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David v. Kohler Co.

United States District Court, W.D. Tennessee, Eastern Division

December 10, 2019

RICHARD DAVID and MATT HOFFMAN, individually and on behalf of others similarly situated, Plaintiffs,
v.
KOHLER CO., Defendant.

          ORDER DENYING JOINT MOTION TO APPROVE SETTLEMENT ORDER DENYING JOINT MOTION FOR LEAVE TO FILE SETTLEMENT UNDER SEAL

          S. THOMAS ANDERSON CHIEF UNITED STATES DISTRICT JUDGE

         Before the Court is the parties' Joint Motion to Approve Settlement (ECF No. 200) and Joint Motion for Leave to File Settlement Under Seal (ECF No. 201), both filed October 3, 2019. The Court held a motion hearing with counsel for the parties on November 8, 2019, and following the hearing, Defendant Kohler Co. filed a Brief to Support the Confidentiality of the Settlement (ECF No. 208). Having considered the settlement agreement, the parties' arguments as to why the Court should approve the agreement in its present iteration, and the entire record of the case, the Joint Motion to Approve Settlement is DENIED without prejudice, and the Joint Motion for Leave to File Settlement Agreement Under Seal is DENIED.

         BACKGROUND

         Plaintiffs Richard David and Matt Hoffman (“the named Plaintiffs”), who are hourly manufacturing employees at Kohler's Union City, Tennessee plant, filed suit for unpaid wages under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 216(b). See Complaint, Nov. 2, 2015 (ECF No. 1); Am. Comp., Mar. 8, 2016 (ECF No. 40). The named Plaintiffs sought the conditional certification of a collective action on behalf of similarly situated Kohler employees in multiple states. On August 30, 2017, the Court adopted the United States Magistrate Judge's recommendation to grant conditional certification of a collective action for a class of Kohler employees defined as follows:

All non-exempt, hourly-paid, manufacturing employees, or similarly-titled employees, who worked as Kohler employees at Kohler facilities in Union City, Tennessee; Huntsville, Alabama; Sheridan, Arkansas; Hattiesburg, Mississippi; Brownwood, Texas; and Kohler, Wisconsin; who are currently employed with Kohler or were employed with Kohler within the last three years; who regularly worked 40 hours or more per week; and who worked off the clock in violation of the Fair Labor Standards Act.

See Order Adopting the Mag. J.'s Rep. & Recommendation and Granting Pls.' Am. Mot to Certify, Aug. 30, 2017 (ECF No. 69). The parties thereafter sent notice of the collective action to a class of 7, 600 Kohler employees, of which approximately 428 opted to join in the action (“the opt-in Plaintiffs”). By the close of the discovery phase in May 2019, the parties had deposed both named Plaintiffs, 58 of the opt-in Plaintiffs, and Kohler's Rule 30(b)(6) representative. However, a number of opt-in Plaintiffs failed or refused to participate in discovery and, as a result, the Court dismissed them without prejudice from the collective action. See Order Granting Def.'s Unopposed Mot. to Dismiss, Feb. 27, 2019 (ECF No. 179); Order Granting Def.'s Am. Second Unopposed Mot. to Dismiss, Mar. 19, 2019 (ECF No. 187); Order Granting Def.'s Third Unopposed Mot. to Dismiss, May 29, 2019 (ECF No. 194); Order Granting Def.'s Fourth Unopposed Mot. to Dismiss, July 23, 2019 (ECF No. 198).

         The parties now seek court approval for their settlement of the FLSA claims of the named Plaintiffs and the 150 opt-in Plaintiffs who remain in the case. In their Joint Motion to Approve Settlement, the parties argue that their settlement is a fair and adequate resolution of a bona fide dispute and meets all of the criteria for approval. The agreement creates a funding pool for the payment of Plaintiffs attorney's fees and a sum for each named and opt-in Plaintiff, representing 0.2 hours of overtime compensation for each week worked at a Kohler manufacturing plant. The parties have also agreed on an incentive award of $2, 250 for each named Plaintiff. The parties filed the settlement agreement under seal and request that the total amount of the settlement fund remain confidential. In exchange for Kohler's agreement to a monetary settlement, the named and opt-in Plaintiffs agree to the dismissal of their suit and the release all claims they have against the company. The parties have also agreed to keep the terms of their settlement, the amount received by each named and opt-in Plaintiff, and the amount of the fees and costs awarded to counsel for Plaintiffs confidential.

         In their Joint Motion for Leave to File Settlement Agreement Under Seal and for In Camera Review (ECF No. 201), Kohler states its wish to maintain the confidentiality of the amount of the settlement, both because it denies any liability to any Plaintiff and out of a desire to avoid any “unwanted or frivolous copycat litigation.” Jt. Mot. for Leave File 2, Oct. 3, 2019 (ECF No. 201). For their part Plaintiffs state that the confidentiality of the amount of their monetary recovery protects their individual privacy interests in the public disclosure of their income. The parties posit that there is no public interest in the disclosure of their settlement and therefore argue that their private interests in the secrecy of their settlement justify the sealing of their agreement. For legal support, the parties cite a number of decisions from the Western District of Tennessee permitting FLSA settlement agreements to be filed under seal. In the event the Court denies their request to file the agreement under seal, the parties request permission to file the agreement on the record with the amounts of the settlement fund redacted.

         At the November 8, 2019 hearing on the settlement, the Court received additional argument from the parties as to why the Court should approve their agreement. The Court raised with the parties its concerns about the confidential nature of the settlement. For example, the Court noted that under a strict reading of the agreement, the confidentiality provision would preclude the named and opt-in Plaintiffs from disclosing the settlement amounts to a spouse or a tax adviser. Perhaps more important, the Court pointed out to the parties that a number of courts have declined to approve FLSA settlements containing confidentiality provisions based on the public interest in the resolution of FLSA claims. Rather than approving the agreement at the conclusion of the hearing, the Court gave the parties 20 days in which to refile their request for approval without the confidentiality clause or submit additional briefing on why the Court should approve the agreement in its current form with the confidentiality provision.

         Kohler has responded by filing its Brief in Support of Confidentiality of Settlement (ECF No. 208), which incorporates by reference the parties' principal arguments for the sealing and confidentiality of their agreement set out in their Joint Motion. In its separate brief addressed to the confidentiality provision, Kohler offers essentially the same arguments as to why the Court should approve the agreement as drafted with the confidentiality provision. Kohler argues that the confidentiality of the agreement protects its interests in keeping the terms of the settlement private. Kohler denies any wrongdoing and fears that a publicly available settlement agreement might suggest that Kohler somehow violated the FLSA. Kohler only agreed to settle the case in order to avoid the costs of continued litigation, which would be substantial. As Kohler notes, the company could reasonably settle any other type of case against it simply for good business reasons and insist on confidentiality. An FLSA claim should be no different. The named Plaintiffs and 150 opt-in Plaintiffs are fully aware of the suit and their rights to pursue relief. No compelling policy reason exists to protect any other party's right to know about in the outcome of this suit. Without the confidentiality provision, Kohler's only other alternatives are to continue litigating or reach a settlement without the confidentiality provision. Therefore, Kohler argues that the Court should allow the parties' confidentiality provision to remain and approve the settlement agreement.

         STANDARD OF REVIEW

         The United States Supreme Court has held that “employees may not, either prospectively or retrospectively, waive their FLSA rights to minimum wages, overtime, or liquidated damages.” Boaz v. FedEx Customer Info. Servs., Inc., 725 F.3d 603, 606 (6th Cir. 2013) (citing D.A. Schulte, Inc. v. Gangi, 328 U.S. 108, 114 (1946); and Brooklyn Savings Bank v. O'Neil, 324 U.S. 697, 707 (1945)). The Supreme Court has noted that granting employees a sweeping or unchecked right to waive or release an FLSA claim might allow an employer to “circumvent the Act's requirements-and thus gain an advantage over its competitor, ” Boaz, 725 F.3d at 605 (citing O'Neil, 324 U.S. at 706-10), and otherwise undermine the FLSA's goal of “achiev[ing] a uniform national policy of guaranteeing compensation for all work or employment engaged in by employees covered by the Act.” Jewell Ridge Coal Corp. v. Local No. 6167, United Mine Workers of Am., 325 U.S. 161, 167 (1945).

         All of which is to say, the right of private parties to settle FLSA claims is not absolute. O'Neil, 324 U.S. at 704-05. Where parties settle or compromise an FLSA wages claim, the parties must seek court approval for the proposed settlement. Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350, 1353 (11th Cir. 1982); see also Cheeks v. Freeport Pancake House, Inc., 796 F.3d 199, 206 (2d Cir. 2015); Walton v. United Consumers Club, 786 F.2d 303, 306 (7th Cir. 1986) (remarking that the FLSA has “bann[ed] private settlements of disputes about pay”); but see Martin v. Spring Break '83 Prods., LLC, 688 F.3d 247, 255 (5th Cir. 2012) (enforcing the settlement of bona fide FLSA disputes over hours worked or wages owed without judicial or Department of Labor approval); Barbee v. Big River Steel, LLC, 927 F.3d 1024, 1026-27 (8th Cir. 2019) (noting the circuit split on the question but finding it unnecessary to announce its own view on the split). Where parties seek court approval for their settlement, courts may enter a stipulated judgment after scrutinizing the settlement for fairness. Lynn's Food Stores, 679 F.2d at 1353. Typically, courts regard the adversarial nature of a litigated FLSA case to be an adequate indicator of the fairness of the settlement. Id. at 1353-54. ...


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