Pohl v. United Airlines, 99-4007

• Citation: 213 F.3d 336
• Decision Date: 10 May 2000
• Docket Number: No. 99-4007,99-4007
• Parties: (7th Cir. 2000) MICHAEL G. POHL, Plaintiff-Appellant, v. UNITED AIRLINES, INCORPORATED, Defendant-Appellee
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 336

213 F.3d 336 (7th Cir. 2000)

MICHAEL G. POHL, Plaintiff-Appellant, v. UNITED AIRLINES, INCORPORATED, Defendant-Appellee.

No. 99-4007

In the United States Court of Appeals For the Seventh Circuit

Argued April 7, 2000

Decided May 10, 2000

Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. 97 C 1246--Sarah Evans Barker, Chief Judge.

Before BAUER, EASTERBROOK, and ROVNER, Circuit Judges.

ROVNER, Circuit Judge.

Some litigants in pursuing settlement of their claims hold the belief that they can change their mind at any time before they actually sign the settlement agreement. As this case illustrates, that perception is often unfounded in the law.

The genesis of this case was a lawsuit by Michael Pohl, an aircraft inspector for United Airlines, against United alleging violations of the Uniformed Services Employment and Reemployment Rights Act (USERRA). The complaint included three counts, alleging discrimination based on his military status (Count 1), retaliation (Count 2), and failure to properly credit Pohl's employee stock ownership ("ESOP") account for time spent fulfilling his duties in the Reserves (Count 3). Eventually, the parties began to discuss settlement, although there is a wide divergence between Pohl's perception of the discussions and that portrayed by his attorney and opposing counsel. What is undisputed is that the attorneys engaged in a number of settlement discussions by telephone between December 15, 1998, and March 8, 1999, and eventually informed the court that they had reached a settlement of the entire case. Shortly thereafter, Pohl called the court himself, and expressed surprise when informed of the news of a full settlement. The judge convened a status conference, at which time Pohl reviewed the written settlement proposal for the first time and refused to sign it. United then brought a motion to enforce the settlement, which Pohl opposed on the ground that his attorney did not have the authority to negotiate the settlement.

After holding an evidentiary hearing on the issue, the district court entered an opinion which granted enforcement of the settlement. Unfortunately, the court did not enter a separate judgment in the case as is required under Fed. R. Civ. P. 58. At oral argument, however, the parties both agreed that the opinion by the district court disposed of all issues, and that a separate judgment would merely have reflected the language in the opinion. Specifically, they agreed that enforcement of the settlement required dismissal of the case with prejudice, and that the settlement agreement itself would not have been incorporated into the judgment. Accordingly, under Bankers Trust v. Mallis, 435 U.S. 381 (1978) we may proceed to consider the appeal despite the technical violation of R. 58.

Pohl asserts that his attorney lacked the authority to negotiate a settlement of his case. Issues regarding the formation, construction, and enforceability of a settlement agreement are governed by local contract law, Carr v. Runyan, 89 F.3d 327 (7th Cir. 1996), and therefore we must look to the law of Indiana in deciding this claim. As the Indiana Supreme Court held in Koval v. Simon Telelect, 693 N.E.2d 1299, 1301 (Ind. 1998), in order to bind a client to a settlement, an attorney must have either express, implied, or apparent authority, or must act according to the attorney's inherent agency power. The Koval court further held, however, that retention of an attorney does not, in itself, confer implied or apparent authority to settle. Id. The authority to settle, therefore, derives from other actions of the client with respect to the attorney or third parties, including but not limited to express grants of actual authority. For instance,

[t]he client may not intend for the attorney to settle a claim but may nonetheless imply that intention to the attorney. If so, the client is bound by a resulting settlement. Further, both apparent authority and inherent agency power may be created by actions of the client in its dealings with third parties even if the attorney knows there is no actual authority. Under these circumstances, the client is bound even if it is a breach of the attorney's professional obligations to make the commitment.

Id. at 1303 n.6. The district court determined that Pohl's attorney had actual authority to settle, and we review that decision only for abuse of discretion. Carr, 89 F.3d at 331; Wilson v. Wilson, 46 F.3d 660, 664 (7th Cir. 1995). The court reached that conclusion after conducting an evidentiary hearing, and the history of the negotiations and of the communications between Pohl and his attorney establishes that the court's determination is well-supported by the record.

The relevant history begins at a December 15, 1998, settlement conference with Magistrate Judge Shields. The discussions turned to Count 3, and United agreed to look into whether the ESOP account had been properly credited. The other counts were not discussed at any length. Pohl claims that was because they could not reach a consensus on those counts, but the attorneys maintain that the talks centered on Count 3 because the other counts had turned out to have little merit. It is of little import who is right. The parties left the settlement conference with the understanding that United would contact Pohl's attorney with the ESOP calculations. United did so, and agreed that the ESOP account had not been properly credited. The attorneys then discussed language for a settlement agreement. Among other provisions, the settlement required United to: agree to credit Pohl's ESOP account and provide documentation regarding the credits; promise not to retaliate against Pohl for filing the litigation; and pay Pohl's reasonable attorneys' fees. In return, Pohl would dismiss the entire complaint, release United from any liability for claims arising from the facts in the complaint except to the extent that those facts formed the basis for a claim under the Americans With Disabilities Act, 42 U.S.C. sec.sec. 12101 et seq., and maintain the confidentiality of the agreement.

The billing records from Pohl's attorney document ten phone calls between Pohl's attorney and either Pohl or his wife in the time period from December 15, 1998, to March 8, 1999. The records further reveal that before or after each one of those calls, Pohl's counsel was in contact with opposing counsel. On March 8, 1999, Pohl's...