Demons v. United States, 131 Fed. Cl. 514

Background

Two related opt-in class actions (DeMons No. 13-779C; Garcia No. 13-1024C) challenged the VA’s practice of not paying Saturday and night premium pay to certain Veterans Health Administration employees while they were on authorized paid leave for the period July 1, 2012–Feb 28, 2016.
The court certified opt-in classes in DeMons (Dec. 15, 2014) and Garcia (Apr. 9, 2015), later consolidated (Feb. 19, 2016) and re‑certified as two sub‑classes (May 20, 2016).
The VA produced a list of 21,990 potential class members; 10,190 timely opt‑in claim forms were filed and became the Class Members for settlement purposes.
Parties negotiated a settlement under which the United States would pay $6,568,366.51 (covering back pay, interest, employer tax contributions, and a $279,136.56 allocation for attorney fees/expenses to the Settlement Trust) to a qualified settlement trust administered by Epiq.
The settlement provided for distribution of Net Settlement Fund to class members (100% of estimated back pay where funds suffice; pro rata if not), payment of administrator fees, and payment of a contingent attorney fee award (up to 30% of back pay and interest), subject to court approval and normal tax withholdings.
The court held a fairness hearing, received no objections, reviewed fairness factors (relative strengths, counsel recommendation, class reaction, fairness of distribution, fee provision) and approved the settlement and requested attorney fee awards as reasonable.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether classwide relief for unpaid night/Saturday premium pay while on paid leave is warranted	Class members are entitled under 38 U.S.C. §7453/7454 to premium pay when scheduled to work but on paid leave	Government negotiated settlement without admitting liability; contested merits previously but produced data for settlement	Court approved settlement resolving claims without trial; did not adjudicate merits (settlement fair, reasonable, adequate)
Whether the proposed settlement is fair, reasonable, and adequate	Settlement pays 100% of estimated unpaid back pay (subject to taxes, fees), reached after arm’s‑length negotiations and use of VA data; no class objections	Government supported settlement and provided class list and estimates; settlement avoids litigation risk and administrative burden	Court found settlement fair, reasonable, and adequate under RCFC 23(e) after applying standard factors and held fairness hearing with no objections
Class notice, opt‑in process, and distribution mechanics	Notice and claims process (mailed to 21,990 potential members; 10,190 timely opt‑ins) were adequate; distribution via an appointed administrator is appropriate	Agreed to use Epiq as administrator; settlement terms specify trust, reserves, withholding, reissuance, uncashed check rules	Court approved notice and distribution plan; authorized creation of Settlement Trust and procedures for payments, withholding, and returns
Attorney fees and administrator costs: amount and method	Class counsel seeks approval of fees/expenses (motion up to 30% of back pay/interest; $1,711,877.07 requested in motion as amended) and payment to Epiq for administration costs	Government agreed not to oppose fee award up to 30% of back pay and interest; fees/expenses to be paid from Settlement Trust	Court approved settlement and attorneys’ fee motion as reasonable under RCFC 23(h); authorized payments to administrator and counsel per settlement terms

Key Cases Cited

DeMons v. United States, 119 Fed. Cl. 345 (Fed. Cl. 2014) (class certification decision in related matter)
Berkley v. United States, 59 Fed. Cl. 675 (Fed. Cl. 2004) (standard that settlement must be fair, reasonable, and adequate)
Sabo v. United States, 102 Fed. Cl. 619 (Fed. Cl. 2011) (factors for evaluating class settlement)
Dauphin Island Property Owners Ass'n v. United States, 90 Fed. Cl. 95 (Fed. Cl. 2009) (consideration of settlement fairness factors)