379 F.3d 445 (7th Cir. 2004), 03-2752, Sims-Madison v. Inland Paperboard and Packaging, Inc.

Docket Nº:03-2752.
Citation:379 F.3d 445
Party Name:Johnnie SIMS-MADISON, Plaintiff-Appellant, v. INLAND PAPERBOARD AND PACKAGING, INC. (f/k/a Inland Container Corp.), Defendant-Appellee.
Case Date:August 11, 2004
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit

Page 445

379 F.3d 445 (7th Cir. 2004)

Johnnie SIMS-MADISON, Plaintiff-Appellant,


INLAND PAPERBOARD AND PACKAGING, INC. (f/k/a Inland Container Corp.), Defendant-Appellee.

No. 03-2752.

United States Court of Appeals, Seventh Circuit

August 11, 2004

Argued May 19, 2004.

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Denise K. LaRue, Philip J. Gibbons, Jr. (argued), Haskin, Lauter, Cohen & Larue, Indianapolis, IN, for Plaintiff-Appellant.

Roberta S. Recker (argued), Baker & Daniels, Indianapolis, IN, for Defendant-Appellee.

Before CUDAHY, RIPPLE, and WILLIAMS, Circuit Judges.

WILLIAMS, Circuit Judge.

Johnnie Sims-Madison is an African-American woman who was employed at Inland Paperboard and Packaging's Evansville, Indiana, plant until early 2000, when she was fired for fighting with another employee. Sims-Madison brought a Title VII action, and the district court granted summary judgment to Inland. At the same time, the district court also said that it was enforcing a purported settlement agreement the parties had previously reached. Sims-Madison appeals, and we vacate and remand.

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Sims-Madison and a co-worker, Mike Faver, were fired for fighting in January 2000. The Paper, Allied-Industrial, Chemical and Energy Workers International Union (the "Union"), which represented both employees under a collective bargaining agreement, immediately filed grievances protesting their terminations. The following month, Sims-Madison filed a charge with the EEOC alleging racial and gender discrimination and retaliation by Inland. She also hired attorney Kevin Kinkade to represent her.

In December 2000, while Sims-Madison and Inland were participating in the EEOC's mediation program, Kinkade sent the mediator a letter. This letter, which is the settlement agreement, 1 stated:

This letter serves to confirm that my client, Johnnie Sims Madison, has agreed to the following:

1) She will give up arbitration of her termination;

2) She will give up her EEOC Charge and not file any additional charges for any conduct which predates the Agreement;

3) She will agree that she will not be reinstated and cannot apply for re-employment with the company; and

4) She will execute a proper and appropriate release of claims.

In exchange, Kinkade wrote that Inland would pay Sims-Madison $30,000. William Hewett, an in-house attorney for Inland, also received a copy of the letter; on the letter below Kinkade's signature he handwrote "Agreed William D. Hewett 12/8/00" and returned the letter to Kinkade. Sims-Madison first saw this letter when Kinkade provided her with a copy a few days after he had sent it. Upon reading the letter, Sims-Madison immediately told Kinkade that she had never authorized him to settle the pending arbitration of her union grievance, as provided by the first point of the agreement. Accordingly, she refused to comply with the fourth point of the agreement and sign a release. Two months later, Hewett sent Kinkade a letter in which he wrote that Inland believed it had an enforceable agreement with Sims-Madison. Hewett's letter stated that Inland expected her to sign the release, and that it would pay her as soon as she did so. Sims-Madison again refused to sign the release and has continued to refuse ever since. Accordingly, Inland has never paid her the $30,000.

Despite the first point of the agreement that purported to drop Sims-Madison's union grievance, the Union and Inland proceeded in February 2001 to arbitrate the grievances concerning Sims-Madison's and Faver's terminations. In May, the arbitrator reduced both terminations to 60-day suspensions and awarded both employees backpay and benefits dating back to January 2000 (with the exception of the suspension period). Inland reinstated both employees, but paid backpay and benefits only to Faver. In July 2001, Sims-Madison (who had returned to work) sued Inland for firing her in January 2000, alleging that the company's actions were motivated by racial and gender discrimination and retaliation.

In its answer to Sims-Madison's complaint, Inland pleaded the affirmative defense of accord and satisfaction. Inland later moved for summary judgment on a number of grounds, and in November 2002 the district court granted Inland's motion

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solely based on accord and satisfaction, finding that a "valid, binding and enforceable settlement agreement was reached." The court also stated that it "enforces those portions of the settlement agreement consistent with the authority Plaintiff bestowed upon Mr. Kinkade."

Eight days after the district court issued its order, Inland fired Sims-Madison for a second time. Inland claims that the district court's enforcement of the agreement, specifically its third point--which provided that Sims-Madison would not be reinstated and could not apply for re-employment--authorized it to fire her. Sims-Madison's second discharge prompted the Union to file a separate suit 2 against Inland claiming that Inland illegally violated the arbitrator's award by refusing to pay her the backpay and benefits, and by firing her for the same incident for which the arbitrator had ordered her reinstated. The Union's lawsuit is not before us, and we express no opinion on its merits.

Sims-Madison then moved under Fed.R.Civ.P. 59(e) to alter or amend the judgment. The district court denied the motion, but noted that it had misunderstood the facts when it issued its original order. Specifically, the court said it originally believed that Inland had paid Sims-Madison the agreed-upon $30,000, and also that it had been unaware of the arbitration proceeding. Both of these facts, the order said, "should have been brought to the court's attention prior to the court's judgment."


Sims-Madison appeals (1) the district court's enforcement of the settlement agreement, (2) the grant of summary judgment for Inland, and (3) the denial of her Rule 59(e) motion.

A. Standard of Review

We review the grant of summary judgment de novo. Lang v. Ill. Dep't of Children & Fam. Servs., 361 F.3d 416, 418 (7th Cir.2004). We review for an abuse of discretion both the enforcement of the settlement agreement, Hakim v. Payco-Gen. Am. Credits, Inc., 272 F.3d 932, 935 (7th Cir.2001), and the denial of Sims-Madison's Rule 59(e) motion, Hayes v. Potter, 310 F.3d 979, 980 (7th Cir.2002).

B. Enforcement of the Settlement Agreement

Sims-Madison argues that the district court erred by enforcing the settlement agreement because Inland never requested enforcement, either in its motion for summary judgment or at any other time during the proceedings in the district court. Issues regarding the formation, construction, and enforcement of settlement agreements are governed by state contract law. Pohl v. United Airlines, Inc., 213 F.3d 336, 338 (7th Cir.2000). All of the pertinent events in this case...

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