Court Opinion

ID: 4698841
Source: CourtListenerOpinion
Date Created: 2021-06-25 20:03:41.211679+00
Date Added: 2024-06-11T08:05:58.421358
License: Public Domain

In the United States Court of Federal Claims
                                     No. 06-872C

                               (E-Filed: June 25, 2021)

                                         )
 GERALD K. KANDEL, et al.,               )
                                         )   Class Action Settlement; Fairness
               Plaintiffs,               )   Hearing; RCFC 23(e).
                                         )
       v.                                )
                                         )
 THE UNITED STATES,                      )
                                         )
              Defendant.                 )
                                         )

                                        ORDER

       On May 25, 2021, the court held a fairness hearing on the parties’ settlement
agreement. See ECF No. 423 (hearing transcript). Following the fairness hearing and
pursuant to the court’s June 10, 2021 scheduling order, the parties filed their corrected
settlement agreement with attachments. See ECF No. 421. For the following reasons,
the court APPROVES the Corrected PCC Subclass Settlement Agreement, ECF No. 421.

I.    Background

        This case is a class action that involved two subclasses—the “Settlement
Subclass” and the “PCC Subclass.” See ECF No. 172 (amended order approving class
certification); ECF No. 387 (order defining the two subclasses). Plaintiffs summarize the
claims in their first amended complaint as follows:

      When members of the two plaintiff sub-classes retired, died, or separated
      with unused annual leave to their credit, they were entitled to payment for
      accrued and accumulated, unused annual leave under § 5551 of title 5 of the
      United States Code equal to the “pay” they would have received had they
      worked their regular and customary scheduled hours until the period of their
      unused annual leave expired. However, when they received payment of the
      lump-sum for their unused annual leave, they did not receive the full
      payments to which they were entitled because the computation of their lump-
      sum payment did not include an amount equal to the pay which they regularly
        and customarily received immediately prior to the date the employee became
        eligible for a lump-sum payment for unused annual leave.

ECF No. 401 at 2 (first amended complaint). And plaintiffs explain the distinction
between the two classes as follows:

        The “opt-in” plaintiff class consists of two subclasses, a “Settlement
        Subclass” consisting of the former employees of twenty-nine federal
        agencies plus certain employees of the Panama Canal Commission, and a
        “PCC Subclass” consisting of 492 former employees of the Panama Canal
        Commission who do not have a social security number, or do not personally
        possess their PCC Form 2764, or have not requested [the appropriate agency]
        to provide it.

Id. at 3.

        On October 30, 2020, following a fairness hearing, the court issued an order
approving the parties’ settlement agreement to resolve the claims brought by the
Settlement Subclass. See ECF No. 405. On February 19, 2021, the parties informed the
court that they had reached a second settlement agreement, which resolves the claims of
the PCC subclass, and filed an unopposed motion in which they requested that the court
preliminarily approve the PCC subclass settlement agreement, to approve the proposed
notice of a fairness hearing, and to conduct a fairness hearing to consider final approval
of the agreement. See ECF No. 413. The court granted the motion on March 3, 2021,
see ECF No. 414, and notice was sent to the PCC subclass members in accordance with
the procedures approved by the court, see ECF No. 418 (plaintiffs’ notice of compliance).

        The court conducted a fairness hearing on May 25, 2021. See ECF No. 423. At
the fairness hearing, the plaintiffs asked the court to approve the settlement agreement,
and defendant did not oppose the request. Neither the court nor the parties received any
objections from members of the PCC subclass. The corrected PCC subclass settlement
agreement is now before the court. 1 See ECF No. 421.

1
        The settlement agreement was initially filed with the court on February 19, 2021. See
ECF No. 413-1. Subsequent to the May 25, 2021 fairness hearing, however, the court
identified an error in the settlement agreement, and directed the parties to file a corrected
version of the settlement agreement, along with a notice explaining the nature of the error and
stating whether the error justified additional proceedings. See ECF No. 419 (order). In
response to the court’s order, plaintiffs filed a corrected version of the settlement agreement,
ECF No. 421, and a notice in which the parties explain that the error was typographical and
that no additional proceedings are necessary, ECF No. 420. Accordingly, the corrected
settlement agreement, ECF No. 421, supersedes the parties’ previously filed version.

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        According to the terms of the settlement agreement, defendant agrees to pay a total
of “$36,900, an amount that represents a compromise payment of $75 to each of the 492
members of the [PCC] subclass, excluding attorney fees, expenses, and costs, and the
costs and fees of the class action administrator.” Id. at 5. Because the members of the
PCC subclass are Panamanian nationals, “the class administrator will not be responsible
for calculating, withholding, or paying any taxes that may be owned by any class member
as a result of the disbursement of the settlement proceeds.” Id. at 6-7.

        In exchange, PCC subclass members have agreed to:

        release, waive, and abandon all PCC Subclass claims for lump-sum
        payments for unused accumulated and accrued annual leave, Sunday
        premium pay (for those who had separated on or before October 1, 1997),
        and foreign post allowances, against the United States, its political
        subdivisions, its officers, agents, and employees, arising out the amended
        complaint or otherwise involved in the is case.

Id. at 5.

       Upon receipt of the settlement funds, the class action administrator “will make
payments to claimants in the form of a check from the Settlement Trust, mailed to the last
known address of each class member.” Id. at 7. The settlement agreement details the
timing of these payments, and the protocol for managing undeliverable checks. See id.

II.     Legal Standards

       Under Rule 23(e) of the Rules of the United States Court of Federal Claims
(RCFC), “[t]he claims, issues, or defenses of a certified class . . . may be settled,
voluntarily dismissed, or compromised only with the court’s approval.” “[T]he court
may approve [the settlement] only after a hearing and only on finding that it is fair,
reasonable, and adequate.” RCFC 23(e)(2). In reaching this judgment, the court
considers whether:

        (A)    the class representatives and class counsel have adequately
               represented the class;

        (B)    the proposal was negotiated at arm’s length;

        (C)    the relief provided for the class is adequate, taking into
               account:

               (i)    the costs, risks, and delay of trial and appeal;

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              (ii)    the effectiveness of any proposed method of distributing
                      relief to the class, including the method of processing class-
                      member claims;

              (iii)   the terms of any proposed award of attorney’s fees,
                      including timing of payment; and

              (iv)    any agreement required to be identified under RCFC
                      23(e)(3); and

       (D)    the proposal treats class members equitably relative to each other.

Id. The court has discretion to accept or reject a proposed settlement, but it may not alter
the proposed settlement; nor may it decide the merits of the case or resolve unsettled
legal questions. Adams v. United States, 107 Fed. Cl. 74, 75-76 (2012) (citing Evans v.
Jeff D., 475 U.S. 717, 726-27 (1986); Nat’l Treasury Emps. Union v. United States, 54
Fed. Cl. 791, 797 (2002)).

III.   Analysis

        The proposed settlement agreement is the result of conscientious, arms-length
negotiations between the parties. See ECF No. 423 at 16-18. The parties do not have
access to the employment records of the PCC subclass members, and gaining such access
could have cost the parties in excess of $8,000 per claimant. See id. at 7. In light of this
considerable expense, the parties have agreed to a compromise settlement in the amount
of seventy-five dollars for each subclass member. See id. at 18. That seventy-five dollar
figure was derived from the fact that the hourly increases due to subclass members
ranged from five to ten cents per hour, and represents a fair settlement amount based on
the available information in the view of both plaintiffs’ and defendant’s counsel. See id.
at 12, 18.

       It is clear to the court that the parties have worked diligently, and have
competently represented their respective clients’ interests in this endeavor. Neither the
parties nor the court have received any objections to the settlement agreement. And in
addition, the terms of the agreement—to pay each PCC subclass member a compromise
settlement amount based on the scant facts available—are fair and reasonable.

        Counsel then described for the court the process for distributing the funds. Once
the settlement funds are disbursed by defendant, the class administrator will distribute the
funds through checks to individual subclass members. See id. at 8. Subclass members
will have sixty-days to negotiate the checks, and the class administrator will be afforded
additional time to attempt delivery of any checks returned as undeliverable, or to re-issue
lost or destroyed checks. See id. at 9-10. Defendant’s counsel noted that many of the

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subclass members are annuitants, and as such, their addresses are on file with the
government, which should assist in successful delivery of the settlement checks. See id.
at 11. The parties have also taken into account the manner in which the Panamanian mail
system works in negotiating a reasonable amount of time for this process. See id. at 8,
10-11 (plaintiffs’ counsel explaining the Panamanian mail system, and counsel for both
parties agreeing that the procedures in the settlement agreement appropriately
accommodate that system). The settlement does not account for any tax payments, as the
subclass members are Panamanian nationals, and are not subject to United States taxes.
See id. at 5. In the court’s view, the process described appears both efficient and
effective.

      The parties have not negotiated any agreement on attorneys’ fees, and no other
agreements have been made in connection with the proposed settlement. See id. at 15-16.

        Finally, the court finds that the terms of the settlement “class members equitably
relative to each other.” RCFC 23(e)(2)(D). Each of the subclass members will receive
the same amount from the settlement trust given the dearth of records that might support
a different, equitable distribution.

         For the foregoing reasons, the court finds that the proposed settlement agreement
is fair, reasonable, and adequate, and comports with the requirements of RCFC 23(e). As
the court stated at the hearing:

       Based on the information provided to the [c]ourt which includes the
       settlement agreement, the notices to the PCC subclass members and notice
       of compliance indicating that the notice was communicated to the PCC
       subclass members, along with the presentations made today, the [c]ourt is
       satisfied that the settlement is fair and appropriately accounts for the interests
       of all parties in accordance with the considerations of the [c]ourt’s Rule 23.

ECF No. 423 at 19.

       As a final matter, the court notes that the settlement agreement requires the parties
to act within fourteen days of the court’s final approval thereof. See ECF No. 421 at 6.
The date of this order shall be the date from which all such deadlines are calculated.

IV.    Conclusion

       Accordingly, for the foregoing reasons:

       (1)    Pursuant to RCFC 23(e), the court APPROVES the corrected PCC
              Subclass Settlement Agreement, ECF No. 421;

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(2)   The date of this order shall be the date from which all deadlines included in
      the amended partial settlement agreement are calculated; and

(3)   Absent the filing of a joint motion for voluntary dismissal, on or before
      August 6, 2021, the parties are directed to FILE a joint status report
      informing the court of whether any further proceedings are necessary
      before this case is closed.

IT IS SO ORDERED.

                                   s/Patricia E. Campbell- Smith
                                   PATRICIA E. CAMPBELL-SMITH
                                   Judge

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