277 F.3d 544 (D.C. Cir. 2002), 01-7029, Makins v. District of Columbia

Docket Nº:01-7029
Citation:277 F.3d 544
Party Name:Brenda Elaine Makins, Appellant v. District of Columbia and Francis J. Henderson, Acting Warden, D.C. Department of Corrections Central Facility, Appellees
Case Date:January 18, 2002
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit
 
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Page 544

277 F.3d 544 (D.C. Cir. 2002)

Brenda Elaine Makins, Appellant

v.

District of Columbia and Francis J. Henderson, Acting Warden, D.C. Department of Corrections Central Facility, Appellees

No. 01-7029

United States Court of Appeals, District of Columbia Circuit

January 18, 2002

Argued September 17, 2001

Page 545

Appeal from the United States District Court for the District of Columbia (98cv02693)

Gregory L. Lattimer argued the cause and filed the briefs for appellant.

Carl J. Schifferle, Assistant Corporation Counsel, argued the cause for appellees. With him on the brief were Robert R. Rigsby, Corporation Counsel, and Charles L. Reischel, Deputy Corporation Counsel.

Before: Henderson, Randolph, and Rogers, Circuit Judges.

Opinion for the Court filed by Circuit Judge Randolph.

Dissenting opinion filed by Circuit Judge Henderson.

Randolph, Circuit Judge:

This appeal from a district court order enforcing a settlement agreement presents an issue much litigated in the other circuits but not yet decided by this court--namely, under what circumstances, if any, may an attorney without actual authority from his client bind the client to a settlement agreement. We must also decide whether to look to state or federal law in answering this question.

I.

In November 1998, Brenda Makins brought an action against the District of Columbia claiming sex discrimination and retaliatory firing, in violation of Title VII (42 U.S.C. § 2000e et seq.). Makins had been employed in the District's Department of Corrections from 1995 until her discharge in 1997. Her complaint sought reinstatement, compensatory damages, and attorney fees.

Makins' attorney, John Harrison, began representing her in 1996, after she received a notice of termination from the Department. Harrison and Makins did not have a written retainer agreement. In the summer of 2000, at a pre-trial conference, the district judge referred Makins' case to a magistrate judge "for settlement purposes only" and ordered the District to "have present at all settlement meetings ... an individual with full settlement authority." The judge set the case for trial in December 2000. Makins v. Dist. of Columbia, No. CV-98-2693, mem. op. at 2 (D.D.C. Dec. 11, 2000). A few days later, the magistrate ordered the "lead attorney(s) for the parties" to appear before him for a settlement conference; the order required that the "parties shall either attend the settlement conference or be available by telephone for the duration of the settlement conference."

The conference, originally scheduled for August 22, took place on September 12, 2000. Makins did not attend. After two and a half hours of negotiations, Harrison and the attorneys for the District reached an agreement to end the case. Makins would receive $99,000 and have her personnel records amended from "discharged" to "resigned" (to preserve her retirement benefits if she were able to attain other federal employment). In return, Makins would dismiss her claims against the District. The attorneys "shook hands" on the deal and later reduced it to writing. A few days later, when Harrison presented Makins with a copy for her signature, she refused to sign it. The District then filed a Motion to Enforce Settlement. Makins retained another attorney and the court held an evidentiary hearing in which Harrison, Makins, and the lead attorney for the District testified.

The testimony of Makins and Harrison were at odds. According to Makins, she never agreed to settle her case under the terms Harrison and the District negotiated

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because "getting [her] job back had to be part of any agreement." She admitted wanting to settle the case and knowing that the correctional facility in which she had worked was downsizing. She claimed that Harrison waited until the night before the conference to alert her to it and specifically told her not to attend. She talked to Harrison several times during the settlement negotiations on September 12. But she insisted that she never agreed to the negotiated terms because, as she expressed to Harrison in one of their cell phone conversations that day, getting her job back was a condition to settling the case. Although Makins swore in an affidavit, filed before the hearing, that Harrison alerted her during the negotiations that he was discussing the $99,000 figure, she testified that she did not recall such a conversation.

Harrison disputed much of Makins' testimony. He said they had extensively discussed the possibility of settlement the day before the conference, that he discouraged her from insisting on getting her job back, that he thought it made sense strategically for his client to remain at home so that "the Judge couldn't put pressure on her to settle," that she gave him a number where he could reach her on September 12, and that she told him to do "what you think is right, I trust you." At the conference, each side presented its case separately to the magistrate. The attorneys and the magistrate then sat at a table and negotiations began. On several occasions, the magistrate sent one of the attorneys out of the room and talked to the other about what he saw as strengths and weaknesses in the case. By cell phone Harrison called Makins when he was out of the room. He contends that she agreed to settle for $99,000. Harrison testified that when the District agreed to this figure, he called Makins immediately and "told her that the 99 was done," to which she replied "good." Harrison also stated that Makins did not express any dissatisfaction with the settlement until several days later when she refused to sign the papers in Harrison's office.

The District's attorney generally confirmed Harrison's account of the conference (although he did not know what Harrison and his client had discussed by cell phone, or even if they had discussions). In response to the District's offer of approximately $80,000, Harrison said his client was still at $120,000, or thereabouts. The District's attorney replied that he would not settle the case for more than $100,000. Harrison left the room, cell phone in hand, and came back a few minutes later. He said $99,000 would be fine but his client wanted her records changed to show that she had resigned. The District reluctantly agreed. Neither the attorney for the District nor the magistrate spoke to Makins to confirm her assent to the terms of the agreement.

The district court, observing the "sharp conflict" in testimony between Makins and Harrison, declined to resolve it. Instead, the court assumed arguendo that Harrison did not have actual authority to settle the case. The court granted the District's motion to enforce the settlement on the alternative ground that Harrison had apparent authority to bind Makins to the agreement. The court saw "no justification for the District of Columbia not to reasonably believe that Mr. Harrison had the full confidence and authority of his client." Mem. op. at 7.

II.

Settlement agreements are in the nature of contracts. See Gaines v. Cont'l Mortgage & Inv. Corp., 865 F.2d 375, 378 (D.C. Cir. 1989). As in other contract negotiations, one or both of the parties

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may insist that the terms be reduced to writing and that only a signed agreement will be effective. But not all contracts, and not all settlements, must be written in order to be enforceable. The parties may orally agree upon the material terms and intend to be bound. See United States v. Mahoney, 247 F.3d 279, 285 (D.C. Cir. 2001). "Lawsuits may, of course, be compromised by oral contract." Autera v. Robinson, 419 F.2d 1197, 1198 n.1 (D.C. Cir. 1969); see also Feltman v. Sarbov, 366 A.2d 137, 141 (D.C. 1976). The attorney for Makins and the District agreed upon essential terms. That Makins refused to sign the settlement papers is therefore not conclusive, a point she does not debate. The question is whether the oral understanding between the attorneys may be enforced against Makins-whether, in other words, she was bound by the deal her attorney negotiated.

The District urges us to adopt local law as the rule of decision. Makins thinks we should devise federal law: the case was brought in federal court; the cause of action is derived from federal legislation; and the actions of attorneys conducting federal litigation are of particular federal concern. Apparently for these reasons, some federal courts agree with Makins. See, e.g., Kinan v. Cohen, 268 F.3d 27, 32 (1st Cir. 2001); Malave v. Carney Hosp., 170 F.3d 217, 221 (1st Cir. 1999); Michaud v. Michaud, 932 F.2d 77, 79 n.3 (1st Cir. 1991); Fennell v. TLB Kent Co., 865 F.2d 498, 501 (2d Cir. 1986); Mid-South Towing Co. v. Har-Win, Inc., 733 F.2d 386, 386 (5th Cir. 1984). Makins also cites Alexander v. Gardner-Denver Co., 415 U.S. 36, 52 & n.15 (1974), for the proposition that federal law governs settlement agreements in Title VII cases. The Supreme Court, after saying that an employee could enter into a voluntary settlement and waive his cause of action under Title VII, added this: "In determining the effectiveness of any such waiver, a court would have to determine at the outset that the employee's consent to the settlement was voluntary and knowing," 451 U.S. at 52 n.15, thus invoking the familiar test of Johnson v. Zerbst, 304 U.S. 458, 464 (1938). But this was dictum. The employee in Alexander had not entered into a settlement. An arbitrator had rejected his grievance charging racial discrimination. The Court was not concerned with settlement agreements in general, or with the authority of attorneys to enter into them. The issue before the Court was whether the labormanagement arbitration, conducted pursuant to a collective bargaining agreement, precluded the employee from bringing a Title VII...

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