Hogan v. Allstate Beverage Co.

• Decision Date: 15 August 2011
• Docket Number: Civil Action No. 2:10cv390–MHT.
• Citation: 821 F.Supp.2d 1274
• Parties: Floyd HOGAN, Jr., Plaintiff, v. ALLSTATE BEVERAGE COMPANY, INC., d/b/a Gulf Distributing, Defendant.
• Court: U.S. District Court — Middle District of Alabama

821 F.Supp.2d 1274

Floyd HOGAN, Jr., Plaintiff,

v.ALLSTATE BEVERAGE COMPANY, INC., d/b/a Gulf Distributing, Defendant.

Civil Action No. 2:10cv390–MHT.

United States District Court,M.D. Alabama,Northern Division.

Aug. 15, 2011.

Albert Gamaliel Lewis, III, Dink Smyth, III, Lewis, Smyth & Winter, P.C., Tuscaloosa, AL, for Plaintiff.

Lisa Bradford Hansen, Vickers, Riis, Murray and Curran, LLC, Mobile, AL, William Evans Brittain, Ball Ball Matthews & Novak PA, Montgomery, AL, for Defendant.

OPINION AND ORDER

MYRON H. THOMPSON, District Judge.

Plaintiff Floyd Hogan, Jr., charges that his former employer, defendant Allstate Beverage Company, Inc., wrongfully withheld overtime pay in violation of federal law. Hogan asserts a claim for back wages and liquidated damages under the Fair Labor Standards Act of 1938 (FLSA), as amended, 29 U.S.C. § 201 et seq.

This case is before the court on Allstate Beverage's motion to enforce settlement and dismiss the case with prejudice. Allstate Beverage contends that it and Hogan agreed to settle this case in exchange for $ 7,500 paid by Allstate Beverage to Hogan. Hogan denies that the parties reached a settlement. Based on the evidence and argument, including that presented at a hearing, Allstate Beverage's motion to enforce settlement and dismiss this case will be denied.

I. BACKGROUND

Hogan worked for Allstate Beverage from May 2008 through December 2009, performing a range of tasks in the company's warehouse. Hogan alleges that he was regularly required to work between 45 and 55 hours in a given week and that Allstate Beverage deliberately failed to pay required overtime.

In addition to the FLSA action before this court, Hogan filed a separate administrative charge with the Equal Employment Opportunity Commission (EEOC), pursuant to Title VII of the Civil Rights Act of 1964 (Title VII), 42 U.S.C. § 2000e et seq. Hogan alleges that Allstate Beverage discriminated against him because he is African–American. (Prior to initiating a Title VII lawsuit in court, a plaintiff must file a charge with the EEOC. 42 U.S.C. § 2000e–5.)

Soon after the FLSA complaint was filed, Hogan's attorney commenced settlement negotiations with Allstate Beverage. Hogan authorized his attorney to negotiate for a settlement offer that Hogan would review and then approve. Hogan maintains he never authorized his attorney to make a final agreement or to settle any claims beyond his FLSA claim. He told him only that he would be willing to sign a provision to keep the settlement confidential.

During the months of June and July 2010, Hogan's attorney communicated with Allstate Beverage's attorney to negotiate the terms and amount of a potential settlement. Counsel exchanged emails and telephone calls regarding the terms of the settlement. In exchange for a settlement of $ 7,500, Allstate Beverage requested that Hogan agree both to a confidentiality provision and to a waiver of his pending EEOC charge for race discrimination. Hogan's attorney responded that Hogan would keep the settlement confidential but he would not release the EEOC charge. According to Allstate Beverage's counsel, the two attorneys verbally confirmed settlement of the case over the phone on or around July 13.

On July 15, Allstate Beverage sent Hogan's attorney a written settlement contract for Hogan to sign. This contract included a confidentiality agreement as well as a release provision. The release provision, on the one hand, preserved Hogan's “EEOC Charge” but, on the other hand, explicitly waived any “right or claims” under “Title VII.” The provision read in pertinent part:

“With the exception of the specific allegations found in EEOC Charge, Hogan does hereby forever RELEASE ... Allstate ... from any and all ... liabilities ... that have arisen prior to Hogan's execution of this Agreement. Specifically, Hogan acknowledges that by signing below, Hogan is releasing any rights or claims he may have against Allstate or the other Released Parties under Title VII ... or any other claims arising under federal, state or local statutory or common law.”

Settlement Contract 1, Evidentiary Hr'g, Def.'s Ex. 1.

Hogan came to his attorney's law offices and received a copy of the written settlement Allstate Beverage had prepared. Hogan refused to sign the contract because he believed the broad language of the contract's waiver provision could be interpreted as releasing his race-discrimination claim. Hogan had expressly told his attorney that he intended to proceed with this charge. When Hogan raised his concern, his attorney “admitted that he had ‘not read’ the settlement document prepared by [Allstate Beverage]” and that the language departed from the agreement counsel had reached over the phone. Hogan Aff. at 7 (doc. no. 28). Hogan's attorney told him he would redraft the contract.

On July 28, 2010, Hogan's attorney faxed him a revised copy of the written settlement. In addition to limiting the confidentiality agreement, this version removed the language explicitly releasing any Title VII claim. However, it retained a pervasive waiver, releasing “Allstate ... from any and all demands, charges, causes of action ... or liability of any kind ... that have arisen prior to Hogan's execution of this Agreement.” Hogan Aff. at 3 (doc. no. 28). Hogan again objected that this language could compromise his race–discrimination claim. He also protested that he had never agreed to release any claim beyond the pending FLSA suit. Hogan refused to sign the document and advised his attorney that he no longer wished to retain him as counsel. Hogan's attorney filed a motion to withdraw on August 2, 2010.

After receiving the motion to withdraw, Allstate Beverage requested a conference call before the magistrate judge to discuss the status of settlement negotiations. On August 11, 2010, the magistrate judge held an on-the-record conference call with Hogan, his attorney, and counsel for Allstate Beverage. Allstate Beverage's attorney asserted that the parties had already reached a binding settlement through counsels' oral agreement over the telephone on July 13.

Hogan's attorney verified that he and Allstate Beverage's attorney had agreed on the phone to settle the FLSA claim for $ 5,000 to Hogan with an additional $2,500 in attorney's fees. Hogan's counsel said that, while Hogan had authorized the suit to be settled for this sum, Allstate Beverage's release waiver diverged from their agreement; Hogan's attorney said he had never agreed to waive any future Title VII claim.

Hogan subsequently retained new counsel and has recalculated the overtime pay allegedly due. Hogan asserts that Allstate Beverage's own time-card records demonstrate that the $ 5,000 settlement would not have fully compensated him for the wages wrongfully withheld. Hogan contends that he is owed an uncontested sum of $ 7,972 in back wages and liquidated damages, substantially more than the $ 5,000 he would have received under the agreement negotiated by his prior counsel. In addition, Hogan now contends that he is owed wages for overtime hours unreflected on his time cards. He maintains he was regularly required to remain at the warehouse and continue working until the last person completed any outstanding tasks. He asserts that his working hours should be calculated using the latest “clock out” time of other employees on his shift. Using this last “clock out” method, Hogan calculates he is owed $ 15,211 in back wages and liquidated damages.¹

Allstate Beverage argues that Hogan is barred from revisiting his FLSA claim because he entered into a binding agreement through his prior counsel to settle this suit.

II. DISCUSSION

A.

The court will first determine whether the parties reached a binding agreement settling Hogan's claims. A district court ordinarily has the power to enforce a settlement agreement entered into by litigants while litigation is pending before the Court. Massachusetts Cas. Ins. Co. v. Forman, 469 F.2d 259, 260 (5th Cir.1972) (per curiam).² If material facts concerning the existence or enforceability of a settlement agreement are in dispute, the court holds a plenary hearing to determine the enforceability of the settlement. Murchison v. Grand Cypress Hotel Corp., 13 F.3d 1483, 1486 (11th Cir.1994); Pearson v. Ecological Science Corp., 522 F.2d 171 (5th Cir.1975). On November 23, 2010, the court heard testimony regarding the parties' settlement negotiations.

“Principles governing general contract law apply to interpret settlement agreements.” Resnick v. Uccello Immobilien GMBH, Inc., 227 F.3d 1347, 1350 (11th Cir.2000). The parties dispute whether state or federal law should govern here. Hogan relies on state law to argue that an enforceable settlement was never reached because the parties never signed a written settlement contract, as required by Alabama law. Allstate Beverage contends that federal common law of settlements should govern claims arising under the FLSA, a uniquely federal regulatory scheme, and that it and Hogan reached an oral agreement enforceable under federal common law.

On some occasions, federal courts have enforced oral settlement of federal claims under principles of federal common law. See, e.g., Fulgence v. J. Ray McDermott & Co., 662 F.2d 1207, 1209 (5th Cir.1981) (“[For cases dealing] with the operation of a Congressional statutory scheme, the federal courts are competent to determine whether a settlement exists without resort to state law.... Creation of a federal rule rather than absorption of a state rule is appropriate where ... the rights of the litigants and the operative legal policies derive from a federal source.”) (citations omitted). On other occasions, federal courts have applied state contract law to interpret settlement agreements even when a plaintiff's claims derive from federal statutes. See Resnick, 227 F.3d at 1350 (applying Florida law to construe a settlement under the Americans with Disabilities Act of 1990, as...