Alewel v. Dex One Service, Inc.
Filing
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MEMORANDUM AND ORDER: The parties joint motion for leave to file their settlement agreement and release under seal (Dk. 18 ) is denied, and the parties shall have until January 13, 2014, to file a notice of withdrawal from settlement and intent proceed with case, or to file an unsealed settlement agreement along with a notice requesting the court to grant their joint motion for approval of settlement agreement (Dk. 19 ). Signed by U.S. District Senior Judge Sam A. Crow on 12/30/2013. (mb)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
GREG ALEWEL, On Behalf of
Himself and All Others
Similarly Situated,
Plaintiff
vs.
Case No. 13-2312-SAC
DEX ONE SERVICE, INC.,
Defendant.
MEMORANDUM AND ORDER
The plaintiff Greg Alewel worked approximately two years, April
of 2011 through April 2013, as a telephone-marketing consultant at Dex One
Service, Inc.’s (“Dex”) call center in Overland Park, Kansas. (Dk. 1). He filed
a complaint on June 26, 2103, on behalf of himself and other similarly
situated individuals pursuant to 29 U.S.C. § 216(b), alleging the defendant
Dex violated the Fair Labor Standards Act (“FLSA”) in failing to pay certain
overtime compensation. Indicating that they have negotiated a settlement,
the parties have filed a joint motion for leave to file their settlement
agreement and release under seal (Dk. 18) and a joint motion for approval
of settlement agreement (Dk. 19). For the reasons stated below, the court
denies both motions at this time.
The joint motion to seal argues several grounds for relief. First,
their settlement agreement is confidential, and settlement agreements “are
ordinarily confidential.” (Dk. 18, p. 2). Confidentiality serves to encourage
settlement, to avoid “copycat litigation” and the use of more court and
litigant resources, and to protect the parties’ respective privacy interests. In
balancing the different considerations, the parties characterize the
settlement agreement as impacting only the FLSA rights of Alewel and not
the FLSA rights of any other employees. The parties represent that
confidentiality plays a significant role in their decision to settle and is a term
of their settlement agreement. The public disclosure of the settlement
agreement would encourage copycat suits or frivolous litigation against the
defendant and would expose “confidential financial information” regarding
the plaintiff. (Dk. 18, p. 3). The parties regard the public as having “no
meaningful and substantial interest” in learning the particular terms of their
settlement and regard their concerns and interests to outweigh the public’s.
In support of their position, the parties represent that “[t]his
Court recently granted a motion to seal/review in camera” in two FLSA cases
and cite the docket numbers in two cases from the same federal chambers in
the District of Kansas. For the first case, the parties cite the docket number
of an order that did not grant a motion to seal but did indicate it had made
an in camera review. In that case, there is no order filed that discussed
granting a motion to seal or the reasons for doing it. In the second FLSA
case, involving the same defendant as the instant case and the filing of a
joint motion for leave to file settlement agreement under seal that is nearly
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identical to the motion here, the court granted the joint to motion to seal for
“good cause shown” in a single-sentence order. While these cited FLSA cases
may evidence a practice within a single chambers, they do not necessarily
demonstrate the practice within the entire District of Kansas. Moreover, they
certainly do not offer any rationale or reasoning for granting the parties’
joint motion. This is not to say that such federal district decisions discussing
the merits of this issue do not exist in the District of Kansas, as they do, but
the parties have chosen not to cite them.
In two different FLSA cases, a federal district court judge in the
District of Kansas filed written decisions that are available on the internet
and that discuss the reasons for denying the parties’ efforts to keep
settlement information out of the public forum either through a request for
in camera review or by a motion to seal. Gambrell v. Weber Carpet, Inc.,
2011 WL 3518172 (D. Kan. 2011); McCaffrey v. Mortgage Sources, Corp.,
2010 WL 4024065 (D. Kan. 2010). Each decision emphasizes the public’s
right of access to judicial records as serving “the public’s interest in
understanding disputes that are presented to a public forum for resolution
and is intended to assure that the courts are fairly run and judges are
honest.” Gambrell, 2011 WL 3518172 at *1; McCaffrey, 2010 WL 4024065
at *1. After reiterating that the sealing of documents is reserved for factual
grounds, not “unsupported hypothesis or conjecture,” the court concluded in
both cases that the public’s interest in understanding disputes and trusting
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courts as fairly and honestly run “outweighs any interest of the parties in
keeping confidential the amount of settlement.” Gambrell, 2011 WL 3518172
at *1-*2; McCaffrey, 2010 WL 4024065 at *1-*2.
The parties’ joint motion cites thirteen unpublished federal
district court orders or decisions from other districts. Of those cited, the
court reviewed those for which the parties provided an internet citation and
did not find a single decision which expressly discussed and balanced the
factors relevant in deciding whether to seal judicial filings. The cited orders
show, at most, the judicial authority to seal FLSA settlement documentation,
but they do not offer any meaningful guidance on when this authority should
be exercised. Indeed, the only factor mentioned in these decisions is that
the parties regard the filings as confidential. These decisions have little
persuasive value in this district. For as this order will discuss later, the
sealing of records based solely on confidentiality grounds is not a practice
condoned in this district. For that matter, motions to seal are often jointly
filed and frequently unopposed, so it falls to the court to sua sponte raise
and consider the public interest implicated. Partminer Worldwide Inc. v.
Siliconexpert Technologies Inc., 2010 WL 502718 at *6, n.6 (D. Colo. 2010).
The parties recognized in their joint motion that their settlement
of the FLSA claim for unpaid wages is subject to judicial approval:
The FLSA was enacted for the purpose of protecting workers from
substandard wages and oppressive working hours. Barrentine v.
Arkansas-Best Freight System, 450 U.S. 728, 101 S.Ct. 1437, 1444,
67 L.Ed.2d 641 (1981). Recognizing that there are often great
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inequalities in bargaining power between employers and employees,
Congress made the FLSA's provisions mandatory; thus, the provisions
are not subject to negotiation or bargaining between employers and
employees. Brooklyn Savings Bank v. O'Neil, 324 U.S. 697, 65 S.Ct.
895, 902, 89 L.Ed. 1296 (1945). “FLSA rights cannot be abridged by
contract or otherwise waived because this would ‘nullify the purposes'
of the statute and thwart the legislative policies it was designed to
effectuate.” Barrentine v. Arkansas-Best Freight System, supra at
1445 (citations omitted).
....
When employees bring a private action for back wages under the
FLSA, and present to the district court a proposed settlement, the
district court may enter a stipulated judgment after scrutinizing the
settlement for fairness. See Schulte, Inc. v. Gangi, 328 U.S. 108, 66
S.Ct. 925, 928 n.8, 90 L.Ed. 1114; Jarrard v. Southeastern
Shipbuilding Corporation, 163 F.2d 960, 961 (5th Cir. 1947).
Lynn's Food Stores, Inc. v. U.S. By and Through U.S. Dept. of Labor,
Employment Standards Admin., Wage and Hour Div., 679 F.2d 1350, 135253 (11th Cir. 1982) (footnotes omitted); see Nall v. Mal-Motels, Inc., 723
F.3d 1304, 1306 (11th Cir. 2013); Grove v. ZW Tech, Inc., 2012 WL
1789100, at *2 (D. Kan. 2012). Thus, the district court scrutinizes a
proposed FLSA settlement looking for a bona fide dispute and a resolution
that is fair and equitable to all concerned. Id. While acknowledging this
requirement of judicial approval, the parties insist their general interests in
confidentiality are more than enough to outweigh the public’s right of access
to the settlement agreement. In discussing this issue, the courts, however,
have characterized FLSA settlements as more than mere confidential papers
and in the nature of judicial documents with a considerable presumption in
favor of public access:
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Although in many—if not most—cases, a settlement agreement would
not qualify as a “judicial document,” settlement agreements in FLSA
cases are different because of the requirement for judicial approval.
That is, an agreement settling an FLSA claim that is submitted for
court approval is indisputably a document that is “relevant to the
performance of the judicial function and useful in the judicial process,”
and thus a “judicial document” subject to the presumption of access.
Lugosch [v. Pyramid Co. of Onondaga,] 435 F.3d [110] at 119 [(2nd
Cir. 2006)](internal quotation marks omitted); see also, e.g., Curasi v.
Hub Enters., Inc., No. 11–CV–2620 (JS)(GRB), 2012 WL 728491, at *1
(E.D.N.Y. Mar. 5, 2012) (noting that “because judicial approval is
required for settlement under the FLSA, settlement agreements in
FLSA cases are judicial documents to which a presumption of public
access applies”); Lin v. Comprehensive Health Mgmt., Inc., No. 08 Civ.
6519(PKC), 2009 WL 2223063, at *1 (S.D.N.Y. July 23, 2009)
(explaining that “[a]ny document reflecting the terms of the
settlement and submitted to the Court is a ‘judicial document’ to which
the presumption of access likely applies”) (citing Lugosch, 435 F.3d at
119–20). Further, insofar as such an agreement goes to the heart of
the matter being adjudicated—and implicates the underlying policies of
the FLSA—the presumption of public access that attaches to judicial
documents is at its strongest. See, e.g., [U.S. v.] Amodeo, 71 F.3d
[1044] at 1049 [(2nd Cir. 1995)](explaining that the strength of the
presumption varies “on a continuum from matters that directly affect
an adjudication to matters that come within a court's purview solely to
insure their irrelevance”); see also, e.g., Tran v. Thai, Civil Action No.
H–08–3650, 2009 WL 2477653, at *1 (S.D. Tex. Aug. 12, 2009) (“The
presumption of public access to settlements of FLSA actions is
particularly strong.... Absent an extraordinary reason, the court cannot
seal such records.”) (internal quotation marks omitted); accord
Stalnaker v. Novar Corp., 293 F.Supp.2d 1260, 1264 (M.D. Ala. 2003).
Wolinsky v. Scholastic Inc., 900 F. Supp. 2d 332, 337-38 (S.D.N.Y. 2012);
see, e.g., Dees v. Hydradry, 706 F. Supp. 2d 1227, 1244-45 (M.D. Fla.
2010); In re Seppracor Inc. Fair Labor Standards Act (FLSA) Litigation, 2009
WL 3253947 at *1 (D. Ariz. 2009); Nichols v. Dollar Tree Stores, Inc., 2013
WL 5933991 at *1 (M.D. Ga. 2013) (and cases cited in each).
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Because the common-law right to access judicial records is not
absolute, a court “in its discretion, may seal documents if the public's right
of access is outweighed by competing interests.” Helm v. Kansas, 656 F.3d
1277, 1292 (10th Cir. 2011) (internal quotation marks and citation omitted).
“This right is an important aspect of the overriding concern with preserving
the integrity of the law enforcement and judicial processes.” Lanphere v.
Urbaniak v. Colorado, State of, 21 F.3d 1508, 1511 (10th Cir.) (internal
quotation marks and citation omitted), cert. denied, 513 U.S. 1044 (1994).
The public’s interest in these settings includes “the general interest in
understanding disputes that are presented to a public forum for resolution”
and the “public’s interest in assuring that the courts are fairly run and judges
are honest.” Crystal Grower’s Corp. v. Dobbins, 616 F. 2d 458, 461 (10th
Cir. 1980); see Bullard v. Goodyear Tire and Rubber Company, 2011 WL
5248085 at *2 (D. Kan. 2011). The court’s discretionary weighing of
interests works from the premise that the public’s interests “are
presumptively paramount against those advanced by the parties.” Helm, 656
F.3d at 1292 (internal quotation marks and citation omitted). “The burden is
on the party seeking to restrict access to show some significant interest that
outweighs the presumption.” Colony Ins. Co. v. Burke, 698 F.3d 1222, 1241
(10th Cir. 2012)
The party’s agreement over what matters are confidential in
character and any ensuing protective order do not limit a court’s “authority
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to decide whether the parties may file documents under seal.” Helm, 656
F.3d at 1292. Instead, the burden remains with the parties to “articulate a
real and substantial interest that justifies depriving the public of access to
the records that inform our decision-making process.” Id; see Colony Ins.
Co., 698 F.3d at 1241 (“[W]e are not convinced, in this particular case, that
the parties’ interests in keeping the terms of their agreements confidential
outweighs the public interest in access, particularly in light of the centrality
of these documents to the adjudication of this case.”); New Jersey and its
Div. of Inv. v. Sprint Corp., 2010 WL 5416837 at *2 (D. Kan. 2010) (“The
fact that the exhibits are ‘confidential’ within the meaning of the parties'
protective order has no bearing on whether those exhibits should be sealed
in the record.”). For that matter, “[t]he existence of a confidentiality
provision [in a FLSA settlement agreement], without more, does not
constitute good cause, let alone a compelling reason, to seal.” Luo v. Zynga
Inc., 2013 WL 5814763, at *3 (N.D.Cal. 2013) (citing in part, see e.g., Foltz
v. State Farm Mut. Auto. Ins. Co., 331 F.3d 1122, 1136–38 (9th Cir.
2003));see Joo v. Kitchen Table, Inc., 763 F. Supp. 2d 643, 647-48
(S.D.N.Y. 2011) (courts have “roundly rejected” this confidentiality in the
FLSA settlement agreement as sufficient justification. (citations omitted)).
Indeed, some courts have held that confidentiality clauses in FLSA
settlement agreements are contrary to the FLSA’s goals and policy of
transparency and frustrate public and private enforcement efforts. Carpenter
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v. Colonial Mgmt. Group, LP, 2012 WL 2992490 at *2 (D. Md. 2012); Galvez
v. Americlean Servs. Corp., 2012 WL 1715689 at *4 (E.D. Va. 2012) (and
cases cited therein).
The parties here have failed to articulate substantial interests
recognized by legal authority and to support those interests with facts
showing them to be real and not mere conjecture. There are no arguments
based on the confidentiality of trade secrets or comparably sensitive
business or financial information or on documents covered by a privilege,
such as the attorney-client privilege. Swarthout v. Ryla Teleservices, Inc.,
2012 WL 5361756, at *2 (N.D. Ind. 2012) (and cases cited therein); See
Kamakana v. City and County of Honolulu, 447 F.3d 1172, 1179 (9th Cir.
2006) (“’compelling reasons’ sufficient to outweigh the public’s interest in
disclosure and justify sealing . . . exist when such ‘court files might become
a vehicle for improper purposes,’ such as the use of records to gratify
private spite, promote public scandal, circulate libelous statements, or
release trade secrets.” (citing Nixon v. Warner Communications, Inc., 435
U.S. 589, 598 (1978)). The court agrees with other courts in finding that the
public’s interest outweighs the parties’ interest in keeping confidential the
amount of settlement. See, e.g., Gambrell, 2011 WL 3518172 at *1 (D. Kan.
2011) (and cases cited therein). For that matter, it is not enough to justify
sealing that disclosure “may lead to a litigant’s embarrassment,
incrimination, or exposure to further litigation.” Kamakana, 447 F.3d at 1179
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(citation omitted); see, e.g., In re Fort Totten Metrorail Cases, ---F. Supp.
2d---, 2013 WL 4026840 at *6 (D.D.C. 2013); LDM Group, LLC v. Akers,
2013 WL 1316420 at *10 (E.D. Mo. 2013); State Farm Mut. Auto. Ins. Co. v.
Altamonte Springs Diagnostic Imaging, Inc., 2013 WL 1212818 (M.D. Fla.
2013).
The court will follow the decisions within this district and deny
the parties’ request to seal the FLSA settlement agreement when presented
with only generic confidentiality concerns. See Gambrell v. Weber Carpet,
Inc., 2011 WL 3518172 (D. Kan. 2011); McCaffrey v. Mortgage Sources,
Corp., 2010 WL 4024065 (D. Kan. 2010). The court’s research has revealed
numerous decisions from other jurisdictions that have refused to seal FLSA
settlement agreements after discussing and balancing the respective
interests. See, e.g. See Joo v. Kitchen Table, Inc., 763 F.Supp.2d 643, 646–
48 (S.D.N.Y.2011) (joining “the overwhelming consensus of district courts
that have considered the issue to hold that an FLSA settlement cannot be
sealed absent some showing that overcomes the presumption of public
access”); Kianpour v. Rest. Zone, Inc., No. 11–cv–0802, 2011 WL 3880463,
at *2 (D.Md. Aug. 30, 2011) (vast majority of recent cases addressing this
issue apply the presumption of public access to FLSA settlements) (and
cases cited in each).
The parties’ settlement agreement includes a clause anticipating
the possibility that their joint motion to seal could be denied: “Provided,
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however, in the event that the District Court does not approve the parties’
Joint Motion to submit this settlement under seal, the subsequent filing of
this Agreement with the Court shall not constitute a breach by Alewel of his
obligations in this paragraph of the Agreement.” Nonetheless, because
confidentiality remains a central term of the parties’ settlement and the
court is denying their motion to file the settlement agreement under seal,
the court will give the parties the option of withdrawing from this settlement
agreement or proceeding with the settlement per this agreement and filing it
in the public judicial record. The parties shall have until January 13, 2014, to
notify the court of their intentions and to file the unsealed settlement
agreement by that date. Once the parties have presented properly all
matters to the court, the court will address the joint motion for approval of
settlement agreement.
IT IS THEREFORE ORDERED that the parties’ joint motion for
leave to file their settlement agreement and release under seal (Dk. 18) is
denied, and the parties shall have until January 13, 2014, to file a notice of
withdrawal from settlement and intent proceed with case, or to file an
unsealed settlement agreement along with a notice requesting the court to
grant their joint motion for approval of settlement agreement (Dk. 19).
Dated this 30th day of December, 2013, Topeka, Kansas.
s/Sam A. Crow
Sam A. Crow, U.S. District Senior Judge
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