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Hens v. Clientlogic Operating Corp.

October 31, 2010

MARTIN J. HENS, PAUL VAN VOORHEES, DAWNE DOMAGALA, JENNIFER VITELLO, DANIEL MILLER, AND PAUL PRINCE, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
CLIENTLOGIC OPERATING CORPORATION, DEFENDANT.



The opinion of the court was delivered by: William M. Skretny Chief Judge United States District Court

DECISION AND ORDER

I. INTRODUCTION

Plaintiffs, current and former hourly telephone customer service employees, commenced this action on behalf of themselves and others similarly situated on May 31, 2005, seeking unpaid wages from Defendant pursuant to the Fair Labor Standards Act ("FLSA") and the New York Labor Law ("NYLL"). Plaintiffs filed an Amended Complaint on August 31, 2005, and a Second Amended Complaint on October 16, 2006. Presently before the Court is the parties' Joint Motion for Protective Order or to Seal Settlement Agreement. (Docket No. 490.)

II. BACKGROUND

By Decision and Order issued on September 26, 2006, this Court granted Plaintiffs' Motion for Conditional Certification as an FLSA Collective Action and for Court Authorized Notice to employees. (Docket No. 344.) Several thousand individuals have since consented to join this lawsuit. On April 13, 2007, the parties filed a Notice and Stipulation of Tolling in order to engage in settlement negotiations. (Docket No. 356.) After negotiations had continued for some time, the Court referred the matter to mediation on October 3, 2007. (Docket No. 375.) Mediation took place over the course of more than two years, and eventually resulted in a settlement agreement.

On February 22, 2010, counsel appeared before this Court for a status conference and confirmed that the parties had reached a settlement in principle. (Docket No. 491, hereafter "Tr." at 2:16-4:10.) Defense counsel went on to state that, from Defendant's perspective, "confidentiality is an important aspect of the agreement," and requested that the Court review the settlement agreement in camera and approve it without filing the document. (Tr. at 4:24-25, 7:15-18, and 8:11-14.) The Court declined to conduct an in camera review, but agreed to consider a joint motion to seal. (Tr. at 8:21-9:6 and 9:24-25.) For the reasons discussed below, the Joint Motion to Seal is denied.

III. DISCUSSION

In support of the Joint Motion to Seal, the parties urge that: (1) there is no presumption of public access to the settlement agreement because the Court is not being asked to interpret or enforce its terms, and (2) the injury and harm that would result from disclosure outweighs any public interest in the settlement. Both propositions are rejected.

A. The Presumption of Public Access

There is a well-established presumption favoring full and complete access to court proceedings and judicial documents. Nixon v. Warner Communications., Inc., 435 U.S. 589, 597, 98 S.Ct. 1306, 55 L.Ed. 2d 570 (1978); Lugosch v. Pyramid Co. of Onondaga, 435 F.3d 110, 119 (2d Cir. 2006) ("The common law right of public access to judicial documents is firmly rooted in our nation's history."); Gambale v. Deutsche Bank AG, 377 F.3d 133, 140 (2d Cir. 2004) (confirming public's common law presumptive right of access to judicial documents); United States v. Amodeo, 44 F.3d 141, 145 (2d Cir. 1995) (a judicial document, subject to the right of public access, is one that is relevant to the performance of a judicial function and useful in the judicial process).

In most cases, a settlement agreement is not a judicial document. Typically, when a private settlement is reached, the plaintiff files a notice or stipulation of dismissal, pursuant to Federal Rule of Civil Procedure 41(a)(1)(A), which does not require a court order.*fn1 But FLSA cases are different. Parties must submit their settlement agreement for approval, and a district court "must consider whether the agreement reflects a 'reasonable compromise of disputed issues [rather] than a mere waiver of statutory rights brought about by an employer's overreaching.'" Tuan Le v. SITA Info. Networking Computing USA, Inc., No. 07-CV-0086, 2008 U.S. Dist. LEXIS 46174, at *2 (E.D.N.Y. June 12, 2008) (quoting Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350, 1354 (11th Cir. 1982)). Such consideration is, of course, a judicial act.

Numerous circuit and district courts have concluded that a settlement agreement submitted to the court for consideration and approval is a judicial record and, thus, the presumption of public access attaches. Xue Lian Lin v. Comprehensive Health Mgmt., No. 08 Civ. 6519, 2009 U.S. Dist. LEXIS 64625, *3-4 (S.D.N.Y. July 23, 2009) (declining request to approve FLSA settlement absent document to which public's right to access can attach); see also, Dees v. Hydradry, Inc., No. 09-CV-1405, 2010 U.S. Dist. LEXIS 40900, at *43-44 (M.D. Fl. Apr. 19, 2010) (parties' joint stipulation for dismissal of FLSA action, which did not include terms of settlement, did not comport with public's right of access); Tabor v. Fox, No. 09-CV-338, 2010 U.S. Dist. LEXIS 60839, at *4 (E.D.N.C. June 17, 2010) (presumption of access applies to FLSA settlement) (citing Jessup v. Luther, 277 F.3d 926, 929-30 (7th Cir. 2002) (presumption applies to court-approved settlement of civil rights action); S.E.C. v. Van Waeyenberghe, 990 F.2d 845, 848 (5th Cir. 1993) (finding district court abused its discretion in sealing stipulated order in securities case); Stalnaker v. Novar Corp., 293 F. Supp. 2d 1260, 1263-64 (M.D. Ala. 2003) (presumption applies to FLSA cases and court may not rubber stamp a stipulation to seal); Boone v. City of Suffolk, VA., 79 F. Supp. 2d 603, 609 (E.D. Va. 1999) (unsealing of FLSA settlement agreement upon finding that it is judicial document to which presumption of access applies)).

This Court agrees with the reasoning set forth in these circuit and district court cases, which identify two bases supporting public access to settlement agreements in FLSA cases. First is the general public interest in the content of documents upon which a court's decision is based, including a determination of whether to approve a settlement. Jessup, 277 F.3d at 928-29; Boone, 79 F. Supp. 2d at 609. Second is the "private-public character" of employee rights under the FLSA, whereby the public has an "independent interest in assuring that employees wages are fair and thus do not endanger 'the national health and well-being.'" Stalnaker, 293 F. Supp. 2d at 1264 (quoting Brooklyn Savings Bank v. O'Neil, 324 U.S. 697, 706, 709, 65 S.Ct. 895, 89 L.Ed. 1296 (1945)). Thus, "'there is a strong presumption in favor of keeping settlement agreements in FLSA wage-settlement cases unsealed and available for public view,'" and this Court finds that the settlement agreement presented here is a judicial document to which the presumption ...


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