MEMORANDUM DECISION AND ORDER
After a grueling day of mediation in a putative class action, thelawyers and those clients who were present agreed on the mostimportant disputed issues. The mediator then drafted a statement ofthe terms they had accepted. All recognized that, since the lawsuitpurported to be aclass action, any settlement agreement would have to be detailed and inwriting to obtain court approval. See Fed. R. Civ. P. 23. As the mediator'sversion was circulated for signature, one of the defendants' lawyers addedthe following clause: "This mediation agreement contemplates that a writtenSettlement Agreement will be executed upon agreement to all material terms."During the succeeding weeks, the lawyers drafted a detailed andcomprehensive settlement agreement. But the defendants failed to providewhat the plaintiffs deemed acceptable security for the financial installmentobligation the defendants had agreed to. After a succession of courtdeadlines passed with no written settlement agreement filed for courtapproval, I issued decisions on pending motions. The decisionsaltered the parties' respective negotiating positions. As a result,the defendants now refuse to go forward with the purportedsettlement. The plaintiffs have brought this motion to enforce thealleged agreement. Upon a de novo review and after an evidentiaryhearing, I agree with the Magistrate Judge that the agreement isenforceable.
The factual allegations of the Amended Complaint are described extensivelyin earlier rulings. See, e.g., Order on Pls.' Mot. for Class Cert.and Defs.' Mot. for Summ. J. (Mar. 31, 2000) ("Order of March 31,2000") (order denying class certification and granting most ofdefendants' motion for summary judgment) at 3. For this motion,suffice it to say that the plaintiffs seek to represent a class ofMexican or Hispanic workers at the DeCoster egg farms. They chargeDeCoster with racial/ethnic discrimination and a variety of otherfederal and state law violations. Id. At an early stage I granted thedefendants' motion to dismiss the government of Mexico, a ruling thatwas on appeal at the time of the mediation. Order on Defs.' Mot. toDismiss Pl. Estados-Unidos Mexicanos, at 1 (Aug. 9, 1999) (ordergranting motion to dismiss government of Mexico). Difficult motionsfor class certification and for summary judgment also were filed andwere pending at the time of mediation. See Order of March 31, 2000, at 2-3.
After I had invested substantial time and energy in working on the issuesraised by the motions, the parties notified me that they were engaged insubstantive and promising settlement negotiations. As a result, theyasked me several times to delay ruling on their motions, and Iconsented. Order on Mot. to Stay Any Further Action on the CasePending Mediation (Jan. 10, 2000).
In fact, the parties had engaged former United States Senator Rudman tomediate their dispute. Senator Rudman presided at a full day of mediation onFebruary 21, 2000, here in Portland. Evidentiary Hearing ("Evid.Hr'g") Ex. 34 (Test. of Senator Warren B. Rudman) at 2-3 ("RudmanTest."); Evid. Hr'g Tr. at 76 (Test. of Att'y Karen Wolf); Tr. at157-58 (Test. of DeCoster Att'y Timothy O'Brien). Austin DeCoster,the principal defendant, was present; so were one of the namedindividual plaintiffs, Luis Ramirez, and two representatives of thegovernment of Mexico. Rudman Test. at 39-40; Tr. at 16 (Test. ofAtt'y Wolf). There were three lawyers, a paralegal and an interpreter(who was also a migrant labor organizer) for the plaintiffs; fivelawyers for DeCoster; and a nonlawyer representative for thenon-DeCoster defendants.1 Id. at 16, 24-25.
Toward the end of a long day of intensive mediation (the majorityof it wasspent on financial terms, Rudman Test. at 2-3), the parties reachedagreement on the amount of settlement and certain other matters. Id. at21; Tr. at 18 (Test. of Att'y Wolf), 159-60 (Test. of Att'y O'Brien).Senator Rudman dictated to a paralegal the terms he believed the partieshad agreed on as follows:
In the matter of Estados Unidos Mexicanos et al. v. Austin J. DeCoster, et al.
Agreement reached under the auspices of mediation by Senator Warren B. Rudman on February 21st, 2000 in Portland, Maine.
1. Plaintiffs agree to settle this matter against all Defendants for the sum of $6 million dollars.
2. Payments shall be as follows:
$1.5 million upon approval of the Court
$4.5 million over a period of 24 months
3. The Plaintiffs agree to use their best efforts to help lift the boycott of DeCoster with the various retail establishments.
4. Consideration will be given to rehiring certain former employees of DeCoster.
5. Parties agree to make a good faith effort to deal with other collateral but not financial issues with the Court.
When the document was passed around, DeCoster attorney McGivney added a sentence:
6. This mediation agreement contemplates that a written Settlement Agreement will be executed upon agreement to all material terms.
Evid. Hr'g Ex. 1 at 1-2. Attorney Wolf signed the document for theplaintiffs; Attorney Schreiber signed for the defendants; and SenatorRudman signed as Mediator. Id.
After Senator Rudman left to catch a plane, the lawyers tried to proceedwith their negotiations, but discovered they were too exhausted. Tr.at 30-33 (Test. of Att'y Wolf). They resumed the next day at 11:00a.m., the plaintiffs bringing a draft of another document. Id. at32-33. After some progress, they adjourned, with the defendants'lawyers promising to draft a comprehensive document for presentationto the Court. Id. at 33-34. Negotiations went on thereafter by phone,fax and mail. See, e.g., Evid. Hr'g Ex. 5 (Letter from Att'ySchreiber to Att'y Friedman, Mar. 6, 2000); Evid. Hr'g Ex. 9 (Faxfrom Att'y Friedman to Att'y O'Brien, et al., Mar 22, 2000); Evid.H'rg Ex. 13 (3/27/00 Draft Settlement Agreement).
As the date approached when I was required by statute to report publiclythe pending motions as having been under advisement for more than sixmonths, see 28 U.S.C. § 476 (Civil Justice Reform Act), I told theparties that the succession of consented-to delays would have to cometo an end. Tr. of March10, 2000 Conference at 2; Tr. of Mot. toEnforce at 49-50 (Cohen, Mag. J., Sep. 13, 2000). Although thelawyers continued to tell me and/or the Court's case managers thatsettlement was imminent, Tr. of March 10, 2000 Conference, they didnot file a written settlement agreement. At one conference ofcounsel, they told me that they had agreed upon the most difficultaspect of the settlement-money and that they were very hopeful ofresolving everything. Tr. of Mot. to Enforce at 31 (statement byAtt'y O'Brien); Tr. at 194 (Test. of Att'y O'Brien).2
On March 27, 2001, DeCoster attorney Schreiber told plaintiff attorneyWolf that she "could just call the Court and tell them the case wassettled." Tr. at 46 (Test. of Att'y Wolf). Attorney Wolf did not doso. After waiting until the last possible time,3 I proceeded torule on March 31, 2000. Order on Pls.' Mot. for Class Cert. & Defs.'Mot. for Summ. J. at 2-3. Although each side won some and lost someportion of the rulings, the balance favored the defendants. Id. Notsurprisingly, the defendants no longer endorse the terms of thepurported settlement. Defs.' Opp'n to Pls.' In Camera Mot. to EnforceSettlement Agreement (July 24, 2000) ("Defs.' Opp'n"). The plaintiffsdo. Pls.' In Camera Mot. to Enforce Settlement Agreement (July 7,2000) ("Pls.' Mot. to Enforce").
On July 7, 2000, the plaintiffs brought a motion to enforcesettlement. Pls.' Mot. to Enforce at 9-11. The defendants opposed it.Defs.' Opp'n at 9-10. After full briefing and oral argument,Magistrate Judge Cohen recommended that the motion be granted.Recommended Decision on Pls.' Mot. to Enforce Settlement (Cohen, Mag.J., Sep. 18, 2000) ("Rec. Dec.") at 1, 24 (recommending enforcementof Feb. 21, 2000 agreement). On review, I concluded that the bettercourse was to hold an evidentiary hearing before ruling. See Malavev. Carney Hosp., 170 F.3d 217, 220 (1st Cir. 1999); Dankese v.Defense Logistics Agency, 693 F.2d 13,16 (1st Cir. 1982); Warner v.Rossignol, 513 F.2d 678, 683 (1st Cir. 1975). Testimony was taken onthree days (one day by videoconference from Washington, D.C., wherethe lawyers and Senator Rudman appeared while I presided from thecourtroom in Portland). Evid. Hr'g Ex. 34 (Rudman Test.); Evid. Hr'gTr. Jan. 22-23, 2001.
The parties have analyzed this settlement issue in terms of Maine law. TheMagistrate Judge considered both federal and Maine law. Rec. Dec. at5. A recent First Circuit decision makes clear that federal law mustbe applied where, as here, the underlying lawsuit is based uponfederal statutes. Quint v. A.E. Staley Mfg. Co., 246 F.3d 11, 14 (1stCir. 2001); see alsoMalave, 170 F.3d at 220. I therefore limit my attention to federallaw.5
According to the First Circuit, "[the] argument, that when theparties to an agreement contemplate a written document willmemorialize a contract, there can be no agreement until the documentis executed, is a radical and doomed departure from the principles ofcontract law. . . . [T]hat is not the law." Quint, 246 F.3d at 15.Dealing with an oral agreement, the First Circuit went on to explainthat "[t]here are certainly instances in which no . . . contract isformed where material terms are not yet agreed upon, and no agreementis reached until there is written agreement embodying those materialterms." Id. For that proposition, it cited an earlier case that hadstated: "Parties do not become contractually bound until theymutually assent to bind themselves to an agreement. Courts determinethat mutual assent, not on the basis of what goes on inside theparties' heads, but rather on the basis of what they say and do."Salem Laundry Co. v. New Eng. Teamsters & Trucking Indus. PensionFund, 829 F.2d 278, 280 (1st Cir. 1987) (citations omitted); accordAbbott Lab. v. Alpha Therapeutic Corp., 164 F.3d 385, 387 (7th Cir.1999). I apply those principles here, where I am the factfinder.6Salem Laundry, 829 F.2d at 280 (noting that trial court must inquireinto intent of the parties); RCI Northeast Servs. Div. v. BostonEdison Co., 822 F.2d 199, 202 (1st Cir. 1987) (noting that thefactfinder "must ferret out the intent of the parties").
A. Material Terms
Some things were clearly resolved in the first writing at the close of theFebruary 21 day of mediation. The document resolved the amount thedefendants would pay in compromise; the schedule for payment; a bestefforts commitment by the plaintiffs to help lift a boycott thatcertain retailers had imposed; and a good faith commitment on bothsides in dealing with the Court on nonfinancial issues. Evid. Hr'gEx. 1. (No issue has been made of the clearly precatory agreement togive "consideration" to rehiring.) But the defendants say that thefollowing material terms were not agreed upon: (a) the definition of"best efforts"; (b) the scope of the plaintiff class; and (c) thenature of any security for the installment payments. Tr. at 170-71(Test. of Att'y O'Brien).7 I consider each separately.
(1) Best Efforts
The DeCoster defendants argue that lifting the boycott is an exceedinglyimportant part of the agreement to them because the potential for ending theretailers' boycott of DeCoster eggs is what justifies the amount ofmoney DeCoster agreed to pay in order to settle. Tr. at 170-71 (Test.of Att'y O'Brien); DeCoster Defs.' in camera Obj. to Mag. Judge'sRec. Dec. on Pls.' Mot. to Enforce at 16-17 (Oct. 5, 2000) ("DeCosterDefs.' Obj."). I accept that assertion, but it remains the case thatcontinuation of the boycott is in the control of third parties, notthe plaintiffs. The plaintiffs cannot guarantee a favorable outcomeunder any language that might be drafted. They can only give "bestefforts." With time, more content and detail might have been addedto what is included within the phrase "best efforts," but thestandard could not be more demanding than that. In fact, asMagistrate Judge Cohen observed, "best efforts" is a familiar term tolawyers and not unusual to find in a contract. Rec. Dec. at 9 n. 7;Tr. of Mot. to Enforce at 43; see Triple-A Baseball Club Assoc. v.Northeastern Baseball, Inc., 832 F.2d 214, 225 (1st Cir. 1987)(enforcing parties' agreement to use "best efforts" to obtainapproval of purchase of baseball franchise); Satellite Broad. Cable,Inc. v. Telefonica de Espana, 807 F. Supp. 210, 212 (D.P.R. 1992)("Where the party includes in the contract a best efforts clause, thesame will be given effect."). Compliance with or breach of the "bestefforts" clause could be determined without further enumeration ofwhat the parties contemplated.8 See Triple-A Baseball, 832 F.Supp. at 225 (noting that "best efforts" standard has been held to beequivalent to that of good faith).
(2) Scope of Plaintiff Class
The defendants argue that the agreement signed at the close ofmediation does not specify the scope of the class. DeCoster Defs.'Obj. at 15-17; see also Defs.' Opp'n at 11. In fact, however, thescope of the class had never been an issue during the mediation.After all, a motion for class certification had been filed, and theentire dispute arises out of employment and housing relationshipsbetween the plaintiffs and the DeCoster defendants. The only "scope"issues possible were defining the ethnic group and the chronologicalyears covered. It was in the defendants' interest to have as broad adefinition as possible for all the obvious reasons. Although therewas some later suggestion by the plaintiffs to limit the class toplaintiffs of Mexican origin, Tr. at 174-75 (Test. of Att'y O'Brien),when the defendants objected, the plaintiffs' lawyers quickly agreedto the defendants' definition that included all Hispanic plaintiffs.Id. at 236.This topic was not mentioned in the agreement only because it was not amatter of dispute between the parties.9
(3) Security for the Installment Obligation
The agreement that Senator Rudman drafted does not mention any securityfor DeCoster's installment obligation. See Evid. H'rg Ex. 1. (Thereference to "collateral" in paragraph 5 is in its adjectival senseof auxiliary or secondary, not as a noun meaning security.) But thesubject came up toward the end of the day of mediation, when DeCosterfirst proposed an installment payment as he increased the amount hewas willing to pay to settle. Tr. at 20-21 (Test. of Att'y Wolf), 177(Test. of Att'y O'Brien). According to Senator Rudman, whosetestimony I credit as a neutral observer:
[T]here was an intensive discussion about securitizing the 4.5 million dollars that would be outstanding for, I recall, 24 months. There was a discussion that the parties would get together subsequent to the mediation and try to find a satisfactory way of doing that.
This was kind of at the end of all of this, and once it became apparent this would not be a cash outright settlement, an outright cash settlement, you [referring to plaintiff attorney Friedman] expressed concern about that. And so I asked the parties, I asked Mr. Decoster's counsel-and I might say he was sitting essentially two chairs away from me at that time or three chairs away-that could they come up with any idea then and there in which they could outline a piece of property or a security interest or something that we could incorporate in the agreement.
I asked the question, I recall that, and it was obvious that they could not, and I believe Mr. DeCoster himself indicated that his corporate holdings were fairly complex. He did not have in his head how much equity there might be in a particular piece of real estate or other real or personal property, and thus there would be discussions subsequent, and I understood that. No reason he should know that at the time, and that is why it was not specified. I would have preferred to, but, obviously, we could not do that.
Q. By "specified" you mean articulated in the writing?
A. Yes. I would like to have specified a farm located in Bridgton, Maine, or whatever. . . .
Rudman Test. at 12-14.
But subsequently on February 21, 2000, the parties did get together,apparently outside of Senator Rudman's presence. Tr. at 21, 36 (Test.of Att'y Wolf), 177 (Test. of Att'y O'Brien). The defendants agreedorally that day that DeCoster would in fact provide security for theobligation-the words used were "adequate security," Tr. at 21 (Test.of Att'y Wolf); Tr. of Mot. to Enforce at 36 (Statement of Att'yO'Brien)? but the amount and nature were not defined.
On this topic, I agree with the Magistrate Judge that the nature of thesecurity is not a material term. Rec. Dec. at 14 ("[T]he nature of[the] security . . . . is not integral to the settlement itself.").Moreover, the requirement of "adequate security" is enforceable inany event. Applying that standard is the typical sort of dispute thatcourts are called upon to resolve.10
So no material terms were missing from the agreement. Indeed, the absenceof material terms is largely a makeweight set of arguments. The DeCosterdefendants' more serious argument is their contention that AttorneyMcGivney's insertion of paragraph 6 in the February 21 document meantthat any apparent "agreement" Senator Rudman had achieved wasillusory and unenforceable. Def. DeCoster Obj. at 14-15.
B. Was a Further Writing Required to Make the Agreement Enforceable?
As I said at the outset, the First Circuit has determined thatexistence of an enforceable agreement is to be resolved by thefactfinder. Salem Laundry Co., 829 F.2d at 280. I must determinefactually whether there was mutual assent to be bound at the close ofmediation, and I must determine that, not by what was in people'sheads, but objectively by what they said and did. Id. I thereforeexamine the evidence from that perspective. I observe first that thelawyers who were present at the mediation and who testified in courtare heavily invested in the outcomeof this dispute for powerful financial and emotional reasons. I do notfor a moment suggest that any of them testified dishonestly; they are allprofessionals of the highest standing. But I do believe that theirunderstandings and recollections are inevitably colored by the passionof their participation. I find Senator Rudman, the mediator, to be themost neutral and dispassionate observer of what was said and done.
1. Senator Rudman testified that he had concluded from what he sawand heard that the parties had reached a settlement. Rudman Test. at 21. Inconfirmation, the document begins by calling itself "Agreement . . .,"Evid. Hr'g Ex. 1 at 1, and its first provision states:"Plaintiffs agree to settle this matter against all defendants forthe sum of $6 million dollars." Id.
2. As I told the lawyers, I have no independent recollection of the wordsthey used in speaking to me at various case conferences. The case managerstestified that they understood from communications from the lawyers that asettlement was imminent, but that they never received the finalconfirmation from counsel that it had occurred, a message that wouldhave prompted them to issue a procedural order. Tr. at 145-46 (Test.of Case Mgr. Marie Cross), 151-52 (Test. of Case Mgr. Deborah Whitney).
3. There is no evidence of what the class plaintiffs said and did thatbears upon the issue. Only one class representative was present atthe mediation. Tr. at 16 (Test. of Att'y Wolf); Rudman Test. at 40.According to Attorney Wolf's testimony, this plaintiff expressedconcern to Senator Rudman about having been terminated in retaliationfor his complaints and a desire to be reinstated. Tr. at 28 (Test. ofAtt'y Wolf). As a result, Senator Rudman inserted the provision that"consideration" would be given to reinstatement. Id. at 28-29. Therepresentatives of the government of Mexico were well aware of whatthey were agreeing to and discussed with the defendants what Mexicocould and could not do under the "best efforts" commitment. Id. at 25-26.
4. Austin DeCoster himself was present throughout the daylongnegotiations. Id. at 16; Rudman Test. at 39. Senator Rudman testifiedthat at the end of the day, DeCoster told Senator Rudman that theSenator had done a good job and that he, Austin DeCoster, had agreedto pay what was probably too much. Rudman Test. at 20-21, 42-43.Although I continued the evidentiary hearing on one occasion topermit DeCoster himself to testify about the negotiations, heultimately chose not to.
5. One of the plaintiffs' lawyers, Karen Wolf, testified in detail.Tr. at 12-137. Her testimony about the mediation day was consistentwith that of Senator Rudman. She also testified that the lawyers toldme on March 10 that the case had settled, Tr. at 38, but I find thatto be an overstatement of what was told me that day for the reasonsset forth supra at n. 2. She testified about her intent in sendingvarious letters to defense counsel over the days between February 21and March 31 and also telephone conversations. See, e.g., Tr. at 76,80-81, 86-87.
6. One of the DeCoster defendants' lawyers, Timothy O'Brien, alsotestified in detail. Tr. at 154-245. He testified about the events ofthe February 21 mediation in a manner consistent with the testimonyof Senator Rudman and that ultimately on February 21 DeCoster agreedto provide adequate security. Tr. at 177; see also Tr. of Mot. toEnforce at 36. He explained the importance of favorable publicity anda joint press conference to DeCoster's business circumstances. Tr. at188-192. Healso testified about the negotiations between February 21 and March 31.See, e.g., id., at 172-187.
7. Another of the DeCoster defendants' lawyers, John McGivney, alsotestified in detail. Tr. at 246-282. He testified about the mediationproceedings and his concern when he heard Senator Rudman dictating anagreement, considering it to be unnecessarily dangerous. Id. at250-52. He testified that he, Attorney McGivney, personally avoidedsigning the agreement and, when he saw that Attorney Schreiber wouldsign it, arranged to insert paragraph 6 into the document so as to?in Attorney McGivney's mind? prevent it from becoming a settlementagreement. Id. at 251-52. He also testified about the negotiationsbetween February 21 and March 31, an unprofessional telephone callexchange on March 28 where the negotiations were disrupted (AttorneyWolf also testified about this incident), and what happenedthereafter. Id. at 256-66.
8. Senator Rudman's best recollection of how paragraph 6 came to beadded is as follows:
[W]e had come to the agreement, and we were sitting drafting it, and one of the counsel said, "you know, we are going to need a more formal settlement agreement. There are collateral things here that we have to wrap up, and we ought to be able to wrap them up. And this paper itself we can't give to Judge Hornby. So let's get together in the next few days and put together a settlement agreement." That was essentially the conversation that was had.
Rudman Test. at 41-42. I credit this account for the reasons I havealready stated.
What I find from all this is that Austin DeCoster thought he hadagreed to a settlement, plaintiffs' lawyer Wolf thought there wasagreement, as did the plaintiff representatives who were present, andSenator Rudman thought there was agreement. Attorney McGivney thoughthe had created a loophole by inserting paragraph 6, Tr. at 250-53(Test. of Att'y McGivney), but Attorney McGivney did not expressaloud to the others what it was he was doing. Certainly the insertionof paragraph 6 did not create additional unagreed-to material terms.I find therefore that the parties had agreed on all material terms.Moreover, they expressed to each other and to Senator Rudman thatthey had reached agreement, whatever Attorney McGivney thoughtinternally. Rudman Test. at 19-20, 42-43. Those words and conductcreated a binding agreement. All the lawyers and Senator Rudmanrecognized that a formal written document must be prepared in orderto secure court approval, but that was basically a scriveningexercise, with a good faith obligation attached. That was thereasonable objective interpretation of paragraph 6. The intent to bebound was made manifest, and paragraph 6 did not expressly conditionthe effectiveness of the deal on execution of a later, morecomprehensive, document. The February 21 agreement was, therefore,binding. See Abbott Lab., 164 F.3d at 388-89 ("[I]nformal writingsbetween parties can constitute a binding settlement agreement unlessthe parties decide to expressly condition their deal on the signingof a formal document. This is an accurate statement of the rule, butinformal writings must still manifest each party's intent to be boundby the material terms proposed.") (emphasis added).
It is important not to lose sight of the fact that this was a lawsuitessentially about money. Once the money issue was resolved, everything elsecould be expected to fall into place after some pushing and shoving.Subsequently, the plaintiffs pushed too hard for security, and I wasinsufficiently flexible in permitting extensions of time, but thosesubsequent events do not change the fact that as of the close of themediation day, there was an enforceable agreement.11
There is one final issue. If there was an enforceable agreement atthe end of February 21, 2000, did the plaintiffs later repudiate itin statements and actions leading up to March 31, such that thedefendants were entitled to treat the settlement agreement as nolonger in effect once the Court issued its March 31 Order? Thedefendants did not raise this argument in their papers beforeMagistrate Judge Cohen. They raised it only after he ruled againstthem. That is too late and amounts to a waiver of the argument.Santiago v. Canon U.S.A., Inc., 138 F.3d 1, 4 & n. 3. (1st Cir. 1998)("The district court is under no obligation to discover . . . newlegal theories for a party challenging a report and recommendationissued by a magistrate judge. There is no indication that themagistrate judge was ever alerted to the legal theory belatedlyasserted by plaintiffs . . . before the district court."); Borden v.Secretary of Health & Human Servs., 836 F.2d 4, 6 (1st Cir. 1987)("[T]he district court judge properly refused toconsider an argument which could have been, but inexplicably was not,presented to the magistrate in the first instance."); Singh v.Superintending Sch. Comm. of Portland, 593 F. Supp. 1315, 1318(D.Me. 1984) ("On referral of a pretrial motion to the Magistrate for hishearing and determination thereon, all parties are required to take beforehim, not only their best shot but all of their shots.").
In any event, I agree with Magistrate Judge Cohen's analysis of thepost-February 21 statements and conduct (apart from what was said tome about the settlement at the March 10 conference, see n. 2, supra).Rec. Dec. at 14-22. Specifically, the lawyers on both sides wereposturing; the plaintiffs never said "we're out of the agreement";instead, the lawyers were working diligently with clients who weresometimes difficult to reach or pin down, and the lawyers simplywatched in frustration as the Court's deadline passed before theywere able to produce the detailed written document required. SeeRestatement (Second) of Contracts § 250, Comment, at 273 (1981)("Mere expression of doubt as to his willingness to perform is notenough to constitute a repudiation"). No party repudiated theagreement before I ruled on March 31.12
I likewise find no repudiation by the plaintiffs in the delaybefore they filed their motion to enforce. My orders were issued onMarch 31, 2000. Obviously, the lawyers had to consult with theirclients, the government of Mexico and the representative classplaintiffs; they also had to prepare their motion for reconsiderationof the March 31st Order; they had to review the documents and eventsthat had occurred in the congested time period between February 21,2000 and March 31, 2000. They alerted the defendants and the Court towhat was coming on May 22, 2000, in the letter to the defendants'lawyers withdrawing the bond demand and their references at aconference that day with Magistrate Judge Cohen. There was no delayhere that amounted to a repudiation of the agreement. See ThermoElectron Corp. v. Schiavone Const. Corp., 958 F.2d 1158, 1164 (1stCir. 1992) (noting that delay will repudiate a contract only if theplaintiff "unreasonably delayed" performing); Restatement (Second) ofContracts § 250, Illustr. 8, at 275 (1981) (noting that delayconstitutes repudiation only if the delay would entitle the party todamages for total breach).
It should go without saying that the settlement agreement stillmust secure court approval under the strictures of Rule 23. Theparties have not yet addressed themselves to all the intricacies ofthat rule. And perhaps ultimately they will be unable to meet all therequirements. All I am deciding now is that the defendants arecurrently in breach of a contractually enforceable agreement. If theagreement turns out to be unenforceable for other, Rule-related,reasons, I will have to address those issues then. But if for reasonsof the defendants' recalcitrance I am unable to specifically enforcethe agreement, that will be grounds for a remedy for breach of thesettlement agreement.
The Magistrate Judge's recommendation is ACCEPTED, the defendants'objection is OVERRULED, and the plaintiffs' motion is GRANTED for thereasons set forth in this Memorandum Decision.
It should be clear from this opinion that I have respect for howthe lawyers have professionally handled this difficult situation (butfor the telephone conference of March 28, 2000). I expect the sameprofessional behavior from them in the weeks ahead in implementingthe settlement agreement now that I have ordered it enforced.
1. I described the relationships among the various defendants inmy Order of March 31, 2000. Order on Pls.' Mot. for Class Cert. &Defs.; Mot. for Summ. J. at 2 n. 1.
2. I am aware that Attorney Wolf testified that they told me thatthe case was settled, Tr. at 38 (Test. of Att'y Wolf), and I believeshe is sincere in making that statement because, in her mind, thecase was settled and that is what they were trying to convey to me.As I have told the lawyers, I do not have an independent recollectionof what they told me at that conference. I credit Attorney O'Brien'smore qualified version of what words were actually used, Tr. at 194(Test. of Att'y O'Brien), because if I had believed the case was thensettled, I would not have proceeded to finalize my decisions on thepending motions.
3. At one point late in the process, the lawyers requested myassistance in resolving the parties' dispute. Tr. at 49 (Test. ofAtt'y Wolf); Evid. Hr'g Ex. 17 (Letter from Att'y McGivney to Att'yWolf, Mar. 30, 2000). I declined the request because I thought theywere unnecessarily temporizing. I was unaware of their writtendocument that provided for seeking court assistance, and they did notinform me that the request was pursuant to an agreement they hadreached with the mediator. Tr. at 31 (Test. of Att'y Wolf).
4. I will deal with only the DeCoster defendants. The nonDeCosterdefendants were not present at the mediation, and did not sign themediation agreement, and the plaintiffs subsequently dismissed themvoluntarily from the lawsuit. Stipulation of Dismissal, June 28, 2000(voluntarily dismissing nonDeCoster defendants); Tr. at 125-27,134-36 (Test. of Att'y Wolf). I therefore no longer have jurisdictionover them. See Kokkonen v. Guardian Life Ins. Co. of Am.,511 U.S. 375, 381-82 (1994). As a result, I do not have before metheir argument that allocation of the financial responsibility amongthe defendants was a material issue not addressed in the agreement.In Camera Objs. of Non-DeCoster Defs. to Maj. J.'s Proposed Findingsand Recommendation on Pls.' Mot. to Enforce Settlement Agreement andRequest for De Novo Review & Incorp. Mem. of Law, at 7-8 (Oct. 4, 2000).
5. Where the underlying lawsuit is in federal court because offederal question jurisdiction, the presence of pendent orsupplemental state law counts (as there are here) cannot change theapplicability of federal law to efforts to settle the lawsuit.Otherwise, different principles would apply to different counts, anda settlement agreement designed to settle an entire controversy couldbe enforceable as to some counts and not enforceable as to others, animpossible outcome.
6. No party has suggested that a jury should decide the issue. Theplaintiffs argue that I should affirm the Magistrate Judge without anevidentiary hearing, arguing that the defendants waived any right toan evidentiary hearing by not requesting either an evidentiaryhearing or oral argument in opposing the motion to enforce and onlyraising the issue at oral argument in front of the Magistrate Judge.Pls.' in camera Mem. of Law in Opp'n to Defs.' Obj. to Mag. Judge'sRec. Dec. on Pls.' Mot. to Enforce Settlement Agreement at 17-19(Oct. 23, 2000). It certainly would have been better practice for thedefendants to have requested an evidentiary hearing earlier. As itdeveloped, on the affidavits submitted, the Magistrate Judge found nofactual disputes. Rec. Dec. at 5. But certainly the inferences to bedrawn were conflicting. In light of the First Circuit caselaw I havecited earlier in text, I have decided therefore to resolve thedispute on the basis of the evidentiary hearing.
7. During the litigation over the motion to enforce, at varioustimes other issues have been posited as material: administration ofthe class fund; the nature of any press conferences to announce thesettlement; and apportionment of the monetary payment among thedefendants. Rec. Dec. at 9. For the reasons articulated by theMagistrate Judge, I find that none of these was material. Rec. Dec.at 10-13.
8. Or, as Senator Rudman put it in his testimony,
Q. [D]oes this agreement reflect except for financial security the material concerns of each party with respect to a settlement agreement?
A. Yes, with one proviso. I thought there might be an ability to expand the best-efforts language of paragraph three in the boycott.
Q. And when you say, "expand that effort," in what context?
A. By giving it specificity. The people who were involved here would do A, B, C, D, E, F, and G, that you would actually have it. I thought it might be spelled out more, which is-but if it wasn't, this would stand. It's kind of an easy one to walk away from, but it was there.
Rudman Test. 37-38.
9. A second issue concerning the class relates, not to theexistence of an agreement among the parties, but to whether a classaction settlement is any longer possible in light of the fact that Ihave subsequently denied the motion to certify the class. See AmchemProd., Inc. v. Windsor, 521 U.S. at 591, 620 (1997). Contrary to thedefendants' argument, my later decision not to certify the class doesnot automatically prevent a settlement class (except perhaps for thefraud and breach of contract claims where I found that Rule 23(a) wasnot satisfied). Order of March 31, 2000 at 12-13. The Supreme Courthas held that classes cannot be certified solely for settlementpurposes where the class does not meet the requirements of Rule23(a), especially the elements of the Rule designed to protectabsentees. Id. But the Court also made clear in that decision that,when reasons of practicality in managing a trial lead to the refusalto certify a class under Fed.R.Civ.P. 23(b)(3), it does notnecessarily follow that a settlement class cannot be certified:"Confronted with a request for settlement-only class certification, adistrict court need not inquire whether the case, if tried, wouldpresent intractable management problems, see Fed.R.Civ.P.23(b)(3)(D), for the proposal is that there be no trial. But otherspecifications of the Rule . . . demand undiluted, even heightenedattention in the settlement context." Amchem, 521 U.S. at 620. Thatis the case here. My reasons for refusing to certify under 23(b)(3)were based largely upon the difficulties of managing the resultingjury trial. See Order of March 31, 2000 at 7-8. Those difficultiesare not presented in a settlement. From all that appears, the classhere meets the other requirements of the Rule. (I will not determinethat issue finally until I rule on a properly presented settlementdocument.) Moreover, even if it turns out later that there is someimpossibility of performance (always a risk), that eventuality doesnot preclude a finding that the defendants stand in breach of theagreement now.
10. In fact, what happened here is that the plaintiffs' lawyerskept asking for higher quality security (a bond) in the face ofDeCoster's offer to provide only a second mortgage on his alreadyhighly leveraged Turner farm property. Evid. Hr'g Exs. 10 (Letterfrom Att'y Friedman to Att'ys McGivney and Schreiber, Mar. 27, 2000),11 (Letter from Att'y Schreiber to Att'y Friedman, Mar. 27, 2000). Onthe morning the rulings would issue, the lawyers recognized that theyhad only two remaining issues, Tr. at 180 (Test. of Att'yO'Brien) — the form of press conferences announcing the settlement, amatter easily resolved (Attorney Wolf testified credibly that shetold Attorneys Schreiber and O'Brien that there was no remainingdispute as to the public comment and public disclosure issues, Tr. at67 (Test. of Att'y Wolf)), and the security. The plaintiffs offeredto pay one-half the $130,000 cost of a bond, Tr. at 67 (Test. ofAtt'y Wolf), 180 (Test. of Att'y O'Brien), but DeCoster refused tocontribute anything toward the posting of a bond, and left theplaintiffs only the two options of the second mortgage or paying forthe bond themselves. Id. at 67 (Test. of Att'y Wolf), 180-81 (Test.of Att'y O'Brien). That is where matters stood when the deadlinepassed and I issued my Order on the pending motions. (Later, in aletter of May 22, 2000, the plaintiffs' lawyers agreed to drop therequirement of a bond for the settlement agreement. Evid. Hr'g Ex. 22(Letter from Att'y Friedman to Att'y O'Brien, May 22, 2000) at 1.)
11. Senator Rudman's understanding of what happened is as follows:
And so the purpose for that [paragraph 6], as you know, no court would accept this document as a settlement agreement or what I would call in New Hampshire a stipulation of the parties to settle, and that's why that was there. So there certainly was an agreement within the four corners of this document, I thought, but there certainly was an agreement to agree on a future document which would, in fact, fine-tune whatever needed fine-tuning, particularly the securitization, and if there needed to be an expansion of paragraph three. That's the best answer I could give you.
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Q. And does that suggest to you that there were certain material terms that were not contained in paragraphs one to six of the February 22. . .agreement?
A. Yes, it did. That's why-obviously, there were other issues that I was not privy to, but I didn't know what they were.
Q. And to your knowledge the material terms that had yet to be agreed to, did they include the boycott dispute?
A. They included it to the sense, sir, that I didn't think our language in paragraph three was expansive enough to satisfy what Mr. DeCoster would have eventually liked. On the other hand, people were willing to sign it. And on its face it says, "People use their best efforts."
I don't know how you ever get people to do more than that. But the answer is, yes, I thought there would be two — my understanding was there would be two things that will be addressed and that paragraph six called for a stipulation. A would have been a precise securitization, which would have ensured they would be paid. And B would be, if possible, a fine-tuning of paragraph three.
* * *
Q. So it's fair to say, Senator, that unless there was a written settlement agreement executed and presented to the Honorable Judge Hornby there would be no settlement of the matter?
A. I'm not sure there would be a settlement or not or there would be action or not, but certainly there wouldn't be an agreement presented to court, and that's a legal conclusion, Mr. [Knowles]. I don't know the answer.
I know the background because you have both sent me all the documents, and I have no idea of the status of this particular document. But I do know that I thought you reached an agreement on money, which was the key issue, and boycott was a key issue, and there were some other collateral issues which you had to have an agreement on. That's all I know.
I don't know any more about it. And I really don't want to get on either side of this argument. I am trying to be right down the middle with my recollection of the facts, which is all I really recall.
Rudman Test. at 24-32.
12. The matter was also undoubtedly complicated by theconfidentiality the parties had imposed on themselves and the Court.It would have been better if they had simply come in on March 31 andsaid on the record "We have an agreement; we have agreed oneverything; the defendants have agreed on providing adequatesecurity; and we are simply trying to specify what that means." Itake responsibility for not having ordered them to come in to explaintheir circumstances, particularly given the size, complexity andimportance of the lawsuit.
Once it became clear that this dispute over a settlement agreementcould not be rendered without an evidentiary hearing, I informed thelawyers that the previous confidentiality protection would be liftedand the dispute would be open to public scrutiny.