When parties agree to resolve these claims as part of litigation, two things often happen:
- A court must approve the settlement; and
- The settlement agreement becomes public; i.e., no confidentiality.
Recently, Trevor Tahiem Smith, Jr. and the other parties to an FLSA action requested that a New York federal court relax the publicity rules by creating a “celebrity exception.”
Oh, you don’t know Trevor Tahiem Smith, Jr.?
That’s Busta Rhymes!
So what so what so what’s the scenario?
Here’s a little more background on the lawsuit.
The plaintiff is the former personal chauffeur for Busta Rhymes. He claims Busta and Starbus, LLC, failed to pay him required overtime and discriminated against him based on his age. The plaintiff also claims that, on the day his employment ended, Busta physically assaulted him. So, the plaintiff filed a five-count complaint consisting of both state and federal claims.
The defendants denied all of the claims and the two sides litigated for about a year until the defendants agreed to — cue the music — ante up and settle back in November.
This is where the parties tried to get creative.
Ok, I will.
New York is part of the Second Circuit court of Appeals. In the Second Circuit, there is a case called Cheeks v. Freeport Pancake House, Inc. In Cheeks, the Second Circuit concluded that parties must get court approval all stipulated dismissals of FLSA actions with prejudice. And, as I noted above, most courts won’t approve an FLSA settlement agreement with a confidentiality provision.
So, knowing that courts generally frown on confidential FLSA settlement agreements, the parties here hatched an interesting plan: they offered to stipulate to the plaintiff being deemed an independent contractor for settlement purposes.
Ah, I get it. No employee; no FLSA. No FLSA; no need for court approval.
Unfortunately, the parties had no legal support whatsoever for this plan of theirs.
That plan sounds dangerous.
Indeed, in its opinion, the court conceded its skepticism but indulged the parties by permitting them to file a proposed settlement agreement for the court to review.
Then, the court determined that Cheeks would apply anyway:
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.”…I see no basis, therefore, for the court to credit what the parties have simply decided to label their relationship in this context, particularly given plaintiff’s express reservation of his right to contest this issue if the settlement were not approved.
Then, the court elaborated on how allowing parties to game the system isn’t what the FLSA is all about:
The 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.
Fortunately, the parties had a Plan B; namely, the aforementioned “celebrity exception.” That is, the parties argued that Busta’s “public persona” as a “well-known recording artist” should create an exception to the presumption of public access to FLSA settlement agreements.
Unfortunately, the parties cited no case law to support their argument. Again.
The Court then rubbed a little salt in the wound by citing several instances in which District Courts in the Second 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.”
Did I say a little salt? I meant a lot of salt:
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. In this context, shielding this settlement from public disclosure would convey the impression to the public that celebrities’ notoriety places them above the normal application of the law.
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.”…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.
Thus, the Court ordered the parties to — cue music — put your
hands agreement where my eyes could see.