Kassman v. KPMG LLP

Background

Donna Kassman filed the action in 2011 on behalf of similarly situated female KPMG employees. The fourth amended complaint alleged class and individual claims involving gender discrimination in compensation, promotion, and other employment terms under the Equal Pay Act of 1963, Title VII of the Civil Rights Act of 1964, and several New York laws. It also alleged individual claims involving pregnancy, childbirth, related conditions, and race under the Family and Medical Leave Act and the Civil Rights Act of 1866.

In 2014, the court conditionally certified an Equal Pay Act collective, and nearly 1,300 women opted in. In 2018, the court denied class certification and decertified the conditionally certified collective, but allowed the former opt-in plaintiffs to pursue Equal Pay Act claims by submitting verified fact sheets. After some fact sheets were challenged, 437 former opt-in plaintiffs remained, along with the nine named plaintiffs.

The parties mediated before an experienced Judicial Arbitration and Mediation Services mediator and reached a settlement in principle in December 2020. The settlement sought to resolve all remaining claims.

Settlement Terms

KPMG agreed to pay $10 million to settle all claims, including attorneys’ fees and costs. Plaintiffs estimated total potential damages at approximately $49.5 million: approximately $46.5 million for the former opt-in plaintiffs’ Equal Pay Act claims and $3 million for the named plaintiffs’ Equal Pay Act and other claims.

The settlement provided for an average claimant recovery of approximately $14,348.79 after attorneys’ fees and costs, according to plaintiffs, and no claimant would receive less than $250 before tax withholdings and deductions. Retired District of Columbia Superior Court Judge Nan R. Shuker would allocate the fund using factors including alleged damages, possible defenses, participation in the litigation, and whether a claimant was deceased and represented by an estate.

The former opt-in plaintiffs would release their Equal Pay Act claims and additional claims related to gender, sex, or pregnancy discrimination against KPMG. The named plaintiffs would provide a general release of claims against KPMG. Plaintiffs’ counsel would receive $3.5 million, equal to 35% of the settlement fund. Counsel reported more than 47,100 hours of work, a lodestar exceeding $26.475 million, and more than $1.8 million in costs.

Legal Standard

Because the Equal Pay Act is part of the Fair Labor Standards Act, the court applied the requirement that a settlement of covered wage claims be fair and reasonable. The court considered the possible recovery, the burdens and risks of continued litigation, whether the negotiations were conducted at arm’s length, and whether fraud or collusion was present. It also considered public-policy factors and independently evaluated the reasonableness of attorneys’ fees and costs.

Court’s Analysis

The court found the $10 million fund reasonable because it represented approximately 20% of plaintiffs’ estimated potential damages and was within the range of settlements approved in the district. The court also found that the proposed allocation plan accounted for individual differences among claimants.

The settlement avoided substantial additional litigation, including approximately 380 possible motions to dismiss fact sheets, individualized discovery, dispositive motions, and trials. The court emphasized that the case had already involved nearly ten years of litigation, multiple complaints and motions, more than 60 depositions, more than 100 interrogatory responses, certification proceedings, and more than 450 fact sheets.

The court found that the settlement resulted from arm’s-length negotiations conducted with the assistance of an experienced mediator and that the parties were represented by experienced counsel. Nothing in the record suggested fraud or collusion. The court also found that the public-policy factors did not weigh against approval and noted that the agreement contained neither a confidentiality provision nor a non-disparagement provision.

The court approved the named plaintiffs’ general release because the settlement resolved both Equal Pay Act and non-Equal Pay Act claims, and because the lengthy, adversarial litigation supported the release under the circumstances. The court found the attorneys’ fees and costs reasonable based on the 35% fee percentage, counsel’s substantial time and expenses, and the comparison between the requested fee and counsel’s lodestar.

Disposition

Judge Schofield granted the motion and approved the Settlement Agreement. The parties were directed to provide a general accounting after distributing the settlement fund and to submit status letters every six months until the final accounting. The clerk was directed to close the relevant motions, and the parties were directed to file a proposed stipulation of dismissal with prejudice.