Appeal from the United States District Court for the Southern District of Texas.
For Ambre Bodle, Leslie Meech, Plaintiffs - Appellants: Charles Alfred Sturm, Sturm Law, P.L.L.C., Houston, TX.
For Txl Mortgage Corporation, WILLIAM DALE COUCH, Individually, Defendants - Appellees: Levon G. Hovnatanian, Martin, Disiere, Jefferson & Wisdom, L.L.P., Houston, TX; Dale Jefferson, Martin, Disiere, Jefferson & Wisdom, L.L.P., Houston, TX.
Before REAVLEY, SMITH, and GRAVES, Circuit Judges.
JAMES E. GRAVES, JR.,
In this appeal, we are requested to extend our holding in Martin v. Spring Break '83 Productions, L.L.C., 688 F.3d 247 (5th Cir. 2012) to the facts of this case. In Martin, we held that a private settlement reached over a bona fide dispute regarding Fair Labor Standards Act (" FLSA" ) claims was enforceable despite the general prohibition against the waiver of FLSA claims. Applying Martin, the district court in the instant action enforced a generic, broad release against the plaintiffs' subsequent FLSA claims, even though the release was obtained through the private settlement of a prior state court action that did not involve the FLSA or any claim of unpaid wages. For the reasons outlined below, principally that we cannot be assured under these facts that the release resulted from a bona fide dispute regarding overtime wages, we decline to extend Martin and reverse.
Plaintiffs-Appellants Ambre Bodle and Leslie Meech (collectively referred to as " the plaintiffs" ) filed the instant FLSA action against their former employer TXL Mortgage Corporation (" TXL" ) and its president William Dale Couch (collectively referred to as " the defendants" ) on May 16, 2012. The plaintiffs alleged that the defendants failed to compensate them for their overtime work as required by Section 207 of the FLSA. The defendants moved for summary judgment asserting res judicata as a basis for dismissal. The defendants also argued that the plaintiffs executed a valid and enforceable waiver in a prior state court action, which released all claims against the defendants arising from the parties' employment relationship. The district court found the latter contention dispositive.
The defendants in the instant case filed the prior state court action against the plaintiffs on February 3, 2012. The defendants
claimed that the plaintiffs, who had resigned from the company about a year prior, had begun to work for a direct competitor and had violated their noncompetition covenants with TXL by soliciting business and employees to leave TXL for the competitor. In connection with these allegations, the defendants asserted nine state law causes of action against the plaintiffs. In response, the plaintiffs sought a declaration that the non-compete and non-solicitation of client provisions in the employment agreements were unenforceable.
On May 16, 2012, the parties filed with the state court a joint motion for entry of agreed final judgment pursuant to a settlement agreement. The state court granted the parties' motion and entered an agreed final judgment on May 23, 2012. The private settlement agreement between the ...