In re Wells Fargo Wage & Hour Emp't Practices Litig. (No. III)

• Decision Date: 12 May 2014
• Docket Number: Multi–District Litigation Case No. H–11–2266.
• Citation: 18 F.Supp.3d 844
• Parties: In re WELLS FARGO WAGE AND HOUR EMPLOYMENT PRACTICES LITIGATION (NO. III).
• Court: U.S. District Court — Southern District of Texas

18 F.Supp.3d 844

In re WELLS FARGO WAGE AND HOUR EMPLOYMENT PRACTICES LITIGATION (NO. III).

Multi–District Litigation Case No. H–11–2266.

United States District Court, S.D. Texas, Houston Division.

Signed May 12, 2014.

Diana Elizabeth Marshall, Ronald C. Lewis, Marshall & Lewis, John M. Padilla, Padilla & Rodriguez, L.L.P., R. Paul Yetter, Reagan W. Simpson, Yetter Coleman LLP, Rhonda Hunter Wills, Wills Law Firm, Marshall & Lewis LLP, Houston, TX, for Plaintiff.

David Bryce Jordan, April Nicole Love, Littler Mendelson, P.C., Houston, TX, David Scott Warner, Littler Mendelson PC, New York, NY, Keith J. Rosenblatt, Michael T. Grosso, Littler Mendelson PC, Newark, NJ, Lindbergh Porter, Mary D. Walsh, Philip L. Ross, Littler Mendelson, San Francisco, CA, for Defendant.

Order

GRAY H. MILLER, District Judge.

Pending before the court is a motion to reconsider filed by the lead plaintiffs in Chan v. Wells Fargo Home Mortgage, Inc. (the “Chan Plaintiffs”). Dkt. 241. The Chan Plaintiffs seek reconsideration of the court's order granting the unopposed motion for approval of a settlement on behalf of the Fair Labor Standards Act (“FLSA”) collective action members filed by counsel for the Richardson v. Wells Fargo and Chaplin v. Wachovia matters (“MDL Lead Counsel”). Having considered the motion, responses, reply, and applicable law, the court is of the opinion that the motion should be DENIED.

I. Background

This is a multi-district litigation case involving five cases in which the plaintiffs assert that the defendants failed to pay overtime compensation to plaintiffs who worked for the defendants as home mortgage consultants, mortgage consultants, loan originations, loan consultants, or similar positions.See Dkt. 81. Three of these five cases are relevant to the current motion: Richardson et al. v. Wells Fargo Bank, N.A., No. 10–cv–4949, Chaplin et al. v. Wachovia Mortgage Corp. et al., No. 11–cv–638, and Chan v. Wells Fargo Home Mortgage, Inc., No. 11–cv–3275. The Chan case is a class action complaint for unpaid overtime wages and minimum wage and for failure to allow employee meal and break periods pursuant to Washington state law. Dkt. 214. The Chaplin and Richardson cases assert claims for violation of the FLSA on behalf of the named plaintiffs and those similarly situated throughout the nation. Dkts. 211, 212.

The court conditionally certified nationwide collective action classes of plaintiffs in Chaplin and Richardson . Dkt. 81. The court approved a notice of collective action, which was mailed to current and former mortgage loan officers employed by defendants Wells Fargo or Wachovia during the relevant time periods. Dkt. 233. Following the notice period, approximately 4,487 opt-in plaintiffs returned consent to join forms and became members of the FLSA collective action.¹ Id.

Following a two-day mediation, the parties agreed to settle the federal and state wage-and-hour claims of the plaintiffs who opted in to the Richardson and Chaplin classes (with the exception listed in footnote 1). Id. Under this settlement, each settling plaintiff will receive a proportionate share of the settlement fund according to a formula that takes into account the person's tenure and compensation. Id. The average gross per capita recovery for each settling plaintiff is $3,343. Id. In exchange for these funds, the defendants required a release. Id. The release includes “any claims derived from or based upon or related to or arising out of the same factual predicate of the Richardson Complaint and the Chaplin Complaint, whether known or unknown ....” Dkt. 233–1. It releases claims that “arise from the same factual predicate ... whether under the [FLSA] or state wage and hour laws.” Id.

MDL Lead Counsel filed an unopposed motion for approval of the settlement on March 25, 2014, and a corrected motion for approval on March 27, 2014.² Dkts. 232, 233. On March 31, 2014, the Chan Plaintiffs filed objections to the proposed settlement. Dkt. 234. The Chaplin and Richardson plaintiffs and the defendants both filed responses to the objections on April 3, 2014. Dkts. 235, 236. The hearing to approve the settlement was held on April 4, 2014. Dkt. 238. MDL Lead Counsel, the defendants' counsel, and counsel for the Chan Plaintiffs appeared and presented arguments. The defendants and MDL Lead Counsel argued that the Chan Plaintiffs did not have standing to object to the settlement, as the named plaintiffs did not opt in to the FLSA collective action and no case had been certified in Chan . The court agreed that the Chan Plaintiffs lacked standing and otherwise agreed that the settlement was fair and reasonable. The court issued an order granting the motion to approve the settlement on April 4, 2014. Dkt. 239.

The Chan Plaintiffs now request that the court reconsider this order, arguing that they did not have sufficient time to fully develop their argument prior to the hearing, that they have standing due to a fiduciary duty to the putative class members, and that the class notice in this case violated due process because it did not apprise the Washington opt-in plaintiffs that they may be giving up their Washington state-law claims. Dkt. 241. The Chan Plaintiffs seek permission to interview Washington opt-in plaintiffs to determine if they had full knowledge and understood the consequences of what they would be releasing.Id. The Chan Plaintiffs also assert that the court erred in approving the settlement because it did not enter an order of final certification of the collective action and that it could not have issued a final certification order because the named plaintiffs are not similarly situated to the Washington opt-in plaintiffs. Id.

II. Legal Standard

The Federal Rules of Civil Procedure do not specifically provide for a motion for reconsideration, but courts in the Fifth Circuit may treat motions for reconsideration as either a Rule 59(e) motion to alter or amend judgment or a Rule 60(b) motion for relief from judgment. Shepherd v. Int'l Paper Co., 372 F.3d 326, 328 n. 1 (5th Cir.2004). If the motion is filed within twenty-eight days of the entry of the order that the party wants reconsidered, the motion to reconsider is treated as a Rule 59(e) motion. Fed.R.Civ.P. 59(e) (allowing a party to alter or amend a judgment “no later than 28 days after the entry of judgment”); Shepherd, 372 F.3d at 328 n. 1 (stating this rule but relying on the ten-day period in the former Rule 59(e) rather than twenty-eight day period adopted in 2009). Otherwise, it is considered a Rule 60(b) motion. Shepherd, 372 at 328 n. 1. Here, the motion was filed within twenty-eight days of the order.

A motion to reconsider pursuant to Rule 59(e) “is not the proper vehicle for rehashing evidence, legal theories, or arguments that could have been offered or raised before the entry of judgment.” Templet v. HydroChem Inc., 367 F.3d 473, 479 (5th Cir.2004) (citing Simon v. United States, 891 F.2d 1154, 1159 (5th Cir.1990) ). Rather, Rule 59(e) allows parties “to correct manifest errors of law or fact or to present newly discovered evidence.” Waltman v. Int'l Paper Co., 875 F.2d 468, 473 (5th Cir.1989). “Reconsideration of a judgment after its entry is an extraordinary remedy that should be used sparingly.” Templet, 367 F.3d at 479. An “unexcused failure to present evidence available at the time of ... judgment provides a valid basis for denying a subsequent motion for reconsideration.” Id. (citing Russ v. Int'l Paper Co., 943 F.2d 589, 593 (5th Cir.1991) ).

III. Analysis

First, the court must determine whether it may reconsider the order approving the settlement under Rule 59(e). Defendants and MDL Lead Counsel urge that the Chan Plaintiffs have presented no manifest error of law or new evidence that could not have been presented at the time of the original objections. Dkts. 245, 246. The Chan Plaintiffs argue that the short timeframe between the filing of the proposed settlement and the hearing did not allow them to fully develop their arguments. Dkt. 241. The court finds the Chan Plaintiffs have provided a sufficient excuse for not fully developing their arguments prior to the hearing. The court therefore turns to whether there was a manifest error of law in its approval of the settlement.

A. Standing

During the hearing for the approval of the settlement, the court overruled the Chan Plaintiffs' objection to the settlement, primarily because the Chan Plaintiffs lacked standing to object. The Chan Plaintiffs assert that they had standing and the court's finding to the contrary is a manifest error of law. Dkt. 241. MDL Lead Counsel and the defendants argue that the Chan Plaintiffs do not have standing to object to the settlement because they are not parties to the settlement and, since no class has been certified in the Chan case, they do not represent any parties to the settlement. Dkts. 245, 246. The Chan Plaintiffs argue that they have standing to challenge the settlement in this case because, having asserted a claim for a Rule 23 class action, the Chan Plaintiffs have a fiduciary duty to all members of the putative class to raise matters bearing on the interests of putative class members even prior to class certification. Dkt. 241. The Chan Plaintiffs assert that the settlement is against the interests of the Washington opt-in plaintiffs, who are also members of the Chan putative class, because it releases wage-and-hour claims asserted under Washington state law in addition to the FLSA claim.

The Chan Plaintiffs cite the following cases in support of their argument that they have standing to challenge the settlement: Roper v. Consurve, Inc., 578 F.2d 1106, 1110 (5th Cir.1978) ; Payne v. Travenol Labs., Inc., 673 F.2d 798, 814 (5th Cir.1982) ; Susman v. Lincoln Am. Corp., 587 F.2d 866, 871 (7th Cir.1978) ; Shelton v. Pargo, Inc., 582 F.2d 1298, 1305 (4th Cir.1978) ; Boles v. Moss Codilis, L.L.P., No. 10–1003, 2011 WL 4345289, at *2 (W.D.Tex. Sept. 15, 2011) ; Schnick v. Berg, No....