U.S. Supreme Court denies cert in Fifth Circuit Case—The Future for the Enforceability of Private FLSA Settlement Agreements

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In a prior post, we wrote about a recent decision from the Fifth Circuit Court of Appeals enforcing a private settlement agreement that released claims under the Fair Labor Standards Act (FLSA), even though the agreement did not receive court approval and was forged without Department of Labor (DOL) supervision. Martin v. Spring Break ’83 Productions, LLC, Case No. 11-30671 (5th Cir. July 24, 2012). (The Fifth Circuit is the federal court of appeals for Louisiana, Mississippi, and Texas.)

As we noted, the Fifth Circuit’s decision stands in contrast to the Eleventh Circuit Court of Appeals’ thirty-year old holding in Lynn’s Food Stores, Inc. v. U.S., 679 F.2d 1350 (11th Cir. 1982). (The Eleventh Circuit has federal appellate jurisdiction over Florida, Georgia, and Alabama.) There, the Eleventh Circuit ruled that an employee-plaintiff’s settlement and release of his or her FLSA claims, absent DOL supervision, can be enforceable only where a court approved the settlement agreement as the resolution of a bona fide dispute “after scrutinizing the settlement for fairness.” For the past three decades, the Eleventh Circuit’s view of the matter stood unchallenged until Martin created a circuit split.

In a further development, the U.S. Supreme Court has now denied the Martin plaintiffs’ petition for a writ of certiorari. This means that the Supreme Court will not hear the case, and that Martin will continue to stand. This is good news for employers. While Martin is not binding on courts outside the Fifth Circuit, it at least demonstrates to courts outside the Eleventh Circuit that there is an alternative to the Lynn’s Food Stores approach to requiring court approval of private FLSA settlements. Will other circuit and district courts follow? Only time will tell, so stay tuned.

Christopher C. Murray is a shareholder in the Indianapolis office of Ogletree Deakins.