Opinion
Civil Action No. 02-30164-MAP
January 27, 2004
MEMORANDUM AND ORDER WITH REGARD TO DEFENDANTS' MOTIONS TO ENFORCE SETTLEMENT AGREEMENT (Document Nos. 31 and 41)
The two defendants in this employment termination case — Verizon Communications, Inc. ("Verizon") and Local 2324 of the International Brotherhood of Electrical Workers, AFL-CIO ("the union") (together "Defendants) — have separately moved to enforce a settlement agreement purportedly reached with Thomas Malek ("Plaintiff") in the Spring of 2003. For the reasons indicated below, the court will deny both motions. As will be described, the court concludes that the purported settlement agreement is unenforceable.
District Judge Michael A. Ponsor initially referred the motions to this court for a report and recommendation pursuant to 28 U.S.C. § 636(b)(1)(B). However, by December of 2003, following a hearing, the parties had all consented to having this court enter this final order on the motions in accordance with 28 U.S.C. § 636(c) and Fed.R.Civ.P. 73.
I. BACKGROUND
The following facts come directly from undisputed affidavits and other evidence supplied at the hearing. Sometime in 2000, Plaintiff was terminated from his employment at Verizon. He thereafter filed a union grievance and an arbitration was scheduled. On March 29, 2002, representatives from Verizon and the union executed a settlement agreement which, inter alia, called for Verizon to pay Plaintiff $10,000.Plaintiff, however, refused to sign the proposed agreement. Instead, on October 8, 2002, he filed this lawsuit in which he alleges wrongful termination (by Verizon) and breach of the duty of fair representation (by the union). Verizon's answer, filed on October 31, 2002, includes counterclaims in which it seeks damages from Plaintiff for his wrongful deprivation of Verizon's compensation and equipment.
On April 24, 2003, Plaintiff's counsel at the time, Leon Rosenblatt, and Verizon's counsel, Sheila O'Leary, engaged in settlement negotiations. Rosenblatt was also in communication with the union's counsel, Jennifer Rieker. During his negotiations with O'Leary, Rosenblatt made several overtures: that Plaintiff was willing to settle the case in exchange for $10,000; that Plaintiff did not want to return to work for Verizon; and that if the "original offer" was placed back on the table, and there were mutual releases, Plaintiff would "walk away from" the case. As Rosenblatt put it:
My authority was to settle for $10,000 and mutual releases. I informed [O'Leary] that it was my practice not to recommend that my clients sign a settlement agreement with one-way promises. For example, I informed [O'Leary] that I would not recommend that . . . [P]laintiff sign an agreement with a non-confidentiality commitment unless it were a mutual commitment.
(Rosenblatt Aff. ¶ 2.)
In a telephone call on April 25, 2003, O'Leary told Rosenblatt that Verizon would indeed pay Plaintiff $10,000 to settle the case. Rosenblatt and O'Leary then agreed that both parties would mutually release their claims. During the conversation, Rosenblatt stated that he would review the terms of the oral "agreement" with Plaintiff, but that he could not imagine there would be a problem with it. At no time during the conversation did Rosenblatt indicate that he lacked authority to settle the matter.
On April 28, 2003, O'Leary sent to Rosenblatt, by facsimile, a multiple-page document entitled "Settlement Agreement." (To avoid confusion with other purported oral agreements, the court will follow the parties' lead and use capital letters when referring to this document.) In a conversation with O'Leary later that day, Rosenblatt confirmed that the parties had reached an agreement "in principle" and that the terms of the agreement were "unusually fair." Believing that the parties had indeed reached an agreement, O'Leary cancelled a deposition scheduled for the next day. Another deposition was also cancelled.
Rosenblatt sent the Settlement Agreement to Plaintiff who strongly objected to a particular portion which would have prevented him not only from working for Verizon, but also from working for any company affiliated with Verizon. According to Rosenblatt, "[P]laintiff's fear was that he might find himself employed by a company which is acquired by Verizon, and the [S]ettlement [A]greement could force him to resign." (Rosenblatt's Aff. ¶ 4.) Meanwhile, on April 30, 2003, the union modified the Settlement Agreement by adding itself as a party and adopting the Agreement's standard terms.
In a letter dated May 14, 2003, Rosenblatt informed O'Leary that, although he had not yet reviewed the Settlement Agreement with Plaintiff, certain terms were unsatisfactory. Specifically, Rosenblatt told O'Leary that Plaintiff took issue with the clause prohibiting him from working for Verizon, or any affiliate, in the future. Rosenblatt also noted that while some of the covenants were mutual, not all of them were, at least not to the same degree. On May 21, 2003, O'Leary left a message for Rosenblatt explaining that Verizon insisted on maintaining the non-employment clause, but asking Rosenblatt to propose a way to deal with the other matters.
For example, the Settlement Agreement stated that Plaintiff would not disparage Verizon; however, there was no non-disparagement clause directed at Verizon. (Verizon's Ex. 1 ¶ 4(b).) Moreover, while the Settlement Agreement included covenants by both parties that they would not sue the other concerning the subject matter of the agreement, only Plaintiff's covenant included an "indemnity" and "hold harmless" clause which also stated that, if he did sue Verizon, he would "pay the expenses, attorneys' fees, and costs actually incurred in defending such suit or legal proceeding." ( Id. ¶ 7.)
On May 27, 2003, Rosenblatt and Plaintiff had a further discussion about the terms of the Settlement Agreement. Thereafter, Rosenblatt had several telephone conversations with O'Leary. "In an effort to break the impasse," Rosenblatt avers, "I asked whether Verizon would agree to a simple boilerplate exchange of releases rather than an elaborate settlement agreement." (Rosenblatt Aff. ¶ 6.) Verizon refused, which Rosenblatt took "to be a clear indication that the terms of [the] [S]ettlement [A]greement were essential elements." ( Id.)
On June 12, 2003, O'Leary contacted Rosenblatt to further discuss the Settlement Agreement. Rosenblatt, however, informed both O'Leary and Rieker that Plaintiff had changed his mind and was unwilling to settle for less than $20,000. In due course, Defendants filed the instant motions to enforce, Plaintiff tendered an opposition, the court held a hearing, and Verizon, at the court's request, filed a post-hearing memorandum.
II. VERIZON'S MOTION TO ENFORCE
The court was initially unclear as to what "agreement" Verizon sought to have enforced. On the one hand, Verizon's motion repeatedly stated that the court should enforce the "Settlement Agreement," i.e., the multi-page document which Plaintiff never signed. On the other hand, Verizon implied at the hearing that it is actually seeking to enforce an agreement to make a good faith effort to come to a formal agreement.With regard to the latter possibility, Verizon has since acknowledged that, although given the opportunity to do so, it has discovered no case law to support its position that "an agreement to make a good faith effort to come to a formal agreement" is enforceable. (Document No. 45.) Such a concession is appropriate. As District Judge Steven McAuliffe explained in Clark v. Mitchell, 937 F. Supp. 110 (D.N.H. 1996), "parties either have a complete, enforceable settlement agreement, requiring no further negotiation on any material point, or they have no settlement agreement at all." Id. at 114 (rejecting argument that the plaintiff "should be ordered to negotiate the remaining disputed terms in good faith" and holding that there is "no middle ground between an enforceable settlement agreement and no settlement agreement at all"). Accordingly, the court is left with Verizon's request, as set forth in its motion, that the court enforce the Settlement Agreement as written. The question the court needs to answer, therefore, is whether this document formed a valid contract.
As this court has previously observed, the formation of a settlement agreement, like any other contract, requires a bargain in which there is a manifestation of mutual assent, i.e., a meeting of the minds to the exchange and consideration. See O'Rourke v. Jason, Inc., 978 F. Supp. 41, 45 (D. Mass. 1997) (citing Restatement (Second) of Contracts § 17(1) cmt c). See also Trifiro v. New York Life Ins. Co., 845 F.2d 30, 31 (1st Cir. 1988). To be sure, an oral agreement to settle a claim may be enforced as any other contract. See O'Rourke, 978 F. Supp. at 45-46 (citing cases). As described, however, Verizon — despite some references in its memoranda to the contrary — is not seeking to enforce an oral contract. Rather, Verizon argues that the written Settlement Agreement encapsulates the parties' oral understanding and, therefore, that the document should be enforced as drafted by Verizon. (See, e.g., Verizon's Motion at 5 ("[Plaintiff] cannot, and has not, claimed that Verizon's proffered draft was inconsistent with the settlement. . . . [Plaintiff]'s demand for $20,000 constitutes a repudiation of the Settlement Agreement and [Verizon] is entitled to enforce the terms of the Agreement."), 6 ("[T]here is no indication that [Rosenblatt] did not have authority to agree to the terms of the Settlement Agreement.") and 7 ("[A]llowing Plaintiff to nullify the Settlement Agreement would undermine the Court's preference for the voluntary settlement of matters.") (emphasis added).)
Verizon's argument notwithstanding, the court cannot enforce the written Settlement Agreement. The reason is simple. The written proposal materially changed the terms upon which the parties had orally agreed: Verizon added a non-employment clause as well as several other one-way promises. Put differently, the Settlement Agreement constituted a new offer by Verizon, Plaintiff rejected that offer and, as a result, no agreement exists.
As Plaintiff pointed out at the hearing, the present matter is analogous to two New Hampshire cases. In Arapage v. Odell, 327 A.2d 717 (N.H. 1974), the court held that where counsel accepted the monetary part of a settlement offer, but specifically rejected other provisions, there was no enforceable agreement between the parties. See id. at 718. A similar result was reached by Judge McAuliffe in Clark, 937 F. Supp. at 113-14 (holding that a written draft which "contains terms that differ markedly from those agreed to orally" is unenforceable).
New Hampshire, like Massachusetts, follows traditional contract law principles: "Offer, acceptance and consideration are essential to contract formation." Chisholm v. Ultima Nashua Indus. Corp., 834 A.2d 221, 225 (N.H. 2003). Compare Quinn v. State Ethics Comm'n, 516 N.E.2d 124, 216 (Mass. 1987) (observing, under Massachusetts law, that the "essential elements" of a contract are "bargained-for exchange-offer, acceptance and consideration").
Like the plaintiff's attorney in Clark, Rosenblatt "readily concedes he agreed to certain provisions and personally considered the case settled on those terms," id. at 114, i.e., $10,000 and the exchange of mutual releases. "[H]e also specifically rejected other material provisions proposed by defendants," id., namely the non-employment clause and the other one-way promises. "Curiously, however" — and to paraphrase Judge McAuliffe — Verizon is "not seeking to enforce the agreement [Rosenblatt] concedes. It is defense counsel, not [Plaintiff], who ha[s] strived mightily to disprove the enforceable agreement . . . by trying to prove a materially different one. Given [Verizon's] position, there simply was no enforceable settlement between the parties." Id. (emphasis in original). In short, as in Clark, "the broad settlement sought to be enforced by [Verizon] is not a settlement that was ever in fact reached by counsel" and, ergo, cannot be enforced. Id. (citation and internal quotation marks omitted).
Of course, Verizon also argues that the "essential elements" of the oral deal, in fact, had been reached, that the added written provisions were "not material," and that, as a result, there is no barrier to enforcing the Settlement Agreement as drafted. The court, however, disagrees. "It is axiomatic that to create an enforceable contract, there must be agreement between the parties on the material terms of that contract," Situation Mgmt. Systems, Inc. v. Malouf, Inc., 724 N.E.2d 699, 703 (Mass. 2000), and "[a] failure of the parties to agree on material terms . . . may prevent any rights or obligations from arising on either side for lack of a completed contract," Rosenfield v. U.S. Trust Co., 195 N.E. 323, 325 (Mass. 1935). Here, it is clear that the non-employment clause in particular, if not the other one-way promises (see n. 2), was material. Certainly, Plaintiff himself viewed these terms as critical. Moreover, Verizon's refusal on May 27, 2003, to agree to an exchange of releases was a "clear indication," as Rosenblatt avers, that it too deemed the additional terms "essential."
To be sure, the situation might have been different had Verizon promptly sought to enforce the oral agreement reached by the parties on April 25, 2003: $10,000 and the exchange of mutual releases. As described, however, Verizon is bent on enforcing the Settlement Agreement as drafted. Since there has been no meeting of the minds with respect to that document, Verizon's motion to enforce will be denied.
III. THE UNION'S MOTION TO ENFORCE
The union's motion to enforce — filed just prior to the hearing and, by its own terms, dependent on Verizon's motion — is riddled with deficiencies. For one thing, the motion makes no reference to case law or other authority. Also, the motion is unsupported by affidavit or other suitable evidence. Finally, and perhaps most importantly, the motion is vague as to what "verbal agreement" the union wants enforced and how it has standing with respect thereto. At best, the union states that it "agreed to settle the case for $10,000 payable by Verizon to . . . Plaintiff," but it overlooks the other material terms that are at the heart of this dispute and which Verizon incorporated into the draft Settlement Agreement which it seeks to have enforced. Accordingly, the union's motion to enforce will be denied as well.
IV. CONCLUSION
For the reasons stated, Defendants' motions to enforce are hereby DENIED. The clerk shall schedule a case management conference.
IT IS SO ORDERED.