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 — VerizonCommunications, Inc. ("Verizon") and Local 2324 of the InternationalBrotherhood of Electrical Workers, AFL-CIO ("the union") (together"Defendants) — have separately moved to enforce a settlementagreement purportedly reached with Thomas Malek ("Plaintiff") in theSpring of 2003. For the reasons indicated below, the court will denyboth motions. As will be described, the court concludes that thepurported settlement agreement is unenforceable.1
I. BACKGROUNDPage 2
The following facts come directly from undisputed affidavits and otherevidence supplied at the hearing. Sometime in 2000, Plaintiff wasterminated from his employment at Verizon. He thereafter filed a uniongrievance and an arbitration was scheduled. On March 29, 2002,representatives from Verizon and the union executed a settlementagreement which, inter alia, called for Verizon to pay Plaintiff$10,000.
Plaintiff, however, refused to sign the proposed agreement. Instead, onOctober 8, 2002, he filed this lawsuit in which he alleges wrongfultermination (by Verizon) and breach of the duty of fair representation(by the union). Verizon's answer, filed on October 31, 2002, includescounterclaims in which it seeks damages from Plaintiff for his wrongfuldeprivation 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 settlementnegotiations. Rosenblatt was also in communication with the union'scounsel, Jennifer Rieker. During his negotiations with O'Leary,Rosenblatt made several overtures: that Plaintiff was willing to settlethe case in exchange for $10,000; that Plaintiff did not want to returnto work for Verizon; and that if the "original offer" was placed back onthe table, and there were mutual releases, Plaintiff would "walk awayfrom" 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 thatVerizon wouldPage 3indeed pay Plaintiff $10,000 to settle the case. Rosenblatt and O'Learythen agreed that both parties would mutually release their claims. Duringthe conversation, Rosenblatt stated that he would review the terms of theoral "agreement" with Plaintiff, but that he could not imagine therewould be a problem with it. At no time during the conversation didRosenblatt indicate that he lacked authority to settle the matter.
On April 28, 2003, O'Leary sent to Rosenblatt, by facsimile, amultiple-page document entitled "Settlement Agreement." (To avoidconfusion with other purported oral agreements, the court will follow theparties' lead and use capital letters when referring to this document.) Ina conversation with O'Leary later that day, Rosenblatt confirmed that theparties had reached an agreement "in principle" and that the terms of theagreement were "unusually fair." Believing that the parties had indeedreached an agreement, O'Leary cancelled a deposition scheduled for thenext day. Another deposition was also cancelled.
Rosenblatt sent the Settlement Agreement to Plaintiff who stronglyobjected to a particular portion which would have prevented him not onlyfrom working for Verizon, but also from working for any companyaffiliated with Verizon. According to Rosenblatt, "[P]laintiff's fear wasthat he might find himself employed by a company which is acquired byVerizon, and the [S]ettlement [A]greement could force him to resign."(Rosenblatt's Aff. ¶ 4.) Meanwhile, on April 30, 2003, the unionmodified the Settlement Agreement by adding itself as a party andadopting 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'Learythat Plaintiff took issue with thePage 4clause prohibiting him from working for Verizon, or any affiliate,in the future. Rosenblatt also noted that while some of the covenantswere mutual, not all of them were, at least not to the same degree.2On May 21, 2003, O'Leary left a message for Rosenblatt explaining thatVerizon insisted on maintaining the non-employment clause, but askingRosenblatt to propose a way to deal with the other matters.
On May 27, 2003, Rosenblatt and Plaintiff had a further discussionabout the terms of the Settlement Agreement. Thereafter, Rosenblatt hadseveral telephone conversations with O'Leary. "In an effort to break theimpasse," Rosenblatt avers, "I asked whether Verizon would agree to asimple boilerplate exchange of releases rather than an elaboratesettlement agreement." (Rosenblatt Aff. ¶ 6.) Verizon refused, whichRosenblatt 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 theSettlement Agreement. Rosenblatt, however, informed both O'Leary andRieker that Plaintiff had changed his mind and was unwilling to settlefor less than $20,000. In due course, Defendants filed the instantmotions to enforce, Plaintiff tendered an opposition, the court held ahearing, and Verizon, at the court's request, filed a post-hearingmemorandum.Page 5
II. VERIZON'S MOTION TO ENFORCE
The court was initially unclear as to what "agreement" Verizon soughtto have enforced. On the one hand, Verizon's motion repeatedly statedthat the court should enforce the "Settlement Agreement," i.e., themulti-page document which Plaintiff never signed. On the other hand,Verizon implied at the hearing that it is actually seeking to enforce anagreement to make a good faith effort to come to a formal agreement.
With regard to the latter possibility, Verizon has since acknowledgedthat, although given the opportunity to do so, it has discovered no caselaw to support its position that "an agreement to make a good faitheffort to come to a formal agreement" is enforceable. (Document No. 45.)Such a concession is appropriate. As District Judge Steven McAuliffeexplained in Clark v. Mitchell, 937 F. Supp. 110 (D.N.H. 1996), "partieseither have a complete, enforceable settlement agreement, requiring nofurther negotiation on any material point, or they have no settlementagreement at all." Id. at 114 (rejecting argument that the plaintiff"should be ordered to negotiate the remaining disputed terms in goodfaith" and holding that there is "no middle ground between an enforceablesettlement 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 questionthe court needs to answer, therefore, is whether this document formed avalid contract.
As this court has previously observed, the formation of a settlementagreement, like any other contract, requires a bargain in which there isa manifestation of mutual assent, i.e., a meeting of the minds to theexchange and consideration. See O'Rourke v. Jason, Inc., 978 F. Supp. 41,45 (D. Mass. 1997) (citing Restatement (Second) ofPage 6Contracts § 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 tosettle a claim may be enforced as any other contract. See O'Rourke, 978F. Supp. at 45-46 (citing cases). As described, however, Verizon —despite some references in its memoranda to the contrary — is notseeking to enforce an oral contract. Rather, Verizon argues that thewritten Settlement Agreement encapsulates the parties' oral understandingand, therefore, that the document should be enforced as drafted byVerizon. (See, e.g., Verizon's Motion at 5 ("[Plaintiff] cannot, and hasnot, claimed that Verizon's proffered draft was inconsistent with thesettlement. . . . [Plaintiff]'s demand for $20,000 constitutes arepudiation of the Settlement Agreement and [Verizon] is entitled toenforce the terms of the Agreement."), 6 ("[T]here is no indication that[Rosenblatt] did not have authority to agree to the terms of theSettlement Agreement.") and 7 ("[A]llowing Plaintiff to nullify theSettlement Agreement would undermine the Court's preference for thevoluntary settlement of matters.") (emphasis added).)
Verizon's argument notwithstanding, the court cannot enforce thewritten Settlement Agreement. The reason is simple. The written proposalmaterially changed the terms upon which the parties had orally agreed:Verizon added a non-employment clause as well as several other one-waypromises. Put differently, the Settlement Agreement constituted a newoffer by Verizon, Plaintiff rejected that offer and, as a result, noagreement exists.
As Plaintiff pointed out at the hearing, the present matter isanalogous to twoPage 7New Hampshire cases.3 In Arapage v. Odell, 327 A.2d 717 (N.H. 1974),the court held that where counsel accepted the monetary part of asettlement offer, but specifically rejected other provisions, there wasno enforceable agreement between the parties. See id. at 718. A similarresult was reached by Judge McAuliffe in Clark, 937 F. Supp. at 113-14(holding that a written draft which "contains terms that differ markedlyfrom those agreed to orally" is unenforceable).
Like the plaintiff's attorney in Clark, Rosenblatt "readily concedes heagreed to certain provisions and personally considered the case settledon those terms," id. at 114, i.e., $10,000 and the exchange of mutualreleases. "[H]e also specifically rejected other material provisionsproposed by defendants," id., namely the non-employment clause and theother one-way promises. "Curiously, however" — and to paraphraseJudge 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 toprove a materially different one. Given [Verizon's] position, there simplywas no enforceable settlement between the parties." Id. (emphasis inoriginal). In short, as in Clark, "the broad settlement sought to beenforced by [Verizon] is not a settlement that was ever in fact reachedby counsel" and, ergo, cannot be enforced. Id. (citation and internalquotation marks omitted).
Of course, Verizon also argues that the "essential elements" of theoral deal, inPage 8fact, had been reached, that the added written provisions were "notmaterial," and that, as a result, there is no barrier to enforcing theSettlement Agreement as drafted. The court, however, disagrees. "It isaxiomatic that to create an enforceable contract, there must be agreementbetween the parties on the material terms of that contract," SituationMgmt. Systems, Inc. v. Malouf, Inc., 724 N.E.2d 699, 703 (Mass. 2000),and "[a] failure of the parties to agree on material terms . . . mayprevent any rights or obligations from arising on either side for lack ofa completed contract," Rosenfield v. U.S. Trust Co., 195 N.E. 323, 325(Mass. 1935). Here, it is clear that the non-employment clause inparticular, 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 releaseswas a "clear indication," as Rosenblatt avers, that it too deemed theadditional terms "essential."
To be sure, the situation might have been different had Verizonpromptly sought to enforce the oral agreement reached by the parties onApril 25, 2003: $10,000 and the exchange of mutual releases. Asdescribed, however, Verizon is bent on enforcing the Settlement Agreementas drafted. Since there has been no meeting of the minds with respect tothat 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 hearingand, by its own terms, dependent on Verizon's motion — is riddledwith deficiencies. For one thing, the motion makes no reference to caselaw or other authority. Also, the motion is unsupported by affidavit orother suitable evidence. Finally, and perhaps most importantly, themotion is vague as to what "verbal agreement" the union wantsPage 9enforced and how it has standing with respect thereto. At best, the unionstates that it "agreed to settle the case for $10,000 payable by Verizonto . . . Plaintiff," but it overlooks the other material terms that areat the heart of this dispute and which Verizon incorporated into thedraft Settlement Agreement which it seeks to have enforced. Accordingly,the union's motion to enforce will be denied as well.
For the reasons stated, Defendants' motions to enforce are herebyDENIED. The clerk shall schedule a case management conference.
IT IS SO ORDERED.
1. District Judge Michael A. Ponsor initially referred the motions tothis court for a report and recommendation pursuant to28 U.S.C. § 636(b)(1)(B). However, by December of 2003, following ahearing, the parties had all consented to having this court enter thisfinal order on the motions in accordance with 28 U.S.C. § 636(c) andFed.R.Civ.P. 73.
2. For example, the Settlement Agreement stated that Plaintiff wouldnot disparage Verizon; however, there was no non-disparagement clausedirected at Verizon. (Verizon's Ex. 1 ¶ 4(b).) Moreover, while theSettlement Agreement included covenants by both parties that they wouldnot sue the other concerning the subject matter of the agreement, onlyPlaintiff's covenant included an "indemnity" and "hold harmless" clausewhich also stated that, if he did sue Verizon, he would "pay theexpenses, attorneys' fees, and costs actually incurred in defending suchsuit or legal proceeding." (Id. ¶ 7.)
3. New Hampshire, like Massachusetts, follows traditional contract lawprinciples: "Offer, acceptance and consideration are essential to contractformation." 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 "essentialelements" of a contract are "bargained-for exchange-offer, acceptance andconsideration").