Borup v. The CJS Solutions Group, LLC

Background

This order addressed two related Fair Labor Standards Act collective-action cases involving worker classification. Gray’s case began in the Southern District of New York, where the parties reached a settlement in February 2019. The case was later transferred to the District of Minnesota and reassigned as related to Borup’s case. The New York court had not formally evaluated or approved the settlement before the transfer.

Gray’s counsel again asked the District of Minnesota to approve the settlement. Borup argued that the settlement may have resulted from a “reverse auction,” meaning that a defendant facing competing class cases selects the lawyers willing to accept the lowest recovery for the workers in exchange for higher fees. Borup also asked the court to consolidate the cases for purposes of resolving the settlement issues. Separately, the defendant appealed Magistrate Judge David Schultz’s order requiring it to produce certain information about potential members of the Gray collective.

Settlement approval

The court identified several facts suggesting that a reverse auction may have occurred. It noted that the settlement provided a low amount for collective-action members, included a high total attorney-fee award, and reflected steps by the defendant to keep the two cases separate. The court concluded that additional discovery, or information gathering, was needed before the settlement could be approved. It allowed Gray to renew the approval motion after the outstanding settlement issues were resolved.

Limited consolidation

The court found that the cases involved common legal and factual questions. It pointed to similarities between the plaintiffs’ Fair Labor Standards Act claims, the composition of the worker groups, and overlapping factual issues. The court therefore determined that limited consolidation was appropriate to streamline resolution of the remaining settlement issues and avoid unnecessary costs and delay.

Appeal of the magistrate judge’s order

The defendant challenged Magistrate Judge Schultz’s order, which had granted in part and denied in part Borup’s motion to compel. The defendant argued that the information it was required to produce was not relevant and raised concerns about overlap between people who had joined the two cases. The court rejected those concerns in light of the potential settlement issues and the limited consolidation. It held that the magistrate judge’s production order was not clearly erroneous or contrary to law.

Disposition

The court ordered that: (1) Gray’s motion for approval of the settlement was denied without prejudice; (2) the two matters were consolidated on a limited basis to resolve outstanding issues related to the Gray settlement; and (3) the defendant’s appeal of the magistrate judge’s decision was denied.