William Whitlock v. FSL Management
843 F.3d 1084
| 6th Cir. | 2016Background
- Former employees sued defendants under Kentucky Wage and Hour Act (KRS § 337.385) alleging off-the-clock work and improper tip-pooling; case removed to federal court and amended as a class action.
- District court certified the class in 2012; defendants sought interlocutory review (denied) and later moved to reconsider after Comcast.
- Parties negotiated and reached a settlement agreement (preliminary approval granted); after preliminary approval, Kentucky Court of Appeals issued McCann, holding KRS § 337.385 does not permit class actions; McCann was then taken for discretionary review by Kentucky Supreme Court.
- Defendants sought to stay settlement approval and later moved under Rule 23(c)(1)(C) to decertify based on McCann; district court denied decertification and granted final approval, treating the settlement as a binding contract enforceable under Kentucky law.
- Sixth Circuit assumed (without deciding) that McCann’s reading of Kentucky law might be correct but held that a post‑settlement change or clarification of state law does not bar enforcement of a binding class settlement, and affirmed the district court.
Issues
| Issue | Plaintiffs' Argument | Defendants' Argument | Held |
|---|---|---|---|
| Whether a Kentucky statute (KRS § 337.385) barring class actions prevents certification under Rule 23 | Whitlock: class certification satisfied Rule 23 and settlement class may be maintained | Defendants: KRS § 337.385(2) forbids class suits so Rule 23 certification is improper | Court assumed defendants’ view of Kentucky law for argument’s sake but held defendants failed to show Rule 23(a)/(b) requirements were disturbed; no abuse of discretion in maintaining certification |
| Whether the Rules Enabling Act forbids certification/enforcement of the settlement class when state law bars class actions | Whitlock: settlement-class certification enforces parties’ agreement and does not adjudicate substantive rights | Defendants: Rule 23 would modify substantive state right in violation of 28 U.S.C. § 2072(b) if it allowed class relief contrary to state law | Court held settlement-class certification to enforce a voluntary settlement does not violate Rules Enabling Act; certification recognizes parties’ compromise, not a substantive adjudication |
| Whether Rule 23(e) required vacatur/refusal to enforce the settlement after the state-law change | Whitlock: Rule 23(e) protects absent class members but does not defeat a binding settlement freely made by adequately represented parties | Defendants: public-policy and fairness considerations under Rule 23(e) (and analogies to consent decrees) require refusing enforcement where state law now forbids class relief | Court held Rule 23(e) does not bar enforcement of a settlement after a post‑settlement change in substantive law; district court didn’t abuse its discretion (citing Ehrheart and the presumption favoring settlement) |
| Whether the district court abused its discretion in denying decertification and approving settlement | Whitlock: district court properly enforced the agreement and protected absent class members via Rule 23(e) review | Defendants: district court should have decertified and refused approval because state law forbids class actions | Court affirmed: even assuming state-law prohibition, defendants failed to show abuse of discretion; settlement enforceable |
Key Cases Cited
- Comcast Corp. v. Behrend, 569 U.S. 27 (2013) (class-certification predominance and methodology review)
- Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997) (Rule 23 requirements remain important in settlement contexts to protect absent class members)
- Shady Grove Orthopedic Assocs. v. Allstate Ins. Co., 559 U.S. 393 (2010) (analysis of conflict between Rule 23 and state rules; Rules Enabling Act considerations)
- Ehrheart v. Verizon Wireless, 609 F.3d 590 (3d Cir. 2010) (post‑settlement change in law does not automatically defeat enforcement of binding class settlement)
- Sullivan v. DB Investments, Inc., 667 F.3d 273 (3d Cir. 2011) (certifying settlement class recognizes parties’ bargain and does not adjudicate substantive entitlement)
- UAW v. General Motors Corp., 497 F.3d 615 (6th Cir. 2007) (factors for evaluating fairness, reasonableness, and adequacy of class settlements)
- In re Prudential Ins. Co. Am. Sales Practice Litig., 148 F.3d 283 (3d Cir. 1998) (settlement approval and standards)
- Randleman v. Fidelity Nat. Title Ins. Co., 646 F.3d 347 (6th Cir. 2011) (standard of review for class-certification decisions)