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of the release in the settlement and the description of the
cause of action in the pretrial order. The language in the
release does not indicate that the clause at issue modifies
only the last type of relief in the list given. If that had
been the intention, the authors could have written it as
petitioners rewrote it in their briefs, with numbers clearly
delineating the types of relief and applying the modifying
clause only to the last type of relief. The pretrial order
description of the settlement agreement also belies
petitioners’ interpretation. The release is described as a
release of “any and all claims Plaintiffs have made or could
have made arising out of any and all known or unknown economic
losses or damages compensable under the FLSA”. This language
clearly excludes from the release any claims for noneconomic
injuries or for any claims for losses or damages arising out of
non-FLSA causes of action.
Petitioners testified that they understood the release to
cover all claims against the State of Kansas, including any
claims for the medical conditions they contend resulted from
their employment with the State. Although the belief of the
payee is relevant to the inquiry, the character of the
settlement payment hinges ultimately on the dominant reason of
the payor in making that payment. See Agar v. Commissioner,
290 F.2d 283, 284 (2d Cir. 1961), affg. T.C. Memo. 1960-21;
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Last modified: May 25, 2011