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Celebrity Status of a Party is NOT a Reason for Keeping FLSA Settlement Confidential


Jones v. Smith, Jr. a/k/a Busta Rhymes and Starbus LLC - United States District Court, Eastern District of New York


Facts:  David Jones ("Jones") worked as a chauffeur for Tahiem Smith, Jr. a/k/a Busta Rhymes ("Smith") and was employed by both Smith and Starbus, LLC.  Jones filed a lawsuit against both defendants and claimed they failed to pay him required overtime compensation under the Fair Labor Standards Act ("FLSA") and subjected him to verbal harassment and discrimination based on his age.  After litigating the case for a year, the parties agreed to a settlement and submitted a letter to the Court asking for guidance on how to submit the agreement for approval.  Defendants' counsel indicated the agreement did not need to be filed publicly because four of the five claims brought by Jones were non-FLSA claims and did not require judicial approval and since the agreement contained a confidentiality provision (because of Smith's celebrity status), the parties did not want it to be public record.  In an effort to circumvent the issue entirely, the parties proposed that Jones would be deemed an independent contractor so as to avoid the need for court approval of the settlement.  As a result, the matter before the Court in this case was the parties' joint motion for settlement approval.

Holding:  The District Court noted that in accordance with a Second Circuit case, Cheeks v. Freeport Pancake House, court approval is required for all stipulated dismissals of FLSA claims.  In this instance, the Court pointed out that stipulating to the independent contractor status of Jones (as a way to try and avoid court approval of the settlement) was a novel argument.  However, with neither party finding relevant caselaw to guide the Court, the Judge held that he was not empowered to allow the parties to make the independent contractor "run around" of Cheeks.  Instead, the Court pointed out that the rights protected by the FLSA (and by judicial review of FLSA settlements) were not merely private rights.  Rather, the FLSA was intended to be applied "even to those who would decline its protections."

Turning to the confidentiality provision and the "celebrity status" of Smith, the Court acknowledged that "the common law right of public access to judicial documents is firmly rooted in our nation's history."  While in most instances, a settlement agreement would not qualify as a "judicial document" in which the public would have a right to view, the FLSA views the matter differently as judicial approval is required for settlement agreements of FLSA causes of action.  As a result, "[a] court-approved FLSA settlement cannot be confidential absent a substantial showing that the need for confidentiality outweighs the presumption of public access."  In this instance, the Court noted that the parties had failed to cite any caselaw to support their argument that the "celebrity status" of Smith should bar public access to the FLSA settlement.  Instead, the Court held that Smith's career actually increased the presumption of public access as several news organizations had reported on the lawsuit and shielding the settlement from public disclosure would convey the impression the celebrities' notoriety placed them above the normal application of the law.

Judgment:  The Court denied the parties' joint motion for settlement approval of the FLSA claims on the grounds that the settlement must be filed publicly as the presumption of public access to the settlement outweighed the need for confidentiality.  Further, the "celebrity status" of Smith was not sufficient to keep the settlement confidential, in part because the parties could not cite any relevant caselaw to support the argument and the actual celebrity status of Smith was a key reason for making the settlement public record.

The Takeaway:  Based upon the prior caselaw and relevant precedent, I think the Court was right to ultimately find that the proposed FLSA settlement could not remain private and instead would have to be public record (by way of being court approved).  The "celebrity status" of Smith was an interesting argument to make (and as the Court noted, novel).  However, as the Court found, "[a] court-approved FLSA settlement cannot be confidential absent a substantial showing that the need for confidentiality outweighs the presumption of public access."  In this case, I would key in on the phrase "substantial showing".  Quite simply, no party could meet this burden and as the Court held, no caselaw was introduced to back up this argument.  With that being said, the Court was not in the position to create new precedent which resulted in the joint motion for settlement approval being denied.  

Is this worth an appeal?  Perhaps, assuming the parties could find a judge that was interested in creating new caselaw.  Of course, that is never a guarantee.  For the time being, however, the mandate that court approval is required for all stipulated dismissals of FLSA claims remains in place.

Majority Opinion Judge:  Judge Levy

Date:  May 14, 2018

Opinion:  http://hr.cch.com/eld/JonesSmith051418.pdf

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