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McGlon v. Sprint Corp.

United States District Court, D. Kansas

April 18, 2018

MICHAEL MCGLON, On behalf of himself and others Similarly situated, Plaintiff,
v.
SPRINT CORPORATION, et al., A Kansas Corporation Defendants.

          MEMORANDUM AND ORDER

          JULIE A. ROBINSON, CHIEF UNITED STATES DISTRICT JUDGE.

         This matter comes before the Court upon consideration of Defendants Sprint Corporation and Sprint/United Management Company's (collectively “Sprint”) Motion to Enforce Settlement Agreement and Impose Sanctions (Doc. 89). An evidentiary hearing was held March 5, 2018. After considering the arguments, evidence, and testimony of the parties, the Court is prepared to rule. For the reasons explained in detail below, the Court denies Sprint's motion.

         I. Background

         On February 16, 2016, Michael McGlon filed this collective action Complaint against Sprint, alleging that Defendants violated the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201 et.seq., by failing to pay him, and BISO Inside Sales Representatives similarly situated to him, minimum wages and overtime required by the FLSA. McGlon was represented by Class Counsel Brent Hankins and Brendan Donelon. This Court granted McGlon's motion for conditional certification on December 6, 2016, and 152 opt-in plaintiffs joined the lawsuit.

         The parties participated in mediation on July 6, 2017. A Settlement Agreement was negotiated and executed by Sprint on August 30, 2017. On September 1, 2017, the parties filed a Joint Motion for Settlement Approval, and the Court granted the motion, thereby approving the Settlement Agreement, on September 6, 2017.[1] The Settlement Agreement was not filed under seal. In performance of the Settlement Agreement, Sprint paid a total settlement sum of $365, 000, with payments of $120, 450 and $7, 954 to Class Counsel for attorneys' fees and costs, respectively, incurred in the prosecution of McGlon's collective action claims.

         Section 22.1 of the Settlement Agreement states:

The Parties' negotiations [] shall be held confidential other than necessary disclosures made to the Court. Class Counsel and the Named Plaintiff shall not issue, nor cause to be issued, any statements to the public or media regarding the Settlement or any of its terms, including statement on any website(s) or via social media.[2]

         On December 6, 2017, Tijuana Mingo filed a complaint asserting a collective class action under § 216(b) of the FLSA against the same Defendants, Mingo v. Sprint Corporation, et al., No. 17-2688-JAR, which was assigned to this Court. This case was brought by individuals who did not opt into the McGlon case, but are asserting the same claims. The complaint in Mingo describes the class sought for certification as being:

All persons who worked as a BISO Inside Sales Representatives (or persons with similar job duties) for Sprint within three years prior to the filing of this Complaint, but excluding any persons who participated via consent in the FLSA collective action McGlon, et al. v. Sprint Corporation, et al., D. Kan. No. 2:15-cv-2099-JAR (hereinafter the “FLSA Collective”).[3]

         On December 8, 2017, The Kansas City Star (“The Star”) published an article entitled “After Sprint settles lawsuit for overtime pay, more employees sue.”[4] The article reported inter alia, that after previously settling an overtime pay dispute with 153 employees, a new collective class action lawsuit had been filed against Sprint on the same complaint.

         At the hearing, the Court heard testimony from Sprint's in-house counsel and Class Counsel, Brendan Donelon and Brent Haskins.

         Heather Hamilton

         Hamilton is Sprint's in-house counsel. She oversaw the McGlon litigation and served as Sprint's company representative at the mediation. Hamilton testified that the McGlon case was filed in February 2016 and the Court conditionally certified the collective action in December 2016. There was no discovery conducted and a mediation was held July 6, 2017. At that time, there were 153 potential class members. The case settled at mediation for $365, 000. A Stipulation of Settlement Agreement was executed by the parties, and on August 30, 2017, Hamilton signed the Settlement Agreement on behalf of Sprint.[5] As part of the settlement, Class Counsel was paid $128, 404 for their attorneys' fees and costs.

         Hamilton testified about the settlement negotiation process. Class Counsel prepared the first draft, then drafts of the Agreement were exchanged by the attorneys for several weeks. Hamilton testified that Section 22.1 of the Agreement was drafted by Sprint, and that the provision is clear and unambiguous and “completely prohibits” Class Counsel or the named plaintiff, Michael McGlon, from issuing or causing to be issued any statements regarding the Settlement or any of its terms in any public media forum. Hamilton testified that the provision was an essential settlement term, that Sprint would not have settled at mediation if the term was not in the Settlement Agreement, and that it needed the term to be completely enforced in order to uphold the Agreement.

         Hamilton further testified as to how Sprint benefits from the language in Section 22.1. Because of the nature of FLSA opt-in actions, she stated this provision was designed to diminish public discussion about FLSA actions and to prohibit public comments and statements to the media. Publication of the Settlement also had a damaging effect on Sprint's reputation in the community as well as a damaging effect on Sprint's work force. Hamilton testified that Sprint takes great pride in their work force and complying with wage and hour laws, and The Star article reached a large publication audience.

         Hamilton conceded that much of the information in The Star article was a matter of public record, but testified that Sprint takes issue with specific paragraphs in the article. First, paragraphs four and five of the article state:

Mingo hadn't worked at Sprint since February 2015 and hadn't heard about the first lawsuit. But a former co-worker she kept in touch with had been covered by the settlement.

         “She asked me about it, and I didn't know anything about it, ” Mingo said.[6]Hamilton testified that Class Counsel arranged for Ms. Mingo to be interviewed by The Star and make statements about the McGlon settlement, which she believes to be in violation of Section 22.1 of the Settlement Agreement.

         Second, paragraphs six and seven of the article state:

Mingo contacted the attorneys who handled the case, as did several others as word of ...

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