The opinion
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
CRYSTALLE BROWN, et al., : Civil No. 1:19-cv-1227
:
Plaintiff :
: (Chief Judge Jones)
v. :
: (Magistrate Judge Carlson)
LYNDON CITY LINE DINER, :
INC., :
:
Defendant :
MEMORANDUM
I. Factual Background
This case comes before the undersigned for the purpose of writing the last
chapter in the settlement of this Fair Labor Standards Act (FLSA) collective action
brought on behalf of 17 opt-in plaintiffs employed by the defendant. The parties have
reached agreement on the substantive financial terms of a settlement, but there
remained a dispute between the parties regarding certain non-economic terms of this
agreement: specifically, parties could not agree upon the language and scope of any
confidentiality and non-disparagement provisions of this settlement agreement.
Confronted with this impasse, the parties agreed to submit proposed
confidentiality and non-disparagement language to the undersigned for inclusion in
their settlement agreement, and further agreed that we could adopt a proposal
submitted by either parties or draft our own proposed language for inclusion in the
agreement. The parties also stipulated that the language we endorsed would be final
and non-appealable.
With these stipulations, the parties submitted competing proposed language
and legal citations to us for our consideration. We have reviewed these competing
proposals, and upon consideration, have drafted confidentiality and non-
disparagement provisions for the parties which are drawn directly from FLSA
settlements approved by this court in the past. This proposed text, and the rationale
for the confidentiality and non-disparagement provisions, are discussed below.
II. Discussion
In the context of litigation under the Fair Labor Standards Act, as a general
rule, “[t]here are only two ways that FLSA claims may be compromised or settled:
(1) a compromise supervised by the Department of Labor pursuant to 29 U.S.C. §
216(c), or (2) a compromise approved by the district court pursuant to 29 U.S.C. §
216(b).” Kraus v. PA Fit II, LLC, 155 F. Supp. 3d 516, 522 (E.D. Pa. 2016). In
conducting its review of a proposed FLSA settlement, the court should determine
whether the agreement constitutes a resolution of a bona fide workplace dispute. The
Court “next conducts a two-part fairness inquiry to ensure that (1) the settlement is
fair and reasonable for the employees, and (2) the settlement furthers the FLSA's
implementation in the workplace.” Altnor v. Preferred Freezer Servs., Inc., 197 F.
Supp. 3d 746, 764 (E.D. Pa. 2016) (citations omitted).
Confidentiality and non-disparagement provisions in an FLSA settlement
agreement implicate the court’s duty to ensure that a settlement furthers the FLSA's
implementation in the workplace. In this regard, case law strongly favors
transparency in settlement agreements, while recognizing the need for limited
confidentiality and non-disparagement. As this court has observed:
“There is ‘broad consensus’ that FLSA settlement agreements should
not be kept confidential.” Brown, 2013 WL 5408575, at *3
(citing Brumley, 2012 WL 300583, at *3). The “public-private
character” of employee rights under the FLSA means that the public,
including current, former, or potential employees of a particular
defendant, has an interest in assuring that employee wages are fair; thus,
courts find that restrictive confidentiality provisions frustrate the
implementation of the FLSA. See Mabry v. Hildebrandt, No. CV 14-
5525, 2015 WL 5025810, at *3 (E.D. Pa. Aug. 24, 2015) (approving
settlement agreement with the exception of confidentiality clause).
Courts have approved limited or narrowly drawn confidentiality clauses
only where the clauses did not prevent plaintiffs from discussing the
settlements with defendants' employees. Id. For example, in McGee v.
Ann's Choice, Inc., the court found a confidentiality provision
reasonable where “[p]laintiffs are free to discuss the litigation with
friends, family, employees, and individuals not affiliated with the
media.” No. CIV.A. 12-2664, 2014 WL 2514582, at *3 (E.D. Pa. June
4, 2014).
Kutz v. Cargill Cocoa & Chocolate, Inc., No. 3:19-CV-0176, 2019 WL 5457776, at
*9 (M.D. Pa. Oct. 23, 2019) (quoting Yong Li v. Fam. Garden II, Inc., No. 5:18-CV-
01325, 2019 WL 1296258, at *3 (E.D. Pa. Mar. 20, 2019)). These principles
favoring limited and narrowly drawn confidentiality provisions are firmly rooted in
the decisional case law throughout this district.1 Recognizing the public interests
fostered by transparency, it has also been held that:
District courts within the Third Circuit have occasionally approved
narrowly crafted confidentiality clauses. See, e.g., McGee, 2014 WL
2514582, at *3; In re Chickie's & Pete's Wage & Hour Litig., No. 12-
6820, 2014 WL 911718, at *3 (E.D. Pa. Mar. 7, 2014). In each instance,
however, the at-issue clause restricted employees only from
disparaging their employers and discussing the terms of the settlement
with the press and media. McGee, 2014 WL 2514582, at *3; In
re Chickie's & Pete's, 2014 WL 911718, at *3. The courts emphasized
that the confidentiality clauses furthered implementation of the FLSA
by maintaining public access to the settlements and allowing the
employees to discuss the terms with fellow co-workers. McGee, 2014
WL 2514582, at *3; In re Chickie's & Pete's, 2014 WL 911718, at *3.
Haley v. Bell-Mark Techs. Corp., No. 1:17-CV-1775, 2019 WL 1925116, at *6
(M.D. Pa. Apr. 30, 2019).
Consistent with this view that the public’s interest in implementation of the
FLSA is furthered through some measure of transparency, courts have also looked
1 Potoski v. Wyoming Valley Health Care Sys., No. 3:11-CV-00582, 2020 WL
207061, at *6 (M.D. Pa. Jan. 14, 2020); Kutz v. Cargill Cocoa & Chocolate, Inc.,
No. 3:19-CV-0176, 2019 WL 5457776, at *9 (M.D. Pa. Oct. 23, 2019); Haley v.
Bell-Mark Techs. Corp., No. 1:17-CV-1775, 2019 WL 1925116, at *6 (M.D. Pa.
Apr. 30, 2019); Confair v. Charles P. & Margaret E. Polk Found., No. 1:17-CV-
0674, 2018 WL 2095684, at *2 (M.D. Pa. May 7, 2018); Owens v. Interstate Safety
Serv., Inc., No. 3:17-CV-0017, 2017 WL 5593295, at *3 (M.D. Pa. Nov. 21, 2017);
Stickel v. SMP Servs., LLC., No. 1:15-CV-00252, 2016 WL 827126, at *2 (M.D.
Pa. Mar. 1, 2016)
with disfavor upon confidentiality provisions in settlement agreements that contain
sanctions or penalties. See e.g., Potoski, supra, 2020 WL 207061 at *6; 2020;
Confair, supra, 2018 WL 2095684, at *2; Diclemente v. Adams Outdoor Advert.,
Inc., No. CV 3:15-0596, 2016 WL 3654462, at *4 (M.D. Pa. July 8, 2016).
Guided by these principles, we tender the following confidentiality and non-
disparagement provision to the parties, a provision fashioned after those previously
approved by other courts. As noted below, this text is derived directly from cases in
this circuit and draws upon the specific proposals of the parties. The proposed text
is as follows:
Confidentiality and Non-Disparagement
Named Plaintiffs and Class Counsel will refrain from making any
public statements (including, but not limited to, press releases)
regarding the Settlement. Named Plaintiffs and Class Counsel also will
not initiate any contacts with the news media regarding the underlying
facts alleged in the Complaint nor the Settlement, nor respond
substantively to any news media contact regarding the underlying facts
alleged in the Complaint nor the Settlement.2 Should Employees
receive a subpoena or order of a court reasonably believed to be a court
of proper jurisdiction seeking the disclosure of the terms of this
Agreement, Employees shall give the Company notice of any such
order or subpoena by forwarding the same within three business days.3
However, Plaintiffs may not be prevented from discussing the
settlement with Defendant's employees, friends, families, and
individuals not affiliated with the media. Such discussion may take
place orally, in writing, or through a social media platform among the
2 Derived from Potoski, supra, 2020 WL 207061 at *6.
3 Derived from Haley v. Bell-Mark Techs. Corp., No. 1:17-CV-1775, 2019 WL
1925116, at *6 (M.D. Pa. Apr. 30, 2019).
individuals identified herein who, in turn, must keep the terms of the
agreement disclosed to them confidential.4 Employees agree to make
no public or private statements that are disparaging of the Company,
except that employees may furnish factually accurate information
requested by any federal, state or local governmental entity or pursuant
to subpoena.5
Submitted this 9th day of August 2021.
/s/ Martin C. Carlson
Martin C. Carlson
United States Magistrate Judge
4 Derived from Kutz v. Cargill Cocoa & Chocolate, Inc., No. 3:19-CV-0176, 2019
WL 5457776, at *9 (M.D. Pa. Oct. 23, 2019) and McGee v. Ann's Choice, Inc.,
No. CIV.A. 12-2664, 2014 WL 2514582, at *3 (E.D. Pa. June 4, 2014).
5 Derived from Haley v. Bell-Mark Techs. Corp., No. 1:17-CV-1775, 2019 WL
1925116, at *6 (M.D. Pa. Apr. 30, 2019) and Lyons v. Gerhard's Inc., No. CIV.A.
14-06693, 2015 WL 4378514, at *5 (E.D. Pa. July 16, 2015)