Hensley v. Alcon Labortories

• Citation: 277 F.3d 535
• Decision Date: 04 December 2001
• Docket Number: No. 01-1442,01-1442
• Parties: (4th Cir. 2002) ROBERT C. HENSLEY, Plaintiff-Appellant, v. ALCON LABORATORIES, INC., a foreign corporation, Defendant-Appellee, and ALAN MODLISZEWSKI, an individual, Defendant. Argued:
• Court: U.S. Court of Appeals — Fourth Circuit

Page 535

277 F.3d 535 (4th Cir. 2002)

ROBERT C. HENSLEY, Plaintiff-Appellant, v. ALCON LABORATORIES, INC., a foreign corporation, Defendant-Appellee, and ALAN MODLISZEWSKI, an individual, Defendant.

No. 01-1442

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

Argued: December 4, 2001

Decided: January 22, 2002

Appeal from the United States District Court for the Southern District of West Virginia, at Huntington. Robert C. Chambers, District Judge. (CA-99-458-3) [Copyrighted Material Omitted] ARGUED: William D. Ryan, Hurricane, West Virginia, for Appellant. Charles MacKinley Surber, Jr., JACKSON & KELLY, P.L.L.C., Charleston, West Virginia, for Appellee. ON BRIEF: Sherri D. Goodman, GOODMAN ADVOCACY, Charleston, West Virginia, for Appellant.

Before NIEMEYER, MOTZ, and TRAXLER, Circuit Judges.

Reversed and remanded by published opinion. Judge Niemeyer wrote the opinion, in which Judge Traxler joined. Judge Motz wrote an opinion concurring in the judgment.

OPINION

NIEMEYER, Circuit Judge:

On the motion of Alcon Laboratories, Inc. to enforce a settlement agreement allegedly reached with Robert Hensley in connection with his wrongful-employment-termination suit against Alcon, the district court directed the parties to consummate the settlement agreement by a specified date on the threat of dismissing the wrongful-termination suit with prejudice. When Hensley refused to sign the settlement agreement presented to him, protesting that he had not agreed to the terms included in it, the court dismissed the case with prejudice and assessed Alcon's attorneys fees against Hensley because he "unreasonably refused to sign the agreement."

Because the district court failed to conduct a plenary hearing on whether a binding settlement agreement had been reached and, if so, to determine its terms and conditions, we remand for further proceedings. We also reverse the judgment of dismissal and award of attorneys fees as inappropriate sanctions for Hensley's failure to sign the agreement.

I

Beginning in 1981, Robert Hensley worked as an electronic technician for Alcon Laboratories, Inc. Because of chronic depression, Hensley took a medical leave of absence in December 1996, which he expected would last until January 1997. Thereafter, however, Hensley asked for and was granted eight separate medical leave extensions, lasting until June 1997. At that time, he requested a leave of absence for an indefinite term. Under existing company policy, Alcon subsequently gave Hensley's job to another employee. In May 1998, when Hensley was medically released to return to full-time work, he sought to return to Alcon. At that time, however, Alcon was unable to find a comparable job for which Hensley was qualified. A production technician position was available, but the pay grade was lower than Hensley's previous electronic technician position, and Hensley declined to take the job. Alcon thereupon terminated Hensley's employment on May 26, 1998.

Hensley commenced this action in West Virginia state court alleging, in three counts, "wrongful termination/breach of employment agreement," "discrimination due to disability and age" under the West Virginia Human Rights Act, and "punitive damages." Relying on diversity jurisdiction under 28 U.S.C. S 1332, Alcon removed the action to federal court and answered the complaint.

At a settlement conference held with the district judge on May 17, 2000, and attended by Hensley, Hensley's attorney, Jeffrey Taylor, and Alcon's attorney, Alcon and Hensley apparently agreed on a $9,000 amount for settlement of Hensley's wrongful termination suit. The district court issued an order stating that it had been "advised by counsel of the pending settlement of this action" and removed the case from the active docket, giving the parties 30 days within which to submit an agreed-upon order of dismissal. The district court's order also stated that if no agreed-upon order of dismissal were submitted, the court would dismiss the case without prejudice, subject to reinstatement for "good cause."

Following the May 17 conference, Alcon's attorney sent Taylor a proposed written settlement agreement which provided for the payment to Hensley of $9,000 in return for a full release of all claims. The proposed agreement also included several terms and conditions. First, it included a "standard reference clause" under which Alcon agreed to provide Hensley with a reference that he was a "Good Solid Performer." Second, the agreement included a "reinstatement clause," under which Hensley agreed not to seek reemployment by Alcon. Third, it included a "denial of liability clause," under which Alcon denied any liability to Hensley. Fourth, it included a "confidentiality clause." And finally, it included an "approval clause" -in compliance with the West Virginia Human Rights Commission's ruling concerning declaratory releases -that provided Hensley with a 21-day period during which he could accept or reject the settlement agreement and a 7-day period during which he could revoke the agreement once it had been executed.

Taylor suggested some changes to the proposed agreement, including deletion of the 7-day revocation clause. Alcon returned a revised agreement which deleted not only the 7-day revocation clause but also the 21-day approval clause. The proposed agreement retained all of the other terms originally proposed.

When Taylor did not return a signed agreement to Alcon, Alcon inquired about the status of the settlement. On July 7, 2000, Taylor told Alcon that Hensley had some concerns with the settlement agreement and would not sign it.

After Alcon failed to make progress on obtaining a signed settlement agreement, it filed a motion to enforce the settlement agreement or, in the alternative, for summary judgment on the merits of the underlying case. It also requested attorneys fees and costs. In response, Taylor filed a motion to withdraw from his representation of Hensley because Taylor "had made numerous attempts to draft a release that would be acceptable to Hensley, but [was] unable to do so." The motion to withdraw stated that Hensley told Taylor that he had been "forced into settlement," that he "did not intend to sign a release," and that "he wanted to go to trial."

In affidavits thereafter exchanged by the parties, significant disagreement emerged over what happened during the May 17 settlement conference, which was not on the record. Alcon contended that it had "reached an agreement to settle the case whereby Alcon would pay the total sum of $9,000 in complete Release of all plaintiff's claims." In his motion to withdraw as counsel for Hensley, Taylor stated that at the settlement conference "Hensley agreed to dismiss his claims against Alcon in exchange for payment by Alcon in the amount of nine thousand dollars ($9,000)." Hensley, on the other hand, stated that there were merely "representations made by [his] counsel at a settlement conference that [Alcon] would pay $9,000 for a release of all claims." And no one who attended the May 17 conference reported a discussion of the various other clauses included in the proposed settlement agreement.

By order dated August 30, 2000, the district court granted Alcon's motion to enforce the settlement agreement. It concluded:

On May 17, 2000, this Court and the parties engaged in a final settlement conference in which the parties diligently and in good faith negotiated a settlement agreement. In the settlement agreement, Defendant agreed to pay a sum of $9,000 for a complete release of Plaintiff's claims. It is clear to this Court that both parties intended to settle the case and agreed upon the terms of the settlement when they reached their agreement.

The court ordered Hensley to "consummate the settlement on or before September 15, 2000," and warned him that his failure to do so would result in the dismissal of his claims against Alcon with prejudice and the assessment of costs against him. The court denied Taylor's motion to withdraw "as moot."

In response to this order, Hensley, pro se, wrote the court requesting reconsideration of its August 30 order and stating that he "did not lead nor infer to [his] attorney that [he] would sign the Confidential Settlement Agreement." Rather, he "merely stated that [he] would look it over." Once he read the agreement, Hensley told his counsel that he would not sign it. In this letter, Hensley pointed out that he was not "as disturbed with the settlement amount as [he was] with the releases" and other terms of the agreement, such as the denial of liability clause and reinstatement clause.

The court rejected Hensley's version of what transpired and, by order dated September 15, 2000, extended to September 22, 2000, the time within which Hensley could consummate the settlement agreement. The court again warned Hensley that his failure to sign the proposed settlement agreement would result in dismissal of his suit with prejudice and the assessment of costs against him. Also in the September 15 order, the court explained that the proposed settlement agreement, which it had received from Alcon on September 5, 2000, was "consistent with the Court's recollection of the terms of the settlement reached at the Final Settlement Conference" and that the agreement was "consistent with standard terms and conditions found in such agreements." The court concluded that Hensley had "unreasonably refused to sign the agreement."

In response to the September 15 order, Hensley, again pro se, expressed "concerns and questions" regarding the settlement agreement and asked for reconsideration of the district court's order "after hearing [his] issues of why [he was] not satisfied with the enforcement." Hensley also indicated that he was in the process of obtaining new counsel.

By order dated September 25, 2000, the district court scheduled "a hearing in this matter" for October 4 and directed both Hensley and Taylor to appear.

On ...