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Posts Tagged ‘confidentiality’

Wage and Hour Issues Evolving at a Rapid Pace

Posted on: March 6th, 2013

By: Brad Adler 

Wage and hour lawsuits continue to be some of the fastest growing civil suits in our court system. In Georgia alone, FLSA lawsuits increased 40 percent in 2012, outpacing the approximately 13 percent increase nationwide by a significant margin.

Mirroring this increase in suits is an increase in significant decisions interpreting various aspects of the FLSA. For instance, the settlement of FLSA cases is an area that continues to be ripe for debate. Traditionally, courts have held that FLSA lawsuits cannot be settled unless the court reviews and approves the parties’ settlement agreement. Lynn’s Food Stores, Inc. v. U.S. Dept. of Labor, 679 F.2d 1350, 1353 (11th Cir. 1982).

A recent ruling from the Eastern District of New York, however, challenges this notion. In Picerni v. Bilingual SEIT & Preschool, Inc., the court concluded that private settlements of FLSA cases generally do not require court approval. The court distinguished the Lynn ruling as applying only in cases where there are atypical facts, such as pro se plaintiffs or where the defendant settles to avoid a Department of Labor investigation. While this case provides hope that a new trend may be established allowing settlement of FLSA cases without court approval, the Eleventh Circuit precedent set in the Lynn’s case continues to control wage and hour claims brought in federal courts in the states of Georgia, Florida and Alabama.

The requirement that courts review and approve FLSA settlements can be significant for employers, because it creates a potential public relations problem since most employers want settlement agreements to remain confidential. In non-FLSA cases, employers avoid this issue by including a confidentiality clause in the settlement agreement. The inclusion of such a clause in a typical employment claim is expected (and lawful), but there is a growing trend among federal judges to reject settlement agreements in FLSA claims that contain confidentiality provisions.

A recent case in the U.S. District Court for the Northern District of Georgia highlights this trend. The parties (both represented by counsel) submitted a proposed settlement agreement, which contained a confidentiality provision, for review and approval. The Court rejected the agreement due to the confidentiality provision, stating “[a] confidentiality provision furthers resolution of no bona fide dispute between the parties; rather, compelled silence unreasonably frustrates implementation of the ‘private-public’ rights granted by the FLSA and thwarts Congress’s intent to insure widespread compliance with the statute.” The Court also found that sealing the settlement agreement “thwarts Congress’s intent both to advance employees’ awareness of their rights and to ensure pervasive implementation of the FLSA in the workplace.”

This case represents a growing trend among federal courts around the country. As such, companies wishing to settle FLSA lawsuits likely will continue to find it increasingly difficult to ensure that such settlements are confidential. Of course, an employer and plaintiff are free to settle a wage and hour matter privately and the plaintiff may file a stipulation of dismissal. However, without court approval of the settlement, the release is not binding on any future claim by the plaintiff, and the employer runs the risk (albeit a low one) that the employee may re-file their action and seek additional compensation for any amount allegedly not paid as part of the resolution.

Using the Common Interest Doctrine to Protect Information from Disclosure

Posted on: August 14th, 2012

By: Kamy Molavi

Various methods are used in litigation to limit the disclosure of information and documents to opposing parties.  One is to invoke a privilege.  The most common privileges are the work product doctrine and the attorney-client privilege.

Some jurisdictions have adopted a principle related to the work product doctrine and the attorney-client privilege.  This doctrine is most often known as “common interest” or the “joint defense” doctrine, but other names have been used to describe the concept.  Common interest and joint defense have separate origins, the former having its roots in criminal law, whereas the latter first arose in civil litigation.  At present the two phrases are often used interchangeably.  The former is used in this article.

As its name implies, the common interest doctrine may come into play where two or more parties find it useful to share information that they consider otherwise privileged.  It allows the confidential sharing of privileged information.  Such sharing generally must occur either through or in the presence of their counsel.  The exchange must take place for the purpose of formulating a common strategy, usually among defendants.

Some commentators have suggested that the purpose of the common interest doctrine is to encourage the free flow of information and also to enhance the quality of legal advice.  Naturally the beneficiaries are the parties who claim protection under the doctrine, and not the parties seeking the information at issue.  For this reason, and because it impedes the free flow of information among all parties, courts often favor a narrow construction of the common interest doctrine.

Some describe the common interest doctrine as a variant or extension of the work product doctrine or the attorney-client privilege, but it is typically utilized to prevent the waiver of those exclusionary rules.  In other words, the common interest doctrine provides an exception to the general rule that a party waives either the work product doctrine or the attorney-client privilege by sharing protected information to a third party.

Courts applying the common interest doctrine generally require a showing that (a) the information is protected by an underlying privilege; (b) that the parties shared the information when they also shared a common legal (not merely commercial) interest; (c) they shared the information in order to advance that common interest; and (d) the parties have not otherwise waived the underlying privilege.  The burden of proving those elements generally is imposed upon the party invoking the common interest doctrine.

The common interest principle has not been adopted in all jurisdictions, and those that have adopted it do not apply it uniformly.  In some states, the interest among the sharing parties must be pristinely identical, whereas others impose a less stringent standard, allowing the use of the doctrine among parties who may have (or later develop) some conflicting adverse interests at the time of the exchange.  Some courts require a case to be pending or anticipated at the time of the information sharing, but others do not.  Before engaging in an exchange of information with other parties, attorneys must review the laws of the controlling jurisdiction to determine whether the principle has been recognized, and if so, identify its requisite elements.

An express agreement among the parties is not required, but in most states it is recommended, given the limited guidance available as to the operation of the doctrine. To ensure the intended protection, at the outset of the litigation (i.e., before sharing any information) participants should consider asking the court to expressly recognize the privilege and preclude discovery into certain matters.  Further, communication of confidential information should be limited to matters within the common interests of the participants, and the parties to the common interest should take reasonable steps to maintain the confidentiality of the information.

Employers Beware of Rules Against Employee Discussion of Internal Investigations

Posted on: August 1st, 2012

By: David Cole

On July 30, the NLRB issued a decision in the case of Banner Estrella Medical Center, which highlights the dangers of blanket instructions or policies prohibiting employees from discussing internal investigations.  The company’s human resources manager routinely asked complaining employees not to discuss the matter with their coworkers while the company’s investigation was ongoing.  The company did not have a formal policy, but this instruction was listed among several bullet points on its standard interview form.

The NLRB stated that, in order to justify a prohibition like this, an employer must show that it has a “legitimate business justification” that outweighs employees’ Section 7 rights to engage in concerted activity.  The company argued that the prohibition was justified by its “concern with protecting the integrity of the investigation,” but the NLRB held this was not enough.  Instead, the NLRB said that employees have a right to discuss their workplace complaints, and that before requiring confidentiality the company needed to first determine whether any witnesses actually needed protection, whether any evidence was in danger of being destroyed, or whether testimony was in danger of being fabricated.  The NLRB determined that the company’s “blanket approach” did not meet these requirements and, therefore, violated Section 7 of the NRLA.

This is a good reminder for employers to examine their practices and policies regarding confidentiality of internal investigations.  Before prohibiting employees from discussing pending investigations, employers must consider whether there is a real need for confidentiality based on risks of witness coercion, destruction of evidence, or other legitimate business concerns.  Blanket prohibitions against discussion of internal investigations without this type of individualized assessment will likely violate Section 7 of the NRLA.