Recently, in Tucker v. Mercy Tishomingo Hospital Corporation, the Tenth Circuit Court of Appeals considered an issue related to the scope of releases commonly given by plaintiffs in settlement agreements for employment-related lawsuits.[1] The case highlights the need for all counsel, mediators, and settlement judges to be sure that plaintiffs settling employment-related claims know the scope of claims being released by their agreement.
In Tucker, the plaintiff asserted claims under Title VII and the ADEA, in addition to a claim that the defendant breached his employment contract. The district court granted summary judgment in favor of the employer on the plaintiff’s discrimination claims, but allowed the breach of contract claim to move forward. The parties then participated in a mediation where, as is the common practice, the parties were placed in separate rooms, and the mediator communicated offers back and forth. Ultimately, the parties reached an agreement. At the mediation, the parties signed a written settlement agreement whereby the plaintiff agreed to a “full settlement of all his claims in Case # CIV 14-877M.” The plaintiff agreed to execute a full release and dismissal with prejudice. Plaintiff also agreed that the agreement was entered into “without coercion, fraud, duress, undue influence and mistake.” The parties also agreed to commonly-included language that they would sign all documents necessary to achieve a full and final settlement of all claims.
The parties subsequently notified the Court that a settlement had been reached, and the case was administratively closed “without prejudice to the rights of the parties to reopen the proceeding for good cause shown” within 30 days. Plaintiff moved to reopen the case on the basis of a dispute concerning the scope of the release he was required to execute under the settlement agreement. The plaintiff asserted that the settlement pertained only to the breach of contract claim, effectively preserving his right to appeal the summary judgment ruling on Plaintiff’s Title VII and ADEA claims. Defendant, of course, disagreed, arguing that the settlement covered all the claims asserted in the action. Plaintiff’s attorney withdrew from the case, and the Court extended the administrative closure period to provide the parties a chance to resolve their dispute or return for an in camera review of the settlement agreement.
The parties could not reach an agreement, and the plaintiff, now proceeding pro se, moved to vacate the settlement agreement. Plaintiff’s main issue was that the parties were kept in separate rooms during the mediation, which precluded him from negotiating with the defendant’s counsel directly. Plaintiff also contended that his attorney had failed to advise him that he would be waiving his right to appeal the district court’s summary judgment ruling.
Affidavits from defense counsel, plaintiff’s counsel, and the mediator were submitted to the district court. After an evidentiary hearing, the district court denied the motion to vacate the settlement agreement.
On appeal, the Tenth Circuit reviewed the decision under an abuse of discretion standard. The Circuit Court affirmed the decision, finding that a trial court may summarily enforce a settlement agreement entered into by the litigants while the litigation is pending. State contract law applies when considering the formation and construction of a purported settlement agreement. Summarily rejecting arguments by the plaintiff that the Oklahoma Dispute Resolution Act applied to the claims pending in federal court, the Circuit Court found that the structure of the mediation was common and did not preclude a meeting of the minds. The Court further found that the district court’s decision that the plaintiff understood the scope of the release being given in the settlement agreement was not clearly erroneous, given declarations from the plaintiff’s attorney and the mediator that the plaintiff understood he would be releasing all claims against the defendant under the settlement agreement. The terms of the written settlement agreement were also consistent with that understanding.
While Tucker involves a mediation that occurred after the resolution of some but not all claims on summary judgment, the case highlights the importance that counsel and the mediator must place on attending to the details of the agreement, even though these details may seem to be relatively minor during the negotiation process. One approach to reduce the potential for conflict after a mediation is to have the full, complete, and formal settlement agreement ready to be presented and modified during the mediation itself. The presentation of the full, typed settlement agreement containing the precise releases that the plaintiff must agree to while still at the mediation may reduce the potential for differing opinions about what claims are being released. If there is a good possibility that the case may be resolved at a mediation or settlement conference, this extra step may be worthwhile. In any event, this case is a good reminder of the need to be meticulous in the settlement process in making sure the plaintiff knows exactly what claims are being released.
[1] Tucker v. Mercy Tishomingo Hospital Corp, No. 16-6364, 2017 WL 2376551 (10th Cir. June 1, 2017) (not selected for publication and is not binding precedent, but may be cited for persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1).
This article appeared in the August 2017 Labor and Employment Law Edition of Tulsa Lawyer Magazine, published by the Tulsa County Bar Association.
