Millien v. The Madison Square Garden Company

Background

Lead Plaintiff Clint Millien filed the lawsuit in New York Supreme 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 amended complaint asserted four counts. Counts 1 and 2 alleged that the defendants violated the federal Fair Credit Reporting Act (FCRA) and the New York Fair Credit Reporting Act by failing to provide applicants with copies of background-check reports and required notices before deciding not to hire them. Count 3 alleged that the defendants violated the New York City Human Rights Law by failing to perform the analysis required by Article 23-A of the New York Correction Law when rejecting applicants based on allegedly undisclosed criminal convictions. Count 4 alleged that the defendants’ hiring practice had a discriminatory effect on Black and Latino applicants under the New York City Human Rights Law.

The parties reached a settlement after private mediation, before most depositions had been taken. The settlement created two classes. The 508-member “FCRA Class” consisted of people denied employment with the Madison Square Garden Company based on the content of a background-check report during the specified period. The 281-member “NYC Class” consisted of people who applied for employment in New York City and were denied employment based on the company’s determination that they had not fully or accurately disclosed their criminal-conviction history.

Settlement Terms

Each FCRA Class member would receive $200. NYC Class members had to submit claim forms to seek an additional $1,700 payment. Of the 281 NYC Class members, 132 submitted claim forms. For those claimants, the defendants would conduct an Article 23-A analysis and determine whether each person would have been eligible for employment, regardless of whether the person had fully disclosed the criminal record. Claimants found eligible would receive $1,700.

The defendants also agreed to make policy changes concerning hiring and employment of people with criminal records. The settlement provided $7,500 to each lead plaintiff as a service payment and $750,000 in attorney fees and costs. In exchange, the defendants would be released from claims under the FCRA and New York Fair Credit Reporting Act. The NYC Class would also release claims relating to criminal records, including claims under Title VII, the New York Fair Credit Reporting Act, the Correction Law, and the New York City Human Rights Law.

Class Certification

Federal Rule of Civil Procedure 23 governs class actions. The court found that both classes met Rule 23(a)’s requirements of numerosity, commonality, typicality, and adequate representation. The classes each had more than 100 members, and the lead plaintiffs’ claims arose from the same alleged hiring practices as the class claims.

The court also found that the classes met Rule 23(b)(3), which requires common questions to predominate over individual issues and requires a class action to be superior to other ways of resolving the dispute. The court concluded that the central issues concerning the defendants’ background-check and hiring practices were sufficiently common for settlement purposes. Individualized damages issues for NYC Class members did not defeat certification.

Notice and Settlement Approval

The court found that class members received appropriate written notice of the settlement, objection procedures, and opt-out procedures. All 508 class members were successfully sent notice by mail or email. One class member opted out, and one objected. The court concluded that the objection did not justify rejecting the settlement.

Under Rule 23(e)(2), a class settlement must be fair, reasonable, and adequate. The court evaluated both the process that produced the settlement and its terms. It found that the settlement resulted from arm’s-length negotiations involving experienced counsel, a mediator, written discovery, document production exceeding 10,000 pages, and a deposition of the defendants’ principal compliance officer.

The court identified substantial risks in continued litigation. The plaintiffs might have had difficulty proving that the defendants failed to provide the required FCRA notices, proving willfulness for statutory damages, establishing damages, and showing that the New York City Human Rights Law required an Article 23-A analysis when an applicant was rejected for failing to disclose a criminal conviction. The court also described the plaintiffs’ disparate-impact theory as speculative and noted that continued class certification could have been contested.

The court concluded that the settlement payments were reasonable in light of those risks. It found that $200 was within the potential recovery for the FCRA claims and that the possible $1,700 payment for qualifying NYC Class members reasonably approximated lost wages. The court also considered the agreed policy changes, which it said would likely create greater opportunities for applicants with criminal records. Although the court expressed concern that defendants would conduct the Article 23-A analyses and that class members had limited recourse if claims were denied, it accepted the defendants’ assurances that the analyses would be conducted fairly, professionally, and in good faith.

Fees and Service Payments

The court found the $750,000 fee-and-cost award reasonable. Although the award exceeded the class’s direct monetary recovery, the court explained that the award was modest compared with class counsel’s lodestar—the value of counsel’s recorded work calculated using reasonable hourly rates—which was stated to be $1,732,875.50. The court also considered the case’s complexity, risks, public importance, and programmatic relief.

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

Disposition

The court finally certified the classes and finally approved the settlement. It granted the motion for final approval of the class action settlement. It also granted the motions for service payments to the class representatives and for attorney fees and costs. The Clerk was directed to enter judgment and close the case. The order did not decide whether the defendants actually violated the FCRA, New York Fair Credit Reporting Act, or New York City Human Rights Law; it resolved those claims through the approved settlement.