Millien v. The Madison Square Garden Company

Background

Lead Plaintiff Clint Millien filed the lawsuit in New York state court on April 26, 2017. The defendants removed it to federal court, and Millien later amended the complaint to add Felipe Kelly as a plaintiff. The plaintiffs alleged that the defendants refused to hire them and proposed class members based on criminal-background-check information without first providing copies of the reports and required notices, in violation of the federal Fair Credit Reporting Act and the New York Fair Credit Reporting Act.

The plaintiffs also alleged that the defendants failed to perform the analysis required by Article 23-A of the New York Corrections Law before refusing to hire applicants because of criminal convictions or alleged failures to disclose convictions. They brought that theory under the New York City Human Rights Law. In addition, they alleged that the defendants’ practice had a disparate impact on Black and Latino applicants under the New York City Human Rights Law.

The parties reached a settlement during private mediation a few weeks before discovery closed and before most depositions occurred.

Class Certification

The court certified two settlement classes. The Federal Credit Reporting Act class included people denied employment with the Madison Square Garden Company based on the contents of a background-check report from April 26, 2015, through preliminary approval of the settlement. It contained 508 members. The New York City class included people who applied for employment with the company in New York City and were denied employment based on the company’s determination that they had failed to fully or accurately disclose their criminal-conviction history. That class covered the period from May 8, 2014, through preliminary approval and contained 281 members.

The court found that both classes satisfied the requirements of Federal Rule of Civil Procedure 23(a): numerosity, meaning enough members that individual joinder would be impractical; commonality, meaning shared legal or factual questions; typicality, meaning the lead plaintiffs’ claims were typical of the class claims; and adequacy of representation. The court also found that common questions predominated and that a class action was superior to individual lawsuits under Rule 23(b)(3). The court noted that individual damages calculations would not defeat certification for settlement purposes.

Notice and Settlement Terms

All 508 class members received written notice by mail or email. The notice described the settlement, the procedures for objecting, and the procedures for opting out. Of the 281 New York City class members, 132 submitted claim forms. The defendants also notified the relevant federal and state authorities as required by the Class Action Fairness Act.

Under the settlement, every member of the Federal Credit Reporting Act class would receive $200. New York City class members who submitted claim forms and were determined, after an Article 23-A review, to have been eligible for employment would receive an additional $1,700. The Madison Square Garden Company also agreed to implement policy changes concerning hiring and employment of people with criminal records. In exchange, the defendants would be released from claims under the federal and New York Fair Credit Reporting Acts, and the New York City class would release related criminal-record claims under the listed federal, state, and city laws.

Only one class member opted out and one objected. The court concluded that the objection did not justify rejecting the settlement.

Final Approval

Under Rule 23(e)(2), the court had to determine whether the settlement was fair, reasonable, and adequate. It found that the settlement resulted from arm’s-length negotiations by experienced counsel after substantial written discovery, more than fourteen hours of mediation, and one deposition. The parties had produced more than 10,000 pages of documents and litigated discovery disputes.

The court found significant litigation risks. The plaintiffs would have had to prove that required background-check reports and notices were not provided and that any violation was willful. Their Article 23-A theory under the New York City Human Rights Law was described as novel and untested, including uncertainty about whether that law applied when an applicant was rejected for failing to disclose a conviction rather than because of the conviction itself. The court also found risks concerning proof of disparate impact and damages.

The court concluded that the monetary relief was reasonable in light of those risks. The $200 payment was within the potential recovery for the federal claims, which could include statutory damages of $100 to $1,000 for willful violations. The $1,700 payment for qualifying New York City class members was based on an estimate of lost wages. The court acknowledged concerns that the additional payment depended on the defendants’ Article 23-A analysis but accepted the defendants’ assurances that the reviews would be conducted fairly, professionally, and in good faith. The court also considered the settlement’s policy changes to be significant relief.

Fees and Representative Payments

The court approved $750,000 in attorneys’ fees and costs. Although that amount exceeded the class’s monetary recovery and would have been high under a percentage-of-recovery method, the court found it reasonable under the lodestar method, which calculates fees based on counsel’s time and reasonable hourly rates. Counsel reported a lodestar amount of $1,732,875.50 before any possible adjustments. The court also considered the case’s complexity, litigation risks, public importance, and the fact that the fee agreement had been negotiated separately from the class relief.

The court approved an incentive award of $7,500 for each lead plaintiff based on their efforts for the benefit of the class.

Disposition

The court held that the settlement and distribution plan were fair, reasonable, and adequate. It granted the motion for final approval of the class action settlement, granted the motions for service payments to the class representatives and for attorneys’ fees and costs, directed the clerk to enter judgment, and ordered the case closed.