Summary
finding sanctions appropriate for motion to enforce settlement given that a representative of Plaintiff's counsel had acknowledged the enforceability of the settlement in open court
Summary of this case from Harper v. Nev. Prop. 1, LLCOpinion
No. C 01-2611 VRW (MEJ).
June 15, 2004
REPORT AND RECOMMENDATION RE DEFENDANT'S MOTION TO ENFORCE SETTLEMENT AGREEMENT
INTRODUCTION
Before the Court is City and County of San Francisco's (hereinafter "Defendant") Motion to Enforce Settlement Agreement, filed May 6, 2004. This case was referred to Magistrate Judge Maria-Elena James for settlement purposes by Judge Walker. The current motion stems from Plaintiffs Edward Ferdinand's and Derek Madaris' (hereinafter collectively "Plaintiffs") refusal to sign written releases after their claims settled with an oral agreement entered on the record in open court on November 12, 2003.
BACKGROUND
On June 17, 2003, the above captioned matter was directly referred to Magistrate Judge James for a settlement conference. The initial conference was set for September 8, 2003. This initial conference involved 18 plaintiffs. Due to the shear number of plaintiffs and the fact that six of them had newly acquired counsel, the six plaintiffs represented by Waukeen McCoy did not participate in the September 8, 2003, and instead were rescheduled to appear on November 12, 2003.
On November 12, 2003, six of the six scheduled plaintiffs, including Edward Ferdinand and Derek Madaris, settled there claims. Each settlement agreement was entered on the record in open court after six and a half hours of negotiations.
Subsequent to entry of the settlement agreements on the record, Plaintiffs Edward Ferdinand and Derek Madaris refuse to sign written agreements.
On May 6, 2004, Defendant filed the instant Motion to Enforce Settlement Agreement and the Declaration of Jill A. Sprague in support thereof.
On May 19, 2004, Plaintiffs filed an Opposition to the Motion as well as the Declarations of Edward Ferdinand and Derek Madaris in support thereof.
On May 21, 2004, Defendant filed a Reply to Plaintiffs' Opposition.
On June 10, 2004, the Court held a hearing on the matter.
DISCUSSION
A. Legal Standard
Courts have inherent power to enforce settlement agreements between the parties in pending cases. See Metronet Services Corp. v. U.S. West Communications, 329 F.3d 986, 1013-1014 (9th Cir. 2003) (cert. granted and judgment vacated on other grounds by Quest Corp. v. Metronet Services Corp., 124 S.Ct. 1144 (2004)). Specifically, an oral agreement made in open court on the record as to the material terms is a binding agreement. See Doi v. Halekulani Corp., 276 F. 3d 1131, 1134 (9th Cir. 2002). "An agreement announced on the record becomes binding even if a party has a change of heart after he agreed to its terms but before the terms are reduced to writing." Id. at 1138 (citation omitted). Furthermore, where the written terms of a settlement agreement are in accord with the terms agreed to on the record, the written agreement is enforceable by the court. Id. at 1140.
B. Legal Analysis
Defendant argues that the transcript from the settlement conference proceedings demonstrates a plain agreement by the parties to settle the case. Defendant also contends that Plaintiffs' counsel should be judicially estopped from contesting the propriety of enforcing the parties' settlement agreement, given that Ms. Armstrong, an associate of Plaintiffs' counsel, appeared at a hearing in the matter of Madaris, et. al. v. Smoot, San Mateo Superior Court No. C435187 and acknowledged the enforceability of the settlement. For these reasons, Defendant requests that the Court enter an order enforcing the settlement and compelling Plaintiffs Ferdinand and Madaris to sign their respective settlement agreements and releases.
Lastly, Defendants request $1,170 in costs and attorneys' fees incurred in bringing this motion due to Plaintiffs' bad faith in failing to sign the settlement agreements.
Plaintiffs argue that their verbal acceptances of the terms of the agreements were not accomplished knowingly and voluntarily. Plaintiffs contend that they wanted a few days to consider the settlement agreement but agreed to the terms because they felt unnecessarily rushed by the proceedings. Further, Plaintiffs contend that Defendant should not be allowed to enforce the settlement agreement as to Ferdinand and Madaris when Defendant has not abided by the terms of the settlement agreement as to Plaintiff Simpson.
Plaintiffs cite the Age Discrimination in Employment Act (ADEA) as a benchmark for what constitutes a knowing and voluntary waiver in other types of claims. For example, Plaintiffs claim that under the ADEA, an employee must be given at least 21 days to consider the agreement before signing it and then another seven days after signing to revoke. Plaintiffs claim that based on the expediency of the settlement conference and the total lack of review time in the present situation, both Ferdinand and Madaris felt pressured to bind themselves to the agreement.
From the Doi case, if Plaintiffs agreed to the terms of the settlement on the record on November 12, 2003, and the written settlement agreements to which Plaintiffs now object are not inconsistent with the agreements as read into the record, the settlement agreements will be enforced. See Doi v. Halekulani Corp., 276 F. 3d 1131.
The Court's first inquiry is whether Mr. Ferdinand and Mr. Mararis entered into binding agreements on November 12, 2003.
As to Plaintiff Edward Ferdinand, the transcript from the November 12, 2003 settlement conference reads as follows:
See Exhibit B of Defendant's Motion to Enforce Settlement Agreement.
McCOY: This is Ed Ferdinand, Your Honor.
Mr. McCoy is Plaintiffs' counsel.
JUDGE: Mr. Ferdinand. And counsel, I understand that we've reached a settlement as to Mr. Ferdinand.
Ms. Sprague is Defendant's counsel.
JUDGE: And counsel, would you please place that on the record?
SPRAGUE: Yes. The city will pay Mr. Ferdinand $15,000, which includes his pro rata portion of attorney's fees in exchange for a full release of all of his claims against the city though the date of the settlement agreement.
JUDGE: All right, and couns —
McCOY: That's correct, Your Honor.
* * * * *
JUDGE: All right Mr. Ferdinand, you've heard the agreement that was placed on the record?
FERDINAND: Yes.
JUDGE: Do you understand it?
FERDINAND: Yes.
JUDGE: And do you agree to be bound by it?
FERDINAND: Yes.
JUDGE: Okay, all right. Thank you, Mr. Ferinand.
As to Plaintiff Derek Madaris, the transcript from the November 21, 2003 settlement conference reads as follows:
JUDGE: Okay, counsel, have you reached a settlement in this matter?
SPRAGUE: I think so.
JUDGE: Yes, we have.
SPRAGUE: Okay, yes, we have.
JUDGE: And what is the settlement?
SPRAGUE: The city will pay Mr. Madaris $15,000, which includes his pro rata portion of attorney's fees, in exchange for a full release of all of Mr. Madaris's claims through the date of the settlement agreement.
JUDGE: Okay. And counsel, you've also agreed that any ongoing investigation that they're legally required to do will be conducted after contacting Mr. Madaris' counsel first.
SPRAGUE: Yes.
MCCOY: That's correct, Your Honor.
JUDGE: All right. Counsel, you have the authority to bind the city in this [situation]?
SPRAGUE: Yes, I do.
JUDGE: And you do so bind them?
SPRAGUE: Yes.
JUDGE: Okay. Mr. Madaris, you heard the agreement that was placed on the record, did you understand it?
MADARIS: Yeah.
JUDGE: Okay, and do you agree to be bound by it?
MADARIS: Yeah.
It is clear from the transcript recited above that both Ferdinand and Madaris were asked by the Court if they understood their respective agreements. Both Plaintiffs responded affirmatively under oath: Ferdinand responded "Yes," and Mardaris responded, "Yeah." Subsequently, both Plaintiffs agreed to be bound by the agreements. Plaintiffs' argument that their verbal acceptances of the terms of the agreements were not accomplished knowingly and voluntarily is not persuasive. The Court notes that Plaintiffs' understanding of the agreement was specifically addressed by the Court on the record. Both Plaintiffs were represented by counsel and had the opportunity to request clarification and/or decline to enter the settlements. Instead, Plaintiffs stated that they understood their agreements and entered them on the record.
Plaintiffs complaints that the proceedings were rushed is belied by the fact that negotiations at the November 12, 2003 conference continued for six and a half hours before the agreements were entered on the record. Plaintiffs had ample time to consider their agreements. In this way, the Court concludes that Plaintiffs entered into binding agreements knowingly and voluntarily. A subsequent change of heart does not release Plaintiffs from the oral agreement. See Doi, at 1138.
Plaintiffs' argument that Defendant should not be allowed to enforce the settlement agreements as to Ferdinand and Madaris when Defendant has not abided by the terms of the settlement agreement as to Plaintiff Simpson is not relevant to the motion before the Court. Plaintiff Simpson may file his own motion to enforce if he feels that Defendant has not upheld its part of his agreement. Plaintiffs' ADEA argument is also irrelevant. This is a Title VII race discrimination case. The settlement requirements under the ADEA do not apply.
Neither party contends that the written agreements submitted to Plaintiffs for signature deviate from the agreements entered into in open court. Thus pursuant to its inherent power to enforce settlement agreements between the parties in pending cases ( see Metronet Services Corp. at 1013-1014), the Court hereby RECOMMENDS that the District Court GRANT Defendant's Motion to Enforce Settlement Agreement and COMPEL Plaintiffs to sign their respective settlement agreements and releases.
Further, because a representative of Plaintiffs' counsel acknowledged the enforceability of the settlements in open court, the Court finds that Defendant incurred needless time and expense in filing this motion to enforce. Accordingly, the Court hereby RECOMMENDS that the District Court GRANT Defendant $1,170 in costs and attorneys' fees. ( See Declaration of Jill A. Sprague in Support of Motion to Enforce Settlement Agreement.)
Exhibit D of Defendant's Motion is the Reporter's Transcript of Proceedings on March 12, 2004 in the matter of Madaris, et. al. v. Smoot, San Mateo Superior Court No. C435187 in which Mr. McCoy's representative acknowledges the enforceability of the settlements.
CONCLUSION
Based on the foregoing analysis, the Court hereby REPORTS and RECOMMENDS that the District Court GRANT Defendant's Motion to Enforce Settlement, COMPEL Plaintiffs to sign their respective settlement agreements and releases, and GRANT Defendant's costs and attorneys' fees in the amount of $1,170.
Pursuant to Fed.R.Civ.P. 72, a party may serve and file objections to this Report and Recommendation within 10 days after being served with a copy of said report.
IT IS SO RECOMMENDED.