Nichols v. Dollar Tree Stores, Inc., No. 1:2013cv00088 - Document 25 (M.D. Ga. 2013)
Court Description: 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)
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Nichols v. Dollar Tree Stores, Inc. Doc. 25 IN TH E U N ITED STATES D ISTRICT COU RT FOR TH E MID D LE D ISTRICT OF GEORGIA ALBAN Y D IVISION LEONARD R. NICHOLS, Plaintiff, v. DOLLAR TREE STORES, INC., Defendant. : : : : : : : : : : CASE NO.: 1:13-CV-88 (WLS) ORD ER Presently pending before the Court is the Parties’ J oint Motion for Approval of Settlem ent and Dism issal With Prejudice (“J oint Motion”). (Doc. 24.) Therein, the Parties request that the Court enter an ender approving the Fair Labor Standards Act (“FLSA”) settlem ent entered into by the Parties and dism iss this case with prejudice. For the reasons stated below, the J oint Motion for Approval of Settlem ent and Dism issal With Prejudice (Doc. 24) is D EN IED w ith o u t p re ju d ice co n s is te n t w ith th is Ord e r. D ISCU SSION I. In -Cam e ra In s p e ctio n As a prelim inary m atter, the Court reviews its previous decision to allow the parties to em ail the settlem ent agreem ent to the Court for an in-cam era inspection. In their J oint Motion, the Parties stated that: The Agreem ent contains strict confidentiality provisions, and settlem ent between the Parties would not be possible if the Agreem ent were not to rem ain confidential. Therefore, to allow the Court to approve settlem ent, while at the sam e time preserving the confidentiality agreem ent between the Parties, the Parties respectfully request that they be permitted to provide inform ation via in cam era review of the Agreem ent entered into between the Parties. 1 Dockets.Justia.com (Doc. 24 ¶ 9.) In m ost cases when parties settle, the Court does not exam ine or approve their agreem ents; the settlem ents are purely private contracts. In the typical FLSA case, however, a settlem ent agreem ent only available through in-cam era inspection does not com port with the public’s right of access to a judicial proceeding, which right is “an essential com ponent of our system of justice [and] instrum ental in securing the integrity of the process.” Chicago Tribune Co. v. Bridgestone/ Firestone, Inc., 263 F.3d 130 4, 1311 (11th Cir. 20 0 1). The judge’s “approving” a settlem ent constitutes a “public act,” and the public “has an interest in knowing what term s of settlem ent a federal judge would approve.” Jessup v. Luther, 277 F.3d 926, 929 (7th Cir. 20 0 2). As an active com ponent of the judge’s decision, the settlem ent agreem ent is presum ptively a public record. See Brow n v. Advantage Eng’g, Inc., 960 F.2d 10 13, 10 16 (11th Cir. 1992) (“Once a m atter 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., 80 0 F.2d 339, 343 (3d Cir. 1986) ( “[T]he comm on law presum ption of access applies to m otions filed in court proceedings and to the settlem ent agreement ... filed and subm itted 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 presum ption that the record of a judicial proceeding rem ains public “is surely m ost strong when the ‘right at issue is of a ‘private-public character,’ as the Suprem e Court has described em ployee rights under the FLSA.’” Stalnaker v. N ovar Corp., 293 F. Supp. 2d 1260 , 1264 (M.D. Ala. 20 0 3) (quoting Brookly n Savings Bank v. O'Neil, 324 U.S. 697, 70 8 (1945)). “Sealing an FLSA settlem ent agreem ent between an em ployer and em ployee, reviewing the agreem ent in cam era, or reviewing the agreem ent at a hearing without the agreem ent appearing in the record (and in any event precluding other em ployees’ and the public’s access to, and knowledge of, the 2 agreem ent) thwarts Congress’s intent both to advance em ployees’ awareness of their FLSA rights and to ensure pervasive im plem entation of the FLSA in the workplace.” Dees v. Hy dradry , Inc., 70 6 F. Supp. 2d 1227, 1245 (M.D. Fla. 20 10 ). Furtherm ore, reviewing a FLSA settlem ent agreem ent in cam era conflicts with the public’s access to judicial records, frustrates appellate review of a judge's decision to approve (or reject) an FLSA com prom ise, contravenes congressional policy encouraging widespread com pliance with the FLSA, and furthers no judicially cognizable interest of the parties. See id. at 1245 n.21 (“In cam era exam ination equally frustrates appellate review of both a seal and a judge's approval of a settlement agreem ent because the district court reviews a settlem ent agreem ent in cam era without articulating “specific findings” to justify a seal.”); W ebb v. CVS Carem ark Corp., No. 5:11-cv-10 6, 20 11 WL 6743284, at *2 (M.D. Ga. Dec. 23, 20 11) (“There is strong support that FLSA settlem ent agreem ents should never be sealed or reviewed in cam era.”) (citing Dees, 70 6 F. Supp. 2d at 1245); but see Am m irati v. Luteran Servs. Fla., Inc., No. 2:0 9cv-496, 20 10 WL 148724, at *1 (M.D. Fla. J an. 13, 20 10 ) (approving FLSA settlem ent agreem ent reviewed via in-camera inspection); Nunnink W holesale Pictures & Mirrors, LLC, No. 2:0 9-cv-365, 20 10 WL 3380 98, at *2 (M.D. Fla. J an. 22, 20 10 ) (sam e). With these standards in m ind, the Parties’ assertion that an injustice will be caused if the proposed Agreem ent were placed in the public record is nowhere near sufficient to negate the preference for the right of public access. Accordingly, the Court ORD ERS the parties to file, except upon articulated com pelling grounds contem plated by the relevant laws, the proposed settlem ent See Stalnaker, 293 F. Supp. 2d at 1262-64. 3 agreem ent in the public docket. II. Mo tio n to Ap p ro ve Se ttle m e n t Agre e m e n t This case was brought pursuant to the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 20 1 et seq. In Ly nn’s Food Stores, Inc. v. United States, 679 F.2d 1350 , 1352– 55 (11th Cir. 1982), the Eleventh Circuit explained that claim s for com pensation under the FLSA m ay only be settled or comprom ised when the Departm ent of Labor supervises the paym ent of back wages or when the district court enters a stipulated judgm ent “after scrutinizing the settlem ent for fairness.” Id. at 1353. J udicial review is required because the FLSA was m eant 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 settlem ent, the court m ust review it to determ ine if it is “a fair and reasonable resolution of a bona fide dispute.” Id. at 1354– 55. If the settlem ent reflects a reasonable com prom ise over issues that are actually in dispute, the Court m ay approve the settlem ent “in order to prom ote the policy of encouraging settlem ent 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 com pensated adequately and that no conflict of interest taints the am ount the wronged em ployee recovers under a settlem ent agreem ent.” Silva v. Miller, 30 7 F. App’x. 349, 351 (11th Cir. 20 0 9) (per curiam ). A. D am age Aw ard The Parties have inform ed the Court that in “full settlem ent of known and unknown claim s,” Dollar Tree will pay to Plaintiff a total sum of $ 528.10 . The Parties have not, however, m ade a “full and adequate disclosure of the term s of settlem ent, including the factors and reasons considered in reaching sam e and justifying the com prom ise of the plaintiff's claim s.” Dees, 70 6 F. Supp. 2d at 1243. The Court cannot determ ine whether Plaintiff’s claim s are being paid in full or if Plaintiff has 4 com prom ised the am ounts of his claim . It is unclear how the Court can determ ine what is “fair and reasonable” without knowing these germ ane details. Moreover, under the FLSA a plaintiff is entitled to recover unpaid wages plus an equal am ount of liquidated dam ages. 28 U.S.C. § 216(b). The parties do not state whether Plaintiff is receiving liquidated dam ages, or if he is not, the reasons why. Without clarification on all the above grounds, the Court cannot approve the proposed settlem ent agreem ent. B. W aive r Pro vis io n s The Court also finds that it cannot approve the proposed settlem ent agreement based on the “pervasive release” contained therein. Subsection 3(b)(ii) of the Agreem ent states that Plaintiff agrees to release all claim s he has or had against the Release Parties, including but not lim ited to: (A) those which in any way relate to [Plaintiff’s] em ploym ent with [Defendant]; and (B) any other claim s or dem ands [Plaintiff] m ay have on any basis, including but not lim ited to com m on law or tort, or other claim s that m ay have arisen under any of the anti-discrim ination statutes or laws, the Worker Adjustm ent & 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, § 50 3 and § 50 4 of the Rehabilitation Act of 1973, the Genetic Inform ation Nondiscrim ination Act of 20 0 8, the Fam ily and Medical Leave Act (“FMLA”), the Fair Labor Standards Act (“FLSA”), the Equal Pay Act (“EPA”), the Am ericans With Disabilities Act (“ADA”), the Em ploym ent Retirem ent Incom e Security Act of 1974 (“ERISA”), and any sim ilar dom estic or foreign laws, such as the Virginians with Disabilities Act, the Virginia Hum an Rights, the Georgia Fair Em ploym ent Practices Act, and the Georgia Equal Pay Act. This kind of provision is called a “pervasive” release, and the Court finds its inclusion problem atic as applied to this case. As one district court noted, while this kind of “reciprocal, general release is incontestably a staple of accepted and com m on litigation practice[, . . .] a[] FLSA action is different.” Moreno v. Regions Bank, 729 F. Supp. 2d 1346, 1348 (M.D. Fla. 20 10 ). Per the Moreno Court, “[a] pervasive release in 5 an FLSA settlem ent introduces a troubling im ponderable into the calculus of fairness and full com pensation.” This Court could not agree more. Here, the Parties would have the Court approve a settlem ent that allows Plaintiff to waive any claim he m ay presently have that m ay not becom e known to him until years later for $ 50 0 .0 0 . If the Court were to accept the currently proposed Agreem ent, 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 em ployee who executes a broad release effectively gam bles, 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 em ployee the risk of extinguishing an unknown claim . In the language of Hy dradry , a pervasive release is a “side deal” in which the em ployer extracts a gratuitous (although usually valueless) release of all claim s in exchange for m oney unconditionally owed to the em ployee. (If an em ployee signs a pervasive release as part of a “side deal” and later discovers a valuable but released claim , the em ployee perhaps looks for compensation from the attorney who advise [sic] the em ployee to grant the release.) Although inconsequential in the typical civil case (for which settlem ent requires no judicial review), an employer is not entitled to use an FLSA claim (a m atter arising from the em ployer's failing to com ply with the FLSA) to leverage a release from liability unconnected to the FLSA. 729 F. Supp. 2d at 1351 (footnote om itted). Therefore, in the absence of any other inform ation shedding light on the relative equities of the proposed release, see id. at 1352 (“Absent som e knowledge of the value of the released claims, the fairness of the com prom ise rem ains indeterm inate.”), the Court finds it to be inherently unfair. Accordingly, the Court cannot approve the proposed Agreem ent with the inclusion of the pervasive release.1 1 The Court’s finding of fairness as to the pervasive release also encom passes subsections 3(c)-(d). 6 C. “N o D is p arage m e n t,” “N o Facilitatio n ,” an d Co n fid e n tiality Pro vis io n s The Court also concludes that the “No Disparagem ent” provision in subsection 4(b) is not fit for the Court’s approval. Courts have struck such provisions in FLSA settlem ent agreem ents, finding them to constitute a “judicially im posed ‘prior restraint’ in violation of the First Am endm ent.” Valdez v. T.A.S.O. Properties, Inc., No. 8:0 9-cv2250 , 20 10 WL 1730 70 0 , at *1 n.1 (M.D. Fla. Apr. 28, 20 10 ) (citing federal case law regarding First Am endm ent concerns in the context of perm anent injunctions in defam ation actions); DeGraff v. SMA Behavioral Health Servs., Inc., No. 3:12-cv-733, 20 13 WL 2177984, at *4 (M.D. Fla. Mar. 5, 20 13); Housen v. Econosw eep & Maintenance Servs., Inc., No. 3:12-cv-461, 20 13 WL 2455958, at *2 (M.D. Fla. J une 6, 20 13). Specifically here, the Court finds the proposed disparagem ent provision to be particularly problem atic in that it does not lim it the restraints on Plaintiff’s free speech to only those statem ents concerning his FLSA claim . Therefore, the Court finds that this provision should be stricken. In subsection 4(d), entitled “Prom ise Not to Facilitate Claim s Against Dollar Tree,” the Agreem ent states that “[Plaintiff] prom ises not to voluntarily encourage, counsel or assist (directly or indirectly) any current or form er em ployee or third party (excluding governm ent law enforcem ent agencies) in the preparation or prosecution of any civil dispute, difference, grievance, claim , charge or com plaint against Dollar Tree . . . unless [Plaintiff] is com pelled to do so by valid legal process.” The Court finds that this provision would sim ilarly im pose a prior restraint on Plaintiff’s free speech rights (the right to engage with third parties for the purpose of facilitating claim s against Dollar Tree), as well as also interfere with another constitutionally protected right— freedom of association. Because the Court has already m ade clear that it will not im pose 7 any “judicially im posed ‘prior restraint[s]’” on Plaintiff’s speech, the Court will m ove on to the free-association part of its analysis. In Roberts v. United States Jay cees, 468 U.S. 60 9, 617-18 (1984), the Suprem e Court concluded that freedom of association is divided into two categories: 1) intim ate association and 2) expression association. Intim ate association protects "choices to enter into and m aintain certain intim ate hum an relationships m ust 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 schem e. In this respect, freedom of association receives protection as a fundam ental elem ent of personal liberty.” Id. Expressive association protects the “right to associate for the purpose of engaging in those activities protected by the First Am endm ent—speech, assem bly, petition for the redress of grievances, and the exercise of religion. The Constitution guarantees freedom of association of this kind as an indispensable m eans 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 com plaint against Dollar Tree,” the Court finds expressive association to be the right im plicated in this case. “[C]ourts have ‘long understood as im plicit in the right to engage in activities protected by the First Am endm ent a corresponding right to associate with others in pursuit of a wide variety of political, social, econom ic, educational, religious, and cultural ends.’” Beta Upsilon Chi v. Machen, 559 F. Supp. 2d 1274, 1278 (N.D. Fla. May 29, 20 0 8) (quoting Roberts, 468 U.S. at 618), vacated and rem anded on other grounds by 586 F.3d 90 8 (11th Cir. 20 0 9). The Court finds Plaintiff’s right to associate with others to possibly pursue grievances against Dollar Tree to fall within the am bit of this 8 right. If the Court cannot im pose a prior restraint on Plaintiff’s ability to speak disparagingly about Dollar Tree, it follows that the Court m ay not im pose a prior restraint on Plaintiff’s right to assist a third party in som e collective undertaking that m ay still have the effect of disparaging Dollar Tree. Sim ply put, if Plaintiff wants to start a “he-m an Dollar Tree haters club” whose only m ission is to pursue redress against Dollar Tree, this Court cannot sanction Dollar Tree’s attem pt to bargain for the right to preem ptively stand in the way of such an endeavor.2 Also within the “Prom ise Not to Facilitate Claim s” provision, the Court further finds the requirem ent that Plaintiff obtain Dollar Tree’s perm ission before providing any testim ony “in any context about Dollar Tree” to any third party to be no less problem atic. “[T]he right to appear and give true testim ony as a witness in a legal proceeding is guaranteed by the first am endm ent's free speech clause.” Green v. City of Montgom ery , 792 F. Supp. 1238, 1253 (M.D. Ala. 1992); Sm ith v. Hightow er, 693 F.2d 359, 368 (5th Cir. 1982), cert. denied, 50 2 U.S. 90 6 (1991); Melton v. City of Oklahom a City , 879 F.2d 70 6, 714 (10 th Cir. 1989); Reeves v. Claiborne Cnty . Bd. of Educ., 828 F.2d 10 96, 110 0 -0 1 (5th Cir. 1987). Therefore, the Court cannot approve any bargain, in the context of the sensitive nature of FLSA settlem ents, that abridges this right, especially an abridgement without lim itation like the one suggested here.3 Finally, as to the confidentiality provision in the Agreem ent, because the Court has already ordered that the Settlem ent Agreem ent shall be filed on the public docket, 2 The Agreement states that the “Prom ise Not to Facilitate Claim s” is necessary to protect Dollar Tree’s “m any legitim ate protectable interests, including but not lim ited to confidential proprietary, business process and personal inform ation.” The Court, however, concludes that if Dollar Tree has any right to pursue redress for any dam age to proprietary inform ation, such right would not em anate from this settlement agreem ent entered into under the Fair Labor Standards Act. This right would, in fact, arise out of contract, e.g., a nondisclosure agreem ent entered into by the Parties. Dollar Tree cannot now seek to protect their proprietary inform ation via a settlem ent agreement for $ 50 0 in wages under FLSA. 3 The Court’s finding is not intended to interfere with any rights under tort law that Dollar Tree m ay have to the extent Plaintiff engages in any actionable conduct with third parties. The Court is m erely concluding that Dollar Tree m ay not use the instant FLSA settlem ent agreement to create any substantive rights. 9 the confidentiality provision in subsection 4(c) is stricken as well as it is unenforceable and unnecessary. W ebb, 20 11 WL 6743284, at *3 (noting that “in light of the Court's ruling that it will not seal any settlem ent agreem ents, it is likely the confidentiality provisions are unenforceable” and, m oreover, that “a confidentiality provision in a FLSA settlem ent agreem ent both contravenes the legislative purpose of the FLSA and underm ines the Departm ent of Labor's regulatory effort to notify em ployees of their FLSA rights”); Housen, 20 13 WL 2455958, at *2 (citing W ebb and striking confidentiality provision as unenforceable). D. “N o Fu tu re Em p lo ym e n t” Pro vis io n The Agreem ent also contains a provision that states that Plaintiff “prom ises never to seek em ploym ent with Dollar Tree in the future (including but not lim ited to em ploym ent as an em ployee or engagem ent as a tem porary em ployee, seasonal em ployee, or contractor).” As an initial m atter, 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 sim ilar waivers of future em ploym ent in FLSA settlem ent agreements in cases where the em ployee warranted to the Court that s/ he has no desire to ever seek re-em ploym ent with the em ployer. See, e.g., Robertson v. Ther-Rx, No. 2:0 9-cv-10 10 , 20 11 WL 1810 193, at *2 (M.D. Ala. May 12, 20 11); Cruz v. W inter Garden Realty , LLC, No. 6:12cv-10 9, 20 13 WL 4774617, at *3 (M.D. Ala. Sept. 4, 20 13). Here, however, not only does the Court not have any inform ation about Plaintiff’s desire (or lack thereof) to pursue future em ploym ent with Dollar Tree, but the Court believes that the relevant inquiry should be the im pact of the future-em ploym ent waiver, not the m utual 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-em ploym ent waiver appeared to be predicated on the im pact of the waiver. Per the court, because of the “precarious financial viability” of Ther-Rx Corp—a fact that m ade “future employm ent . . . far from assured for anyone”—the “im pact of th[e waiver of future em ploym ent] requirem ent [wa]s inconsequential.” On the contrary, the court in Cruz v. W inter Garden Realty , LLC, No. 6:12-cv-10 9, 20 13 WL 4774617, at *3 (M.D. Ala. Sept. 4, 20 13), did not discuss the “im pact” of the waiver. In this Court’s view, however, a future-em ploym ent waiver for a local realty com pany does not engender anywhere near the sam e kind of concerns that a waiver for a retail business of the stature of Dollar Tree does. Dollar Tree is a Fortune 50 0 com pany that operates 4,763 stores throughout the United States and Canada, m aking 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 num bers, the im pact of the instant future-em ploym ent waiver on Plaintiff would be far from “inconsequential.” Furtherm ore, the instant future-em ploym ent waiver, without m ore, can also be viewed as punishm ent for the exercise of a legal right under the FLSA, which would be inconsistent with the purpose of the statute. No m atter how “voluntary” Plaintiff’s subm ission to this provision m ay be, the Court believes that the inclusion of overly broad provisions like this in FLSA settlem ent agreem ents have im plications that reach far beyond the parties involved. Because this agreem ent will becom e part of the public record, other em ployees seeking to vindicate rights under FLSA m ay feel deterred from doing so for fear that em ployers m ight seek to exact from them a prom ise to never again apply for future em ploym ent. See Dees, 70 6 F. Supp. 2d at 1247 (“An em ployee's right to a m inim um wage and overtim e is unconditional, and the district court should 4 Dollar Tree, http:/ / www.dollartree.com (last visited November 1, 20 13). 11 countenance the creation of no condition, whether confidentiality or any other construct, that offends the purpose of the FLSA.”) Dollar Tree is welcom e to hire whom it chooses, as em ployers are perm itted to do within the bounds of the law. In this Court’s view, however, expansive provisions like the instant future em ploym ent waiver are unconscionable when placed in a FLSA agreement—a characterization that is not negated by the agreem ent of the parties. Accordingly, this provision, as presented, is stricken as well. CON CLU SION In light of the foregoing, the Court D EN IES without prejudice, consistent with this order, the J oint Motion for Approval of Settlem ent and Dism issal With Prejudice (Doc. 24). Within twenty-one (21) days of the date of this order, the parties may m ove for this Court’s approval of an am ended proposed settlem ent agreem ent in accordance with this order and file the proposed am ended settlem ent agreem ent on the record or articulate a legal and factual basis for sealin g in view of the discussion at Part I. SO ORD ERED , this 1st day of Novem ber, 20 13. / s/ W. Louis Sands TH E H ON ORABLE W . LOU IS SAN D S, U N ITED STATES D ISTRICT COU RT 12
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