United States District Court, W.D. Arkansas, Fayetteville Division
OPINION AND ORDER
HOLMES, III U.S. DISTRICT JUDGE
the Court is a joint motion (Doc. 14) to approve the
parties' settlement agreement and dismiss Plaintiffs'
Fair Labor Standards Act and Arkansas Minimum Wage Act
claims. No. collective action has been certified. In addition
to the unsealed motion and exhibits, the parties have filed a
proposed settlement agreement under seal (Doc. 15) for the
Court's review. The motion will be denied without
prejudice to its refiling.
district court may only approve a settlement agreement and
enter a stipulated judgment that includes a waiver of FLSA
claims after it determines that the litigation involves a
bona fide dispute and that the proposed settlement is fair
and equitable to all parties. Lynn's Food Stores,
Inc. v. United States, 769 F.3d 1350, 1353 n.8 (11th
Cir. 1982). The parties dispute whether any bona fide FLSA
wage and overtime violations occurred. Plaintiffs contends
that Defendant's unlawful pay practices resulted in
Plaintiffs not being paid for overtime work performed.
Defendant argues that its pay practices comply with relevant
legal requirements as evidenced by a DOL audit which found no
back wages owed.
issues exist with the parties' sealed settlement
agreement that prevent the Court from approving it. The
parties have made clear that the current settlement agreement
is to remain confidential, the waiver of claims against
Defendant extends beyond just wage and hour claims, the
agreement lacks an adequate justification for the exclusion
of liquidated damages, and Plaintiffs are to bear the costs
of litigation. These issues must be addressed before the
Court can approve the agreement.
agreements conditioned on confidentiality run counter to the
policy of public access to judicial documents. In order for
the Court to approve a confidential settlement agreement, the
parties must demonstrate a need for confidentiality that
outweighs the strong presumption of public access.
Wolinsky v. Scholastic Inc., 900 F.Supp.2d 332, 337
(S.D.N.Y. 2012). The motion fails to make this demonstration.
Because the provisions of the FLSA are mandatory, their
compromise cannot be made contingent upon confidentiality
agreements and the waiver of non-wage-and-hour claims.
Briggins v. Elwood TRI, Inc., 3 F.Supp.3d 1277,
1288-89 (N.D. Ala. 2014) (stating that in order to be
compensated consistently with the FLSA, an employee cannot be
compelled to make “side deals” that do not relate
to the bona fide disputes over FLSA coverage or wages due).
Plaintiffs waive their right to recover liquidated damages
“because of the risk of a failure to recover damages at
a trial on the merits.” (Doc. 14, p. 4).
“Generally, an award of liquidated damages is mandatory
if a FLSA violation occurs.” Goldsby v. Renosol
Seating, LLC, 294 F.R.D. 649, 654 (S.D. Ala. 2013)
(rejecting settlement agreement that did not break down the
amount of unpaid overtime compensation, unpaid wages, or
liquidated damages). However, liquidated damages are not
mandatory if “the employer can show good faith and
reasonable grounds for believing that it was not in violation
of the FLSA.” See Jarrett v. ERC Properties,
Inc., 211 F.3d 1078, 1083 (8th Cir. 2000) (quoting
Braswell v. City of El Dorado, 187 F.3d 954, 957
(8th Cir. 1999)). Risk of a defense verdict is not an
adequate basis for waiving liquidated damages-if the parties
have agreed that Plaintiffs should be compensated for some
hours worked, liquidated damages are also appropriate.
the settlement agreement provides that Plaintiffs are
responsible for their own attorney's fees. Settlements
that shift the costs of litigation back to a plaintiff run
counter to the statutory scheme of the FLSA. When an FLSA
settlement reduces the plaintiffs' recovery to pay the
plaintiffs' attorney's fees and costs, “such an
outcome undermines the statutory scheme set forth by
Congress. FLSA plaintiffs, per the statute, are entitled to
gain all of the benefit from successful litigation without
paying attorneys' fees and costs. The FLSA shifts the
burden of paying fees and costs to the defendant.”
Williams v. Coventry Health Care of Florida, Inc.,
No. 6:16-cv-731-Orl-41TBS, 2018 WL 1466395, at *3 (M.D. Fla.
Mar. 26, 2018). The proposed agreement improperly shifts the
expense of litigation back to Plaintiffs. The proposed
settlement is not fair and equitable.
THEREFORE ORDERED that the joint motion (Doc. 14) is DENIED