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Employer Law Report

Martin v. Spring Break ’83 Productions, LLC … the Sequel or Part Deux? The Supreme Court is Asked to Review Whether a Private Settlement Agreement Dismissing FLSA Claims is Enforceable

Posted in Wage & Hour

As you might recall, in August we blogged on Martin v. Spring Break ’83 Productions, LLC, a case involving the blockbuster movie "Spring Break ’83" [stated with sarcasm], where the Fifth Circuit became the first federal appellate court to enforce a private FLSA settlement. In that blog, available here, we crossed our fingers and hoped the Fifth Circuit’s decision would come to a jurisdiction near you. Well, that hope is one step closer to reality as the plaintiffs/appellants – now the Petitioners – filed a Petition for Writ of Certiorari (the "Petition") and asked the United States Supreme Court to review the case. One of the two questions the Court has been asked to review is:

Whether a settlement agreement executed by a union and an employer relating only to collectively bargained for rights can preclude union members from filing individual claims for minimum wage and overtime under the Fair Labor Standards Act [("FLSA")].

In arguing for certiorari, the Petitioners argued that the Fifth Circuit’s decision creates a split of authority on whether claims under the FLSA can be compromised in a private settlement and whether unions can collectively bargain away individuals’ rights under the FLSA.

Turning to the first argument, if the Court grants certiorari, the potential impact of this decision is quite significant, as it stands to undo the 30-year-old Lynn’s Food Stores, Inc. v. United States case, in which the Eleventh Circuit noted that there are only two ways to compromise claims under the FLSA: (1) under a Department of Labor supervised settlement; and (2) for an employee to bring a lawsuit and have the settlement reviewed by the court. As the Petitioners’ brief notes, the Fifth Circuit’s decision rejected the Eleventh Circuit’s reasoning when it held "a private compromise of claims under the FMLA is permissible where there exists a bona fide dispute as to liability."

The Petitioners also argue that the Fifth Circuit’s ruling conflicts with the Supreme Court’s Barrentine v. Arkansas-Best Freight Sys., decision, another over 30-year-old case, where it held that a union cannot waive individual FLSA rights through collective bargaining. The Fifth Circuit distinguished Barrentine, in Martin and found, "[i]n Barrentine, the plaintiffs’ grievances based on rights under the FLSA were submitted by the union to a joint grievance committee that rejected them without explanation, a final and binding decision pursuant to the collective bargaining agreement. Here, appellants accepted and cashed settlement payments. Appellants’ FLSA rights were adhere to and addressed through the Settlement Agreement, not waived or bargaining away." The Fifth Circuit went on, "FLSA substantive rights may not be waived in the collective bargaining process, however, here, FLSA rights were not waived, but instead, validated through settlement of a bona fide dispute, which Appellants accepted and were compensated for."

Currently, Martin’s reach is limited to the three states in the Fifth Circuit: Louisiana, Mississippi, and Texas. Should the Supreme Court grant certiorari, it would resolve the split between the Fifth and Eleventh Circuits concerning private FLSA settlement and clarify whether unions may settle their members’ FLSA claims. Better yet, should the Supreme Court uphold Martin, employers could engage in private, confidential FLSA settlements and unions would have the authority to settle their members’ FLSA claims under certain circumstances. Even in a worst case scenario, which would occur if the Supreme Court chooses not to review the case or reverses it, employers are in no worse shape, and the reason for this is simple: Employers have been following Lynn’s Food Stores, Inc. and Barrentine for over 30 years now, so most already know they must either obtain DOL supervision or get court approval to settle employee FLSA claims and that FLSA settlements are not issues for collective bargaining.

We expect a decision on whether or not the Supreme Court will take up this case by Spring Break ’13.

To be continued…