McGlon v. Sprint Corporation et al

Filing 95

MEMORANDUM AND ORDER denying 89 Sprint's Motion to Enforce Settlement Agreement and Impose Sanctions. Signed by Chief District Judge Julie A Robinson on 04/18/2018. (tvn)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
MICHAEL MCGLON,
On behalf of himself and others
Similarly situated,
Case No. 16-2099-JAR

Plaintiff,
v.
SPRINT CORPORATION, et al.,
(A Kansas Corporation)
Defendants.

MEMORANDUM AND ORDER
This matter comes before the Court upon consideration of Defendants Sprint Corporation
and Sprint/United Management Company’s (collectively “Sprint”) Motion to Enforce Settlement
Agreement and Impose Sanctions (Doc. 89). An evidentiary hearing was held March 5, 2018.
After considering the arguments, evidence, and testimony of the parties, the Court is prepared to
rule. For the reasons explained in detail below, the Court denies Sprint’s motion.
I.

Background
On February 16, 2016, Michael McGlon filed this collective action Complaint against

Sprint, alleging that Defendants violated the Fair Labor Standards Act (“FLSA”), 29 U.S.C.
§§ 201 et.seq., by failing to pay him, and BISO Inside Sales Representatives similarly situated to
him, minimum wages and overtime required by the FLSA. McGlon was represented by Class
Counsel Brent Hankins and Brendan Donelon. This Court granted McGlon’s motion for
conditional certification on December 6, 2016, and 152 opt-in plaintiffs joined the lawsuit.

1

The parties participated in mediation on July 6, 2017. A Settlement Agreement was
negotiated and executed by Sprint on August 30, 2017. On September 1, 2017, the parties filed a
Joint Motion for Settlement Approval, and the Court granted the motion, thereby approving the
Settlement Agreement, on September 6, 2017.1 The Settlement Agreement was not filed under
seal. In performance of the Settlement Agreement, Sprint paid a total settlement sum of
$365,000, with payments of $120,450 and $7,954 to Class Counsel for attorneys’ fees and costs,
respectively, incurred in the prosecution of McGlon’s collective action claims.
Section 22.1 of the Settlement Agreement states:
The Parties’ negotiations [] shall be held confidential other than
necessary disclosures made to the Court. Class Counsel and the
Named Plaintiff shall not issue, nor cause to be issued, any
statements to the public or media regarding the Settlement or any
of its terms, including statement on any website(s) or via social
media.2
On December 6, 2017, Tijuana Mingo filed a complaint asserting a collective class action
under § 216(b) of the FLSA against the same Defendants, Mingo v. Sprint Corporation, et al.,
Case No. 17-2688-JAR, which was assigned to this Court. This case was brought by individuals
who did not opt into the McGlon case, but are asserting the same claims. The complaint in
Mingo describes the class sought for certification as being:
All persons who worked as a BISO Inside Sales Representatives (or
persons with similar job duties) for Sprint within three years prior to the
filing of this Complaint, but excluding any persons who participated via
consent in the FLSA collective action McGlon, et al. v. Sprint
Corporation, et al., D. Kan. case no.: 2:15-cv-2099-JAR (hereinafter the
“FLSA Collective”).3

1

Docs. 85, 88.

2

Doc. 86-1 at 18.

3

Case No. 17-2688, Doc. 1.

2

On December 8, 2017, The Kansas City Star (“The Star”) published an article entitled
“After Sprint settles lawsuit for overtime pay, more employees sue.”4 The article reported inter
alia, that after previously settling an overtime pay dispute with 153 employees, a new collective
class action lawsuit had been filed against Sprint on the same complaint.
At the hearing, the Court heard testimony from Sprint’s in-house counsel and Class
Counsel, Brendan Donelon and Brent Haskins.
Heather Hamilton
Hamilton is Sprint’s in-house counsel. She oversaw the McGlon litigation and served as
Sprint’s company representative at the mediation. Hamilton testified that the McGlon case was
filed in February 2016 and the Court conditionally certified the collective action in December
2016. There was no discovery conducted and a mediation was held July 6, 2017. At that time,
there were 153 potential class members. The case settled at mediation for $365,000. A
Stipulation of Settlement Agreement was executed by the parties, and on August 30, 2017,
Hamilton signed the Settlement Agreement on behalf of Sprint.5 As part of the settlement, Class
Counsel was paid $128,404 for their attorneys’ fees and costs.
Hamilton testified about the settlement negotiation process. Class Counsel prepared the
first draft, then drafts of the Agreement were exchanged by the attorneys for several weeks.
Hamilton testified that Section 22.1 of the Agreement was drafted by Sprint, and that the
provision is clear and unambiguous and “completely prohibits” Class Counsel or the named
plaintiff, Michael McGlon, from issuing or causing to be issued any statements regarding the
Settlement or any of its terms in any public media forum. Hamilton testified that the provision

4

Def. Ex. 2.

5

Def. Ex. 1.

3

was an essential settlement term, that Sprint would not have settled at mediation if the term was
not in the Settlement Agreement, and that it needed the term to be completely enforced in order
to uphold the Agreement.
Hamilton further testified as to how Sprint benefits from the language in Section 22.1.
Because of the nature of FLSA opt-in actions, she stated this provision was designed to diminish
public discussion about FLSA actions and to prohibit public comments and statements to the
media. Publication of the Settlement also had a damaging effect on Sprint’s reputation in the
community as well as a damaging effect on Sprint’s work force. Hamilton testified that Sprint
takes great pride in their work force and complying with wage and hour laws, and The Star
article reached a large publication audience.
Hamilton conceded that much of the information in The Star article was a matter of
public record, but testified that Sprint takes issue with specific paragraphs in the article. First,
paragraphs four and five of the article state:
Mingo hadn’t worked at Sprint since February 2015 and hadn’t heard
about the first lawsuit. But a former co-worker she kept in touch with had
been covered by the settlement.
“She asked me about it, and I didn’t know anything about it,” Mingo said.6
Hamilton testified that Class Counsel arranged for Ms. Mingo to be interviewed by The Star and
make statements about the McGlon settlement, which she believes to be in violation of Section
22.1 of the Settlement Agreement.
Second, paragraphs six and seven of the article state:
Mingo contacted the attorneys who handled the case, as did several others
as word of the settlement spread.

6

Def. Ex. 2.

4

“You expect one or two of those, maybe a half dozen,” attorney Brent
Hankins said of the calls from employees who didn’t know about the first
lawsuit. “For the better part of 10 days or two weeks, I was probably
getting two calls a day.”7
Hamilton testified that these paragraphs violate the Settlement Agreement because Class Counsel
is commenting and giving statements to The Star about his experiences with what happened to
him following the McGlon settlement.
Finally, paragraph eighteen of the article states:
Hankins said many simply never got the notice because they had moved or
didn’t respond because they believed they would receive little from the
court case. He said some still working at Sprint likely were concerned
about losing their jobs.8
Hamilton testified that Hankins’s statements discuss terms of the settlement, specifically, how
the class was defined, the notice consent forms, the amount of settlement funds to be distributed
to and received by class members, and why employees did not join or were not part of the
settlement class, suggesting Sprint improperly retaliated against employees for joining the
lawsuit.
Hamilton confirmed that The Star reached out to Sprint about the article, but Sprint
declined to comment and expected Class Counsel to do the same. Hamilton testified about how
Class Counsels’ comments damaged Sprint, including serving as an advertisement for the Mingo
lawsuit and against Sprint as a whole. She stated that Sprint was requesting the Court to order
half the amount paid to Class Counsel be remitted back to Sprint, as well as enforcement of
Section 22.1 of the Agreement prohibiting any additional statements by Class Counsel regarding
the settlement or any of its terms.

7

Id.

8

Id.

5

Brendan Donelon
Donelon was Class Counsel in the McGlon litigation and is Class Counsel in the pending
Mingo litigation. He attended the mediation in the McGlon case in July 2017, and acknowledged
that the Settlement Agreement was jointly drafted by the parties. Donelon confirmed that Sprint
added Section 22.1 to the Agreement during negotiations, and that he was comfortable with the
language because it referred to the “Settlement,” which is a defined term in the Agreement.
Donelon testified that Mark Davis, a reporter with The Star, called him on December 6,
2017, and that he memorialized their discussion in a sworn declaration, attached to Class
Counsel’s response to Sprint’s Motion to Enforce Settlement.9 Donelon testified that Davis
asked him about the details of the McGlon lawsuit and settlement and he informed Davis that he
could not talk about it, meaning the details of the Settlement Agreement. Donelon testified that
when Davis inquired why employees did not participate in the McGlon litigation, he explained
why in the context of how FLSA cases in general work and the opt-in mechanism for collective
class actions. Donelon testified that he typically does not talk to the media about FLSA
settlements, instead saying the matter is “resolved.” After he told Davis he could not talk about
the Settlement, Davis made the comment that he had the case number and could look the case up,
as he monitored court filings as part of his job. Donelon gave Davis Hankins’s information
because Davis wanted to interview Ms. Mingo about the new lawsuit.
Donelon testified that he understood the term “Settlement” in Section 22.1 to mean the
terms or conditions of the Settlement Agreement; since The Star article merely described why
employees were part of the Mingo case and not the McGlon case, he believes there was no
violation of that provision in the Agreement. Donelson further testified that he did not question

9

Def. Ex. 3.

6

Sprint about the meaning of Section 22.1 during negotiations, and that he has been involved in
other FLSA settlements where the settlement agreement itself was public record, but the
defendant did not want plaintiffs’ counsel to issue a press release or go to the media to call
attention to the actual settlement.
Brent Hankins
Hankins was Class Counsel in the McGlon case and is Class Counsel in the pending
Mingo lawsuit. He also attended the mediation in July 2016.
Hankins also memorialized his discussion with Davis in a sworn declaration.10 When
asked if he was surprised to see the headline in The Star, “After Sprint settles lawsuit for
overtime pay, more employees sue,” he testified he was not because Davis made clear he knew
about the terms of the McGlon Settlement Agreement when he contacted Hankins. Davis
informed Hankins that Donelon told him he could not discuss the terms of the Settlement
Agreement, and when Hankins confirmed that was accurate, Davis said he was going to pull the
file in the clerk’s office. Hankins testified that he did not discuss the terms of the McGlon
Settlement Agreement with Davis, nor did he point him to where Davis could find that
information in the court filing system. Hankins testified that Davis knew there were
approximately 980 potential employees who could have participated in the McGlon litigation and
asked if Hankins knew why the participation numbers were so low, with 153 employees optingin. Hankins told Davis that the responses he had from the current group of persons he had
interviewed who wanted to join the Mingo lawsuit fit into three categories: those who did not get
notice because of an incorrect address or had moved; those who thought they would receive little
from the McGlon case; and those who were current employees of Sprint concerned about losing

10

Def. Ex. 4.

7

their jobs. Hankins testified that as of the date of the hearing, approximately 55 individuals
have joined the Mingo lawsuit. Of that number, none had indicated to Hankins that they learned
about the Mingo case from the article in The Star.
II.

Discussion
Sprint contends that Class Counsel breached the Settlement Agreement by making

statements to The Star regarding the McGlon settlement, in violation of Section 22.1, causing
damage to Sprint. That section prohibits Class Counsel and Named Plaintiff McGlon from
issuing any statements to the media regarding the “Settlement” or any of its terms. Section 1.19
of the Agreement defines the term “Settlement” as “this Stipulation of Settlement Agreement and
Release and the terms outlined therein.”11
The Court retained jurisdiction over the parties for the purposes of administration and
enforcement of the Settlement Agreement, which states that it shall be governed by Kansas
law.12 Under Kansas law, a settlement agreement is a type of contract and is therefore governed
by contract principles.13 The elements of a breach of contract claim are (1) the existence of a
contract between the parties; (2) consideration; (3) one party’s performance or willingness to
perform in compliance with the contract; (4) the other party’s breach of the contract; and (5) that
the performing party suffered damage caused by the breach.14
Generally, under Kansas law, if the language in a written contract “is clear and can be
carried out as written, there is no room for rules of construction. To be ambiguous, a contract

11

Doc. 86-1 at 5.

12

Doc. 86-1, Sec. 23.1.

13

Jones v. Wyandot, Inc., No. 14-2112-TJJ, 2015 WL 5730604, at *3 (D. Kan. Sept. 30, 2015) (citing
Ferguson v. Smith, 63 P.3d 1119, 1121 (Kan. Ct. App. 2003)).
14
Ryan Dev. Co. v. Ind. Lumbermens Mut. Ins. Co., 783 F. Supp. 2d 1179, 1182 (D. Kan. 2011) (applying
Kansas law).

8

must contain provisions or language of doubtful or conflicting meaning, as gleaned from a
natural and reasonable interpretation of its language.”15 “In considering a contract which is
unambiguous and whose language is not doubtful or obscure, words used therein are to be given
their plain, general and common meaning, and a contract of this character is to be enforced
according to its terms.”16 “The cardinal rule of contract interpretation is that the court must
ascertain the parties’ intention and give effect to that intention when legal principles so allow.”17
“Where a contract is complete and unambiguous on its face, the court must determine the parties’
intent from the four corners of the document, without regard to extrinsic or parole evidence.”18
Even if the parties interpretations of the contract differ, the Court need not resort to parol
evidence to interpret the contract meaning if the contract is complete and unambiguous.19
Here, the parties’ dispute centers on the unambiguous language in Section 22.1. Sprint
contends that Hankins’ comments to The Star consist of statements to the media regarding the
Settlement in violation of Section 22.1 of the Agreement. Class Counsel respond that neither of
them discussed any terms of the McGlon Settlement Agreement with Davis, and any information
and details about the Agreement were obtained by Davis from the publicly filed pleadings in that
case. Class Counsel argue that Sprint conflates statements regarding the McGlon litigation with
those regarding the Settlement Agreement and its terms, and that Sprint’s interpretation of
Section 22.1, as defined in Section 1.19, expands the clear and precise language of the

15

Gore v. Beren, 867 P.2d 330, 336 (Kan. 1994) (quotation omitted).

16
Wagnon v. Slawson Expl. Co., 874 P.2d 659, 666 (Kan. 1994) (quoting Barnett v. Oliver, 672 P.2d 1228,
1238 (Kan. Ct. App. 1993)).
17

Kay-Cee Enter., Inc. v. Amoco Oil Co., 45 F. Supp. 2d 840, 843 (D. Kan. 1999) (quoting Ryco Packaging
Corp. v. Chapelle Int’l, Ltd., 926 P.2d 669, 674 (1996)).
18

Id. (citing Simon v. Nat’l Farmers Org., Inc., 829 P.2d 884, 887–88 (Kan. 1992)).

19

See Decatur Cty. Feed Yard, Inc. v. Fahey, 974 P.2d 569, 575 (Kan. 1999).

9

Agreement to prohibit Class Counsel from making any comment to the media that might
collaterally touch upon the McGlon litigation.
Applying the principles used to interpret contracts under Kansas law, the Court finds that
Class Counsels’ interpretation is correct. The plain, unambiguous language of Section 22.1 is
that Class Counsel is prohibited from issuing statements regarding the “Settlement” specifically,
not “settlement” in general. “When the terms of the contract are plain and unambiguous the
meaning must be determined by its contents alone and words cannot be read into the agreement
which import an intent wholly unexpressed when it was executed.”20 The Court declines to
rewrite the Settlement Agreement to fit Sprint’s expanded definition of its terms, which would
effectively prohibit discussion of even the existence of a settlement. The record shows that Class
Counsel declined to discuss the McGlon Settlement Agreement when questioned by Davis;
Hankins’ comments about what he had been told by class members in the Mingo litigation who
did not participate in the McGlon litigation is not a statement regarding the McGlon “Settlement”
or its terms. Accordingly, based on the clear and unambiguous language in the Agreement, the
Court finds there was no breach.
Even if Class Counsel breached the Settlement Agreement, however, there is no basis to
justify an award of sanctions on these facts. The Settlement Agreement does not contain a
liquidated damages or disgorgement provision for violation of Section 22.1. As the parties note,
the court has “inherent power” to “issue sanctions when a party has acted in bad faith,
vexatiously, wantonly, or for oppressive reasons.”21 The cases cited by Sprint, however, are
distinguishable from the facts of this case: although these lawsuits involved imposition of

20

Wood v. Hatcher, 428 P.2d 799, 804 (Kan. 1967).

21

Raymond v. Spirit Aero Sys. Holdings, Inc., No. 16-1282-JTM, 2017 WL 3895012, at *5 (D. Kan. Sept. 6,

2017).

10

sanctions or damages for violations of settlement agreements, including confidentiality
provisions, none are FLSA class action settlements “to which a presumption of public access
applies,”22 nor do the circumstances of this case even approach the level of bad faith at issue
before those courts. 23
IT IS THEREFORE ORDERED BY THE COURT that Sprint’s Motion to Enforce
Settlement Agreement and Impose Sanctions (Doc. 89) is denied.
IT IS SO ORDERED.

Dated: April 18, 2018
S/ Julie A. Robinson
JULIE A. ROBINSON
CHIEF UNITED STATES DISTRICT JUDGE

22

See Alewel v. Dex One Servs., Inc., No. 13-2132-SAC, 2013 WL 6858504, at *3 (D. Kan. Dec. 30, 2013)
(denying joint motion to seal FLSA settlement agreement).
23

See Baella-Silva v. Hulsey, 454 F.3d 5, 7, 11–13 (1st Cir. 2006) (breach of settlement agreement that
included a confidentiality clause providing for liquidated damages in the amount of $50,000 in the event either party
disclosed the terms of the settlement agreement; court awarded liquidated damages and imposed additional sanctions
after party electronically filed on the court’s public docket a motion for disbursement of funds that disclosed some
of the details of the sealed settlement judgment); Toon v. Wackenhut Corr. Corp., 250 F.3d 950, 952, 954 (5th Cir.
2001) (after defendant failed to pay settlement funds as agreed, plaintiff filed unsealed motion to enforce that
exposed the terms of the settlement in violation of the confidentiality provision in the settlement agreement; court
found plaintiff acted in bad faith by failing to file the motion to enforce under seal and imposed sanctions
prohibiting counsel from representing other plaintiffs against the same defendant, ordering $15,000 payment to the
court, and reducing the percentage of attorney’s fees provided for in counsel’s contingency fee arrangement);
Travelers Indem. Co v. Excalibur Reinsurance Corp., No. 13-cv-293, 2014 WL 1094451, at *4 (D. Conn. Mar. 19,
2014) (sanctioning party that breached settlement agreement by failing to pay the agreed upon amount; court found
that breaching party acted in bad faith by not paying the settlement amount by the due date so that it could continue
to have the use of the money at the expense of the moving party and awarded attorney’s fees associated with filing
and briefing the motion to enforce settlement); Bittel Tech., Inc. v. Bittel USA, Inc., No. C10-00719-HRL, 2011 WL
940300, at *5 n.2 (N.D. Cal. Feb. 18, 2011) (noting generally that the court has the power to order specific
performance of a settlement agreement and to order damages or sanctions for breach); Gulliver Sch., Inc. v. Snay,
137 So. 3d 1045, 1047–48 (Fla. Dist. Ct. App. 2014) (granting motion to enforce settlement agreement where
plaintiff violated confidentiality agreement that prohibited direct or indirect disclosure of the existence or terms of
the settlement, where provision contained disgorgement of settlement funds in case of breach).

11