A federal judge in the Middle District of Pennsylvania has approved a $20.9 million settlement in a wage-and-hour class and collective action against Rite Aid Corp.
U.S. District Judge John E. Jones III’s final approval in the consolidated cases of Craig v. Rite Aid settles 14 class and collective actions brought across the country against Rite Aid over allegations the drugstore chain improperly designated assistant store managers and co-managers as exempt employees not eligible for overtime pay.
The settlement puts to rest four years of litigation that included one of the cases — Knepper v. Rite Aid — going up to the U.S. Court of Appeals for the Third Circuit for a determination that collective action claims under the Fair Labor Standards Act and class action claims under state wage-and-hour laws can be brought in the same action.
Out of the 14 consolidated class and collective actions, which touched upon 4,700 Rite Aid stores and created a 7,426-member class across 31 states, about 4,000 of the potential class members have filed claims against the settlement fund, according to lead plaintiffs’ counsel Seth Lesser of Klafter Olsen & Lesser in Rye Brook, N.Y.
The class members will get paid out of the settlement based on the amount of hours worked during the applicable period. They are expected to get, on average, $1,845 per class member, Jones said in his opinion.
Plaintiffs counsel will share in about $6.7 million in attorney fees and nearly $275,000 in costs. There were 12 firms that worked on the case for a total of more than 14,000 hours since the case was filed in 2008. Klafter Olsen spent the most hours at 3,877, followed by Winebrake & Santillo, who billed 2,395 hours. The overall attorney fee request, which was about $1 million more than the lodestar calculation of the hours worked times the hourly rates, represents 32 percent of the settlement less the expenses, Jones noted.
Lesser said the settlement provides that excess funds will be sent to certain cy pres award recipients. Some of any excess settlement funds will be returned to Rite Aid, Lesser said.
“We’re extremely happy that this case has ended after many years of hard-fought litigation, including litigation at the Third Circuit,” said Peter Winebrake of Winebrake & Santillo.
Daniel E. Turner of Ogletree, Deakins, Nash, Smoak & Stewart in Atlanta led the defense for Rite Aid. He did not return a call seeking comment.
According to Jones’ opinion, the 14 consolidated cases have collectively run the full spectrum of litigation events, including class certification and decertification motion practice, dispositive motion practice, discovery and even appellate adjudication. Lesser said a few of the cases were close to reaching trial.
Lesser said he was pleased with the result given wage-and-hour cases are often hard fought and frequently result in a win for the defendants.
Jones said in his opinion that the class members alleged they often worked well in excess of 40 hours per week but were not compensated for the overtime. During the relevant time period, Rite Aid designated assistant store managers and co-managers as exempt from overtime pay requirements under the FLSA and its analogous state wage-and-hour laws. The lawsuit sought a change in the employees’ designation as well as reimbursement for unpaid overtime wages.
According to Lesser, Rite Aid did change the designation of the assistant store managers and co-managers about two years ago. He said the chain wouldn’t be facing these suits anymore.
At a December hearing to raise objections to the proposed settlement, only the class counsel for the New Jersey plaintiffs raised an objection. The argument was that the New Jersey plaintiffs should get more from the settlement because of how the state’s laws are written. Jones rejected that argument, however, noting in his opinion that the settlement does provide for New Jersey class members to receive a 20 percent increase in their awards.
Jones praised the lawyers in the case for their efforts.
“We are compelled to note, after comprehensive review of the settlement terms, that the agreement represents an excellent and optimal settlement award for the class members and is the obvious result of diligent, exhaustive and well-informed negotiations on the part of counsel for all parties,” Jones said.
In approving the attorney fees and costs, Jones noted the class members stood to benefit from a $20.9 million settlement and no one objected to the fee award. The “incredible time commitment alone” of 14,000 hours weighed in favor of the award as well, Jones said. So too did the fact that the case took four years and ran the gamut of litigation activities, he said.