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Engledow v. Houston Lake Funeral Home LLC

United States District Court, M.D. Georgia, Macon Division

June 4, 2019

WILLIAM ENGLEDOW, Plaintiff,
v.
HOUSTON LAKE FUNERAL HOME, LLC, d/b/a MCCULLOUGH FUNERAL HOME and MAGNOLIA CEMETERY, LLC, d/b/a MAGNOLIA PARK CEMETERY, Defendants.

          AMENDED [1] ORDER DENYING WITHOUT PREJUDICE CONSENT MOTION FOR APPROVAL OF SETTLEMENT AGREEMENT

          TILMAN E. SELF, III, JUDGE.

         Plaintiff William Engledow alleges in his Complaint that Defendants Houston Lake Funeral Home, LLC, d/b/a McCullough Funeral Home and Magnolia Cemetery, LLC, d/b/a Magnolia Park Cemetery (collectively “Defendants”) violated the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201, et seq., by failing to pay his “overtime premium when he worked more than forty hours each week” and his “earned commissions when he was terminated.” [Doc. 1 at p. 2]. Plaintiff's Complaint also raised the following non-federal claims; breach of contract, quantum meruit, and promissory estoppel. [Id. at pp. 23-26].

         After the Court granted the parties' Joint Motion to Stay Proceedings [Doc. 19], the parties conducted a settlement conference and, after “extensive negotiations, ” reached a settlement to resolve the aforementioned disputed claims in their entirety. See [Docs. 22- 23]; see also [Doc. 24 at pp. 2-3]. Having reached a settlement, the parties submitted their FLSA Settlement Agreement and Release [Doc. 24-1] for Court approval pursuant to 29 U.S.C. § 216(b). For the following reasons, the Court DENIES their Consent Motion for Approval of Settlement Agreement [Doc. 24] without prejudice.

         DISCUSSION

         A. Standard of Review

         In the Eleventh Circuit, FLSA actions may not be settled privately; instead, the Department of Labor must supervise the payment of back wages or a court must enter a stipulated judgment after it has determined that the proposed settlement is “a fair and reasonable [resolution] of a bona fide dispute over FLSA provisions.” Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350, 1355 (11th Cir. 1982). Additionally, a court must review the reasonableness of attorneys' fees to ensure that counsel is adequately compensated and that no conflict of interest affects the amount the plaintiff-employee recovers under the agreement. Silva v. Miller, 307 Fed.Appx. 349, 351 (11th Cir. 2009) (per curiam).

         Despite the parties' acknowledgment of bona fide disputes as to liability for the asserted wage-related claims, they are still willing to compromise and settle this case. See, e.g., [Doc. 24-1 at ¶ 8 (“Defendants specifically disclaim[ ] and den[y] any liability to Plaintiff or that it engaged in any wrongful, tortious, or unlawful activity.”)]; see also [Doc. 24 at p. 8]. However, the Court cannot approve the proposed settlement agreement as submitted because it contains pervasive-release language within a provision entitled “General Release of Claims By The Parties, ” as well as a mutual provision prohibiting disparagement from either party against the other. [Id. at ¶¶ 5, 9].

         B. The Parties' Pervasive Release Language

         First, the Court cannot approve the proposed settlement agreement because it contains what courts refer to as a “pervasive release.” The essence of this provision requires Plaintiff to refrain from participating in lawsuits against Defendants. Such releases are typified by broad, sweeping language that exempts a defendant from claims that a plaintiff has not brought or, in some cases, claims of which a plaintiff is not yet aware. These releases often include claims that are “‘known and unknown,' or ‘past, present, and future,' or ‘statutory or common law,' or other claims included among the boiler plate, but encompassing, terms unfailingly folded into the typical general release.” Moreno v. Regions Bank, 729 F.Supp.2d 1346, 1352 (M.D. Fla. 2010) (footnote omitted). These kinds of provisions are unacceptable because

[a]n employee who executes a broad release effectively gambles, exchanging unknown rights for a few hundred or a few thousand dollars to which he is otherwise unconditionally entitled. In effect, the employer requests a pervasive release in order to transfer to the employee the risk of extinguishing an unknown claim. . . . [A] pervasive release is a ‘side deal' in which the employer extracts a gratuitous (although usually valueless) release of all claims in exchange for money unconditionally owed to the employee. . . . Although inconsequential in the typical civil case . . ., an employer is not entitled to use an [sic] FLSA claim (a matter arising from the employer's failing to comply with the FLSA) to leverage a release from liability unconnected to the FLSA.

Id. at 1351.

         Basically, a pervasive release allows the defendant-employer to stack the odds- “to confer[ ] an uncompensated, unevaluated, and unfair benefit on [itself].” Id. at 1352. Should the plaintiff-employee discover in the future that a claim accrued prior to the date he entered the settlement agreement, he can seek no relief and must content himself with money (1) that the defendant-employer paid to him months or even years before he became aware of the new claim, (2) that was not related in any way to the newly discovered claim, and (3) that he would have been entitled to in the absence of a pervasive release. See Id. at 1352 (“The employer who obtains a pervasive release receives either nothing (if no claim accrues) or a windfall at the expense of the unlucky employee. In either instance, the employee bears the risk of loss, and the employer always wins-a result that is inequitable and unfair in the circumstance. The employer's attempt to ‘play with house money' fails judicial scrutiny.”).

         A portion of the proposed settlement agreement in this case states verbatim,

5. General Release of Claims By The Parties. Plaintiff, on behalf of himself, his heirs, executors, administrators, and assigns, knowingly and voluntarily waives and releases the Defendants and its parent corporation, their affiliates, subsidiaries, divisions, insurers, predecessors, both individually and in their business capacities, and their employee benefits plans and programs and their administrations and fiduciaries (collectively, the ‘Released Parties'), from any and all claims, known and unknown, that Plaintiff has or may have against the Released Parties as of the date of execution of the Agreement. This release is comprehensive and includes any claim that Plaintiff could assert ...

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