Case 1:21-cv-00349-RP Document 38 Filed 10/24/22 Page 1 of 39
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF TEXAS
`AUSTIN DIVISION
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`
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`
`§
`§
`§
`§
`
`§
`§ CIVIL ACTION No. 1:21-cv-00349-LY
`§
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`§
`§
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`
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`PLAINTIFFS’ RESPONSE TO DEFENDANT’S MOTION TO ENFORCE
`SETTLEMENT AGREEMENT AND SANCTIONS AGAINST ISAIAH SMITH
`
`
`ISAIAH SMITH, ON BEHALF OF
`HIMSELF AND ALL OTHERS
`SIMILARLY SITUATED,
`Plaintiffs,
`
`
`v.
`
`MV TRANSPORTATION, INC.
`Defendant.
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`

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`Case 1:21-cv-00349-RP Document 38 Filed 10/24/22 Page 2 of 39
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`TABLE OF CONTENTS
`RELEVANT BACKGROUND ................................................................................................... 1
`ARGUMENTS & AUTHORITY ................................................................................................ 3
`A.
`Plaintiff Isaiah Smith and Defendant Did Not Reach a Valid,
`
`Enforceable Settlement Agreement .......................................................................... 4
`1.
`Defendant's inability to point to an executed FLSA settlement
`agreement is reason enough to deny its Motion to Enforce .......................... 4
`
`2.
`The complexity of Defendant’s proposed settlement agreement
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`indicates that the Parties did not intend to bind themselves
`orally or by email. ......................................................................................... 5
`
`3.
`The terms of Defendant’s proposed settlement agreement indicate
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`that the Parties did not intend to bind themselves prior to
`signing the settlement. ................................................................................... 7
`
`4.
`The Parties did not agree on all of the terms that they regarded
`as essential to resolving their dispute ........................................................... 9
`
`a. Settlement Payments .......................................................................... 10
`b. Smith's Eligibility/Ineligibility for Rehire ......................................... 11
`c. General Versus Limited Release ........................................................ 12
`d. Indefinite Confidentiality and "Liquidated-Damages" Provisions .... 15
`The lack of partial performance weighs against enforceability .................. 17
`5.
`The Opt-In Plaintiffs Did Not Enter into an Enforceable FLSA
`Settlement Agreement with Defendant .................................................................. 17
`1.
`The opt-in Plaintiffs have the same status, rights, and protections
`as named Plaintiff, Isaiah Smith ................................................................. 17
`
`2.
`The opt-in Plaintiffs were entitled to, but did not receive,
`notice of Defendant's settlement offers and the opportunity to object ........ 18
`
`3.
`The alleged settlement is unenforceable against the opt-in
`Plaintiffs as against public policy and state law ......................................... 20
`
`The Unsigned Agreement that Defendant Seeks to Enforce is Not the
`Product of a Fair or Reasonable Compromise of a Bona Fide Dispute ................. 25
`1.
`The record does not support a finding that the alleged agreement
`is the product of a “bona fide” FLSA dispute. ............................................ 26
`
`2.
`The unsigned settlement agreement that Defendant seeks to enforce
`is neither fair nor reasonable. ..................................................................... 29
`
`a. Confidentiality and Nondisclosure Provisions ................................... 29
`b. General Release Provisions ............................................................... 30
`
`C.
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`
`B.
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`Case 1:21-cv-00349-RP Document 38 Filed 10/24/22 Page 3 of 39
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`c. Non-Disparagement Obligation ......................................................... 32
`The Court Should Deny Defendant's Request for Sanctions Against
`D.
`Isaiah Smith ............................................................................................................ 33
`
`PRAYER .............................................................................................................................. 35
`CERTIFICATE OF SERVICE .................................................................................................. 36
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`Case 1:21-cv-00349-RP Document 38 Filed 10/24/22 Page 4 of 39
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF TEXAS
`AUSTIN DIVISION
`
`
`ISAIAH SMITH, ON BEHALF OF
`HIMSELF AND ALL OTHERS
`SIMILARLY SITUATED,
`Plaintiffs,
`
`
`v.
`
`MV TRANSPORTATION, INC.
`Defendant.
`
`§
`§
`§
`§
`§
`§
`§
`§
`§
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`
`
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`CIVIL ACTION No. 1:21-cv-00349-LY
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`
`
`PLAINTIFFS’ RESPONSE TO DEFENDANT’S MOTION TO ENFORCE
`SETTLEMENT AGREEMENT AND SANCTIONS AGAINST ISAIAH SMITH
`
`TO THE HONORABLE JUDGE OF SAID COURT:
`
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`Plaintiffs Isaiah Smith, Mark Adam, Collette Graham, Barbara Nash, Leslie Smith,
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`Steven Laureano, and Lori Boykin file the following Response in opposition to
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`Defendant’s Motion to Enforce Settlement Agreement and Sanctions Against Isaiah Smith
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`(Doc. 22):
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`
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`RELEVANT BACKGROUND
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`This is a wage-and-hour lawsuit. Defendant employed Plaintiffs as bus drivers in
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`Austin, Texas. Plaintiff Isaiah Smith filed this lawsuit against Defendant MV
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`Transportation, Inc. as a collective action1 under the Fair Labor Standards Act (FLSA).2
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`1 of 36
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`1 See 29 U.S.C. § 216(b).
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` 29 U.S.C. § 201 et seq.
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` 2
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`Case 1:21-cv-00349-RP Document 38 Filed 10/24/22 Page 5 of 39
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`Although the Court has yet to consider “if and when to send notice to potential opt-
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`in plaintiffs,”3 to date, no fewer than twenty additional current and former employees have
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`joined this lawsuit as party-Plaintiffs. Plaintiffs seek to recover, among other things, unpaid
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`overtime wages and liquidated damages for Defendant’s alleged violations of the FLSA.
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`Doc. 1.
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`On August 30, 2022, Defendant filed a “Motion to Enforce Settlement Agreement
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`and Request for Sanctions Against Plaintiff Isaiah Smith.” Doc. 22. In its Motion,
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`Defendant asks the Court to “order Smith to sign the settlement agreement [that Defense
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`counsel drafted] so that this matter may be resolved and dismissed from the Court’s docket,
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`and impose sanctions against Smith individually.” Id. at 1. That same day, Defendant filed
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`a “Motion for Leave to File Confidential Settlement Agreement Under Seal” (Doc. 23),
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`which this Court subsequently granted (Doc. 30).
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`On September 2, 2022, Plaintiff Isaiah Smith’s original attorney, Doug Welmaker,
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`filed a Motion for Leave to Withdraw as Counsel, which is still pending. Doc. 24. Mr.
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`Welmaker also filed a Motion for Extension of Time to File Response/Reply to
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`Defendant’s Motion to Enforce and for Sanctions. Doc. 26. Mr. Welmaker then refused to
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`prepare a response in opposition to Defendant’s Motion to Enforce and for Sanctions on
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`behalf of his clients.
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`On September 12, 2022, Defendant filed sealed documents with the Court that are
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`the subject of its pending Motion to Enforce Settlement and for Sanctions. See Doc. 31-1
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`3 Swales v. KLLM Transp. Servs., L.L.C., 985 F.3d 430, 441 (5th Cir. 2021).
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`Case 1:21-cv-00349-RP Document 38 Filed 10/24/22 Page 6 of 39
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`(SEALED).
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`On September 21, 2022, this Court entered an Order directing Plaintiffs to “retain
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`new counsel” and extending their deadline for filing a response in opposition to
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`Defendant’s Motion to Enforce Settlement and for Sanctions to October 3, 2022. Doc. 33.
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`On September 29, 2022, the undersigned counsel filed a Notice of Appearance on
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`behalf of Plaintiffs Isaiah Smith, Mark Adam, Collette Graham, Barbara Nash, Leslie
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`Smith, Steven Laureano, and Lori Boykin (hereinafter collectively referred to as
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`“Plaintiffs”). That same day, the undersigned counsel filed a Motion for Extension of
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`Deadline to File Response to Defendant’s Motion to Enforce Settlement and for Sanctions
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`from October 3 to October 24, 2022. Doc. 35, at 2. In the Motion for Extension, the
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`undersigned counsel pointed out that, because Defendant filed the purported settlement
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`documents under seal, he was unable to review the sealed documents prior to filing a Notice
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`of Appearance on Plaintiffs’ behalf and obtaining copies of the documents from Defense
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`counsel. Id. at 3.
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`Because the Court has yet to decide the undersigned counsel’s Motion for
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`Extension, out of an abundance of caution, the undersigned counsel now files the following
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`Response in opposition to Defendant’s Motion to Enforce Settlement Agreement and for
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`Sanctions (Doc. 22).
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`ARGUMENTS & AUTHORITY
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`The Court should deny Defendant’s Motion to Enforce Settlement Agreement and
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`for Sanctions for the following reasons:
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`A.
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`Plaintiff Isaiah Smith and Defendant Did Not Reach a Valid, Enforceable
`Settlement Agreement
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`“If the non-moving party challenges the validity, an evidentiary hearing must be
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`held before the court can determine whether to enforce the agreement.”4 Defendant cannot
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`show that it reached a valid, enforceable settlement agreement with Plaintiff Isaiah Smith
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`for the following reasons:
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`1.
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`Defendant’s inability to point to an executed FLSA settlement agreement
`is reason enough to deny its Motion to Enforce.
`
`“[S]ettlements of . . . FLSA claims” like those in this case “are of the type typically
`
`
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`committed to writing, because they require judicial approval.” 5 “In contractual terms,
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`FLSA plaintiffs lack capacity to enter into a binding agreement with the defendant that is
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`not conditioned on court or Department approval.”6 Not surprisingly, courts in FLSA cases
`
`
`4 Lee v. Gulf Coast Blood Ctr., No. H-19-4315, 2020 U.S. Dist. LEXIS 145806 at *8 (S.D. Tex. Aug. 13,
`2020) (Rosenthal, J.) (citing Mid-S. Towing Co. v. Har-Win, Inc., 733 F.2d 386, 390 (5th Cir. 1984)
`(“Although a district court has inherent power to enforce an agreement to settle a case pending before
`it summarily, when opposition to enforcement of the settlement is based not on the merits of the claim but
`on a challenge to the validity of the agreement itself, the parties must be allowed an evidentiary hearing on
`disputed issues of the validity and scope of the agreement.”)).
`
` 5
`
` Velazquez v. Yoh Servs., LLC, No. 17 Civ. 842 (CM), 2017 U.S. Dist. LEXIS 165497, at *9 (S.D.N.Y.
`Sep. 25, 2017) (citing Cheeks v. Freeport Pancake House, Inc., 796 F.3d 199, 206 (2d Cir. 2015)); see
`also Mora v. Bareburger Grp. LLC, No. 16 Civ. 4373 (RML), 2020 WL 5369051, at *2 (E.D.N.Y. Sept. 8,
`2020) (“Ultimately dispositive [of the denied settlement enforcement motion] is the type of settlement
`agreement at issue here: an FLSA settlement agreement.”); Scalia v. Agave Elmwood Inc., 458 F. Supp. 3d
`161, 171 (W.D.N.Y. 2020) (collecting cases for the proposition that “[a]greements to settle FLSA claims
`are typically committed to writing”); Junjiang Ji v. Jling, Inc., No. 15 Civ. 4194 (SIL), 2019 U.S. Dist.
`LEXIS 55341, 2019 WL 1441130, at *12 (E.D.N.Y. Mar. 31, 2019) (finding that “agreements to
`settle FLSA claims are virtually always memorialized in writing”) (citations omitted), appeal dismissed,
`799 F. App'x 88 (2d Cir. 2020); Alvarado v. Given Town Car Wash, Inc., No. 13 Civ. 1672 (RJD) (JO),
`2014 WL 252015, at *2 (E.D.N.Y. Jan. 22, 2014) (adopting report and recommendation finding that
`“written agreements are the norm when parties seek to settle claims under the FLSA”).
`
` 6
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` Sanchez v. Burgers & Cupcakes, LLC, No. 16 CV 3862, 2017 U.S. Dist. LEXIS 38292, 2017 WL
`2171870, at *2 (S.D.N.Y. Mar. 16, 2017).
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`have refused to enforce alleged settlement agreements in the absence of a fully executed
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`agreement that permits meaningful judicial review and approval. 7 Here, the fact that
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`Defendant cannot present a fully executed FLSA settlement agreement to the Court for
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`review and scrutiny is reason enough to deny its Motion to Enforce.
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`2.
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`The complexity of Defendant’s proposed settlement agreement indicates
`that the Parties did not intend to bind themselves orally or by email.
`
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`Courts have also “found that the complexity of the underlying agreement is an
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`
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`indication of whether the parties reasonably could have expected to bind themselves
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`orally.”8 While this alleged settlement agreement does not concern a complicated business
`
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`7 See, e.g., Velazquez v. Yoh Servs. LLC, No. 17 CV 842, 2017 U.S. Dist. LEXIS 165497, 2017 WL
`4404470, at *4 (S.D.N.Y. Sept. 25, 2017) (denying the defendants’ motion to enforce oral FLSA settlement
`agreement, noting that to hold otherwise would be “contrary to the FLSA policy of protecting
`plaintiffs”); Junjiang Ji v. Jling Inc., No. 15-CV-4194 (SIL), 2019 U.S. Dist. LEXIS 55341, at *36
`(E.D.N.Y. Mar. 31, 2019) (denying motion to enforce settlement agreement and noting that a movant’s
`inability to point to a signed settlement agreement “weighs heavily against enforcement because agreements
`to settle FLSA claims are virtually always memorialized in writing”); Potts v. Postal Trucking Co., 2021
`U.S. Dist. LEXIS 249074, at *10–12 (E.D.N.Y. Dec. 30, 2021) (finding that the absence of a signed, written
`FLSA settlement “weigh[ed] heavily against granting Defendants’ motion [to enforce settlement]” since
`FLSA settlements are “of the type [settlements] usually committed to writing”); Scalia v. Agave Elmwood
`Inc., 458 F. Supp. 3d 161, 170-71 (W.D.N.Y. 2020) (“Indeed, as have other courts, this Court finds [the
`absence of a signed FLSA settlement agreement] particularly dispositive of the pending motion, requiring
`denial of the motion to enforce.”); Mora v. Bareburger Grp. LLC, No. 16 CV 4373 (RML), 2020 U.S. Dist.
`LEXIS 163339, 2020 WL 5369051, at *3 (E.D.N.Y. Sep. 5, 2020) (denying the plaintiffs’ motion to enforce
`an alleged FLSA settlement in the absence of a written agreement); Lin v. Grand Sichuan 74 St. Inc., No.
`15 Civ. 2950 (RA) (KNF), 2016 WL 5497837, at *1 (S.D.N.Y. June 23, 2016) (denying the defendants’
`motion to enforce a disputed FLSA settlement agreement, citing the defendants’ concession that “no
`stipulated settlement agreement resolving the instant action was ever presented to the court” or the DOL);
`Nunez v. Shinobi NY LLC, 2013 U.S. Dist. LEXIS 193317 , 2013 WL 12107728, at *3 (S.D.N.Y. Sept. 13,
`2013) (denying a motion to enforce an unsigned FLSA settlement that the plaintiff had refused to sign and
`which the court had not approved because doing so is contrary to the FLSA’s policy of protecting
`employees).
`
` Ciaramella v. Reader's Digest Ass'n, 131 F.3d 320, 326 (2d Cir. 1997).
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`Case 1:21-cv-00349-RP Document 38 Filed 10/24/22 Page 9 of 39
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`deal, it does span ten pages of text and contains many detailed provisions that will apply
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`into perpetuity. For example:
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`•
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`•
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`•
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`•
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`•
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`Sections 5.1 and 5.2 define the scope of the Plaintiffs’ release in exhaustive
`detail.9
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`Section 6.1 contains detailed confidentiality, nondisclosure, and liquidated
`damages provisions.10
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`Section 6.2 prohibits Plaintiffs from “plac[ing Defendant] in a negative light”
`for the remainder of their lives.11
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`Section 6.3 restricts Plaintiffs from becoming “member[s] of any class or
`group seeking relief against the COMPANY in any matter relating to their
`respective employment.”12
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`Section 6.4 states that Smith will “not [be] eligible for reinstatement, re-hire,
`future employment or any employment relationship with the COMPANY or
`any successor Company . . . .”13
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`Given the considerable length, granular detail, and sweeping scope of terms in Defendant’s
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`proposed settlement agreement, it’s clear that the Parties did not intend to bind themselves
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`to any terms of settlement in the absence of a written, fully executed settlement
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`agreement.14
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`9 See Defendant’s Unsigned Release and Settlement Agreement, at 5 (Sealed Doc. 31-1).
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`10 Id. at 7–8.
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`11 Id. at 8.
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`12 Id.
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`13 Id. at 8–9.
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`14 See Winston v. Mediafare Entm't Corp., 777 F.2d 78, 83 (2d Cir. 1985) (finding a four-page settlement
`agreement that contained obligations that would last over several years sufficiently complex to require
`reduction to writing).
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`3.
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`The terms of Defendant’s proposed settlement agreement indicate that the
`Parties did not intend to bind themselves prior to signing the settlement.
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`Additionally, the provisions in Defendant’s proposed settlement agreement indicate
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`
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`that the Parties contemplated the moment of signing as the point at which they would be
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`bound by a settlement agreement.15 For example, in Section 6.13, the document states,
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`“This Agreement is effective on the date signed by ISAIAH SMITH (‘Effective Date’).”16
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`Section 6.5 provides, “No modifications or amendments to any of the terms,
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`conditions, or provisions hereof may be enforced unless evidenced by a subsequent written
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`agreement executed by the Parties hereto.”17 This provision is evidence that the Parties
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`did not intend to be bound until they both signed the written agreement.18
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`Under Section 4.5, Defendant is under no obligation to pay the Plaintiffs unless and
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`until Smith and his attorney provide Defendant with a “fully executed Agreement.”19 This
`
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`15 See Border Gateway, L.L.C. v. Gomez, No. 14-10-01266-CV, 2011 Tex. App. LEXIS 7589, at *7 (Tex.
`App.---Hous. [14th Dist.] Sep. 20, 2011, no pet. h.) (“[W]e must therefore determine whether the parties
`intended for the contemplated formal writing to be a condition precedent to the formation of a contract, or
`merely a memorial of an already enforceable contract.”); Ciaramella v. Reader’s Digest Ass’n, 131 F.3d
`320, 324 (2d Cir. 1997) (“We find numerous indications in the proposed settlement agreement that the
`parties did not intend to bind themselves until the settlement had been signed. We must give these
`statements considerable weight, as courts should avoid frustrating the clearly-expressed intentions of the
`parties.”).
`
`16 Defendant’s Unsigned “Release and Settlement Agreement” § 6.13 (Sealed Doc. 31-1) (emphasis added).
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`17 Id. § 6.5 (emphasis added)
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`18 14 DORSANEO, TEX. LIT. GUIDE § 210A.04 (2022) (“A provision in the contract that it may only be
`modified or amended by a writing signed by both parties, and a blank signature block at the end of the
`contract, are evidence that the parties did not intend to be bound until they both signed the contract.”); In
`re Bunzl USA, Inc., 155 S.W.3d 202, 211 (Tex. App.—El Paso 2004, orig. proceeding).
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`19 Defendant’s Unsigned “Release and Settlement Agreement” § 4.5 (Sealed Doc. 31-1).
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`is further evidence that, at the time, Defendant did not intend to bind itself to any
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`representations or promises until it received a fully executed copy of its proposed
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`settlement agreement.20
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`Section 6.7 reflects the Parties’ intent to afford each Plaintiff “adequate time” to
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`“carefully read” Defendant’s proposed agreement and consult with a lawyer about “the
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`meaning and application of each of its paragraphs” before binding them to it.21 That Section
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`makes clear that the Parties contemplated the moment of signing as the point at which the
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`Parties would bind themselves to a settlement: “PLAINTIFF[] . . . executes this
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`Agreement voluntarily and knowingly, as his or her own free act and deed, with the intent
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`of being bound by the Agreement.”22
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`Section 6.8 similarly reflects the Parties’ intent not to enter into a binding settlement
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`agreement without first affording every Plaintiff “an opportunity to participate in the
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`drafting and preparation of this Agreement.” 23 The fact that Defendant’s own draft
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`agreement placed great significance on the execution date evinces an intent not to create a
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`binding agreement until formally executed.24
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`20 See, e.g., R.G. Grp., Inc. v. Horn & Hardart Co., 751 F.2d 69, 71, 76 (2d Cir. 1984) (finding an explicit
`reservation of the right not to be bound absent signature in the wording of an agreement that declared,
`“when duly executed, this agreement sets forth your rights and your obligations”).
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`21 Defendant’s Unsigned “Release and Settlement Agreement” § 6.7. (Sealed Doc. 31-1).
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`22 Id. (emphasis added).
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`23 Id. § 6.8 (emphasis added).
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`24 See, e.g., Davidson Pipe Co. v. Laventhol & Horwath, 84 CIV 5192 (LBS); 84 CIV 6334 (LBS), 1986
`U.S. Dist. LEXIS 29414, at *16-20, 1986 WL 2201, at *4 (S.D.N.Y. Feb. 11, 1986) (finding that wording
`in a settlement agreement that placed great significance on the execution date evinced an intent not to create
`a binding settlement until some formal date of execution).
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`Additionally, Section 2.1 provides, “The rights and obligations set forth in this
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`document are for the purpose of conclusively resolving and settling any claims . . . against
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`the COMPANY . . . .”25 This language demonstrates that only the terms of a fully executed
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`settlement agreement and not any preexisting pact would legally bind the Parties.
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`4.
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`The Parties did not agree on all of the terms that they regarded as essential
`to resolving their dispute.
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`The fact that the Parties did not agree on all essential terms of settlement further
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`undermines Defendant’s Motion. To determine if the parties reached an enforceable
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`agreement, “the moving party must prove that the parties reached an agreement regarding
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`all material terms.” 26 “[T]he omission or failure of an essential element of a contract
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`vitiates the whole.”27
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`“Whether a term is material or essential is a legal question that the court examines
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`on a case-by-case basis.”28 A term is “material” if it’s one that “the parties reasonably
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`regarded, at the time of contracting, as a vitally important ingredient in their bargain.”29
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`Importantly, “[c]ourts look not only at any relevant written agreements but also at the
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`25 Defendant’s Unsigned “Release and Settlement Agreement” § 2.1 (Sealed Doc. 31-1) (emphasis added).
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`26 Lozano v. Metro. Transit Auth. of Harris Cty., No. CV H-14-1297, 2016 U.S. Dist. LEXIS 94031, 2016
`WL 3906295, at *3 (S.D. Tex. July 19, 2016).
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`27 Neeley v. Bankers Tr. Co. of Texas, 757 F.2d 621, 628 (5th Cir. 1985).
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`28 Coe v. Chesapeake Expl., L.L.C., 695 F.3d 311, 320 (5th Cir. 2012).
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`29 Neeley v. Bankers Tr. Co. of Tex., 757 F.2d 621, 628 (5th Cir. 1985).
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`relationship of the parties, their course of dealings, and then answer the field and fact-
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`specific question of whether essential terms were sufficiently settled to find a contract.”30
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`Here, the Parties’ course of dealings reveals that they did not agree on a number of
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`terms that they regarded as essential to a settlement.
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`a. Settlement Payments
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`First, the record does not contain any evidence that Isaiah Smith authorized his then-
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`attorney, Doug Welmaker, to accept the global sum of $[REDACTED] to settle all of the
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`Plaintiffs’ claims in the aggregate. To the contrary, Smith has stated under oath that he did
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`not in fact authorize Mr. Welmaker to settle all claims in exchange for the payment of a
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`specific global settlement payment.31
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`Similarly, the record reveals that Smith did not authorize Mr. Welmaker to accept a
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`specific dollar amount on behalf of any individual opt-in Plaintiff.32 Smith first became
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`aware of the dollar amounts of the settlement payments that Defendant had offered to each
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`opt-in Plaintiff on August 8, 2022 when Mr. Welmaker provided him with a draft of
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`Defendant’s proposed settlement agreement.33 After reviewing these figures for the first
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`time, Plaintiff told Mr. Welmaker not to settle the opt-in Plaintiffs’ claims for the amounts
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`set forth in Defendant’s proposed settlement agreement.34
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`30 APS Capital Corp. v. Mesa Air Grp., Inc., 580 F.3d 265, 272–73 (5th Cir. 2009).
`31 Declaration of Isaiah Smith, ¶¶ 7–9, 16 (Oct. 22, 2022), attached as Exhibit A.
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`32 Id. ¶ 9.
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`33 Id. ¶ 18; Email from Isaiah Smith to Doug Welmaker (subject: ‘Your case’) (Aug. 8, 2022, at 5:16 pm),
`attached as Exhibit A-4.
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`34 Smith Dec., Ex. A, ¶ 13.
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`b. Smith’s Eligibility/Ineligibility for Rehire
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`Second, the evidence reveals that the Parties were unable to agree on several other
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`terms that, at the time, they considered to be “dealbreakers” to a binding settlement. For
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`example, in his July 23 email to his then-attorney, Smith stressed that Defendant’s promise
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`not to classify him as “ineligible for rehire” was a vitally important term of any settlement
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`they may reach.35 This term was vitally important to Smith because he believed that
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`Defendant had wrongfully classified him as being “ineligible for rehire” (which Smith
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`believes will hinder his future employment prospects) in retaliation for his complaints
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`related to, among other things, Defendant’s FLSA violations.36
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`According to Smith’s then-attorney, however, “That [term] is a deal killer as far as
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`[Defendant was] concerned.”37 Despite learning that Defendant considered this term a
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`“deal killer,” Smith insisted on its inclusion as part of the consideration for releasing his
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`claims against Defendant: “On government jobs they often run employment verification
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`and they often require individuals to state if they are eligible for rehire. . . . I do not want
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`[Defendant] to be telling my employers or any of my prospective employers that I am not
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`eligible for rehire.”38
`
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`35 See Email from Isaiah Smith to Doug Welmaker (subject: ‘Settlement of your case’) (July 23, 2022, at
`4:27 pm), attached as Exhibit A-2.
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`36 See Ex. A-2, Email from Isaiah Smith to Doug Welmaker (subject Settlement of your case’) (July 26,
`2022 at 11:34 am).
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`37 Ex. A-2, Email from Doug Welmaker to Isaiah Smith (subject: ‘Settlement of your case’) (July 23, 2022,
`at 4:48 pm) (emphasis added).
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`38 Ex. A-2, Email from Isaiah Smith to Doug Welmaker (subject: ‘Settlement of your case’) (July 23, 2022,
`at 4:54 pm).
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`In response, Mr. Welmaker reiterated that Defendant would not agree to change
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`Smith’s classification as “ineligible for rehire” as part of a settlement, explaining, “I think
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`the best I can get them to do is say that they have a policy thst [sic] only allows them to
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`confirm your job title and dates of employment.”39 Smith rejected this suggestion as an
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`unsuitable compromise and asked Mr. Welmaker to explain to Defense counsel why this
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`term was critical to achieving a settlement agreement:
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`I am really uncomfortable with being listed as not eligible for rehire when
`they have contacted former employees that have been fired for things that
`they should have been fired for and when I have not. I would like their
`counsel to be made aware of that because employees that engage in
`protected activities during their employment should not be a cause as to
`them taking that type of an adverse employment action against me that
`could affect my employment at other companies. I would like to see what
`their opinion on that issue is and if that is true….40
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`Although the Parties clearly reached an impasse on this essential term, Defendant
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`
`
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`has asked the Court to enforce its unsigned draft agreement that states, “ISAIAH SMITH
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`understands and agrees that he is not eligible for reinstatement, re-hire, future employment
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`or any employment relationship with the COMPANY or any successor Company . . . .”41
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`As the evidence cited above demonstrates, the Parties reached no such agreement. Because
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`Smith’s then-attorney resigned when Smith refused to sign Defendant’s proposed
`
`
`
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`39 Ex. A-2, Email from Doug Welmaker to Isaiah Smith (subject: ‘Settlement of your case’) (July 23, 2022,
`at 4:56 pm).
`
`40 Ex. A-2, Email from Doug Welmaker to Isaiah Smith (subject: ‘Settlement of your case’) (July 26, 2022,
`at 11:34 am) (emphasis added).
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`41 Defendant’s Unsigned “Release and Settlement Agreement” § 6.4 (Sealed Doc. 31-1) (emphasis added).
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`settlement agreement, and Defendant thereafter moved to enforce the unsigned agreement,
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`Smith never had an opportunity to finish bargaining for the terms that he desired. Likewise,
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`because the Parties’ lack of agreement over this term was a “deal killer” for both sides, the
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`Parties did not reach a binding settlement agreement.
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`
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`c. General Versus Limited Release
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`Third, the Parties did not agree on the scope of claims that Smith would release. On
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`June 17, 2022, Mr. Welmaker informed Smith that Defendant had offered to pay him
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`$[REDACTED] in exchange for a general release of all claims, including Smith’s potential
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`retaliation claim:
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`Isaiah, the best I can get for you is $[REDACTED]. . . . They have already
`told me they will want a full release from you, which means you won’t be
`able to sue them again for anything that occurred while you were employed.
`. . . Please let me know as soon as possible whether the above is
`satisfactory . . . .42
`
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`Mr. Welmaker’s email indicates that a general release was one of Defendant’s “major
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`condition[s]” of settlement.43
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`Although Plaintiff responded, “That works. Send me the paperwork,” he did not
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`intend to bind himself to any terms of settlement until the Parties reached agreements on
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`all other material terms of settlement and then signed a written agreement.44 This is evident
`
`
`42 Email from Doug Welmaker to Isaiah Smith (subject: ‘Your case’) (June 17, 2022), attached as Exhibit
`A-1.
`
`43 Id.
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`44 See Ex. A-1, Email from Isaiah Smith to Doug Welmaker (subject: ‘Your case’) (June 17, 2022, at 1:00
`pm); see also Smith Dec., Ex. A, ¶ 11.
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`from the fact that, on July 25, Smith notified Mr. Welmaker that he planned to speak to
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`another lawyer about his potential retaliation claim against Defendant before agreeing to
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`release it.45 Mr. Welmaker’s response to Smith shortly thereafter further confirms that the
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`Parties had yet to agree on this material term of settlement: “This case does not settle
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`unless you release the retaliation claim.”46
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`In his August 8 email to Smith, Mr. Welmaker provided Smith with Defendant’s
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`latest proposed settlement agreement in writing. 47 Mr. Welmaker explained that
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`Defendant’s proposed agreement contained “a general release,” which meant that Smith
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`would “waiv[e] all rights to sue MVT for any cause of action whatsoever up to the date of
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`this settlement agreement” if signed. 48 One of Smith’s reasons for refusing to sign
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`Defendant’s proposed agreement was that he did not wish to release his potential retaliation
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`claim against Defendant for the consideration that Defendant was offering under the
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`proposed settlement.49 Mr. Welmaker’s subsequent email to Smith further confirms that
`
`
`45 See Ex. A-2, Email from Isaiah Smith to Doug Welmaker (subject: ‘Settlement of your case’) (July 25,
`2022, at 6:46 am) (“I am speaking to another attorney about the retaliation claim and for the purposes as to
`getting the max on the retaliation claim.”).
`
`46 Ex. A-2, Email from Doug Welmaker to Isaiah Smith (subject: ‘Settlement of your case’) (July 25, 2022,
`at 7:16 am) (emphasis added).
`
`47 Email from Doug Welmaker to Isaiah Smith with Attachment: ‘Settlement for Isaiah Smith Review.doc’
`(subject: ‘Settlement Agreement for Your Review’) (Aug. 8, 2022, at 9:31 am), attached as Exhibit A-3.
`
`48 Id.
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`49 Ex. A-2, Email from Isaiah Smith to Doug Welmaker (subject: ‘Settlement of your case’) (July 25, 2022
`at 6:46 am).
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`the Parties had yet to reach a final, binding settlement agreement: “Isaiah, it’s not a final
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`agreement, thus I need your input.”50
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`
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`d. Indefinite Confidentiality and “Liquidated-Damages” Provisions
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`Finally, although Defendant considered a confidentiality agreement and liquidated
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`damages of $[REDACTED] per breach to be essential terms of any settle