Nichols v. Dollar Tree Stores, Inc.
Filing
25
ORDER denying without prejudice 24 Motion for Settlement. The parties may move for the Court's approval of an amended proposed settlement agreement within 21 days of the date of this Order. Ordered by U.S. District Judge W. Louis Sands on 11/1/2013. (bcl)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
ALBANY DIVISION
LEONARD R. NICHOLS,
Plaintiff,
v.
DOLLAR TREE STORES, INC.,
Defendant.
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CASE NO.: 1:13-CV-88 (WLS)
ORDER
Presently pending before the Court is the Parties’ Joint Motion for Approval of
Settlement and Dismissal With Prejudice (“Joint Motion”). (Doc. 24.) Therein, the
Parties request that the Court enter an ender approving the Fair Labor Standards Act
(“FLSA”) settlement entered into by the Parties and dismiss this case with prejudice.
For the reasons stated below, the Joint Motion for Approval of Settlement and Dismissal
With Prejudice (Doc. 24) is DENIED without prejudice consistent with this
Order.
DISCUSSION
I.
In-Camera Inspection
As a preliminary matter, the Court reviews its previous decision to allow the
parties to email the settlement agreement to the Court for an in-camera inspection. In
their Joint Motion, the Parties stated that:
The Agreement contains strict confidentiality provisions, and settlement
between the Parties would not be possible if the Agreement were not to
remain confidential. Therefore, to allow the Court to approve settlement,
while at the same time preserving the confidentiality agreement between
the Parties, the Parties respectfully request that they be permitted to
provide information via in camera review of the Agreement entered into
between the Parties.
1
(Doc. 24 ¶ 9.) In most cases when parties settle, the Court does not examine or approve
their agreements; the settlements are purely private contracts. In the typical FLSA case,
however, a settlement agreement only available through in-camera inspection does not
comport with the public’s right of access to a judicial proceeding, which right is “an
essential component of our system of justice [and] instrumental in securing the integrity
of the process.” Chicago Tribune Co. v. Bridgestone/Firestone, Inc., 263 F.3d 1304, 1311
(11th Cir. 2001). The judge’s “approving” a settlement constitutes a “public act,” and the
public “has an interest in knowing what terms of settlement a federal judge would
approve.” Jessup v. Luther, 277 F.3d 926, 929 (7th Cir. 2002). As an active component
of the judge’s decision, the settlement agreement is presumptively a public record.
See Brown v. Advantage Eng’g, Inc., 960 F.2d 1013, 1016 (11th Cir. 1992) (“Once a
matter is brought before a court for resolution, it is no longer solely the parties’ case, but
also the public’s case.”); Bank of Am. Nat'l Trust & Sav. Ass’n v. Hotel Rittenhouse
Assocs., 800 F.2d 339, 343 (3d Cir. 1986) ( “[T]he common law presumption of access
applies to motions filed in court proceedings and to the settlement agreement ... filed
and submitted to the district court for approval.”) The public enjoys the right both to
attend a trial or hearing and to inspect and copy a judicial record.
The presumption that the record of a judicial proceeding remains public “is
surely most strong when the ‘right at issue is of a ‘private-public character,’ as the
Supreme Court has described employee rights under the FLSA.’” Stalnaker v. Novar
Corp., 293 F. Supp. 2d 1260, 1264 (M.D. Ala. 2003) (quoting Brooklyn Savings Bank v.
O'Neil, 324 U.S. 697, 708 (1945)). “Sealing an FLSA settlement agreement between an
employer and employee, reviewing the agreement in camera, or reviewing the
agreement at a hearing without the agreement appearing in the record (and in any event
precluding other employees’ and the public’s access to, and knowledge of, the
2
agreement) thwarts Congress’s intent both to advance employees’ awareness of their
FLSA rights and to ensure pervasive implementation of the FLSA in the workplace.”
Dees v. Hydradry, Inc., 706 F. Supp. 2d 1227, 1245 (M.D. Fla. 2010). Furthermore,
reviewing a FLSA settlement agreement in camera conflicts with the public’s access to
judicial records, frustrates appellate review of a judge's decision to approve (or reject)
an FLSA compromise, contravenes congressional policy encouraging widespread
compliance with the FLSA, and furthers no judicially cognizable interest of the parties.
See id. at 1245 n.21 (“In camera examination equally frustrates appellate review of both
a seal and a judge's approval of a settlement agreement because the district court
reviews a settlement agreement in camera without articulating “specific findings” to
justify a seal.”); Webb v. CVS Caremark Corp., No. 5:11-cv-106, 2011 WL 6743284, at *2
(M.D.
Ga.
Dec.
23,
2011)
(“There
is
strong
support
that
FLSA settlement agreements should never be sealed or reviewed in camera.”) (citing
Dees, 706 F. Supp. 2d at 1245); but see Ammirati v. Luteran Servs. Fla., Inc., No. 2:09cv-496, 2010 WL 148724, at *1 (M.D. Fla. Jan. 13, 2010) (approving FLSA settlement
agreement reviewed via in-camera inspection); Nunnink Wholesale Pictures & Mirrors,
LLC, No. 2:09-cv-365, 2010 WL 338098, at *2 (M.D. Fla. Jan. 22, 2010) (same). With
these standards in mind, the Parties’ assertion that an injustice will be caused if the
proposed Agreement were placed in the public record is nowhere near sufficient to
negate the preference for the right of public access. Accordingly, the Court ORDERS
the parties to file, except upon articulated compelling grounds contemplated by the
relevant
laws,
the
proposed
settlement
See Stalnaker, 293 F. Supp. 2d at 1262-64.
3
agreement
in
the
public
docket.
II.
Motion to Approve Settlement Agreement
This case was brought pursuant to the Fair Labor Standards Act (“FLSA”), 29
U.S.C. § 201 et seq. In Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350, 1352–
55 (11th Cir. 1982), the Eleventh Circuit explained that claims for compensation under
the FLSA may only be settled or compromised when the Department of Labor
supervises the payment of back wages or when the district court enters a stipulated
judgment “after scrutinizing the settlement for fairness.” Id. at 1353. Judicial review is
required because the FLSA was meant to protect employees from substandard wages
and oppressive working hours, and to prohibit the contracting away of their rights.
Id. at 1352. Before approving a FLSA settlement, the court must review it to determine
if it is “a fair and reasonable resolution of a bona fide dispute.” Id. at 1354–55. If the
settlement reflects a reasonable compromise over issues that are actually in dispute, the
Court may approve the settlement “in order to promote the policy of encouraging
settlement of litigation.” Id. at 1354. Additionally, the “FLSA requires judicial review of
the reasonableness of counsel’s legal fees to assure both that counsel is compensated
adequately and that no conflict of interest taints the amount the wronged employee
recovers under a settlement agreement.” Silva v. Miller, 307 F. App’x. 349, 351 (11th
Cir. 2009) (per curiam).
A.
Damage Award
The Parties have informed the Court that in “full settlement of known and
unknown claims,” Dollar Tree will pay to Plaintiff a total sum of $528.10. The Parties
have not, however, made a “full and adequate disclosure of the terms of settlement,
including the factors and reasons considered in reaching same and justifying the
compromise of the plaintiff's claims.” Dees, 706 F. Supp. 2d at 1243. The Court cannot
determine whether Plaintiff’s claims are being paid in full or if Plaintiff has
4
compromised the amounts of his claim. It is unclear how the Court can determine what
is “fair and reasonable” without knowing these germane details. Moreover, under the
FLSA a plaintiff is entitled to recover unpaid wages plus an equal amount of liquidated
damages. 28 U.S.C. § 216(b). The parties do not state whether Plaintiff is receiving
liquidated damages, or if he is not, the reasons why. Without clarification on all the
above grounds, the Court cannot approve the proposed settlement agreement.
B.
Waiver Provisions
The Court also finds that it cannot approve the proposed settlement agreement
based on the “pervasive release” contained therein.
Subsection 3(b)(ii) of the
Agreement states that Plaintiff agrees to release all claims he has or had against the
Release Parties, including but not limited to:
(A) those which in any way relate to [Plaintiff’s] employment with
[Defendant]; and (B) any other claims or demands [Plaintiff] may have on
any basis, including but not limited to common law or tort, or other claims
that may have arisen under any of the anti-discrimination statutes or laws,
the Worker Adjustment & Retraining Notification Act (“WARN Act”), Title
VII of the Civil Rights Act of 1964, Sections 1981 and 1983 of the Civil
Rights Act of 1866, the Civil Rights Act of 1871, § 503 and § 504 of the
Rehabilitation Act of 1973, the Genetic Information Nondiscrimination Act
of 2008, the Family and Medical Leave Act (“FMLA”), the Fair Labor
Standards Act (“FLSA”), the Equal Pay Act (“EPA”), the Americans With
Disabilities Act (“ADA”), the Employment Retirement Income Security Act
of 1974 (“ERISA”), and any similar domestic or foreign laws, such as the
Virginians with Disabilities Act, the Virginia Human Rights, the Georgia
Fair Employment Practices Act, and the Georgia Equal Pay Act.
This kind of provision is called a “pervasive” release, and the Court finds its inclusion
problematic as applied to this case. As one district court noted, while this kind of
“reciprocal, general release is incontestably a staple of accepted and common litigation
practice[, . . .] a[] FLSA action is different.” Moreno v. Regions Bank, 729 F. Supp. 2d
1346, 1348 (M.D. Fla. 2010).
Per the Moreno Court, “[a] pervasive release in
5
an FLSA settlement introduces a troubling imponderable into the calculus of fairness
and full compensation.” This Court could not agree more.
Here, the Parties would have the Court approve a settlement that allows Plaintiff
to waive any claim he may presently have that may not become known to him until years
later for $500.00. If the Court were to accept the currently proposed Agreement,
Plaintiff would essentially be giving up unknown rights in exchange for nothing from
Defendant beyond the FLSA claim. This the Court cannot do. As the Court in Moreno
explained:
An employee who executes a broad release effectively gambles, exchanging
unknown rights for a few hundred or a few thousand dollars to which he is
otherwise unconditionally entitled. In effect, the employer requests a
pervasive release in order to transfer to the employee the risk of
extinguishing an unknown claim. In the language of Hydradry, a
pervasive release is a “side deal” in which the employer extracts a
gratuitous (although usually valueless) release of all claims in exchange for
money unconditionally owed to the employee. (If an employee signs a
pervasive release as part of a “side deal” and later discovers a valuable but
released claim, the employee perhaps looks for compensation from the
attorney who advise [sic] the employee to grant the release.) Although
inconsequential in the typical civil case (for which settlement requires no
judicial review), an employer is not entitled to use an FLSA claim (a matter
arising from the employer's failing to comply with the FLSA) to leverage a
release from liability unconnected to the FLSA.
729 F. Supp. 2d at 1351 (footnote omitted). Therefore, in the absence of any other
information shedding light on the relative equities of the proposed release, see id. at
1352 (“Absent some knowledge of the value of the released claims, the fairness of the
compromise remains indeterminate.”), the Court finds it to be inherently unfair.
Accordingly, the Court cannot approve the proposed Agreement with the inclusion of
the pervasive release.1
1
The Court’s finding of fairness as to the pervasive release also encompasses subsections 3(c)-(d).
6
C.
“No Disparagement,” “No Facilitation,” and
Confidentiality Provisions
The Court also concludes that the “No Disparagement” provision in subsection
4(b) is not fit for the Court’s approval. Courts have struck such provisions in FLSA
settlement agreements, finding them to constitute a “judicially imposed ‘prior restraint’
in violation of the First Amendment.” Valdez v. T.A.S.O. Properties, Inc., No. 8:09-cv2250, 2010 WL 1730700, at *1 n.1 (M.D. Fla. Apr. 28, 2010) (citing federal case law
regarding First Amendment concerns in the context of permanent injunctions in
defamation actions); DeGraff v. SMA Behavioral Health Servs., Inc., No. 3:12-cv-733,
2013 WL 2177984, at *4 (M.D. Fla. Mar. 5, 2013); Housen v. Econosweep &
Maintenance Servs., Inc., No. 3:12-cv-461, 2013 WL 2455958, at *2 (M.D. Fla. June 6,
2013). Specifically here, the Court finds the proposed disparagement provision to be
particularly problematic in that it does not limit the restraints on Plaintiff’s free speech
to only those statements concerning his FLSA claim. Therefore, the Court finds that this
provision should be stricken.
In subsection 4(d), entitled “Promise Not to Facilitate Claims Against Dollar
Tree,” the Agreement states that “[Plaintiff] promises not to voluntarily encourage,
counsel or assist (directly or indirectly) any current or former employee or third party
(excluding government law enforcement agencies) in the preparation or prosecution of
any civil dispute, difference, grievance, claim, charge or complaint against Dollar Tree . .
. unless [Plaintiff] is compelled to do so by valid legal process.” The Court finds that
this provision would similarly impose a prior restraint on Plaintiff’s free speech rights
(the right to engage with third parties for the purpose of facilitating claims against
Dollar Tree), as well as also interfere with another constitutionally protected right—
freedom of association. Because the Court has already made clear that it will not impose
7
any “judicially imposed ‘prior restraint[s]’” on Plaintiff’s speech, the Court will move on
to the free-association part of its analysis.
In Roberts v. United States Jaycees, 468 U.S. 609, 617-18 (1984), the Supreme
Court concluded that freedom of association is divided into two categories: 1) intimate
association and 2) expression association. Intimate association protects "choices to
enter into and maintain certain intimate human relationships must be secured against
undue intrusion by the State because of the role of such relationships in safeguarding
the individual freedom that is central to our constitutional scheme. In this respect,
freedom of association receives protection as a fundamental element of personal
liberty.” Id. Expressive association protects the “right to associate for the purpose of
engaging in those activities protected by the First Amendment—speech, assembly,
petition for the redress of grievances, and the exercise of religion. The Constitution
guarantees freedom of association of this kind as an indispensable means of preserving
other individual liberties.” Id. at 618.
As the restraint in question refers to Plaintiff’s right to associate with third
parties for the purpose of “counsel[ing] or assist[ing] . . . in the preparation or
prosecution of any civil dispute, difference, grievance, claim, charge or complaint
against Dollar Tree,” the Court finds expressive association to be the right implicated in
this case. “[C]ourts have ‘long understood as implicit in the right to engage in activities
protected by the First Amendment a corresponding right to associate with others in
pursuit of a wide variety of political, social, economic, educational, religious, and
cultural ends.’” Beta Upsilon Chi v. Machen, 559 F. Supp. 2d 1274, 1278 (N.D. Fla. May
29, 2008) (quoting Roberts, 468 U.S. at 618), vacated and remanded on other grounds
by 586 F.3d 908 (11th Cir. 2009). The Court finds Plaintiff’s right to associate with
others to possibly pursue grievances against Dollar Tree to fall within the ambit of this
8
right.
If the Court cannot impose a prior restraint on Plaintiff’s ability to speak
disparagingly about Dollar Tree, it follows that the Court may not impose a prior
restraint on Plaintiff’s right to assist a third party in some collective undertaking that
may still have the effect of disparaging Dollar Tree. Simply put, if Plaintiff wants to
start a “he-man Dollar Tree haters club” whose only mission is to pursue redress against
Dollar Tree, this Court cannot sanction Dollar Tree’s attempt to bargain for the right to
preemptively stand in the way of such an endeavor.2
Also within the “Promise Not to Facilitate Claims” provision, the Court further
finds the requirement that Plaintiff obtain Dollar Tree’s permission before providing any
testimony “in any context about Dollar Tree” to any third party to be no less
problematic. “[T]he right to appear and give true testimony as a witness in a legal
proceeding is guaranteed by the first amendment's free speech clause.” Green v. City of
Montgomery, 792 F. Supp. 1238, 1253 (M.D. Ala. 1992); Smith v. Hightower, 693 F.2d
359, 368 (5th Cir. 1982), cert. denied, 502 U.S. 906 (1991); Melton v. City of Oklahoma
City, 879 F.2d 706, 714 (10th Cir. 1989); Reeves v. Claiborne Cnty. Bd. of Educ., 828
F.2d 1096, 1100-01 (5th Cir. 1987). Therefore, the Court cannot approve any bargain, in
the context of the sensitive nature of FLSA settlements, that abridges this right,
especially an abridgement without limitation like the one suggested here.3
Finally, as to the confidentiality provision in the Agreement, because the Court
has already ordered that the Settlement Agreement shall be filed on the public docket,
2 The Agreement states that the “Promise Not to Facilitate Claims” is necessary to protect Dollar Tree’s
“many legitimate protectable interests, including but not limited to confidential proprietary, business
process and personal information.” The Court, however, concludes that if Dollar Tree has any right to
pursue redress for any damage to proprietary information, such right would not emanate from this
settlement agreement entered into under the Fair Labor Standards Act. This right would, in fact, arise out
of contract, e.g., a nondisclosure agreement entered into by the Parties. Dollar Tree cannot now seek to
protect their proprietary information via a settlement agreement for $500 in wages under FLSA.
3 The Court’s finding is not intended to interfere with any rights under tort law that Dollar Tree may have
to the extent Plaintiff engages in any actionable conduct with third parties. The Court is merely
concluding that Dollar Tree may not use the instant FLSA settlement agreement to create any substantive
rights.
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the confidentiality provision in subsection 4(c) is stricken as well as it is unenforceable
and unnecessary. Webb, 2011 WL 6743284, at *3 (noting that “in light of the Court's
ruling that it will not seal any settlement agreements, it is likely the confidentiality
provisions are unenforceable” and, moreover, that “a confidentiality provision in a FLSA
settlement agreement both contravenes the legislative purpose of the FLSA and
undermines the Department of Labor's regulatory effort to notify employees of their
FLSA rights”); Housen, 2013 WL 2455958, at *2 (citing Webb and striking
confidentiality provision as unenforceable).
D.
“No Future Employment” Provision
The Agreement also contains a provision that states that Plaintiff “promises never
to seek employment with Dollar Tree in the future (including but not limited to
employment as an employee or engagement as a temporary employee, seasonal
employee, or contractor).” As an initial matter, the Court is quite confounded as to why
any individual would ever agree to be so bound in this world of uncertainty and finite
job opportunities. Nevertheless, the Court recognizes that other courts have approved
similar waivers of future employment in FLSA settlement agreements in cases where the
employee warranted to the Court that s/he has no desire to ever seek re-employment
with the employer.
See, e.g., Robertson v. Ther-Rx, No. 2:09-cv-1010, 2011 WL
1810193, at *2 (M.D. Ala. May 12, 2011); Cruz v. Winter Garden Realty, LLC, No. 6:12cv-109, 2013 WL 4774617, at *3 (M.D. Ala. Sept. 4, 2013). Here, however, not only does
the Court not have any information about Plaintiff’s desire (or lack thereof) to pursue
future employment with Dollar Tree, but the Court believes that the relevant inquiry
should be the impact of the future-employment waiver, not the mutual assent to the
provision.
10
In reaching this conclusion, the Court finds Robertson to be instructive. In
Robertson, the court’s approval of the future-employment waiver appeared to be
predicated on the impact of the waiver. Per the court, because of the “precarious
financial viability” of Ther-Rx Corp—a fact that made “future employment . . . far from
assured for anyone”—the “impact of th[e waiver of future employment] requirement
[wa]s inconsequential.” On the contrary, the court in Cruz v. Winter Garden Realty,
LLC, No. 6:12-cv-109, 2013 WL 4774617, at *3 (M.D. Ala. Sept. 4, 2013), did not discuss
the “impact” of the waiver. In this Court’s view, however, a future-employment waiver
for a local realty company does not engender anywhere near the same kind of concerns
that a waiver for a retail business of the stature of Dollar Tree does. Dollar Tree is a
Fortune 500 company that operates 4,763 stores throughout the United States and
Canada, making it the nation’s largest single price point retailer.4 There appear to be
over 70 Dollar Tree locations in Georgia alone. Based on these numbers, the impact of
the instant future-employment waiver on Plaintiff would be far from “inconsequential.”
Furthermore, the instant future-employment waiver, without more, can also be
viewed as punishment for the exercise of a legal right under the FLSA, which would be
inconsistent with the purpose of the statute. No matter how “voluntary” Plaintiff’s
submission to this provision may be, the Court believes that the inclusion of overly
broad provisions like this in FLSA settlement agreements have implications that reach
far beyond the parties involved. Because this agreement will become part of the public
record, other employees seeking to vindicate rights under FLSA may feel deterred from
doing so for fear that employers might seek to exact from them a promise to never again
apply for future employment. See Dees, 706 F. Supp. 2d at 1247 (“An employee's right
to a minimum wage and overtime is unconditional, and the district court should
4
Dollar Tree, http://www.dollartree.com (last visited November 1, 2013).
11
countenance the creation of no condition, whether confidentiality or any other
construct, that offends the purpose of the FLSA.”) Dollar Tree is welcome to hire whom
it chooses, as employers are permitted to do within the bounds of the law. In this
Court’s view, however, expansive provisions like the instant future employment waiver
are unconscionable when placed in a FLSA agreement—a characterization that is not
negated by the agreement of the parties. Accordingly, this provision, as presented, is
stricken as well.
CONCLUSION
In light of the foregoing, the Court DENIES without prejudice, consistent with
this order, the Joint Motion for Approval of Settlement and Dismissal With Prejudice
(Doc. 24). Within twenty-one (21) days of the date of this order, the parties may move
for this Court’s approval of an amended proposed settlement agreement in accordance
with this order and file the proposed amended settlement agreement on the record or
articulate a legal and factual basis for sealing in view of the discussion at Part I.
SO ORDERED, this 1st day of November, 2013.
/s/ W. Louis Sands
THE HONORABLE W. LOUIS SANDS,
UNITED STATES DISTRICT COURT
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