Jones v. Smith
Opinion of the Court
This case raises the important question of whether defendants, solely due to their notoriety or celebrity, may enter into confidential settlements of claims against them made under the Fair Labor Standards Act ("FLSA"),
BACKGROUND
Plaintiff David S. Jones ("plaintiff") brought this action against defendants Trevor Tahiem Smith, Jr. and Starbus LLC ("defendants") on May 3, 2016. (See Complaint, dated May 3, 2016 ("Compl."), Dkt. No. 1.) Plaintiff alleged that, while employed by defendants as defendant Smith's personal chauffeur, defendants illegally failed to pay him required overtime compensation and subjected him to verbal harassment and discrimination based on his age. (See Compl. ¶¶ 19-53, 61-64). Plaintiff further alleged that on the day his employment was terminated, defendant Smith physically assaulted him. (See
The parties then filed a letter seeking the court's guidance on how to submit their agreement for approval. In the letter, defendants' counsel insisted that the settlement could not be filed publicly, advancing two lines of argument to support this contention. (See Joint Letter, dated Dec. 11, 2017 ("Joint Ltr."), Dkt. No. 29, at 1-2.) First, the parties stated that because four out of the five claims were non-FLSA claims that did not require judicial approval, "the rationale that 'the public has an independent interest in assuring that employees [sic] wages are fair and thus do not endanger the national health and well-being' is inapplicable to Plaintiff's claim."
I held a telephone conference with the parties on April 5, 2018 to discuss these issues. During the conference, the parties suggested an alternative rationale for avoiding Cheeks review and public disclosure of the settlement. They offered that if they were to stipulate to the plaintiff being deemed an independent contractor for settlement purposes only they could avoid the need for court approval. While I was skeptical of this argument, I instructed the parties to submit an executed version of the settlement agreement to chambers for my review. (Minute Entry, dated Apr. 5, 2018.) Counsel submitted an executed copy of the parties' proposed settlement agreement to my chambers on May 1, 2018.
DISCUSSION
1. Avoiding Cheeks Review
The Second Circuit held in Cheeks that court approval is required for all stipulated dismissals of FLSA actions with prejudice pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(ii). Cheeks v. Freeport Pancake House,
Plaintiffs seem to be relying on the idea that the FLSA is inapplicable to independent contractors. See, e.g. Ethelberth v. Choice Sec. Co.,
WHEREAS, Plaintiff agrees and consents to be classified and treated as an independent contractor hired by the Defendants and not as Defendants' employee for the purposes of the settlement of his claims in this Action, and
WHEREAS, Plaintiff expressly reserves the right to contend that he was in fact an employee of Defendants for the purposes of said claims in the event that this Agreement is not approved or this Action is otherwise not settled....
... 6. Confidentiality . Given that Plaintiff agrees and consents to be classified and treated as an independent contractor, as aforesaid, solely for the purposes of settling his claims, Plaintiff further consents to this Agreement remaining confidential in its entirety.
Plaintiff acknowledges and agrees that because of Defendants' public persona the confidentiality of this Agreement is of the essence.
Thus, while the parties are still seeking the court's approval of the settlement agreement, they are attempting to stipulate for settlement purposes only that the FLSA is inapplicable to the plaintiff. The agreement as written further provides that in the event plaintiff breaches the confidentiality provision, "Defendants shall be entitled to an award of its costs spent enforcing the provision, including all reasonable attorneys' fees associated with the enforcement action, without regard to whether the Defendants can establish actual damages from Plaintiff's breach."
Having carefully considered the issue, I conclude that I am not empowered to permit the parties to make this sort of end-run around Cheeks. The rights protected by the FLSA (and by judicial review of FLSA settlements) are not merely private ones. In fact, "although employees, through counsel, often voluntarily consent to dismissal of FLSA claims and, in some instances, are resistant to judicial review of settlement, the purposes of [the FLSA] require that it be applied even to those who would decline its protections. " Socias v. Vornado Realty L.P.,
*624The potential for abuse by allowing an exception like this to Cheeks review extends far beyond the parties in this case. Disputes about the applicability of the FLSA to particular employees are central to scores of FLSA cases, and the independent contractor exemption has been one of the most fiercely contested issues in FLSA cases for the past few decades. Simply allowing the parties to stipulate that the statute is no longer applicable for settlement purposes would re-open the door to the kind of employer abuses in FLSA settlement negotiations that drove the Second Circuit to clarify the need for settlement review in Cheeks. See Cheeks,
2. Confidentiality and FLSA Settlements
The Second Circuit has repeatedly noted that "the common law right of public access to judicial documents is firmly rooted in our nation's history." Lugosch v. Pyramid Co. of Onondaga,
"Although in many-if not most-cases, a settlement agreement would not qualify as a 'judicial document,' settlement agreements in FLSA cases are different because of the requirement for judicial approval. That is, an agreement settling an FLSA claim that is submitted for court approval is indisputably a document that is 'relevant to the performance of the judicial function and useful in the judicial process,' and thus a 'judicial document' subject to the presumption of access." Wolinsky v. Scholastic, Inc.,
Here, the parties have offered two supposed interests they have in maintaining the confidentiality of this agreement. First, the parties' original letter seeking the court's guidance contended that publicly filing the agreement would contradict the express terms of the parties' agreement. (See Joint Ltr. at 2.) Most district courts in this circuit have rejected this circular rationale. See, e.g., Wolinsky,
Second, the parties contend that Mr. Smith's "public persona" (Agreement at § 6) as a "well-known recording artist" (Joint Ltr. at 2) is a sufficient interest to overcome the presumption of public access to FLSA settlement agreements. Again, however, the parties have cited no case law to support this argument. Generally, though, district courts in this circuit have applied the same body of law regarding the presumption of public access to cases involving other celebrity employers, without giving their notoriety any weight against the presumption of public access.
If anything, the public's interest in Mr. Smith's career actually increases the presumption of public access in this case. Beyond the interest in his career, multiple news organizations have reported on the existence of this lawsuit.
Finally, shielding the agreement from public scrutiny would "thwart[ ] Congress's intent both to advance employees' awareness of their FLSA rights and to ensure pervasive implementation of the FLSA in the workplace." Wolinsky,
Finally, I note that even had this agreement been publicly filed, the court could not approve it given its confidentiality provision. The Second Circuit has cited agreements containing strong confidentiality provisions as examples of the "potential for abuse" in FLSA settlements. Cheeks,
CONCLUSION
For the foregoing reasons, the parties' joint motion for settlement approval is DENIED, without prejudice. The parties are hereby directed to resume their negotiations and submit a revised settlement agreement on the public docket for the court's review and approval. The revised agreement may not include any impermissible confidentiality provisions. The parties are directed to submit their revised agreement for the court's approval by June 15, 2018. If the parties are unable to reach an agreement, the parties shall appear for a status conference on June 19, 2018 at 12:00 p.m. in Courtroom 11-B, with the expectation of proceeding to trial by the end of this year.
SO ORDERED.
The parties also claimed that the agreement's confidentiality provision was limited to the state and city claims and "explicitly carves out Plaintiff's FLSA claim." (Joint Ltr. at 2.) Because the agreement submitted to my chambers contained no such carve-out, however, I have not addressed the issue of whether it would be possible to construct such an agreement that could pass scrutiny under Cheeks.
See, e.g., Gallardo v. PS Chicken Inc.,
There are a few cases in which celebrities have been able to maintain the confidentiality of FLSA settlements, but these cases all appear to pre-date Cheeks, which was decided on August 7, 2015. Thus, the celebrities were not benefiting from any heightened interest in secrecy given their status, but rather from the lack of clarity as to whether dismissals with prejudice could be granted prior to the Second Circuit's decision in Cheeks, See, e.g., Oliver v. Maroon Entm't, Inc., No. 14 CV 10007, Dkt. No. 17 (S.D.N.Y. May 14, 2015) (granting order of dismissal with prejudice in FLSA action against recording artist Mariah Carey); O'Neill v. Mermaid Touring Inc., No. 11 CV 9128, Dkt. No. 86,
See, e.g., John Marzulli, Busta Rhymes mocked chauffeur's age, shorted salary: $236G lawsuit, N.Y. Daily News (May 3, 2016), http://www.nydailynews.com/new-york/busta-rhymes-mocked-chauffeur-shorted-salary-236g-lawsuit-article-1.2623432.
Reference
- Full Case Name
- David S. JONES v. Trevor Tahiem SMITH, Jr., a/k/a Busta Rhymes, a/k/a Trevor George Smith, Jr., and Starbus LLC
- Cited By
- 7 cases
- Status
- Published