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Lucas v. Vee-Pak, Inc.

United States District Court, N.D. Illinois, Eastern Division

December 20, 2017

BRIAN LUCAS, JOSEPH EAGLE, MICHAEL KEYS, ANTWOIN HUNT, and JAMES ZOLLICOFFER, on behalf of themselves and other similarly situated individuals, Plaintiffs,



         Five African American laborers, on behalf of themselves and all other similarly situated laborers, filed this putative class action lawsuit against four companies for employment discrimination. The plaintiffs, Brian Lucas, Joseph Eagle, Michael Keys, Antwoin Hunt, and James Zollicoffer, allege that defendants Vee Pak, Inc. (“Vee Pak”), Staffing Network Holdings LLC (“Staffing Network”), Personnel Staffing Group, LLC d/b/a MVP (“MVP”), and Alternative Staffing, Inc. d/b/a ASI (“ASI”) discriminated against them and other African American laborers on the basis of their race and in violation of the Civil Rights Act of 1964, 42 U.S.C. § 2000e, et seq. (“Title VII”), and 42 U.S.C. § 1981. The plaintiffs have reached a settlement agreement with ASI only and they now move for preliminary approval of their proposed partial class action settlement and for certification of the proposed ASI class. The Court amends the proposed class definition and grants preliminary certification to the ASI class, as amended. Because the plaintiffs have not provided sufficient information about the Settlement Agreement's proposed plan of allocation, however, the Court is unable to rule on the motion for preliminary approval and directs the plaintiffs to supplement their motion.


         According to the fifth amended class action complaint, plaintiffs Lucas, Eagle, Keys, Hunt, and Zollicoffer are African American laborers who sought work at Vee Pak, an Illinois corporation that operates manufacturing and packaging facilities in Hodgkins and Countryside, Illinois. Vee Pak staffs its operations primarily through temporary employment agencies, including Staffing Network, MVP, and ASI. Staffing Network, MVP, and ASI (collectively, the “Staffing Agencies”) operate by finding and providing temporary laborers for their client companies, such as Vee Pak. They recruit, train, assign, and pay the temporary laborers to work at Vee Pak and other client companies.

         The plaintiffs allege that the overwhelming majority of laborers who are assigned by the Staffing Agencies to work at Vee Pak are Latino, and almost no African American laborers are assigned to Vee Pak. According to the complaint, Vee Pak requested that the Staffing Agencies steer African American applicants away from work at Vee Pak. The complaint alleges that the staffing agencies complied with Vee Pak's request by engaging in discriminatory assignment practices in which they did not assign African Americans to work at Vee Pak because of their race.

         The plaintiffs bring Title VII claims against Vee Pak for race-based discrimination under the theories of disparate treatment and adverse impact and § 1981 claims against all defendants for discrimination on the basis of race. They filed their lawsuit in December 2012. ASI and the other defendants filed motions to strike and dismiss the class allegations and to deny class certification, which were granted in part and denied in part. The plaintiffs then amended their complaint and engaged in some initial discovery with ASI. In early 2015, the plaintiffs and ASI agreed to explore settlement discussions with the assistance of Retired Magistrate Judge Morton Denlow. After a full day of negotiations and discussions about information in ASI's possession relevant to the plaintiffs' claims, the plaintiffs and ASI reached the primary terms of a settlement agreement. They continued negotiations with and without the assistance of Judge Denlow and, in March 2016, reached a final settlement agreement (the “Settlement Agreement”), for which they now seek preliminary approval.[1]

         The Settlement Agreement requests the Court's certification of an ASI settlement class (the “ASI Class”) defined as: “The Class Representative and all African Americans who sought a work assignment through ASI and were otherwise eligible to work at Vee Pak but, on one or more occasion, were not assigned or hired to work at Vee Pak during the period December 5, 2008 through [the date of Preliminary Approval].” Pls.' Unopposed Suppl. Br. in Supp. of Mot. for Preliminary Approval of Partial Class Action Settlement with ASI Only (“Pls.' Suppl. Br.”), Attachment 1 (“Settlement Agreement”) ¶ 48, ECF No. 256. The proposed Class Representative of the ASI Class is plaintiff Lucas.

         Under the Settlement Agreement, ASI has agreed to pay $93, 000 into a settlement fund for the ASI class as partial compensation for the alleged denial of Vee Pak work assignments. The settlement fund will also be used to pay for the administrative costs associated with implementing the settlement, service awards, attorneys' fees and costs. ASI has also agreed to certain injunctive relief to help prevent future violations of federal and state anti-discrimination laws. In addition, ASI has agreed to cooperate with the plaintiffs as they pursue their claims against Vee Pak and the other non-settling defendants. Specifically, ASI agrees to provide information, testimony, and/or documents that may be relevant to determining the liability of the other defendants. In exchange for ASI's monetary payment, injunctive relief, and cooperation, the ASI Class agrees to dismiss ASI from the lawsuit and release all their claims against ASI under Title VII and Section 1981 arising out of the assignment of or failure to assign African Americans to work at Vee Pak by ASI.

         The Settlement Agreement binds only the ASI class and ASI and does not settle the claims of Lucas, or others whom he seeks to represent in a certified class, against Vee Pak and the other Staffing Agencies. The plaintiffs' present motion seeks an order granting preliminary approval of the Settlement Agreement, certification of the ASI Class, and approval of the form and content of the proposed notice to the ASI Class. After the plaintiffs submitted their initial memorandum in support of the motion, the Court held a hearing and requested supplemental briefing on the motion. The plaintiffs submitted a supplemental brief, which included an amended version of the Settlement Agreement. The non-settling defendants submitted memoranda objecting to preliminary approval. The plaintiffs submitted a declaration in support of the motion for preliminary approval (the “ASI Declaration”) and a response to the objections.


         Under Rule 23, a class action settlement requires approval of the court. Fed.R.Civ.P. 23(e). The approval process includes two steps. Armstrong v. Bd. of Sch. Dirs. of City of Milwaukee, 616 F.2d 305, 314 (7th Cir. 1980), overruled on other grounds by Felzen v. Andreas, 134 F.3d 873 (7th Cir. 1998). First, the court conducts a preliminary review to determine whether the proposed settlement is “within the range of possible approval” and whether there is reason to notify the class members of the proposed settlement and proceed with a fairness hearing. Id. If preliminary approval is granted, the class members are notified. Id. Second, a fairness hearing is held and the court determines whether the proposed settlement is “fair, reasonable, and adequate.” Id.

         If the court has not yet certified the class, certification of the proposed settlement class is also necessary for approval of the settlement. At the preliminary approval stage, certification of a settlement class may be on a preliminary basis, with final certification occurring after the fairness hearing. See In re Trans Union Corp. Privacy Litig., No. 00 C 4729, 2008 WL 11358136, at *6 (N.D. Ill. Jan. 3, 2008) (noting that “conditional certification” occurs with preliminary approval of the settlement agreement, with final certification occurring later); Manual for Complex Litigation, Fourth, § 21.633 (“[t]he judge should make a preliminary determination that the proposed class satisfies the criteria” of Rule 23); § 13:16 Newberg on Class Actions (5th ed. 2017) (“Just as the settlement approval unfolds through two levels of judicial review (preliminary and final), so, too, does the motion for settlement class certification.”).

         I. Non-Settling Defendants' Objections

         Before proceeding with an analysis of the plaintiffs' motion for preliminary approval and certification, the Court addresses the non-settling defendants' objections to the motion. Defendants Vee Pak, MVP, and Staffing Network ask the Court to deny preliminary approval and certification. MVP and Staffing Network do not contest the adequacy or fairness of the Settlement Agreement, but argue that the ASI Class cannot meet the requirements of Rule 23. Vee Pak argues that the ASI Class cannot be certified under Rule 23 and also contends that the plaintiffs have failed to demonstrate that the Settlement Agreement is fair, adequate, and reasonable.[2]

         The “general rule” is that a non-settling party has no standing to object to a settlement between other parties, unless it can show “plain legal prejudice” resulting from the settlement. Jamie S. v. Milwaukee Pub. Sch., 668 F.3d 481, 501 (7th Cir. 2012) (citing Agretti v. ANR Freight Sys., Inc., 982 F.2d 242, 246 (7th Cir. 1992)). “That a settling defendant creates a tactical disadvantage for another defendant is not sufficient to support standing to object; the prejudice to the nonsettling defendant must be legal, such as (for example) interference with contractual or contribution rights or the stripping away of a cross-claim.” Id. Here, Vee Pak, MVP, and Staffing Network have not offered any basis to conclude that the Settlement Agreement would compromise any legal rights. Vee Pak and the plaintiffs explicitly acknowledge that the certification of the ASI Class is not dispositive of certification of a class against the non-settling defendants.

         Accordingly, the Court need not address specifically the non-settling defendants' objections. The objections, however, address many of the Rule 23 requirements that the Court is required to consider in its independent determination of whether the ASI Class may be certified. See, e.g., Uhl v. Thoroughbred Tech. and Telecomm., 309 F.3d 978, 985 (7th Cir. 2002) (“In some ways, the Rule 23 requirements may be even more important for settlement classes, for which (as this court has put it), the district court must act almost as a fiduciary of the class when approving settlements.”)

         II. Certification of the Settlement Class

         The Court must consider whether the ASI Class meets the certification requirements of Rule 23. Rule 23(a) sets forth the requirements for class certification: (1) the class must be so numerous that joinder of all members is impracticable; (2) there must be questions of law or fact common to the class; (3) the claims or defenses of the representative parties must be typical of the claims or defenses of the class; and (4) the representative parties must be capable of fairly and adequately protecting the interests of the case. Fed.R.Civ.P. 23(a). Courts have also acknowledged the implicit requirement under Rule 23 that a class be ascertainable. Mullins v. Direct Digital, LLC, 795 F.3d 654, 657 (7th Cir. 2015). Class certification also requires the satisfaction of one of the Rule 23(b) provisions. Fed.R.Civ.P. 23(b). Here, plaintiffs' seek certification under 23(b)(3), which requires that: (1) questions of law or fact common to the class members predominate over any questions affecting only individual members; and (2) a class action is superior to other available methods for fairly and efficiently adjudicating the controversy. Fed.R.Civ.P. 23(b)(3).

         As previously noted, when considering certification of a settlement-only class, the Court is obligated to give “undiluted, even heightened, attention” to each requirement of Rule 23. Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 620 (1997). The plaintiffs argue that the ASI Class meets all the requirements of Rule 23 and should be certified.

         A. Ascertainability

         Under Rule 23, a class must be ascertainable, which means that it must be clearly defined by objective criteria. Mullins, 795 F.3d at 657. To satisfy this requirement, the class definition cannot be too vague. Id. at 559. “To avoid vagueness, class definitions generally need to identify a particular group, harmed during a particular time frame, in a particular location, in a particular way.” Id. at 660. In addition, a class cannot be defined by subjective criteria, such as by a person's state of mind. Id. “Fail-safe classes” that are defined in terms of success on the merits are also not permissible under Rule 23's ascertainability standard. Id.

         Ascertainability does not require a class representative to establish at the certification stage that there is a “reliable and administratively feasible” way to identify the members of the putative class. Mullins, 795 F.3d at 657-58. “The ascertainability requirement is not about evidence; it is about whether the proposed class definitions are based on objective criteria.” Smith v. Family Video Movie Club, Inc., 311 F.R.D. 469, 475 (N.D. Ill. 2015) (citing Mullins, 795 F.3d at 659).

         Here, the ASI Class definition includes the term “otherwise eligible to work at Vee Pak, ” but does not define or set forth the criteria for determining eligibility to work at Vee Pak. Settlement Agreement ¶ 14. A class definition that includes an undefined term may be too vague to meet the ascertainability requirement. See Wilson v. City of Evanston, Ill., 14 C 8347, 2017 WL 3730817, at *5 (N.D. Ill. Aug. 30, 2017) (amending class definition to remove the vagueness and overbreadth concerns by defining previously undefined term). The plaintiffs, however, argue that the “otherwise eligible” term does not make the ASI Class unascertainable because, in fact, there were no individual qualifications for the Vee Pak jobs at issue in this case. Pls.' Resp. to the Nonsettling Defs.' Objs. to the Partial Settlement with ASI (“Pls.' Resp. to Objs.”) 12 n.9, ECF No. 261; Decl. of Steven Swerdloff ¶ 10, ECF No. 259. According to the plaintiffs, Vee Pak assignments are low-wage, non- or low-skilled, and rarely require particular experience. Furthermore, the plaintiffs claim that if an individual class member's eligibility to work at Vee Pak is challenged, the issue can be determined at the remedial stage of the proceedings.

         Because the proposed class definition does not define or explain the meaning of “otherwise eligible, ” it fails to identify “a particular group” that was harmed and is therefore too vague to be ascertainable and must be amended. See Wilson, 2017 WL 3730817, at *5. Eliminating the vagueness in the definition, is a simple fix, however, because the “otherwise eligible” term is essentially meaningless. According to the plaintiffs, there were no qualifications for the Vee Pak jobs at issue. And, even if some minimal eligibility requirements did exist, a class member's eligibility to work at Vee Pak could be determined at the remedial stage of the litigation-or, in the context of a settlement, through the claims process. In that case, the amended definition might sweep into the class individuals who ultimately were not harmed by ASI's discriminatory practice because, absent discrimination, they still would not have received a Vee Pak assignment due to their ineligibility. But the Seventh Circuit has held that the “inevitability” that a class will include persons who have not been injured by the defendant's conduct does not preclude certification. Bell v. PNC Bank, Nat'l Ass'n, 800 F.3d 360, 380 (7th Cir. 2015) (upholding certification of class that was likely to include class members who were not harmed by the defendant's overtime policy because they never worked beyond their forty-hour week). The Court, therefore, amends the class definition to eliminate the “otherwise eligible” term: “The Class Representative and all African Americans who sought a work assignment through ASI but, on one or more occasion, were not assigned or hired to work at Vee Pak during the period December 5, 2008 through [the date of Preliminary Approval].” This is the readily ascertainable group of persons who likely would have been harmed by the alleged policy of racial discrimination.

         B. Rule 23(a) Requirements

         1. Numerosity

         Rule 23 requires that a class be “so numerous that joinder of all members is impracticable.” Fed.R.Civ.P. 23(a)(1). Generally, a class that has more than 40 members satisfies this standard. See, e.g., Swanson v. Am. Consumer Indus., Inc., 415 F.2d 1326, 1333 n.9 (7th Cir. 1969); Porter v. Pipefitters Ass'n Local Union 597, 208 F.Supp.3d 894, 904 (N.D. Ill. 2016). The plaintiffs and ASI estimate that there will be approximately 2, 000 individuals in the ASI class. This figure is based on ASI's database, which indicates that 2, 011 ASI applicants self-identified as African American. The plaintiffs also note that many applicants did not self-identify to ASI as African American. The universe of potential class members, therefore, is likely greater than 2, 011. The Court finds that the proposed ASI class meets the numerosity requirement.

         2. Commonality

         A class must also share common questions of law or fact. Fed.R.Civ.P. 23(a)(2). The rule does not require that “every question be common.” Suchanek v. Sturm Foods, Inc., 764 F.3d 750, 756 (7th Cir. 2014) (emphasis in original). Rule 23 only requires that the class members' claims share a common contention, the determination of which “will resolve an issue that is central to the validity of each one of the claims in one stroke.” Wal-Mart Stores, Inc. ...

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