Robertson v. Ther-Rx Corporation

Filing 40

OPINION. Signed by Honorable Myron H. Thompson on 5/12/11. (scn, )

IN THE DISTRICT COURT OF THE UNITED STATES FOR THE
MIDDLE DISTRICT OF ALABAMA, NORTHERN DIVISION

LESLIE ROBERTSON, on behalf )
of herself and all others )
similarly situated,
)
)
Plaintiff,
)
)
v.
)
)
THER-RX CORPORATION,
)
)
Defendant.
)

CIVIL ACTION NO.
2:09cv1010-MHT
(WO)

OPINION
Plaintiff

Leslie

Robertson

brought

this

lawsuit

against defendant Ther-Rx Corporation, claiming that the
termination of her employment violated Title VII of the
Civil Rights Act of 1964, as amended (42 U.S.C. §§ 1981a,
2000e to 2000e-17), and that Ther-Rx interfered with her
rights under the Family and Medical Leave Act (29 U.S.C.
§§ 2601-2654).

Robertson also brought a claim under the

Fair Labor Standards Act (FLSA) (29 U.S.C. §§ 201-219),
charging that she was not paid overtime, as she contends

she was due, and that she routinely worked more than 40
hours in a week.
This case is currently before the court on two joint
motions.

First, the parties move for approval of a

proposed settlement of Robertson’s claims, including her
claim under the FLSA.

In addition to Robertson, seven

other former Ther-Rx employees have consented to the
terms of the proposed settlement, which would settle
their own claims under the FLSA: Alison Harvey, Dennis
Hudgins, Courtland Kennedy, Jennifer Nagro, Mark Moore,
Nelson Powell, and Elsa Salerno.

Like Robertson, all of

the additional persons were terminated by Ther-Rx.

Based

on the representations made during a hearing on April 8,
2011, and for the reasons that follow, the motion will be
granted and the settlement will be approved, with one
modification: the settlement’s confidentiality provision
will be stricken.
Second, the parties move to submit the settlement
agreement under seal.

Because the court concludes that

2

the settlement should not be confidential, this motion
will be denied.
Because the FLSA was enacted to protect workers from
the poor wages and long hours that can result from great
inequalities in bargaining power between employers and
employees,

the

FLSA's

provisions

are

mandatory

and,

except in two narrow circumstances, are generally not
subject

to

bargaining,

contract or settlement.

waiver,

or

modification

by

Brooklyn Savings Bank v. O'Neil,

324 U.S. 697, 706 (1945).

The first exception is that

the Secretary of Labor may supervise the payment of back
wages to employees; employees who accept such payments
waive their rights to bring suits for liquidated damages,
provided the employer pays the back amount in full.

29

U.S.C. § 216(c); Lynn's Food Stores, Inc. v. United
States, 679 F.2d 1350, 1352-53 (11th Cir. 1982).
The second route to settlement, and the one that is
applicable here, occurs when an employee brings a private
action for back wages under 29 U.S.C. § 216(b); the

3

employee and employer present a proposed settlement to
the district court, and the district court reviews the
settlement and enters an appropriate judgment.
Food Stores, 679 F.2d at 1354.

Lynn's

The Eleventh Circuit

Court of Appeals has explained the rationale for court
approval of such settlements:
“Settlements may be permissible in the
context of a suit brought by employees
under the FLSA for back wages because
initiation
of
the
action
by
the
employees provides some assurance of an
adversarial context. The employees are
likely to be represented by an attorney
who can protect their rights under the
statute. Thus, when the parties submit
a settlement to the court for approval,
the settlement is more likely to reflect
a reasonable compromise of disputed
issues than a mere waiver of statutory
rights brought about by an employer's
overreaching.”
Id.
In reviewing a settlement of an FLSA private claim,
a court must “scrutiniz[e] the settlement for fairness,”
id. at 1353, and determine that the settlement is a “fair
and reasonable resolution of a bona fide dispute over

4

FLSA provisions,” id. at 1355.

“If a settlement in an

employee FLSA suit does reflect a reasonable compromise
over issues, such as FLSA coverage or computation of back
wages, that are actually in dispute[,] the district court
[may] approve the settlement in order to promote the
policy of encouraging settlement of litigation.”

Id. at

1354.1
In this case, there are bona-fide disputes over FLSA
provisions,
backpay.

namely

FLSA

coverage

and

the

amount

of

With respect to FLSA coverage, the federal

courts of appeal have split on the applicability of the
‘outside sales exemption,’ a principal issue in this
case.

Compare In Re Novartis Wage and Hour Litigation,

611 F.3d 141, 150-55 (2nd Cir. 2009) (holding the outside
sales

exemption

inapplicable),

with

Christopher

v.

1. In Lynn's Food Stores, the appellate court
disallowed a compromise because it was not brought in the
context of an employee lawsuit, but rather was an attempt
by an employer to “settle” backpay claims because of a
pending investigation by the Secretary of Labor.
The
“compromise” was unfair and reflected the extreme
inequalities of bargaining position against which the
FLSA was designed to protect.
5

SmithKline Beecham Corp., 635 F.3d 383, 395-401 (9th Cir.
2011) (holding the outside sales exemption applicable).
Similarly, the federal appellate courts are divided on
the applicability of the ‘administrative exemption’ to
pharmaceutical sales representatives.

Compare Smith v.

Johnson & Johnson, 593 F.3d 280, 284-86 (3rd Cir. 2010),
with In Re Novartis Wage and Hour Litigation, 611 F.3d at
155-57.

The Eleventh Circuit has not ruled on either

exemption in this pharmaceutical industry.
Further, after hearing from Robertson as well as the
others who have consented to the terms of the proposed
settlement and after reviewing the settlement agreement,
the court concludes that the settlement is a fair and
reasonable

resolution

of

these

bona-fide

disputes.

Counsel for Robertson and the other consenting persons
represent that the settlement proceeds are, assuming
liability,

the

compensation.

unliquidated

amount

of

overtime

Calculations were made using declarations

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filed with the court in connection with the motion to
facilitate a collective action.

(Doc. Nos. 18, 23).2

The court will address three other issues relating to
the proposed settlement.

First, the proposed settlement

includes a waiver of future employment with Ther-Rx.
While the court could envision circumstances where a
requirement of this kind might be retaliatory, in this
case neither Robertson nor the other consenting former
employees

desire

future

employment

with

Ther-Rx.

Further, because the future financial viability of this
corporations is quite precarious, future employment is
far from assured for anyone.

Accordingly, the court is

2. Each of those who filed declarations provided
different accounts of the amount of “overtime” worked.
Robertson says that, on average, she worked 50-55 hours
per week (Doc. No. 18-1); Harvey says that she worked, on
average, 45-55 hours per week (Doc. No. 18-9); Huggins
says that he worked 60-70 hours per week on average (Doc.
No. 18-10); Nagro says she worked 50-65 hours per week on
average (Doc. No. 23-1); and Salerno says she worked 50
hours per week on average (Doc. No. 23-2).
Accepting
these numbers at face value, the court finds that the
number of “overtime” hours per person varies from 11
hours a week to 17 hours a week.
Thus, there are
significant variation in the amount of “overtime” that
they estimate they have worked.
7

convinced

that

impact

of

this

requirement

is

inconsequential.
Second, the proposed settlement includes a general
release from liability for all employment claims against
Ther-Rx.

This

release

would

cover

existing

claims

associated with statutes other than the FLSA, but not any
future claims that might arise.
to

approve

releases.

proposed
See,

Some courts have refused

settlements

e.g.,

Moreno

v.

containing
Regions

general

Bank,

729

F.Supp.2d 1346, 1350-51 (M.D. Fla. 2010) (Merryday, J.).
Counsel for Robertson and the other consenting former
employees suggest that the release does not trouble him.
With respect to Robertson, counsel note that under the
settlement Robertson will, in fact, receive consideration
for her claims under Title VII and the Family and Medical
Leave Act.

With respect to the others, counsel point out

that most of their clients were terminated in March of
2009.

This action was commenced on October 30, 2009,

with the result that, for most of those affected, the

8

statutory pre-condition charge filing period (either 180
or

300

days

depending

on

the

State)

or

statute

of

limitations from other employment claims will have run.
Because of the probable inability of the former employees
to bring any other employment claims, the court does not
view this provision in the release as problematic.

Put

another way, the release of other claims does not create
an imputed discount for the FLSA claims.
Third

and

finally,

the

proposed

contains a confidentiality provision.

settlement

also

As stated, the

court finds that the confidentiality provisions should be
stricken.

Settlements under the FLSA involve not only

the parties, but the public, and several courts have been
reluctant to accept confidentiality provisions.

See,

e.g., Dees v. Hydradry, Inc., 706 F. Supp. 2d 1227, 1242
(M.D. Fla. 2010) (Merryday, J.) (“[A] confidentiality
provision furthers resolution of no bona fide dispute
between

the

unreasonably

parties;

rather,

frustrates

compelled

implementation

9

silence
of

the

‘private-public’ rights granted by the FLSA and thwarts
Congress's intent to ensure widespread compliance with
the statute.”);

Stalnaker v. Novar Corp., 293 F.Supp.2d

1260, 1264 (M.D. Ala. 2003) (Thompson, J.)

(“Absent some

compelling reason, the sealing from public scrutiny of
FLSA agreements between employees and employers would
thwart the public's independent interest in assuring that
employees' wages are fair and thus do not endanger the
national health and well-being.”).
aware

of

the

court’s

The parties were

reservations

about

the

confidentiality provision and agreed to abandon this
provision in the event the court objected.

The court

finds,

provision

therefore,

that

the

confidentiality

should be stricken.
Accordingly,
confidentiality

subject

to

agreement,

approved as presented.

the

the

excision

settlement

of

the

will

be

Further, the motion to file the

matter under seal will be denied.
settlement, the case will be dismissed.

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Pursuant to the

An appropriate judgment will be entered.
DONE, this the 12th day of May, 2011.

/s/ Myron H. Thompson
UNITED STATES DISTRICT JUDGE