Arguelles et al v. Noor Baig, Inc.
Filing
19
ORDER denying 18 Motion for approval of FLSA settlement agreements. Signed by Judge Roy B. Dalton, Jr. on 2/24/2017. (ZRR)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
LINA ARGUELLES; and MARIO
AMARAN,
Plaintiffs,
v.
Case No. 6:16-cv-2024-Orl-37TBS
NOOR BAIG, INC.,
Defendant.
ORDER
This cause is before the Court on the parties’ Joint Motion for Approval of FLSA
Settlement Agreements and Incorporated Memorandum of Law (Doc. 18), filed February
22, 2017.
The parties to this action jointly request that the Court approve their agreements
settle Plaintiffs’ claims for unpaid overtime wages under the Fair Labor Standards Act
(“FLSA”). (Doc. 18 (“Motion”); see also Doc. 18-1 (“Settlement Agreements”).) 1 Upon
consideration, the Court finds that the Motion is due to be denied and that the Settlement
Agreements are due to be rejected.
Congress enacted the FLSA to protect employees from “inequalities in bargaining
power between employers and employees.” See Lynn’s Food Stores, Inc. v. United States
ex rel. U.S. Dep’t of Labor, 679 F.2d 1350, 1352 (11th Cir. 1982). To further this
congressional purpose, the U.S. Court of Appeals for the Eleventh Circuit has placed
“limits on the ability of private parties to settle FLSA lawsuits.” See Nall v. Mal-Motels,
1
Apart from addressing each Plaintiff separately, the Settlement Agreements are
identical.
Inc., 723 F.3d 1304, 1307 (11th Cir. 2013); see also Lynn’s Food, 679 F.2d at 1352
(holding that an employee’s rights under the FLSA “cannot be abridged by contract or
otherwise waived”).
Specifically, in FLSA actions, district courts must scrutinize any settlement “for
fairness” before entering a stipulated judgment. See Nall v. Mal-Motels, Inc., 723 F.3d
at 1306–07; see also Wolff v. Royal Am. Mgmt., Inc., 545 F. App’x 791, 793
(11th Cir. 2013). To do so, a court must determine that any settlement “is a fair and
reasonable resolution of a bona fide dispute over FLSA provisions.” Lynn’s Food,
679 F.2d at 1355. District courts are afforded discretion in deciding whether to approve
an FLSA settlement agreement. See Rodrigues v. CNP of Sanctuary, LLC,
523 F. App’x 628, 629 (11th Cir. 2013). If the district court finds that the settlement reflects
a fair and reasonable compromise of the issues in dispute, it may approve the settlement
“in order to promote the policy of encouraging settlement in litigation.” Lynn’s Food, 679
F.2d at 1354.
The instant Settlement Agreements contain several provisions that prevent them
from constituting fair and reasonable compromises of the issues in dispute. In particular,
the Settlement Agreements contain: (1) a general release and waiver of all Plaintiffs’
claims against Defendant and two non-parties—Mirza R. Baig (“Baig”) and Mughalai
Enterprises (“ME”) 2 (“General Release”); (2) a confidentiality provision; and (3) a
no re-employment provision. (See Doc. 18–1, pp. 4–5, 12–13.)
Though the parties represent that Plaintiffs will receive additional consideration for
2
In their Motion, the parties represent that Baig not only owned Defendant Noor
Baig, Inc. (“Noor”), but also owned and operated ME. (See Doc. 18, p. 3.) According to
the parties, Plaintiffs performed duties for both Noor and ME. (Id.)
2
the inclusion of the General Release in the Settlement Agreements, the Court no longer
approves such consideration because the value of a general release is incalculable.
Additionally, as plaintiffs can only compromise FLSA claims on the basis of a “dispute
over FLSA provisions,” concessions unrelated to the substance of FLSA claims have no
place in FLSA settlements. See Moreno v. Regions Bank, 729 F. Supp. 2d 1346, 1351–
52 (M.D. Fla. 2010). Indeed, a plaintiff’s FLSA claim—which is intended to remedy a
defendant’s violation of mandatory law—should not be used as leverage to procure a
general release of all possible claims. Cf. Lynn’s Food, 679 F.2d at 1352 (recognizing
that “[t]he FLSA was enacted for the purpose of protecting workers from substandard
wages and oppressive working hours”). For the same reasons, a general release may not
be used to release a non-party. Even if the parties were to cabin the release to FLSA
claims, the Court remains skeptical as to the propriety of releasing FLSA claims against
a non-party. 3 Nevertheless, the Court will permit the parties to submit briefing on whether
the specific release of a non-party is permissible in the FLSA context.
Also fatal to the Motion is the confidentiality provision. Courts in the U.S. District
Court for the Middle District of Florida, and this Court in particular, routinely reject such
provisions in FLSA settlement agreements. See, e.g., Weldon v. Backwoods Steakhouse,
Inc., 6:14-cv-79-Orl-37TBS, 2014 WL 4385593 (M.D. Fla. Sept. 4, 2014); Housen v.
Econosweep & Maint. Servs., Inc., 3:12-cv-461-J-34TEM, 2013 WL 2455958 (M.D. Fla
June 6, 2013). As an initial matter, confidentiality provisions, “both contravene[] the
legislative purpose of the FLSA and undermine[] the Department of Labor’s regulatory
3
What’s more is that Noor is the only party purportedly required to pay the
consideration in exchange for the General Release encompassing Noor, Baig, and ME.
(See Doc. 18-1, pp. 3, 11.)
3
effort to notify employees of their FLSA rights.” Dees v. Hydradry, Inc., 706 F. Supp. 2d
1227, 1242 (M.D. Fla. 2010). Moreover, these provisions fly in the face of the presumption
favoring openness and judicial transparency, which is strongest in an FLSA wagesettlement agreement between an employee and an employer. See Stalnaker v. Novar
Corp., 293 F. Supp. 2d 1260, 1263–64 (M.D. Ala. 2013). Such provisions are also wholly
unrelated to Plaintiffs’ FLSA claims and, thus, have no place in what is intended to be a
“fair and reasonable resolution of a bona fide dispute over FLSA provisions.” See Lynn’s
Food, 679 F.2d at 1355. The same can be said for the no re-employment provision.
Practical as it may seem to bundle all of the parties’ potential disputes into one
resolution, the law is clear that there is no basis for leveraging an employee to execute a
release of claims outside the context of the FLSA simply to receive payment of the
compensation to which he or she is entitled by law. In light of the foregoing, the Settlement
Agreements are due to be rejected and the Motion is due to be denied.
Accordingly, it is hereby ORDERED AND ADJUDGED:
1.
The parties’ Joint Motion for Approval of FLSA Settlement Agreements and
Incorporated Memorandum of Law (Doc. 18) is DENIED.
2.
The parties’ Settlement Agreements (Doc. 18-1) are REJECTED.
3.
On or before, Thursday, March 9, 2017, the parties may move for approval
of amended settlement agreements consistent with the terms of this Order.
Such briefing should include authority for the proposition that an FLSA
settlement agreement may properly release non-parties.
DONE AND ORDERED in Chambers in Orlando, Florida, on February 23, 2017.
4
Copies:
Counsel of Record
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