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Full title: Motion to Approve Compromise under Rule 9019 Joint Motion Pursuant to Section 105 of the Bankruptcy Code and Bankruptcy Rules 9019 and 7023 for an Order (I) Certifying a Class for Settlement Purposes, (II) Appointing Plaintiff Cornelius Turner as Class Representative and Plaintiffs' Counsel as Class Counsel, (III) Preliminarily Approving Settlement, (IV) Approving Class Notice, and (V) Scheduling Fairness Hearing Filed by Klausner Lumber Two LLC. Hearing scheduled for 8/11/2021 at 10:00 AM at US Bankruptcy Court, 824 Market St., 6th Fl., Courtroom #3, Wilmington, Delaware. Objections due by 8/4/2021. (Attachments: # 1 Exhibit 1 # 2 Exhibit 2 # 3 Exhibit 3 # 4 Exhibit 4 # 5 Notice) (Butz, Daniel) (Entered: 07/21/2021)
Document posted on Jul 20, 2021 in the bankruptcy, 27 pages and 0 tables.
Bankrupt11 Summary (Automatically Generated)
On May 18, 2020, the Plaintiff and certain other parties (collectively, the “Plaintiffs”) filed a class action adversary proceeding complaint (the “Adversary Proceeding” and together with the Florida Complaint and the Class Proof of Claim (as defined below), the “Action”) against KL1, the Debtor, Klausner Holding USA, Inc., and Klausner Trading USA, Inc. (collectively, the “Defendants”) in the Klausner Lumber One Bankruptcy Case seeking WARN Act backpay and benefits for alleged unpaid wages pursuant to the North Carolina Wage and Hour Act, § 95-25.3 (“NC Wage Act”) and the Florida Constitution, and payment of accrued but unused paid time off for the former employees of Defendants with priority treatment under sections 507(a)(4) and 507(a)(5) of the Bankruptcy Code for the amounts up to the allowed cap, with the balance treated as general unsecured claims (Adv. Class Counsel Fees and Expenses: Subject to the approval of the Court, Class Counsel shall receive attorneys’ fees of one-third (1/3) of the Settlement Amount, net of litigation expenses (including the costs associated with the production and mailing of the Class Notices) not to exceed $20,000, and the Service Payment.Girsh factors strongly support approval of the Settlement Agreement: (i) further litigation will be complicated, protracted and expensive; (ii) Plaintiff supports the Settlement Agreement and Class Counsel believe that the bulk of the other Class Members will have a favorable reaction to the Settlement Agreement and will not object to it; (iii) the Settlement Agreement was reached after the essential facts had been thoroughly investigated by Class Counsel and the parties had shared their respective views of the case during mediation and subsequent settlement negotiations; (iv) the risk that Plaintiff would be unable to establish liability was significant because of the defenses asserted by Debtor if litigation had continued; and (v) when considered in light of the best possible recovery and the attendant risks, the settlement falls well within the range of reasonableness. In another WARN case that Class Counsel settled in 2020, Etzelberger v. FAH Holdings, Inc., Case No. 13-13087-BLS (Bankr. D. Del.), the bankruptcy court granted final approval of a WARN settlement of approximately $1.9 million, including attorneys’ fees of 33⅓% and a service award of $20,000 to the Class Representative.To date, Class Counsel has incurred approximately $6,000.00 in expenses prosecuting the Action and expects to incur additional expenses in connection with seeking preliminary and final approval of the Settlement, mailing the Class Notice, and communicating with Class Members regarding the Settlement.
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Document ContentsIN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: Chapter 11 KLAUSNER LUMBER TWO LLC, Case No. 20-11518 (KBO) Debtor. Objections Due: Aug. 4, 2021 at 4:00 p.m. (ET) Hearing Date: Aug. 11, 2021 at 10:00 a.m. (ET) JOINT MOTION PURSUANT TO SECTION 105 OF THE BANKRUPTCY CODE AND BANKRUPTCY RULES 9019 AND 7023 FOR AN ORDER (I) CERTIFYING A CLASS FOR SETTLEMENT PURPOSES, (II) APPOINTING PLAINTIFF CORNELIUS TURNER AS CLASS REPRESENTATIVE AND PLAINTIFFS’ COUNSEL AS CLASS COUNSEL, (III) PRELIMINARILY APPROVING SETTLEMENT, (IV) APPROVING CLASS NOTICE, AND (V) SCHEDULING FAIRNESS HEARING Cornelius Turner (“Plaintiff”), on behalf of himself and the Class (as defined herein), and Debtor Klausner Lumber Two LLC (“KL2” or the “Debtor”), by and through their counsel, hereby jointly submit this joint motion, pursuant to section 105 of title 11 of the United States Code (the “Bankruptcy Code”), Rule 9019 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), and Rule 23 of the Federal Rules of Civil Procedure (the “Civil Rules”), applicable hereto by Bankruptcy Rule 7023 (the “Motion”), (i) for the entry of an order: (a) approving Settlement Agreement (attached hereto as Exhibit 1) (the “Settlement Agreement”), (b) preliminarily approving the Settlement Agreement pursuant to Bankruptcy Rule 7023, (c) approving the form and manner of notice of settlement, (d) scheduling a Fairness Hearing to consider final approval of the Settlement Agreement, and (e) granting related relief, and (ii) for the entry of a final order, approving the Settlement Agreement following the Fairness Hearing, and granting related relief.
1In support of the Motion, the Parties respectfully represent as follows: JURISDICTION 1. This Court has jurisdiction over the Motion under 28 U.S.C. § 1334. 2. This matter is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2). 3. Venue is proper under 28 U.S.C. §§ 1408 and 1409. The statutory predicates for the relief sought herein are section 105 of the Bankruptcy Code, and Bankruptcy Rules 3018, 9019 and 7023. BACKGROUND 4. On March 27, 2020, Johnnie Raymond and other individuals including Plaintiff and Class Representative Cornelius Turner, on behalf of himself and others similarly situated, filed a First Amended Class Action Complaint in the United States District Court for the Middle District of Florida, Jacksonville Division, for alleged violation of WARN, FLSA, and unpaid wage claims, titled Johnnie Raymond, et al. v. Klausner Lumber One LLC, Klausner Lumber Two LLC, Klausner Holding USA, Inc., Leopold Stephan, Christoph Schaetz and David Larkin (3:20-cv-00287-BJD-MCR) (“Florida Complaint”). 5. On April 30, 2020, Klausner Lumber One LLC (“KL1”) sought voluntary relief under chapter 11 of the Bankruptcy Code before the United States Bankruptcy Court for the District of Delaware (the “Court”), Case No. 20-11033-KBO (the “Klausner Lumber One Bankruptcy Case”). 6. On June 10, 2020, the Debtor sought voluntary relief under chapter 11 of the Bankruptcy Code before the Court, Case No. 20-11518-KBO (the “Klausner Lumber Two Bankruptcy Case”). 7. On May 18, 2020, the Plaintiff and certain other parties (collectively, the “Plaintiffs”) filed a class action adversary proceeding complaint (the “Adversary Proceeding” and together with
2the Florida Complaint and the Class Proof of Claim (as defined below), the “Action”) against KL1, the Debtor, Klausner Holding USA, Inc., and Klausner Trading USA, Inc. (collectively, the “Defendants”) in the Klausner Lumber One Bankruptcy Case seeking WARN Act backpay and benefits for alleged unpaid wages pursuant to the North Carolina Wage and Hour Act, § 95-25.3 (“NC Wage Act”) and the Florida Constitution, and payment of accrued but unused paid time off for the former employees of Defendants with priority treatment under sections 507(a)(4) and 507(a)(5) of the Bankruptcy Code for the amounts up to the allowed cap, with the balance treated as general unsecured claims (Adv. Case No. 20-50602-KBO). In the complaint filed in the Adversary Proceeding, Plaintiffs alleged that (a) beginning on March 16, 2020, Defendants ordered mass layoffs or plant closings that resulted in the terminations of their employment, and that they and the Class Members (defined below) were not provided 60 days’ notice as required by the federal WARN Act, 29 U.S.C. § 2101, et seq., and (b) Defendants failed to pay them and the other similarly situated employees’ wages for their final weeks of work performed between approximately February 29, 2020 and March 16, 2020, in alleged violation of state wage laws of Florida and North Carolina (Adv. D.I. 71), each of which allegations the Defendants deny. 8. On July 7, 2020, Plaintiffs Helmut Thomay and Cornelius Turner filed a class proof of claim (Proof of Claim No. 5.01 and 5.02, ECN-4) against the Debtor (the “Class Proof of Claim”). 9. After Plaintiffs filed the Class Proof of Claim, KL1, the Debtor and the Plaintiffs entered into a series of stipulations extending the time for KL1 to respond to Plaintiffs’ complaint in the Adversary Proceeding in order, inter alia, to permit the parties to engage in informal discovery concerning the allegations in the Action.
310. On November 30, 2020, the Court granted the Parties’ Agreed Order (I) Appointing Mediator, (II) Referring Certain Matters to Mediation, and (III) Granting Related Relief Filed by Klausner Lumber One, LLC, Klausner Lumber Two, LLC (Adv. D.I. 46). 11. On December 11, 2020 and January 22, 2021, representatives for the Debtor and the Plaintiffs attended mediation sessions with former Chief Judge Kevin Gross (Ret.), but were unable to resolve the Action at mediation, however, following the mediation, the Debtor and the Plaintiffs continued to engage in settlement discussions with Judge Gross’s assistance. 12. On May 21, 2021, the Court in the Klausner Lumber One Bankruptcy Case entered the Order Granting Final Approval of Settlement Agreement, Approving Class Counsel’s Fees and Expenses and Granting Related Relief (D.I. 913), which, among other things, settled and resolved the claims asserted against KL1 in the Adversary Proceeding. 13. In order to avoid extensive, costly and uncertain litigation, the Debtor and the proposed Class desire to enter into a Settlement Agreement of the Action, subject to the Court’s approval, to resolve any and all demands, claims, damages and causes of action, present and future, arising out of or relating in any way to claims by employees of KL2, including WARN claims and claims for unpaid or unremitted wages and benefit amounts. ESSENTIAL TERMS OF THE PROPOSED SETTLEMENT 14. The Parties have reached an agreement, subject to this Court’s approval, the terms of which have been refined and memorialized in the Settlement Agreement. The settlement provides that the Class, pursuant to Bankruptcy Rule 3018(a), shall have a temporarily allowed unsecured claim with the priority set forth in section 507(a)(4) of the Bankruptcy Code in the amount of $540,000 solely for purposes of voting to accept or reject the Plan (as defined below), and the Class Representative shall be authorized to submit one single, consolidated ballot on
4behalf of the Class. The other essential terms of the Settlement Agreement are as follows1: a) Definition of the Class: The term “Class” shall mean: All persons who were employed with Klausner Lumber Two LLC who worked at or reported to the facility located at 260 Piper Ln, Enfield, NC 27823, from February 15, 2020 up to and including March 16, 2020, excluding persons who voluntarily quit employment or who were involuntarily terminated from employment for cause during this time period, as listed on Exhibit A of the Settlement Agreement (each person who is part of the Class, a “Class Member”, and collectively, the “Class Members”). b) Settlement Amount: On the Effective Date, the Class shall be awarded an allowed unsecured claim with the priority set forth in section 507(a)(4) of the Bankruptcy Code in the amount of $540,000 less (a) ninety percent of the WARN Back Pay (as defined herein) for any person who is eligible to participate in the Class and who has post-marked a timely and valid request to opt out of the Class (each such person, a “Class Opt Out”) and (b) each Class Opt Out’s (i) unpaid wages owed from February 28, 2020 through March 16, 2020, (ii) accrued but unused paid time off, (iii) unremitted deductions, and (iv) unpaid compensation for medical expenses, if any (the “Settlement Amount”), from which the Service Payment, and the Class Counsel Fees and Expenses, as approved by the Court, shall be paid, with the balance distributed to the Settlement Class on a pro rata basis pursuant to the Plan (the “Class Distribution”). c) Net Settlement Amount: The Settlement Amount will first be reduced by the Service Payment and the Class Counsel Fees and Expenses, resulting in the Net Settlement Amount. d) Individual Class Member Distributions: Each individual Class Member in the Settlement Class shall be entitled to receive such Class Member’s Pro Rata Share from the Net Settlement Amount. The WARN-back pay amount for each such individual Class Member shall be based upon the person’s average monthly gross wages or salary, and any benefits under any employee benefit plan during the sixty (60) day WARN period (the “WARN Back Pay”). The term “pro rata” as used in the Settlement Agreement shall mean the quotient of each individual Class Member’s WARN Back Pay, unpaid wages, accrued time off, and remitted fringe benefits amounts (“Total Claim”) amount over the aggregate Total Claim amount for all Class Members (such amount being each Class Member’s “Pro Rata Share”). e) Taxation of the Class Member’s Pro Rata Share: The Debtor or its successor, as applicable, shall be responsible for calculating, withholding and remitting payment of all payroll tax withholdings to the taxing authorities in accordance with applicable law. Payroll tax withholding shall include all applicable federal, state and local income taxes, and statutory taxes including, without limitation, Federal Insurance Contribution Act and federal and state unemployment insurance amounts associated with the distributions to Class Members receiving payments under the Settlement Agreement. 1 This is a summary of the terms of the Settlement Agreement. In the event there is any ambiguity or inconsistency, the terms set forth in the Settlement Agreement shall govern. Capitalized terms not otherwise defined herein shall have the meanings given to such terms in the Settlement Agreement.
5f) Responsibilities of Class Counsel: In addition to calculating each Class Member’s Pro Rata Share, Class Counsel shall be responsible for the production and mailing of all notices required to be provided to the Class Members (the “Class Notices”). Class Counsel shall receive written approval from the Debtor’s counsel as to the form and substance of the Class Notices prior to disseminating such notices. g) Class Representative Service Payment: Subject to approval of the Court, Plaintiff Cornelius Turner, as the Class Representative, shall be entitled to a one-time payment of $10,000, payable from the Settlement Amount in addition to his pro rata share of the Net Settlement Amount. h) Class Counsel Fees and Expenses: Subject to the approval of the Court, Class Counsel shall receive attorneys’ fees of one-third (1/3) of the Settlement Amount, net of litigation expenses (including the costs associated with the production and mailing of the Class Notices) not to exceed $20,000, and the Service Payment. i) Effective Date: The Settlement Agreement shall become effective when (a) the Approval Order is entered by the Court and such order is not stayed by order of any court of competent jurisdiction, and (b) the Debtor’s chapter 11 plan which shall be consistent with the terms of this Settlement Agreement (the “Plan”), is approved by the Court and becomes effective in accordance with its terms. j) Release of Defendants and Related Parties: Except for the rights and obligations arising out of, provided for, or reserved in the Settlement Agreement, upon the Effective Date, the Class Representative, as well as all other Class Members in the Settlement Class for and on behalf of themselves and their respective heirs, executors, trustees, guardians, administrators, representatives, agents, predecessors, successors, and assigns (collectively, the “Releasing Parties”), do hereby fully and forever release and discharge the Defendants and each of their current and former affiliates, subsidiaries, predecessors, successors, insurers, shareholders and their respective officers (including Robert Prusak of Asgaard Capital, LLC, the Debtor’s duly appointed Chief Restructuring Officer in the Bankruptcy Case (the “CRO”)), directors, shareholders, agents, employees, partners, members, accountants, consultants, financial advisors, attorneys, representatives and other agents or professionals (collectively the “Released Parties”), of and from any and all claims and rights of any kind including demands, debts, liabilities, obligations, liens, actions and causes of action, costs, expenses, attorneys’ fees and damages of whatever kind or nature, at law, in equity and otherwise, whether known or unknown, anticipated, suspected or disclosed, liquidated or unliquidated, contingent or non-contingent, asserted or unasserted, fixed or not, matured or unmatured, disputed or undisputed, legal or equitable, that the Releasing Parties have or may have as of the Effective Date against the Released Parties arising out of, related to, or similar to the facts alleged in the Adversary Proceeding and/or the Florida Complaint and/or the Klausner Lumber Two Bankruptcy Case, including but not limited to: (a) under the WARN Act or any similar state statute, including back pay and unreimbursed out-of-pocket healthcare-related expenditures during the alleged period of the WARN violation; (b) the non-payment of wages; (c) the non-payment of accrued vacation, leave, or other paid time off; (d) unremitted fringe benefit deductions from paychecks (including but not limited to, insurance deductions, healthcare coverage/contributions, dental
6coverage/contributions, vision coverage/contributions, retirement contributions); (e) costs relating to medical expenses; and (f) the Class Proof of Claim, whether asserted by the Plaintiffs or any individual Class Member. k) Unclaimed Funds: In the event that there are any settlement funds remaining for any reason, including checks that are not deposited, endorsed or negotiated on the ninety-first (91st) day following their date of issuance, such Unclaimed Funds shall be held another sixty (60) days to be used to make distributions to any individual who is determined to have been eligible to receive a distribution as a Class Member but was not listed on Exhibit A of the Settlement Agreement. Any funds remaining after the Residual Fund Waiting Period shall be donated to NourishNC, a nonprofit organization dedicated to feeding children. RELIEF REQUESTED 15. By this Joint Motion, the Parties request that the Court enter an order: (i) certifying a class for settlement purposes only; (ii) appointing Plaintiff as the class representative (“Class Representative”) and Plaintiff’s counsel as class counsel (“Class Counsel”); (iii) preliminarily approving the settlement described in the Settlement Agreement; (iv) approving the form and manner of notice to the members of the putative Class (as described in the Motion); and (v) scheduling a fairness hearing to consider final approval of the Settlement. BASIS FOR RELIEF REQUESTED A. The Court Should Certify the Settlement Class. 16. The proposed Class is defined as: all persons who were employed with Klausner Lumber Two LLC who worked at or reported to the facility located at 260 Piper Ln, Enfield, NC 27823, from February 15, 2020 up to and including March 16, 2020, excluding persons who voluntarily quit employment or who were involuntarily terminated from employment for cause during this time period, as listed on Exhibit A of the Settlement Agreement. 17. Where, as in this case, the Court has not already certified a class, before approving a class settlement pursuant to Civil Rule 23, the Court must determine whether the proposed settlement class satisfies the certification requirements of Civil Rule 23. Amchem v. Windsor, 521
7U.S. 591, 620 (1997); In re Community Bank of Northern Virginia, 418 F.3d 277, 300 (3rd Cir. 2005). 18. “[A]ll Federal Circuits recognize the utility of Rule 23(b)(3) settlement classes.” Amchem, 521 U.S. at 618. Accord Community Bank, 418 F.3d at 299. “The settlement class action device offers defendants the opportunity to engage in settlement negotiations without conceding any of the arguments they may have against class certification.” Community Bank, 418 F.3d at 299. See also, General Motors Corp. Pick-Up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768, 786 (3rd Cir. 1995) (“By specifying certification for settlement purposes only . . . the court preserves the defendant’s ability to contest certification should the settlement fall apart.”). 19. Subdivisions (a) and (b) of Rule 23 “focus court attention on whether a proposed class has sufficient unity so that absent members can fairly be bound by decisions of class Representatives.” Amchem, 521 U.S. at 621. 20. To be certified, a class must satisfy the four requirements of Rule 23(a): (1) numerosity, (2) commonality, (3) typicality, and (4) adequacy of representation. FED. R. CIV. P. 23; Community Bank, 418 F.3d at 302. In addition, the class must satisfy the requirements of Rule 23(b)(1), (2), or (3). In this case, the Parties have agreed to request conditional certification under Rule 23(b)(3), “the customary vehicle for damage actions.” Id. In order to certify a class under Rule 23(b)(3), the court must make two additional findings: predominance and superiority. That is, “[i]ssues common to the class must predominate over individual issues, and the class action device must be superior to other means of handling the litigation.” Gates v. Rohm & Hass Co., 248 F.R.D. 434, 442-43 (E.D. Pa 2008). 21. The proposed settlement Class meets each of the foregoing elements.
8(i) The Rule 23(a) Criteria 22. Numerosity requires a finding that the putative class is “so numerous that joinder of all members is impracticable.” Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 182 (3d Cir. 2001). “No single magic number exists satisfying the numerosity requirement.” Beherend v. Comcast Corp., 245 F.R.D. 195, 202 (E.D. Pa. 2007) (citing Moskovitz v. Loop, 128 F.R.D. 624, 628 (E.D. Pa. 1989). However, the Third Circuit “typically has approved classes numbering 40 or more.” Gates, 248 F.R.D. at 440 (citing Stewart v. Abraham, 275 F.3d 220, 226-27 (3d Cir. 2001)). 23. Here, the proposed Class of approximately 62 Class Members (listed in Exhibit A to the Settlement Agreement) meets the numerosity requirement and joinder of all Class Members is impractical. The Class is sufficiently numerous to make joinder of all members impractical, and thus satisfies the numerosity requirement. 24. The commonality requirement requires existence of at least one question of law or fact common to the Class. FED. R. CIV. P. 23(a)(2); Johnston v. HBO Film Management, Inc., 265 F.3d 178, 184 (3d Cir. 2001). The commonality threshold is low, (Powers v. Lycoming Engines, 245 F.R.D. 226, 236 (E.D. Pa. 2007)), and does not require “an identity of claims or facts among class members,” Behrend, 245 F.R.D. at 202. Further, the existence of individual facts and circumstances will not defeat commonality so long as the Class Members allege harm under the same legal theory. 25. Here, fundamental issues of law and fact regarding notice of termination, applicability of several defenses, measure of damages and priority of claims and attorneys’ fees are common to all Class Members.
926. Typicality requires that the “named plaintiff’s” claims are typical, in common-sense terms, of the class, thus suggesting that the incentives of the plaintiffs are aligned with those of the class.” FED. R. CIV. P. 23(a)(3); Beck v. Maximus, Inc., 457 F.3d 291, 295-296 (3d Cir. 2006) (quoting Baby Neal, 43 F.3d at 55). “Typicality requires a strong similarity of legal theories to ensure that the class Representatives’ pursuit of their own goals will work to benefit the entire class.” Powers, 245 F.R.D. at 236. “Factual differences will not render a claim atypical if the claim arises from the same event or practice or course of conduct that gives rise to the claims of the class members, and if it is based on the same legal theory.” Beck, 457 F.3d at 295-296 (quoting Baby Neal, 43 F.3d at 55). 27. The putative Class Representative, Mr. Turner, does not allege that he was singled out for disparate treatment in the manner in which he was terminated. Instead, he alleges that he suffered harm as a result of the same conduct that allegedly injured the other Class Members – all persons who were employed with the Debtor who worked at or reported to the facility located at 260 Piper Ln, Enfield, NC 27823, from February 15, 2020 up to and including March 16, 2020 (excluding persons who voluntarily quit employment or who were involuntarily terminated from employment for cause during this time period) who were allegedly not paid their wages owed upon termination. Accordingly, the Court should find that the typicality requirement is met. 28. With respect to adequacy, class representatives must “fairly and adequately protect the interests of the class.” FED. R. CIV. P. 23(a)(4); Gates, 248 F.R.D at 441. The adequacy inquiry “assures that the named plaintiffs’ claims are not antagonistic to the class and that the attorneys for the class representatives are experienced and qualified to prosecute the claims on behalf of the entire class.” Beck, 457 F.3d at 296. Thus, the court must determine “whether the Representatives’
10interests conflict with those of the class and whether the class attorney is capable of representing the class.” Johnston, 265 F.3d at 185. 29. The Court should find that the Class Representative has and will continue to adequately represent the interests of the Class Members. Indeed, Mr. Turner, has maintained contact with Class Counsel and assisted them throughout the litigation to the benefit of the Class. 30. The second element of Rule 23(a)(4) is met because Plaintiff’s counsel is “qualified, experienced and generally able to conduct the proposed litigation.” Eisen v. Carlisle & Jacquelin, 391 F.2d at 562, cert. denied, 417 U.S. 156 (1974). The Court should find that proposed Class Counsel are well qualified and experienced to represent the Class Members. The attorneys of Raisner Roupinian LLP, proposed Class Counsel, have been appointed class counsel in more than 100 active or settled certified or putative WARN class actions, including the following in district and bankruptcy courts in the Third Circuit: Thomay, et al. v. Klausner Lumber One, LLC, Case No. 20-50602 (KBO (final approval of settlement against Debtor Klausner Lumber One LLC granted on May 20, 2021); Karaniewsky v. US Investigative Services LLC, Case No. 15-50204 (KBO) (Bankr.D.Del.); Etzelberger v. FAH Holdings, Inc., Case No. 13-13087-BLS (Bankr. D. Del.); Primavera v. Crowne Architectural Systems, Inc., 17-1292-SLM (Bankr.N.J.); Miller v. Columbus Steel Castings Company, et al., Adv. Proc. No. 16-50997-CSS (Bankr.Del); Rasheed v. American Home Mortgage Corp., Case No. 07-51688 (Bankr. D. Del.); Mekonnen, et al. v. HomeBanc Mortgage Corporation, Case No. 07-51695 (Bankr. Del.); Aguiar v. Quaker Fabric Corporation, Case No. 07-51716 (Bankr. D. Del.); Jones v. Alliance Bancorp, Case No. 07-51799 (Bankr. D. Del.); Bressmer v. Delta Financial Corporation, Case No. 07-51808 (Bankr. D. Del.); Czyzewski, et al. v. Jevic Transportation, Inc., Case No. 08-50662 (Bankr. Del.); Austen. v. Archway Cookies, Case No. 08-12323 (Bankr. D. Del.); Jackson v. Qimonda NA, Case No. 09-
1150192 (Bankr. D. Del.); Willock v. Pemco World Air Services, Inc., Case No. 12-50799 (Bankr. D. Del.); Folk, et al. v. Monaco Coach Corporation, Case No. 09-50402 (Bankr. D. Del.); Decuir v. WL Homes LLC, Case No. 09-52270 (Bankr. D. Del.); Hampton v. Navigation Capital Partners, Inc., Case No. 1:13-747 (D. Del.); Kohlstadt v. Solyndra LLC, Case No. 11-53155 (Bankr. D. Del.); Bergeron v. DGI Services, LLC, 11-2712 (Bank. D.N.J.); and Karaniewsky v. Altegrity, Inc. et al., Adv. Proc. No. 15-50204-LSS (Bankr. Del.). (ii) The Rule 23(b)(3) Criteria 31. Common questions of law and fact predominate over the individual issues (which appear to be limited to each Class Member’s pay and benefits at the time of termination). Predominance tests whether the proposed Class is sufficiently cohesive to warrant adjudication by representation. Amchem, 521 U.S. at 623-24; Community Bank, 418 F.3d at 308-09. The proper predominance inquiry “trains on the legal or factual questions that qualify each member’s case as a genuine controversy, questions that preexist any settlement.” Amchem, 521 U.S. at 623. “In this vein a predominance analysis is similar to the requirement of Rule 23(a)(3) that claims or defenses of the named representatives must be typical of the claims or defenses of the classes.” Community Bank, 418 F.3d at 309. 32. Here, just as typicality exists, predominance also exists. All of the claims arise from an alleged violation of the WARN Act resulting from the terminations of the North Carolina-based employees of KL2 that occurred in February and March 2020, and from KL2’s alleged failure to given WARN notice and to pay wages due under North Carolina state laws. Accordingly, the Court should find that the predominance requirement is met. 33. Rule 23(b)(3) also requires a determination that “a class action is superior to other available methods for the fair and efficient adjudication of the controversy.” FED. R. CIV. P.
1223(b)(3); Gates, 248 F.R.D. at 443. In effect, “[t]he superiority requirement asks the court to balance, in terms of fairness and efficiency, the merits of a class action against those of alternative available methods of adjudication.” Krell v. Prudential Inc. Co. (In re Prudential Inc. Co.), 148 F.3d at 283, 316 (3d Cir. 1998). 34. Rule 23 sets forth several factors relevant to the superiority inquiry: “(A) the class members’ interests in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already begun by or against class members; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and (D) the likely difficulties in managing a class action.” FED. R. CIV. P. 23(b)(3); Gates, 248 F.R.D. at 443. However, when a class certification is being considered for settlement purposes only, the difficulties in managing a class action are not considered. Gates, 248 F.R.D. at 443. 35. Here, a class action is superior to individual actions. First, the amount of each Class Member’s claim is relatively small. Individually, there is little incentive in controlling the prosecution of separate actions. See Amchem, 521 U.S. at 617 (“The policy at the very core of the class action mechanism is to overcome the problem that small recoveries do not provide the incentive for any individual to bring a solo action prosecuting his or her rights. A class action solves this problem by aggregating the relatively paltry potential recoveries into something worth someone’s (usually an attorney’s) labor.”) (quotation and citation omitted). It is appropriate that all the claims against Debtor arising from the Class Representative’s allegations should be concentrated in this Court. In addition, determining the claims of some Class Members, but not all, could prejudice the claims of the remaining Class Members. Accordingly, the Court should find that the superiority element is met.
1336. Based on the foregoing, the Court should certify the Class for settlement purposes only, appoint Plaintiff as Class Representative, and appoint Plaintiff’s counsel as Class Counsel. B. The Court Should Approve the Settlement Pursuant to Bankruptcy Rule 9019. 37. Bankruptcy Rule 9019(a) authorizes a bankruptcy court to approve a compromise or settlement after notice and a hearing, and section 105(a) of the Bankruptcy Code empowers a bankruptcy court to issue any order that is “necessary or appropriate.” In re Key3Media Group, Inc., 336 B.R. 87, 92 (Bankr. D. Del. 2005) “[T]he authority to approve a compromise settlement is within the sound discretion of the bankruptcy court.”). See also In re Louise’s, Inc., 211 B.R. 798, 801 (D. Del. 1997). When exercising such discretion, the bankruptcy court must determine whether the compromise is “fair, reasonable, and in the best interest [sic] of the estate.” Key3Media, 336 B.R. 87, 92. See also, Fry’s Metals, Inc. v. Gibbons (In re RFE Industries, Inc.), 283 F.3d 159, 165 (3d Cir. 2002); In re Louise’s, Inc., 211 B.R. at 801; In re Marvel Entertainment Group, Inc., 222 B.R. 243, 249 (Bankr. D. Del. 1998). 38. The bankruptcy court is not required to determine that the proposed settlement is the best possible compromise. In re Key3Media Group, 336 B.R. at 92-93 (citing In re Coram Healthcare Corp., 315 B.R. 321, 329 (Bankr. D. Del. 2004)). Rather, the settlement should be approved as long as it does not fall below the lowest point in the range of reasonableness. Cosoff v. Rodman (In re W.T. Grant Co.), 699 F.2d 599, 608 (2d Cir. 1983). In this respect, it is unnecessary for the bankruptcy court to consider the information necessary to resolve the factual dispute, nor is it necessary for the bankruptcy court to “conclusively determine claims subject to a compromise.” Key3Media Group, 336 B.R. at 92.
14(i) Standards for Approval of the Settlement Agreement. 39. Courts consider the following four factors when determining whether a settlement is in the best interests of the estate: (i) the probability of success in the litigation; (ii) the difficulties, if any, to be encountered in the matter of collection; (iii) the complexity of the litigation involved, and the expense, inconvenience and delay necessarily attendant thereto; and (iv) the paramount interest of the creditors and a proper deference to their reasonable opinions. Martin, 91 F.3d at 393; Aetna Casualty & Surety v. Jasmine, Ltd. (In re Jasmine, Ltd.), 258 B.R. 119, 123 (Bankr. D.N.J. 1999); Key3Media Group, 336 B.R. at 93; Marvel, 222 B.R. at 249. 40. In addition to these criteria, bankruptcy courts have also scrutinized additional factors, such as: (i) the competency and experience of counsel who support the settlement; (ii) the relative benefits to be received by individuals or groups within the class; (iii) the nature and breadth of releases to be obtained by the parties to the settlement; and (iv) the extent to which the settlement is the product of arm’s length bargaining. See Fischer v. Pereira (In re Charles Street, Inc.), 209 B.R. 618, 620 (S.D.N.Y. 1997); In re Spielfogel, 211 B.R. 133, 144 (Bankr. S.D.N.Y. 1997); In re Dow Corning Corp., 198 B.R. 214, 223 (Bankr. E.D. Mich. 1996). (ii) Application of the Martin Factors to the Proposed Settlement. 41. The results of a trial are uncertain, and the litigation here is complex. The Action involves numerous legal issues regarding the application of the WARN Act and its statutory and other legal defenses to complex facts. These issues include, inter alia: (i) whether the Debtor provided adequate notice to the Class Members under the WARN Act; (ii) whether the Debtor was entitled to give fewer than sixty (60) days’ notice because of statutory exceptions under the WARN Act; (iii) the computation of the amount of damages; and (iv) whether attorneys’ fees are to be awarded to the Class Members if they prevail.
1542. Continued litigation would be costly and time-consuming and expose the Parties to significant litigation risks. Class Counsel has asserted that the aggregated liability of sixty (60) days’ wages and benefits under the WARN Act (including unpaid wages due under state law, fringe benefits and medical expenses) is approximately $600,000. The settlement provides for payment of a significant percentage of the maximum damages and eliminates any further accrual of litigation expenses in prosecuting the action against the Debtor, including trial and possible appeals. Accordingly, the parties respectfully submit that approval of the Settlement Agreement is warranted. 43. The Settlement Agreement is in the best interest of creditors and the estate. When determining whether a compromise is in the best interests of the estate, a bankruptcy court must “‘assess and balance the value of the claim that is being compromised against the value to the estate of the acceptance of the compromise proposal.’” In re Key3Media Group, 336 B.R. at 93 (quoting In re Martin, 91 F.3d at 393 (citing TMT Trailer Ferry, Inc. v. Anderson, 390 U.S. 414, 424 (1968))). See also In re Nationwide Sports Distributors, Inc., 227 B.R. 455, 460 (Bankr. E.D. Pa. 1998) (“[I]n deciding whether to approve a particular compromise, courts utilize various criteria designed to achieve the objective of having the Trustee or debtor in possession act in [the] best interests of the estate”). To properly balance these values, a bankruptcy court should consider all factors “relevant to a full and fair assessment of the wisdom of the proposed compromise.” In re Marvel, 222 B.R. at 249 (quoting TMT Trailer Ferry, Inc., 390 U.S. at 424). See also Key3Media Group, 336 B.R. at 92 (“[t]he bankruptcy court must be ‘apprised of all relevant information that will enable it to determine what course of action will be in the best interest of the estate.’”) (quoting In re Martin, 91 F.3d at 393).
1644. The paramount interest of creditors and reasonable deference to their views also favors approval of the Settlement Agreement. Moreover, as set forth above, the Settlement Agreement spares the Debtor’s estate the significant expense and uncertainty associated with the litigation of the myriad of liability issues under the WARN Act. 45. Applying each of the Martin factors, the Settlement Agreement should be approved. C. The Court Should Preliminarily Approve the Settlement. 46. After class certification, approval of a class settlement generally requires two hearings: one preliminary approval hearing and one final “fairness” hearing. Gates, 248 F.R.D. 434. “The preliminary approval decision is not a commitment [to] approve the final settlement; rather, it is a determination that “there are no obvious deficiencies and the settlement falls within the range of reason.”” Gates v. Rohm & Haas Co, 248 F.R.D. 434, 438 (E.D. Pa. 2008) quoting Smith v. Professional Billing & Mgmt. Sys., Inc., 2007 WL 4191749, at *1 (D.N.J. Nov. 21, 2007); see also, In re Community Bank of Northern Virginia, 2008 WL 3833271 (W.D. Pa. Aug. 15, 2008). The preliminary approval determination requires the Court to consider whether “(1) the negotiations occurred at arm’s length; (2) there was sufficient discovery; (3) the proponents of the settlement are experienced in similar litigation; and (4) only a small fraction of the class objected.” In re General Motors Corp., 55 F.3d 768, 785-86 (3d Cir. 1995). When class certification is sought in conjunction with preliminary approval, then class member objections are not relevant. Gates, 248 F. R. D. at 444. 47. The Third Circuit has emphasized that “to minimize litigation and expedite the administration of a bankruptcy estate ‘compromises are favored in bankruptcy.’” Myers v. Martin (In re Martin), 91 F.3d 389, 393 (3d Cir. 1996) (quoting 9 Collier on Bankruptcy ¶ 9019.03 (15th ed. 1993)). See also In re Culmtech, Ltd., 118 B.R. 237, 238 (Bankr. M.D. Pa. 1990)
17(“[C]ompromises are favored in bankruptcy and … much of litigation in bankruptcy estates results in settlements”). 48. The Settlement Agreement has no obvious deficiencies and falls well within the range of reason. Each of the above-cited factors favors preliminary approval of the Settlement Agreement. 49. First, the settlement is the result of good faith, arm’s length negotiations between capable adversaries. 50. Second, the Parties have informally exchanged information during litigation, mediation, and settlement negotiations. 51. Third, counsel for the parties, have the experience and the skill to both vigorously litigate WARN Act claims and to determine when and to what extent settlement is appropriate. Class Counsel has litigated over 100 WARN cases in bankruptcy court, many of which have been in Delaware, and has routinely been appointed Class Counsel. 52. Considering the foregoing, the Court should preliminarily approve the Settlement Agreement. 53. Once a settlement is preliminarily approved, notice of the settlement and of the final fairness hearing is provided to class members. Federal Rule of Civil Procedure 23(e) requires that all members of the class be notified of the terms of any proposed settlement. The Rule 23(e) requirements are “designed to summarize the litigation and the settlement and to apprise class members of the right and opportunity to inspect the complete settlement documents, papers and pleadings filed in the litigation.” In re Prudential, 148 F.3d at 326-27 (3rd Cir. 1998). The proposed Notice of Settlement and Fairness Hearing will be served by Class Counsel on each Class Member. Class Counsel proposes that within five business days following entry of the order
18preliminarily approving the Notice of Settlement and Fairness Hearing, substantially in the form attached hereto as Exhibit 2, Class Counsel will mail the notice to each Class Member at their last known addresses according to the relevant books and records, and as updated by Class Counsel. 54. The proposed Class Notice includes each of the facts required by Rule 23(c)(2)(B). Specifically, the Class Notice contains the following information: That the Settlement Agreement shall become effective only if it is approved by the Court and an Approval Order is entered by the Court without material modification under Bankruptcy Rules 7023 and Rule 9019; That, upon approval, the Settlement Agreement shall be effective as to all Class Members in the Settlement Class; That Class Members have the right to opt out of the Settlement Class and object to the Settlement Agreement either in person or through counsel at the Fairness Hearing; and That upon the Effective Date, all Released Claims (defined in the Settlement Agreement) of a Class Member in the Settlement Class (other than those claims to be paid under the terms of the Settlement Agreement) shall be waived, and that no person, including the Class Member, shall be entitled to any further distribution thereon. 55. The Class Notice also outlines the terms of the Settlement Agreement, including the attorneys’ fees proposed to be paid to Class Counsel and describes how each Class Member may obtain a copy of the pleadings in the Action and a copy of the Settlement Agreement. The proposed Notice also states the date, time, location, and purpose of the Fairness Hearing, informs Class Members of their right to appear at the Fairness Hearing, and describes the procedure for objecting to the Settlement Agreement. Accordingly, the proposed form of and manner to distribute the Notice of Settlement and Fairness Hearing is sufficient and should be approved. D. The Court Should Set a Fairness Hearing and Finally Approve the Settlement at the Fairness Hearing. 56. At the Fairness Hearing, the Court should finally approve the Settlement Agreement. Civil Rule 23(e) provides that “[t]he claims, issues, or defenses of a certified class
19may be settled, voluntarily dismissed or compromised only with the court’s approval.” Id. Final approval of a settlement pursuant to Civil Rule 23(e) turns on whether the settlement is “fair, reasonable and adequate.” Fed. R. Civ. P. 23(e)(2); In re Cendant Corp. Litig., 264 F.3d 201, 231 (3d Cir. 2001). “This inquiry requires the court’s independent and objective analysis of the evidence and circumstances before it in order to determine whether the settlement is in the best interest of those whose claims will be extinguished.” Community Bank, 2008 WL 3833271 at * 5 (quoting General Motors, 55 F.3d at 785.). 57. The Third Circuit has held that the following nine factors are relevant in determining whether a proposed class settlement is fair, reasonable, and adequate: (1) the complexity, expense, and likely duration of the litigation; (2) the reaction of the class to the settlement; (3) the stage of the proceedings; (4) the risks of establishing liability; (5) the risks of establishing damages; (6) the risks of maintaining the class action through trial; (7) the ability of the Debtor to withstand a greater judgment; (8) the range of reasonableness of the settlement fund in light of the best recovery; and (9) the range of reasonableness of the settlement in light of all the attendant risks of litigation. Girsh v. Jepson, 521 F.2d 153, 157 (3d Cir. 1975). This list is not exhaustive. Community Bank, 2008 WL 3833272 at *6. 58. The following Girsh factors strongly support approval of the Settlement Agreement: (i) further litigation will be complicated, protracted and expensive; (ii) Plaintiff supports the Settlement Agreement and Class Counsel believe that the bulk of the other Class Members will have a favorable reaction to the Settlement Agreement and will not object to it; (iii) the Settlement Agreement was reached after the essential facts had been thoroughly investigated by Class Counsel and the parties had shared their respective views of the case during mediation and subsequent settlement negotiations; (iv) the risk that Plaintiff would be unable to establish
20liability was significant because of the defenses asserted by Debtor if litigation had continued; and (v) when considered in light of the best possible recovery and the attendant risks, the settlement falls well within the range of reasonableness. The settlement provides for approximately $540,000 in settlement of the priority WARN claim, while also resolving the Class’ unpaid wage, fringe benefits and medical claims. See Community Bank, 2008 WL 3833271 (finding that in light of the attendant risk a settlement representing 12.6% of the prayer was reasonable). 59. Based on the foregoing, the Court should finally approve the Settlement Agreement. E. The Court Should Approve Class Counsel’s Attorneys’ Fees and Costs. 60. Class Counsel is entitled to be paid a fee out of the settlement fund created for the benefit of the Class. Fed. R. Civ. P. 23(h); Boeing Co. v. Van Gemert, 444 U.S. 472, 478-79 (1980) (the Supreme Court has consistently recognized the common fund doctrine to permit attorneys who obtain a recovery for a class to be compensated from the benefits achieved as a result of their efforts); Blum v. Stenson, 465 U.S. 886, 900 n. 16 (1984) (calculation of fees based on the common fund doctrine is based on a percentage of the common fund recovered). The Debtor does not oppose this request and is neutral regarding the points discussed in this section of the Motion. 61. The law in this Circuit is settled that in common fund cases, fees for class counsel are awarded primarily based on a percentage of the common fund recovered for the class and that the lodestar is considered only when the court cannot otherwise come to a resolution of class counsel’s fees. In re Cendant Corp. Litig., 264 F.3d 201, 221, 283 (3d Cir. 2001); Gunter v. Ridgewood Energy Corp., 223 F.3d 190, 195, n.1 (3d Cir. 2000). Class Counsel submits that the award of a fee of one-third of the Settlement Amount, as provided in the Settlement Agreement, is fully warranted.
2162. The percentage award should be based on seven factors, among others, that were enumerated in Gunter, 223 F.3d at 195, n. 1, and then quoted with approval in Cendant, 264 F.3d at 283, as follows: (a) the size of the fund created and the number of persons benefited; (b) the presence or absence of substantial objections by members of the class to the settlement terms and/or fees requested by counsel; (c) the skill and efficiency of the attorneys involved; (d) the complexity and duration of the litigation; (e) the risk of nonpayment; (f) the amount of time devoted to the case by plaintiffs’ counsel; and (g) the awards in similar cases. An eighth factor — “the percentage likely to have been negotiated between private parties in a similar case” — which was considered in determining the percentage fee award from a common fund in the case In re Ikon Office Solutions, Inc. Secs. Litig., 194 F.R.D. 166, 193 (E.D. Pa. 2000). 63. Class Counsel submits that the application of these eight factors to the Action shows that the agreed attorneys’ fee of one-third of the Settlement Amount should be approved for the following reasons: As to the size of the class and the recovery, the Class is 62 members and the $540,000 Settlement Amount represents approximately 90 percent of the maximum priority-dollar portion of the full claim amount. Plaintiff supports the Settlement and Class Counsel anticipates that few, if any, Class Members will object, and that those objections, if any, will not be substantial or merited. As shown by the favorable settlement of this matter achieved in the face of the difficult liability issues and bankruptcy procedural issues, Class Counsel provided legal services with considerable skill. The services were rendered with efficiency, considering the complexity of the issues, the difficulty of addressing the several defenses, and the need for discovery. The risk of non-payment at the outset was substantial as it was not known at that time whether there would be sufficient funds available to pay the putative class’ claims. In addition, the defenses asserted by the Debtor created further risk of non-payment. As to fees in similar cases, Class Counsel submits that in WARN class actions that Class Counsel has prosecuted, Class Counsel’s requests for attorneys’ fees – almost always for one-third the class recovery – have never been denied or reduced.
22 As to the percentage likely to have been negotiated between private parties in a similar case, Class Counsel was retained by the Class Representative on a one-third contingency basis, plus expenses. Class Counsel has been consistently retained in other WARN class actions on a one-third contingency basis. Class Counsel submits that each of the factors to be weighed in considering a fee request plainly favor the award of one-third of the WARN Component. 64. The requested fee of one-third of the proposed WARN settlement amount is supported by the percentage awards in other types of common fund cases. Moreover, the “Third Circuit favors the percentage-of-recovery method of calculating fee awards in common fund cases.” Glaberson v. Comcast Corp., 2015 WL 5582251, at *11 (E.D. Pa. Sept. 22, 2015), citing In re AT&T Corp. Secs. Litig., 455 F.3d 160, 164 (3d Cir. 2006); In re Rite Aid Corp. Secs. Litig., 396 F.3d 294, 300 (3d Cir. 2005). As pointed out in Ikon, 194 F.R.D. at 194, attorneys’ fee awards based upon a percentage of a common fund mostly “fall in the range of nineteen to forty-five percent.” See Levit v. Filmways, Inc., 620 F. Supp. 421 (D. Del. 1985) (33% of the common fund); In re Flonase Antitrust Litig., 951 F. Supp. 2d 739, 751 (E.D. Pa. 2013) (attorneys’ fees of $50 million, representing 33 1/3% of common fund of $150 million, approved); Bradburn Parent Teacher Store, Inc. v. 3M, 513 F. Supp. 2d 322, 336 (E.D. Pa. 2007) (attorneys’ fees of 35% of common fund approved). Class Counsel submits that the fees of one-third of the total expected Class recovery on the WARN claims should be approved under the multi-factor test applicable in this Circuit to fee awards from common fund recoveries. 65. As to fees in similar cases, Class Counsel has consistently been awarded fees of one-third of the class recovery in WARN Act cases by bankruptcy and district courts across the country, including in the bankruptcy courts of the Third Circuit. Most recently, in a WARN case that Class Counsel settled in 2021, Karaniewsky v. US Investigative Services LLC, Case No. 15-50204 (KBO) (Bankr.D.Del.) (Adv. D.I. 77), this Court granted final approval of one-third of the
23common fund in a $10.5 million settlement. In another case against Klausner Lumber One LLC, Thomay, et al. v. Klausner Lumber One, LLC, Case No. 20-50602 (KBO)(Adv. D.I. 71), this Court granted final approval of settlement against Klausner Lumber One LLC. In another WARN case that Class Counsel settled in 2020, Etzelberger v. FAH Holdings, Inc., Case No. 13-13087-BLS (Bankr. D. Del.), the bankruptcy court granted final approval of a WARN settlement of approximately $1.9 million, including attorneys’ fees of 33⅓% and a service award of $20,000 to the Class Representative. (D.I. 2386, Order Granting Preliminary Approval of Settlement, October 21, 2020) (D.I. 2394, Order Granting Final Approval of Settlement, November 30, 2020). Indeed, in all of Class Counsel’s more than 100 WARN class action settlements, it has not been awarded less than one-third. 66. In addition, to an attorney fee of one-third of the Settlement Amount, Class Counsel is seeking reimbursement for out-of-pocket costs incurred in the litigation (including the costs associated with the production and mailing of the Class Notices) not to exceed $20,000.00. To date, Class Counsel has incurred approximately $6,000.00 in expenses prosecuting the Action and expects to incur additional expenses in connection with seeking preliminary and final approval of the Settlement, mailing the Class Notice, and communicating with Class Members regarding the Settlement. 67. In the Third Circuit reference to the lodestar, i.e., the time reasonably spent at a reasonable hourly rate is disfavored as “very time consuming” and, is only to be resorted to if the court is concerned that the fee award may result in a “windfall.” To avoid that result, courts can “cross-check” the percentage award against the lodestar. Cendant, 264 F.3d at 285; Bradburn, 513 F. Supp. 2d at 338. 63. The Court should resolve the fee request without reference to the lodestar,
24especially in view of the burdens of carrying-out a lodestar “cross-check.” Such a cross-check would, in any event, demonstrate that the requested fee results in a multiplier of 1.8. F. The Court Should Approve the Service Payment to the Class Representative. 68. The Class Representative should be awarded the Service Payment for the significant work he undertook on behalf of the Class. Bradburn, 513 F. Supp. 2d at 342 (“‘Courts routinely approve incentive awards to compensate named plaintiffs for the services they provided and the risks they incurred during the course of the class action litigation.’”) (citing Cullen v. Whitman Med. Corp., 197 F.R.D. 136, 145 (E.D. Pa. 2000)). The Debtor does not oppose the requested service payment to the Class Representative and is neutral regarding the points discussed in this section of the Motion. 69. Plaintiff filed a federal lawsuit that is searchable on the internet and may become known to prospective employers when evaluating his application for employment. He retained Class Counsel to commence this action shortly after being terminated from his employment with Debtor. He agreed to initiate the class action as a named plaintiff at a point when his future was uncertain and employment prospects potentially dimmed by suing his former employer. Plaintiff has expended time and effort to assist with the preparation of pleadings, informal discovery, and mediation. But for his efforts, the work done in prosecuting this case would have come to naught. Accordingly, the Service Payment is appropriate and justified as part of the overall Settlement considering the value of his services to the Class in the face of considerable risks. See, Bradburn, 513 F. Supp. 2d at 344 ($75,000 incentive award to class representative approved). 70. Finally, the amount of the Service Payment of $10,000 is consistent and on scale with amounts awarded in WARN Act class actions. The following is a sampling of WARN cases where service payments to class representatives were commensurate with the amount requested
25here: Thomay, et al. v. Klausner Lumber One LLC, Case No. 20-50602 (KBO) (Adv. D.I. 71) ($20,000 service payment to class representative in $1.4 million WARN settlement); Etzelberger v. FAH Holdings, Inc., Case No. 13-13087-BLS (Bankr. D. Del.) [D.I. 2394] (service payment of $20,000 to the class representative in WARN litigation); Kohlstadt v. Solyndra, LLC., Adv. Proc. No. 11-53155 (MFW) (Bankr. D. Del.) [D.I. 51] ($20,000 combined service award to two class representatives in $3.5 million settlement); Capizzi et al v. AWTR Liquidation, Inc., Adv. Proc. No. 2:13-ap-01209-NB (Bankr. C.D. Cal.) [ECF 89] ($20,000 combined service award to two class representatives in WARN Act settlement of $1 million); Binford v. First Magnus Capital, Inc., Adv. Proc. No. 08-01494 (GBN) (Bankr. D. Ariz.) (awarding eight class representative service payments of $7,500, totaling $60,000, from settlement fund of $2.6 million settlement). G. Proposed Notice Schedule 71. The Court’s entry of an Order granting preliminary approval of settlement would, among other things, (i) preliminarily approve the Settlement Agreement, (ii) direct notice of settlement to the Class, and (iii) schedule a fairness hearing to consider final approval of the Settlement Agreement. Accordingly, the Parties propose the following schedule: 72. Deadline for Notice of Settlement to be mailed to Class Members: five (5) business days following entry of the Order granting Preliminary Approval of Settlement, 73. Deadline to opt-out of the Settlement: fourteen (14) days prior to the Final Fairness Hearing. 74. Deadline to Object to the Settlement: seven (7) days prior the Final Fairness Hearing. 75. Final Fairness Hearing: thirty-five (35) days from preliminary approval of the Settlement.
26CONCLUSION WHEREFORE, the Parties respectfully request the Court to (i) enter an Order substantially in the form attached hereto as Exhibit 3: (1) preliminarily approving the Settlement Agreement pursuant to Bankruptcy Rule 7023; (2) approving the form and manner of notice of settlement; (3) scheduling a Fairness Hearing to consider final approval of the Settlement Agreement; and (4) granting related relief, and (ii) enter a final Order substantially in the form attached hereto as Exhibit 4, approving the Settlement Agreement following the Fairness Hearing and granting related relief. Dated: July 21, 2021 MORRIS, NICHOLS, ARSHT & LOIZIDES, P.A. TUNNELL LLP /s/ Christopher D. Loizides /s/ Daniel B. Butz Christopher D. Loizides (No. 3968) Robert J. Dehney (No. 3578) 1225 King Street, Suite 800 Eric D. Schwartz (No. 3134) Wilmington, Delaware 19801 Daniel B. Butz (Bar No. 4227) Telephone: (302) 654-0248 1201 North Market Street, 16th Floor E-mail: email@example.com Wilmington, Delaware 19899-1347 Telephone: (302) 658-9200 RAISNER ROUPINIAN LLP Facsimile: (302) 658-3989 Jack A. Raisner (admitted pro hac vice) Email: firstname.lastname@example.org René S. Roupinian (admitted pro hac vice) 270 Madison Avenue, Suite 1801 WESTERMAN BALL EDERER MILLER New York, New York 10016 ZUCKER & SHARFSTEIN, LLP Telephone: (212) 221-1747 Thomas A. Draghi Email: email@example.com 1201 RXR Plaza Email: firstname.lastname@example.org Uniondale, NY 11556 Tel: (516) 622-9200 LECHNER LAW E mail: email@example.com Jay P. Lechner, Esq. DINSMORE & SHOHL LLP Fifth Third Center Travis M. Bayer 201 E. Kennedy Blvd., Suite 412 Lisa Hodgdon Tampa, Florida 33602 255 E. Fifth Street, Suite 1900 Telephone: (813) 842-7071 Cincinnati, Ohio 45202 Email: firstname.lastname@example.org Email: email@example.com Counsel for Debtor Klausner Lumber Two LLC Counsel for Plaintiffs and the putative class