Adams et al v. Walgreen Co
Filing
32
ORDER signed by Judge J P Stadtmueller on 7/2/15 denying 27 Defendant's unopposed Motion to maintain the "confidential" settlement agreement under seal for 2 years; the Court will permit the parties to either: (1) agree to file the settlement agreement publicly; or, (2) withdraw their motion for approval of the settlement agreement pending further discussion of the Court's order - the parties are instructed to inform the Court, within 21 days of the entry of this order, how they would like to proceed. See Order. (cc: all counsel) (nm)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
LORI ADAMS, MICHAEL ADAMS,
JAIMIE BUDZINSKI, WILLIAM FLAHIVE,
TIMOTHY HOLLAN, TROY KAUN,
LUKE MISIAK, LYNETTE NAUMANN,
LOUIS OLINGER, SCOTT OSTROWSKI,
MARC SCHRADER,
RICHARD STODDARD, CHAD TENPAS,
JOHN TOTZ, SHAUN WHATLEY,
TONYA WILLIAMS, RICK WYSOCKI,
BRAD WANTA, BENJAMIN ZAWISLAN,
JENNIFER ZAWISLAN, and
THOMAS ZORZIN,
Case No. 14-CV-1208-JPS
Plaintiffs,
v.
ORDER
WALGREEN CO. d/b/a Walgreens,
Defendant.
Before the Court are two motions: the parties’ joint motion to approve
their settlement agreement resolving this Fair Labor Standards Act (“FLSA”)
case (Docket #29), and the defendant’s motion to maintain that “confidential”
settlement agreement under seal for two years (Docket #27). The Court will
deny the defendant’s motion to seal the settlement agreement for the reasons
outlined below. As such, the Court will reserve ruling on the propriety of the
parties’ settlement agreement, to allow the parties time to consider the effect
of the Court’s decision on their existing agreement.
1.
BACKGROUND
On September 30, 2014, thirty-two (32) plaintiffs—who were all
Executive Assistant Managers with Walgreens—filed a lawsuit against the
defendant alleging, inter alia, violations of the FLSA, see 29 U.S.C. § 201, et seq.
for failing to pay the plaintiffs overtime compensation for hours “worked off
the clock for each single workweek.” (Docket #1). Each of those plaintiffs
previously consented to join in a collective action that was conditionally
certified and then decertified in the United States District Court for the
Western District of Arkansas. See Teramura v. Walgreen Co., No. 12-CV-5244,
slip op. at 3 (W.D. Ark. June 18, 2014). The Teramura court’s decertification
order also tolled the statute of limitations for those plaintiffs, providing them
ninety (90) days to file an individual action under the FLSA. Id. at 3. Hence,
after decertification, the plaintiffs filed the instant lawsuit.
Since the initiation of this lawsuit, the number of plaintiffs has
dwindled over time. On February 4, 2015, the Court granted a joint
stipulation to dismiss the claims, with prejudice, of seven plaintiffs whose
claims had previously been resolved or no longer wished to participate in the
instant matter. (See Docket #20). In orders dated May 12 and May 15, 2015,
the Court dismissed the claims, with prejudice, of four more plaintiffs. (See
Docket #25, #26). At this time, there remain twenty-one (21) plaintiffs.
2.
DISCUSSION
In Lynn Food Stores, Inc. v. United States, 679 F.2d 1350, 1352 (11th Cir.
1982), the Eleventh Circuit held that “[t]here are only two ways in which
back wage claims arising under the FLSA can be settled or compromised by
employees.” One way to settle those claims, and the way relevant in the
instant matter, is by “present[ing] to the district court a proposed settlement”
which a district court may approve “after scrutinizing the settlement for
fairness.” Id. at 1353. The Eleventh Circuit later expanded that holding to
include settlements between former employees and employers. See Nall v.
Mal-Motels, Inc., 723 F.3d 1304, 1307 (11th Cir. 2013).
Court approval of FLSA settlements—consistent with the Eleventh
Circuit’s holding in Lynn’s Food Stores—is the norm across most circuits,
including the Seventh. See Walton v. United Consumers Club, Inc., 786 F.2d 303,
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306 (7th Cir. 1986) (“Courts therefore have refused to enforce wholly private
[FLSA] settlements.”) (citing Lynn’s Food Stores, 679 F.2d at 1352); Bodle v. TXL
Mortg. Corp., —F.3d—, 2015 WL 3478146, at *4 (5th Cir. June 1, 2015)
(“[M]any courts have held that, in the absence of supervision by the
Department of Labor or scrutiny from a court, a settlement of a FLSA claim
is prohibited.”) (citing Lynn’s Food Stores, 679 F.2d at 1355); Taylor v. Progress
Energy, Inc., 493 F.3d 454, 460 (4th Cir. 2007) (“[U]nder the FLSA, a labor
standards law, there is a judicial prohibition against the unsupervised waiver
or settlement of claims.”) superseded by regulation on other grounds as stated in
Whiting v. Johns Hopkins Hosp., 416 F. App'x 312 (4th Cir. 2011); Seminiano v.
Xyris Enterprise, Inc., 602 Fed. Appx. 682, 683 (9th Cir. 2015) (“FLSA claims
may not be settled without approval of either the Secretary of Labor or a
district court.”) (citing Nall, 723 F.3d at 1306); but see Martin v. Spring Break '83
Productions, L.L.C., 688 F.3d 247, 255 (5th Cir. 2012) (excepting unsupervised
settlements that are reached due to a bona fide FLSA dispute over hours
worked or compensation owed).
2.1
The Defendant’s Arguments For Sealing the Settlement
As noted above, the defendants have moved for approval of the
parties’ settlement agreement, and to file the parties’ settlement agreement
under seal for a period of two years. (See Docket #28). As to the latter, the
plaintiff agreed not to oppose the defendant’s motion to seal if the sealing of
the settlement agreement was only for two years. Id. at 6. The defendant
moves to seal the settlement agreement pursuant to Federal Rule Civil
Procedure 5.2(d) and Civil Local Rule 79(d)(4), and, pursuant to those rules,
argues that there is good cause to seal the settlement agreement. See id. at 2-6.
Page 3 of 10
In summary, the reasons—i.e. the good cause—the defendant gives for
sealing the settlement agreement are: (1) the risk of subsequent litigation by
these plaintiffs or others, given that “there are currently more than 30 similar
cases pending against [the defendant], each involving fundamentally the
same claims” as those here; (2) the defendant “placed a premium on the
confidentiality provisions” of the settlement agreement and is “concerned
that disclosure of the terms of the [settlement agreement] will compromise
its ability to effectively negotiate in the other pending lawsuits”; and (3)
disclosure of the terms of the settlement agreement could detriment plaintiffs
in other cases because “the publication of the terms of this settlement could
influence plaintiffs and their counsel without first considering the actual
value of the claims they have asserted.” Id. at 4, 5.
The defendant further argues that “[c]ourts routinely allow parties in
FLSA disputes to file their settlement agreements under seal.” (Docket #28
at 2). In support of this proposition, the defendant cites one unpublished
decision from this circuit and a series of district court decisions, mostly
unpublished, from various other district courts. See id. The defendant goes
on to acknowledge the Seventh Circuit’s insistence that litigation be
conducted in public, but nonetheless argues that the Seventh Circuit “has not
held that the terms of a private and confidential settlement agreement must
be made available to the public.” Id. at 2-3 (citing Hicklin Eng’g, L.C. v. Bartell,
439 F.3d 346, 348 (7th Cir. 2006)).
As the Court will now explain, the defendant has ignored Seventh
Circuit precedent that undermines much of their argument for sealing the
parties’ settlement agreement. And, the defendant has not overcome the
presumption that court proceedings and judicial records should be made
available to the public.
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2.2
FLSA Settlements Are Presumptively Public and the
Defendant Has Not Rebutted This Presumption
“Secrecy in judicial proceedings is disfavored, as it makes it difficult
for the public (including the bar) to understand why a case was brought (and
fought) and what exactly was at stake in it and was the outcome proper.”
GEA Group AG v. Flex-N-Gate Corp., 740 F.3d 411, 419 (7th Cir. 2014); see also
Hicklin, 439 F.3d at 348 (“Any step that withdraws an element of the judicial
process from public view makes the ensuing decision look more like fiat and
requires rigorous justification.”).
Generally, then, “documents that affect the disposition of federal
litigation are presumptively open to public view.” In re Specht, 622 F.3d 697,
701 (7th Cir. 2010); see Goesel v. Boley Intern. (H.K.) Ltd., 738 F.3d 831, 833 (7th
Cir. 2013) (Posner, J. chambers opinion) (“[T]he presumption of public access
‘applies only to the materials that formed the basis of the parties’ dispute and
the district court’s resolution’; other materials that may have crept into the
record are not subject to the presumption.”) (quoting Baxter Int’l, Inc. v.
Abbott Lab., 297 F.3d 544, 548 (7th Cir. 2002)); see also Jessup v. Luther, 277 F.3d
926, 928 (7th Cir. 2002) (noting that it is a “strong presumption rather than an
absolute rule”). However, “[w]hen there is a compelling interest in secrecy,
as in the case of trade secrets, the identity of informers, and the privacy of
children, portions, and in extreme cases the entirety of a trial record can be
sealed.” Jessup, 277 F.3d at 928; see GEA Group, 740 F.3d at 420 (“[T]he
presumption can be overridden by competing interests, as in cases involving
trade secrets—arguably in some cases involving settlement agreements
—uncontroversially in most cases in which the plaintiff is a child victim of
sexual abuse.”). This interest in secrecy is “weighed against the competing
interests case by case.” Jessup, 277 F.3d at 928.
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Ordinarily settlement agreements are private documents, “not judicial
records, and so the issue of balancing the interest in promoting settlements
by preserving secrecy against the interest in making public materials upon
which judicial decisions are based does not arise—there is no judicial
decision.” Id.; see Goesel, 738 F.3d at 833 (noting that “most settlement
agreements never show up in a judicial record and so are not subject to the
right of public access,” because “[e]ither the agreement is made before a suit
is filed (and so the suit is never filed), or, if after, the parties file a stipulation
of dismissal and in that event they’re not required to make the agreement a
part of the court record”). But, if judicial approval of the terms of a
settlement agreement is required—like, as noted above, in FLSA cases—the
“presumption of a right of public access to court documents should apply.”
Goesel, 738 F.3d at 834; accord Jessup, 277 F.3d at 929 (“The public has an
interest in knowing what the terms of settlement a federal judge would
approve and perhaps therefore nudge the parties to agree to.”).
So, court approved FLSA settlements are presumptively public
documents. See, e.g., Bouzzi v. F & J Pine Rest., LLC, 841 F. Supp. 2d 635, 639
(E.D.N.Y. 2012) (“Where…the FLSA settlement is submitted to the court for
approval, the approval process is a judicial act. Consequently, the settlement
agreement is a judicial document to which the presumption of public access
attaches.”). Rebutting this presumption is possible, however, in the scenarios
described above and, perhaps, if a different compelling reason is given. See
GEA Group AG, 740 F.3d at 420 (noting that the presumption can be
overridden—at least “arguably”—“in some cases involving settlement
agreements”). That the parties have a confidentiality clause, or otherwise
have agreed to keep the agreement hush-hush does not equal a compelling
reason. See Goesel, 738 F.3d at 835 (“…there is potential public value to
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disclosing settlement terms, including amount, [and thus] parties have to give
the judge a reason for not disclosing them—and the fact that they don’t want
to disclose is not a reason.”) (citing Arthur R. Miller, Confidentiality, Protective
Orders, and Public Access to the Courts, 105 HARV . L. REV . 427, 492-93 (1991));
see also Snook v. Valley OB-GYN Clinic, P.C., No. 14-CV-12302, 2014 WL
7369904, at *3 (E.D. Mich. Dec. 29, 2014) (collecting cases and stating, in the
FLSA context, that “[g]enerally, courts have roundly rejected the argument
that confidentiality provisions in settlement agreements are a sufficient
interest to overcome the presumption of public access”) (internal quotation
marks omitted).
So what would be another compelling reason? Here, the Seventh
Circuit has set the bar quite high. As Judge Posner put it, there may not be
many or nearly any other reasons:
Against a background of uncertainty, it’s difficult to imagine
what arguments or evidence parties wanting to conceal the
amount or other terms of their settlement (apart from terms
that would reveal trade secrets or seriously compromise
personal or institutional privacy or national security) could
present to rebut the presumption of public access to judicial
records.
Goesel, 738 F.3d at 835.
And, while the defendants argue that courts have “routinely” allowed
parties to file FLSA settlements under seal, the cases the defendant cites all
involve courts doing so without much discussion of why that is permissible.
(See Docket #28 at 2) (collecting cases that provide little, if any, analysis). This
seems to be a common theme in FLSA cases. See Bouzzi, 841 F. Supp. 2d at 638
(stating that a defendant—in support of sealing an FLSA settlement—cited
“slip opinions hav[ing] no precedential value” and decisions that were “no
more than short ECF entries” without “any reason or justification for their
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decision to seal”); Swarthout v. Ryla Teleservices, Inc., No. 11-CV-21, 2012 WL
5361756, at *2 (N.D. Ill. Oct. 30, 2012).
The courts that have analyzed whether sealing an FLSA settlement
is permissible—without an eminently compelling reason—have overwhelmingly rejected that idea, and have, similar to the Seventh Circuit, set
the bar quite high for litigants seeking to seal FLSA settlements. See, e.g.,
Weismantle v. Jali, No. 13-CV-1087, 2015 WL 1866190, at *2 (W.D. Pa. April 23,
2015) (collecting cases and stating: “What can be gleaned from this
prevailing, if not overwhelming caselaw trend is that, absent something very
special in a very specific case which generates a very good reason above and beyond
the desire of the parties to keep the terms of an FLSA settlement out of the public’s
view, …[an FLSA settlement] cannot be filed under seal.”); Joo v. Kitchen Table,
Inc., 763 F. Supp. 2d 643, 646-48 (S.D.N.Y. 2011) (overwhelming consensus
against sealing FLSA settlement agreements submitted for court approval).
Applying the foregoing to the case at hand, the Court is compelled to
deny the defendant’s motion to seal the settlement agreement for two years.
At bottom, the defendant’s reasons for sealing the settlement agreement are
nothing more than pleas to keep the settlement agreement confidential
because the parties have agreed to do so. That is not enough. See Bouzzi, 841 F.
Supp. 2d at 640. True, the defendant fears future litigation if the settlement
agreement is made public, but Judge Posner found that reason unconvincing
in Goesel. 738 F3d at 833-35. The defendant also fears the effect that disclosing
the settlement amounts will have on future litigation. Again, this justification
has been rejected by not only the Seventh Circuit, see id., but other courts as
well. See, e.g., Bouzzi, 841 F. Supp. 2d at 642; Hens, 2010 WL 4240919 at *4
(“Preventing the employee’s co-workers or the public from discovering the
existence or value of their FLSA rights is an objective unworthy of
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implementation by a judicial seal.”); see also LEAP Sys., Inc. v. MoneyTrax, Inc.,
638 F.3d 216, 222 (3d Cir. 2011); Pansy v. Borough of Stroudsberg, 23 F.3d 772,
777 (3d Cir. 1994) (“Circumstances weighing against confidentiality
exist…when the sharing of information among litigants would promote
fairness and efficiency.”).
Finally, while it is true—as the defendant points out—that at least one
court has decided to seal an FLSA settlement agreement for a limited time,
see Murphy v. Dolgencorp, Inc., No. 09-CV-0007, 2010 WL 4261310, at *1 (W.D.
Va. Oct. 28, 2010), the Court’s decision in Murphy both directly conflicts with
the Seventh Circuit precedent outlined above, and is against the greater
weight of authority in similar cases. See, e.g., Bouzzi, 841 F. Supp. 2d at 641-42
(rejecting the defendant’s attempt—based on Murphy—to temporarily seal
an FLSA settlement). Because Murphy is not binding on this Court, nor
analogous to this case (for various reasons not worth elaborating on), nor
convincing in light of the great weight of authority holding otherwise, the
Court declines to adopt its reasoning here.
Thus, for all of the reasons discussed above, the Court finds that the
defendant’s justifications for sealing the settlement agreement for two years
are insufficient to rebut the presumption of public access to judicial records.
As such, the Court is obliged to deny the defendant’s unopposed motion to
seal the settlement agreement for two years. (Docket #27).
3.
CONCLUSION
Having found that the settlement agreement cannot be sealed
(temporarily or otherwise), the Court will, as it noted at the outset, permit the
parties to either: (1) agree to file the settlement agreement publicly; or, (2)
withdraw their motion for approval of the settlement agreement pending
further discussion of the Court’s order. The parties are instructed to inform
Page 9 of 10
the Court, within twenty-one (21) days of the entry of this order, how they
would like to proceed.
Accordingly,
IT IS ORDERED that the defendant’s unopposed motion to maintain
that “confidential” settlement agreement under seal for two years (Docket
#27) be and the same is hereby DENIED. The Court will permit the parties
to either: (1) agree to file the settlement agreement publicly; or, (2) withdraw
their motion for approval of the settlement agreement pending further
discussion of the Court’s order. The parties are instructed to inform the
Court, within twenty-one (21) days of the entry of this order, how they
would like to proceed.
Dated at Milwaukee, Wisconsin, this 2nd day of July, 2015.
BY THE COURT:
J.P. Stadtmueller
U.S. District Judge
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