Issue (Document No. 96), the Court APPROVES the first part of the proposed schedule, from September 11, 2006 (Insurance defendants filed motion to dismiss) to 75 days after Ruling (Parties' cross−motions for summary judgment on coverage issues to be filed). After ruling by Judge Williams on the motions to dismiss/summary judgment motions, presuming there is coverage, the undersigned will meet with the parties again to map out the remaining scheduling issues as to the substantive aspects of the case. Signed by Judge William Connelly on 10/27/06. (Connelly, William) (Entered: 10/27/2006)

11/06/2006

101 APPEAL OF MAGISTRATE JUDGE DECISION to District Court by John O'Bannon re 100 Order on Motion for Miscellaneous Relief,,,,,,,,,,,,,,, (Attachments: # 1 Dkt 100 − Order Granting Motion for Reinbursement of Discovery Costs# 2 Order Lifting Stay)(Baller, Morris) (Entered: 11/06/2006)

Case: 8:03-cv-00623-AW As of: 07/15/2010 10:45 PM EDT 12 of 17

11/14/2006

102 MOTION for Leave to File Response to Plaintiff's Objections to Magistrate's Order Regarding Cost Reimbursement by Friedman's, Inc.. Responses due by 12/1/2006 (Attachments: # 1 Response to Plaintiffs' Objections to Magistrate's Order Regarding Cost Reimbursement)(Reff, Alisa) (Entered: 11/14/2006)

11/15/2006

103 RESPONSE re 101 Appeal of Magistrate Judge Decision to District Court, filed by Federal Insurance Company. (Attachments: # 1 Exhibit A to Federal's Response to Plaintiff's Objections to Magistrate Judge's Order)(Leonard, David) (Entered: 11/15/2006)

11/22/2006

104 REPLY to Response to Motion re 102 MOTION for Leave to File Response to Plaintiff's Objections to Magistrate's Order Regarding Cost Reimbursement filed by John O'Bannon. (Attachments: # 1 Exhibit Motion for Relief from the Automatic Stay)(Baller, Morris) (Entered: 11/22/2006)

11/30/2006

105 MOTION to Stay PROCEEDINGS ON PLAINTIFFS FIRST CAUSE OF ACTION PENDING RESOLUTION OF PLAINTIFFS SECOND CAUSE OF ACTION; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION; AND REQUEST FOR ORAL ARGUMENT by John O'Bannon. Responses due by 12/18/2006 (Baller, Morris) (Entered: 11/30/2006)

12/18/2006

106 RESPONSE in Opposition re 105 MOTION to Stay PROCEEDINGS ON PLAINTIFFS FIRST CAUSE OF ACTION PENDING RESOLUTION OF PLAINTIFFS SECOND CAUSE OF ACTION; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION; AND REQUEST FOR ORAL ARGUMENT filed by Friedman's, Inc..Replies due by 1/2/2007. (Reff, Alisa) (Entered: 12/18/2006)

12/18/2006

107 RESPONSE in Opposition re 105 MOTION to Stay PROCEEDINGS ON PLAINTIFFS FIRST CAUSE OF ACTION PENDING RESOLUTION OF PLAINTIFFS SECOND CAUSE OF ACTION; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION; AND REQUEST FOR ORAL ARGUMENT filed by Federal Insurance Company.Replies due by 1/2/2007. (Leonard, David) (Entered: 12/18/2006)

01/02/2007

108 REPLY to Response to Motion re 105 MOTION to Stay PROCEEDINGS ON PLAINTIFFS FIRST CAUSE OF ACTION PENDING RESOLUTION OF PLAINTIFFS SECOND CAUSE OF ACTION; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION; AND REQUEST FOR ORAL ARGUMENT filed by John O'Bannon. (Attachments: # 1 Appendix of Exhibits A − I)(Baller, Morris) (Entered: 01/02/2007)

01/18/2007

109 MOTION for Leave to File Sur−reply to Plaintiffs' Motion for Partial Stay, and Memorandum in Support by Federal Insurance Company. Responses due by 2/5/2007 (Attachments: # 1 Exhibit A − Proposed Sur−reply)(Leonard, David) (Entered: 01/18/2007)

01/18/2007

110 MOTION to Strike and Objection to Plaintiffs' Exhibits B through I by Federal Insurance Company. Responses due by 2/5/2007 (Attachments: # 1 Memorandum in Support of Federal's Objection to Plaintiffs' Exhibits and Motion to Strike)(Leonard, David) (Entered: 01/18/2007)

01/29/2007

111 RESPONSE in Opposition re 110 MOTION to Strike and Objection to Plaintiffs' Exhibits B through I, 109 MOTION for Leave to File Sur−reply to Plaintiffs' Motion for Partial Stay, and Memorandum in Support filed by John O'Bannon.Replies due by 2/12/2007. (Baller, Morris) (Entered: 01/29/2007)

03/14/2007

112 PAPERLESS ORDER SCHEDULING telephone hearing on April 11, 2007 at 3:00 p.m. (Eastern Time) regarding Plaintiffs' Motion for Stay of Proceedings on Plaintiffs' First Cause of Action Pending Resolution of Plaintiffs' Second Cause of Action [Document No. 105], Federal Insurance's Motion Seeking Leave to File Sur−reply to Plaintiffs' Motion for a Partial Stay of Proceedings [Document No. 109], and Federal Insurance's Objection and Motion to Strike [Document No. 110]. Signed by Judge William Connelly on 03/14/07. (Connelly, William) (Entered: 03/14/2007)

03/20/2007

113 Letter/ORDER: Pursuant to telephonic conference call with chambers and counsel, a hearing on the pending motions have been set for May 24, 2007 at 9:00am.

Case: 8:03-cv-00623-AW As of: 07/15/2010 10:45 PM EDT 13 of 17

03/20/2007
03/29/2007 04/02/2007 04/02/2007 04/04/2007 04/05/2007 04/05/2007 04/05/2007 04/09/2007 04/11/2007 04/11/2007
04/11/2007

Signed by Judge Alexander Williams Jr. on 3/20/07.(c/m to Barry Goldstein and Keenan Nix) (ch, Deputy Clerk) Modified on 3/20/2007 (ch, Deputy Clerk). (Entered: 03/20/2007)
114 [FILED IN ERROR − SAME ORDER DOCKETED TWICE] Memo to Counsel/ORDER scheduling a motions hearing for May 24, 2007 at 9:00 a.m., however, if counsel for the defendant finds that his schedule will permit this hearing to take place earlier, April 30, 2007 at 9:00 a.m. The telephonic motions hearing on the Motion for Leave to File Friedman's Response to Plaintiff's Objections will take place on April 9, 2007 at 12:00 noon. Plaintiff's attorney will initiate this call. Signed by Judge Alexander Williams Jr. on 3/20/2007. (elt, Deputy Clerk) Modified on 3/20/2007 (elt, Deputy Clerk). (Entered: 03/20/2007)
115 PAPERLESS ORDER MODIFYING the time of the April 11, 2007 telephonic hearing. The hearing will commence at 1:30 p.m. (Eastern). Signed by Judge William Connelly on 03/29/07. (Connelly, William) (Entered: 03/29/2007)
116 ORDER granting 102 Motion for Leave to File. The Clerk of the Court is to re−docket Friedman's attached exhibit as its Response to Plaintiffs' Objections to the Magistrate's Order. Signed by Judge Alexander Williams Jr. on 4/2/07. (c/m to Barry Goldstein and Keenan Nix) (ch, Deputy Clerk) Modified on 4/3/2007 (ch, Deputy Clerk). (Entered: 04/02/2007)
117 Response to Plaintiff's Objections to the Magistrate Order by Friedman's, Inc. (elt, Deputy Clerk) (Entered: 04/03/2007)
118 Letter/ORDER rescheduling Telephonic Conference for Wednesday, April 11, 2007 at 12p.m.,Noon,EST. Signed by Judge Alexander Williams Jr. on 4/4/07. (c/m to Keenan Nix &Barry Goldstein)(ch, Deputy Clerk) Modified on 4/5/2007 (ch, Deputy Clerk). (Entered: 04/05/2007)
119 [FILED IN ERROR−REFILED AS DOC. 120]Letter/ORDER rescheduling Telephonic Motions Hearing for Monday, April 30, 2007 at 9a.m,EST. Signed by Judge Alexander Williams Jr. on 4/5/07. (c/m to Barry Goldstein and Keenan Nix)(ch, Deputy Clerk) Modified on 4/5/2007 (ch, Deputy Clerk). Modified on 4/5/2007 (ch, Deputy Clerk). (Entered: 04/05/2007)
120 [FILED IN ERROR−REFILED AS DOC. 121] AMENDED Letter/ORDER rescheduling Telephonic Motions Hearing for Monday, April 30, 2007 at 9a.m, EST. Signed by Judge Alexander Williams Jr. on 4/5/07. (ch, Deputy Clerk) Modified on 4/5/2007 (ch, Deputy Clerk). (Entered: 04/05/2007)
121 SECOND AMENDED Letter/ORDER rescheduling the Motions Hearing for Monday, April 30, 2007 at 9a.m,EST. Signed by Judge Alexander Williams Jr. on 4/5/07. (c/m to Barry Goldstein and Keenan Nix)(ch, Deputy Clerk) Modified on 4/5/2007 (ch, Deputy Clerk). (Entered: 04/05/2007)
122 Correspondence re: April 11, 2007 Telephonic Hearing (Baller, Morris) (Entered: 04/09/2007)
123 PAPERLESS ORDER GRANTING 109 Federal Insurance's Motion Seeking Leave to File Sur−reply to Plaintiff's Motion for a Partial Stay of Proceedings and DENYING [Document No. 110] Federal Insurance's Motion to Strike. Signed by Judge William Connelly on 04/11/07. (Connelly, William) (Entered: 04/11/2007)
Motions Hearing/Telephone Conference held on 4/11/2007 re 105 MOTION to Stay PROCEEDINGS ON PLAINTIFFS FIRST CAUSE OF ACTION PENDING RESOLUTION OF PLAINTIFFS SECOND CAUSE OF ACTION; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION filed by John O'Bannon, before Judge William Connelly. (Fosbrook 3−B.) (pkf, Deputy Clerk) (Entered: 04/11/2007)
124 PAPERLESS ORDER GRANTING 105 Plaintiffs' Motion for Stay of Proceedings on Plaintiffs' First Cause of Action Pending Resolution of Plaintiffs' Second Cause of Action. Plaintiffs' First Cause of Action is stayed until July 31, 2007. It is the undersigned's understanding that Judge Williams will rule on the Motions to Dismiss on April 30, 2007. In a letter of September 28, 2006 (Document No. 96), the parties previously told the Court that they are able to do the necessary work to

Case: 8:03-cv-00623-AW As of: 07/15/2010 10:45 PM EDT 14 of 17

04/11/2007 04/12/2007
04/19/2007 04/23/2007 04/30/2007 04/30/2007 05/03/2007 05/03/2007
05/06/2007 05/07/2007 05/14/2007 05/25/2007 05/28/2007

get the insurance coverage issue properly presented to the Court in a short period of time. The undersigned thus adopts those guidelines. Thirty days after the ruling on the Motions to Dismiss or, by May 30, 2007, is the deadline for the Insurers and other parties to stipulate to any undisputed facts relevant to the motions for summary judgment. Forty−five days after the ruling or, by June 15, 2007, is when insurance coverage discovery closes. Seventy−five days after the ruling or, by July 16, 2007, the parties must file cross−motions for summary judgment on the coverage issues. The undersigned reserves the right to extend the Stay for a short period of time, for the reasons stated during the telephone conference. Signed by Judge William Connelly on 04/11/07. (Connelly, William) (Entered: 04/11/2007)
Motions/Telephone Conference held on 4/11/2007 held before Judge Alexander Williams Jr. (Court Reporter Gloria Williams) (has, Deputy Clerk) (Entered: 05/15/2007)
125 ORDER that United States Magistrate Judge William Connelly's Order 100 BE, and hereby IS, AFFIRMED; and that the parties are DIRECTED to submit a joint proposal to the Court, as to the agreed upon "Procedure for Reimbursement", within ten (10) days from the entry of this Order. Signed by Judge Alexander Williams Jr. on 4/12/2007. (elt, Deputy Clerk) (Entered: 04/12/2007)
126 Joint MOTION for Extension of Time to File Cost Reimbursement Procedure by Plaintiffs and by Friedman's, Inc.. Responses due by 5/7/2007 (Attachments: # 1 Text of Proposed Order Granting Joint Motion)(Reff, Alisa) (Entered: 04/19/2007)
127 PAPERLESS ORDER "Granting" 126 Joint Motion for Extension of Time Signed by Judge Alexander Williams Jr. on 4/23/07 (ajh, Chambers) (Entered: 04/23/2007)
128 ORDER denying 85 Motion to Dismiss; denying 87 Motion to Dismiss. Signed by Judge Alexander Williams Jr. on 4/30/2007. (elt, Deputy Clerk) (Entered: 04/30/2007)
Motion Hearing held on 4/30/2007 re 87 MOTION to Dismiss filed by St. Paul Mercury Insurance Company, 85 MOTION to Dismiss filed by Federal Insurance Company held before Judge Alexander Williams Jr. (Court Reporter Williams.) (jas, Deputy Clerk) (Entered: 04/30/2007)
129 STIPULATION (Joint) Related to the Procedure for Reimbursement of Firedman's Costs by Friedman's, Inc.. (Reff, Alisa) (Entered: 05/03/2007)
130 ORDER that Friedman's shall submit to Counsel for Plaintiffs an itemized invoice of its attorneys' fees and costs which it believes should be reimbursed; that Plaintiffs shall pay such invoices, or the part thereof which they do not dispute within 30 days; if Plaintiffs dispute any part of the invoice, they shall promptly notify Friedman's Counsel as to the nature of their dispute. Then Counsel for Friedman's and Plaintiffs ahall have 14 days from the date of the notice to attempt to resolve the dispute; and if Counsel are not able to resolve the matter, Friedman's shall submit its position to the Court regarding the dispute with the invoice attached. Then, Plaintiffs shall have 7 business days to respond and Friedman's shall have 5 business day to reply. Signed by Judge Alexander Williams Jr. on 5/3/2007. (elt, Deputy Clerk) (Entered: 05/03/2007)
131 Consent MOTION for Extension of Time to File Answer re 62 Amended Complaint by Federal Insurance Company. Responses due by 5/23/2007 (Leonard, David) (Entered: 05/06/2007)
132 PAPERLESS ORDER "Granting" 131 Joint Consent Motion for Extension of Time Signed by Judge Alexander Williams Jr. on 5/7/07 ( Williams, Alexander) (Entered: 05/07/2007)
133 ANSWER to Amended Complaint by St. Paul Mercury Insurance Company.(Rigby, Suzanne) (Entered: 05/14/2007)
134 ANSWER to Amended Complaint by Federal Insurance Company.(Leonard, David) (Entered: 05/25/2007)
135 Joint MOTION for Extension of Time on Insurance Issues by Thirty Days, by Federal Insurance Company. Responses due by 6/14/2007 (Leonard, David)

Case: 8:03-cv-00623-AW As of: 07/15/2010 10:45 PM EDT 15 of 17

05/29/2007 06/04/2007 07/13/2007 07/16/2007 08/16/2007 08/16/2007
08/16/2007 08/16/2007 08/16/2007
08/16/2007 08/17/2007 08/30/2007 08/31/2007 09/20/2007

(Entered: 05/28/2007)
136 PAPERLESS ORDER "Granting" 135 Joint Motion for Extension of Time Signed by Judge Alexander Williams Jr. on 5/29/07 (Williams, Alexander) (Entered: 05/29/2007)
137 TRANSCRIPT of Proceedings held on 4/11/07 before Judge Alexander Williams, Jr.. Court Reporter: Gloria Williams. (ranks, Deputy Clerk) (Entered: 06/04/2007)
138 Joint MOTION for Extension of Time on St. Paul Insurance Discovery by 14 Days by St. Paul Mercury Insurance Company, John O'Bannon. Responses due by 7/30/2007 (Baller, Morris) (Entered: 07/13/2007)
139 PAPERLESS ORDER "Granting" 138 Joint Motion for Extension of Time Signed by Judge Alexander Williams Jr. on 7/16/07 (Williams, Alexander) (Entered: 07/16/2007)
140 NOTICE of Change of Address by Suzanne Rigby (Rigby, Suzanne) (Entered: 08/16/2007)
141 MOTION for Summary Judgment Plaintiffs' Notice of Motion and Motion for Summary Judgment Denying Defendants' Affirmative Defenses Regarding Interrelated Wrongful Acts by John O'Bannon. Responses due by 9/4/2007 (Attachments: # 1 Plaintiffs' Request for Hearing and Oral Argument in Connection with their Motion for Summary Judgement# 2 Text of Proposed Order [Proposed] Order Granting Plaintiffs' Motion for Summary Judgment Denying Defendants' Affirmative Defenses Regarding Interrelated Wrongful Acts# 3 Plaintiffs' Memorandum of Points and Authority in Support of their Motion for Summary Judgment Denying Defendants' Affirmative Defenses Regarding Interrelated Wrongful Acts# 4 Stipulation of Undisputed Facts[w out exhs]# 5 Declaration of Morris J. Baller in Support of Plaintiffs' Motion for Summary Judgment Denying Defendants' Affirmative Defenses Regarding Interrelated Wrong Acts# 6 Notice of Filing of Lengthy Exhibits−LENGTHY EXHIBITS A−Q RECEIVED IN CLERKS OFFICE 8/17/07)(Baller, Morris) Modified on 8/17/2007 (ch, Deputy Clerk). Modified on 3/27/2008 (rank, Deputy Clerk). (Entered: 08/16/2007)
142 MOTION for Summary Judgment by Federal Insurance Company. Responses due by 9/4/2007 (Attachments: # 1 Exhibit A − Declaration of Christopher J. Cocca# 2 Federal's Memorandum in Support of Its Motion for Summary Judgment)(Leonard, David) Modified on 3/27/2008 (rank, Deputy Clerk). (Entered: 08/16/2007)
143 Request for Hearing re 142 MOTION for Summary Judgment by Federal Insurance Company. (Leonard, David) (Entered: 08/16/2007)
144 MOTION for Summary Judgment by St. Paul Mercury Insurance Company. Responses due by 9/4/2007 (Attachments: # 1 Text of Proposed Order # 2 Memorandum of Points &Authorities# 3 Statement of Undisputed Facts# 4 Declaration of Mark S. Bentley# 5 Declaration of Carole Lofness# 6 Electronic Certificate of Service)(Rigby, Suzanne) Modified on 3/27/2008 (rank, Deputy Clerk). (Entered: 08/16/2007)
145 Request for Hearing by St. Paul Mercury Insurance Company. (Rigby, Suzanne) Modified on 8/17/2007 (elt, Deputy Clerk). (Entered: 08/16/2007)
146 TRANSCRIPT of Motions Hearing held on 4/30/07 before Judge Alexander Williams, Jr. Court Reporter: Gloria I. Williams. Filed Separately (ch, Deputy Clerk) (Entered: 08/17/2007)
147 Joint MOTION for Extension of Time On Insurance Cross−Motions For Summary Judgment Briefing Schedule By 26 Days by John O'Bannon. Responses due by 9/17/2007 (Baller, Morris) (Entered: 08/30/2007)
148 PAPERLESS ORDER granting 147 Motion for Extension of Time.. Signed by Judge Alexander Williams Jr. on 08/31/07. (gc, Chambers) (Entered: 08/31/2007)
149 Joint MOTION for Extension of Time for Briefing on Summary Judgment Motions to Allow for Mediation by Federal Insurance Company. Responses due by

Case: 8:03-cv-00623-AW As of: 07/15/2010 10:45 PM EDT 16 of 17

09/24/2007 10/19/2007 02/01/2008 02/19/2008 03/26/2008 03/26/2008 07/23/2008 09/25/2008
09/25/2008
09/25/2008
09/25/2008
10/06/2008 10/06/2008 10/23/2008

10/9/2007 (Attachments: # 1 Text of Proposed Order Extending Briefing Deadlines to Allow for Mediation)(Leonard, David) (Entered: 09/20/2007)
150 PAPERLESS ORDER "Granting" 149 Joint Motion for Extension of Time Signed by Judge Alexander Williams Jr. on 9/24/07 (Williams, Alexander) (Entered: 09/24/2007)
151 NOTICE of Settlement Notice of Pending Settlement Agreement by Friedman's, Inc. (Reff, Alisa) (Entered: 10/19/2007)
152 NOTICE by Friedman's, Inc. of Automatic Stay (Reff, Alisa) (Entered: 02/01/2008)
153 ORDER setting a telphonic status conference with the parites for Monday, 2/25/08 at 2:30 p.m.. Signed by Judge Alexander Williams, Jr on 2/19/08. (rank, Deputy Clerk) (Entered: 02/19/2008)
154 ORDER that this action BE, and the same hereby IS, STAYED pending resolution of the Bankruptcy proceeding. Signed by Judge Alexander Williams, Jr on 3/25/2008. (elt, Deputy Clerk) (Entered: 03/26/2008)
155 ORDER deferring ruling on Motions 141 , 142 and 144 pending resolution of the Bankkruptcy proceedings. Signed by Judge Alexander Williams, Jr on 3/26/08. (rank, Deputy Clerk) (Entered: 03/27/2008)
156 NOTICE of Change of Address by David M Leonard (Leonard, David) (Entered: 07/23/2008)
157 MOTION for Settlement Plaintiffs Notice Of Motion And Motion For Preliminary Approval Of Consent Decree, Conditional Certification Of Settlement Class, Appointment Of Class Counsel, Designation Of Class Representatives, Approval Of Class Notice, And Scheduling Of Final Fairness Hearing; And Memorandum Of Points And Authorities In Support Of Motion by John O'Bannon Responses due by 10/14/2008 (Attachments: # 1 Exhibit Consent Decree, # 2 Exhibit Notice To Proposed Class, # 3 Exhibit Legal Notice, # 4 Exhibit Enhanced Award)(Baller, Morris) Modified on 9/30/2008 (rank, Deputy Clerk).(Hard Copy rec'd 9/30/08 rk) (Entered: 09/25/2008)
158 AFFIDAVIT re 157 MOTION for Settlement Plaintiffs Notice Of Motion And Motion For Preliminary Approval Of Consent Decree, Conditional Certification Of Settlement Class, Appointment Of Class Counsel, Designation Of Class Representatives, Approval Of Class Notice, An Declaration Of Morris J. Baller by John O'Bannon. (Attachments: # 1 Exhibit Email Communications, # 2 Exhibit Settlement Services, # 3 Exhibit Resume Baller, # 4 Exhibit Resume Goldstein, # 5 Exhibit Resume Warren)(Baller, Morris) (Entered: 09/25/2008)
159 AFFIDAVIT re 157 MOTION for Settlement Plaintiffs Notice Of Motion And Motion For Preliminary Approval Of Consent Decree, Conditional Certification Of Settlement Class, Appointment Of Class Counsel, Designation Of Class Representatives, Approval Of Class Notice, An Declaration Of Edward A. Panelli by John O'Bannon. (Baller, Morris) (Entered: 09/25/2008)
160 MOTION for Settlement Plaintiffs Notice Of Motion And Motion For Preliminary Approval Of Consent Decree, Conditional Certification Of Settlement Class, Appointment Of Class Counsel, Designation Of Class Representatives, Approval Of Class Notice, And Scheduling Of Final Fairness Hearing; And Memorandum Of Points And Authorities In Support Of Motion by John O'Bannon Responses due by 10/14/2008 (Attachments: # 1 Text of Proposed Order [Proposed] Order Granting Preliminary Approval Of Consent Decree)(Baller, Morris) Modified on 9/30/2008 (rank, Deputy Clerk).(Hard Copy rec'd 9/30/08 (Entered: 09/25/2008)
161 Joint Correcting Earlier Submission (Attachments: # 1 Exhibit Poposed Consent Decree)(Reff, Alisa) (Entered: 10/06/2008)
162 CERTIFICATE OF SERVICE by Friedman's, Inc. re 161 Correcting earlier submission (Reff, Alisa) (Entered: 10/06/2008)
Telephone Conference held before Judge Alexander Williams, Jr. on 10/23/2008 (Spence 4A) (has, Deputy Clerk) (Entered: 10/23/2008)

Case: 8:03-cv-00623-AW As of: 07/15/2010 10:45 PM EDT 17 of 17

10/23/2008

163 Joint Correcting Earlier Submission (Attachments: # 1 Exhibit Final Proposed Consent Decree, # 2 Text of Proposed Order Revised Proposed Order Granting Preliminary Approval)(Reff, Alisa) Modified on 10/30/2008 (rank, Deputy Clerk).(Hard Copy rec'd 10/24/08 rk) (Entered: 10/23/2008)

10/29/2008

164 ORDER granting 157 Motion for Settlement; 160 Motion for Settlement; granting 163 Preliminary Approval of Consent Decree, Conditional Certification of Settlement Class, Appointment of Class Counsel, Designation of Class Repressentatives, Approval of Class Notice, and Scheduling of Final Fairness hearing. Signed by Judge Alexander Williams, Jr on 10/29/08. (rank, Deputy Clerk) Modified on 11/3/2008 (elt, Deputy Clerk). (Entered: 10/30/2008)

01/05/2009

165 Correspondence from Carolyn Stallworth indicating she would like to be included in the Class Action Settlement (elt, Deputy Clerk) (Entered: 01/05/2009)

01/12/2009

166 Correspondence from Siudi Paredes requesting a Consent Decree as a member of the class action settlement, and that it be sent by overnight delivery. [Docket clerk will forward request to counsel.] (elt, Deputy Clerk) (Entered: 01/12/2009)

01/30/2009

167 MOTION for Settlement (Motion for Order Granting Final Approval of Class Action Settlement) by John O'Bannon Responses due by 2/17/2009 (Attachments: # 1 Text of Proposed Order, # 2 Declaration of L. Kovach)(Baller, Morris) (Entered: 01/30/2009)

01/30/2009

168 Correcting Earlier Submission (Attachments: # 1 [Revised Proposed] Order Granting Final Approval of Class Action Settlement, # 2 [Final Proposed] Consent Decree)(Baller, Morris) (Entered: 01/30/2009)

02/11/2009

Telephone Conference held on 2/11/2009 before Judge Alexander Williams, Jr. (Court Reporter Gloria Williams) (has, Deputy Clerk) (Entered: 02/11/2009)

02/12/2009

169 FINAL CONSENT DECREE. Signed by Judge Alexander Williams, Jr on 2/11/09. (rank, Deputy Clerk) (Entered: 02/12/2009)

02/12/2009

170 REVISED ORDER Granting Final Approval of Class Action Settlement. Signed by Judge Alexander Williams, Jr on 2/11/09. (rank, Deputy Clerk) (Entered: 02/12/2009)

02/13/2009

171 STIPULATION of Dismissal with Prejudice of the Insurer Defendants by John O'Bannon. (Attachments: # 1 Cover letter)(Baller, Morris) (Entered: 02/13/2009)

05/14/2009

172 ORDER − Stipulation of Dismissal with Prejudice of the Insurer Defendants. Signed by Judge Alexander Williams, Jr on 05/13/2009. (elt, Deputy Clerk) (Entered: 05/14/2009)