Keycorp v. Holland
| Decision Date | 05 July 2017 |
| Docket Number | Civil Action No. 3:16-CV-1948-D |
| Parties | KEYCORP, Plaintiff, v. ALLISON HOLLAND, et al., Defendants. |
| Court | U.S. District Court — Northern District of Texas |
*This memorandum opinion and order was filed under seal on July 5, 2017. This unsealed version is being filed with the redactions requested by the parties.
Plaintiff KeyCorp ("Key") moves to enforce an alleged settlement agreement reached with defendant Allison Holland ("Holland") on November 16, 2016 ("Settlement Agreement"). Holland opposes the motion, contending that the Settlement Agreement does not comply with Tex. R. Civ. P. 11 (hereafter, "Rule 11"), and that it is unenforceable because there was no meeting of the minds on all material terms. For the reasons that follow, the court grants Key's motion to enforce the settlement agreement and denies its request to compel any discovery other than what is required by the terms of the enforced Settlement Agreement.
Key is a retail and commercial bank for which Holland worked from August 2009 to July 2015. Prior to her departure from Key to work for Capital One Financial Corporation ("Capital One"), Holland emailed her Outlook Contact List from her work email to her personal email account. After Holland began working at Capital One, she also requested a quote memo template from a Key employee. The employee emailed Holland at her Capital One account a quote for a completed Key transaction. This quote memo was marked confidential and contained financial information for the transaction, including Key's comments on winning the deal.
As a result of these transactions, Key sued Holland, another former Key employee, and Capital One, alleging trade secret misappropriation and breach of her employment agreement with Key. While the lawsuit was pending, Holland and Key discussed settlement and came to an agreement on many terms, including payment, release of claims, and Holland's obligation to be subject to a "prompt deposition." P. Br. 2. Key simultaneously pursued a preliminary injunction against Holland and the other former Key employee. Key asked for injunctive relief similar to some terms within the alleged Settlement Agreement, including ordering Holland to submit to computer forensic examinations and removal of Key information, extending and enforcing Holland's non-solicitation agreement, and restraining Holland from using or disclosing confidential, proprietary, and trade secret information.
In December 2016 Holland requested "to substitute performance for the 'prompt deposition' term." Id. 19. Key maintains that it agreed to substitute performance due to "Holland's fears of submitting to a deposition while Capital One was still in the case." Id. The parties allegedly agreed that the "prompt deposition" term "could be performed by: (a) a declaration executed by Holland, (b) comprehensive admissions by Holland, (c) [Redacted] , and (d) Key's reservation of rights to take Holland's deposition in the future, if necessary." Id; see D. Br. 9. Holland provided declarations, butthe admissions remained in negotiations.
On January 24, 2017 the court granted in part and denied in part Key's motion for a preliminary injunction. The court enjoined Holland from using or disclosing Key's confidential, proprietary, and trade secret information, including prospect lists, proprietary analytical tools known as "sizers," proprietary client memoranda and templates, market research, and other confidential and trade secret information, but it otherwise denied Key's motion as to Holland. After the court issued its ruling, Holland sent Key an email stating, P. App. 60. Key now moves to enforce the Settlement Agreement allegedly formed on November 16, 2017. Key also requests that the court compel Holland to provide the remainder of the agreed upon "Alternative Discovery," such as the requested admissions, as a substitute for the prompt deposition term. P. Br. 21.
"'[A]lthough federal courts possess the inherent power to enforce agreements entered into in settlement of litigation, the construction and enforcement of settlement agreements is governed by the principles of state law applicable to contracts generally.'" Lockette v. Greyhound Lines, Inc., 817 F.2d 1182, 1185 (5th Cir. 1987) (quoting Lee v. Hunt, 631 F.2d 1171, 1173-74 (5th Cir. Unit A Dec. 1980)); Borden v. Banacom Mfg. & Mktg., Inc., 698 F. Supp. 121, 123 (N.D. Tex. 1988) (Sanders, J). Because Texas law controls this case, Rule 11 also applies. See Anderegg v. High Standard, Inc., 825 F.2d 77, 80 (5th Cir. 1987); Condit Chem. & Grain Co. v. Helena Chem. Corp., 789 F.2d 1101, 1102-03 (5th Cir. 1986).Rule 11 provides that "no agreement between attorneys or parties touching any suit pending will be enforced unless it be in writing, signed and filed with the papers as part of the record, or unless it be made in open court and entered of record."
Because Texas contract law applies to settlement agreements, the agreement must contain all material terms and be "sufficiently definite to enable the court to understand the parties' obligations." Liberto v. D.F. Stauffer Biscuit Co., 441 F.3d 318, 323 (5th Cir. 2006) (citing Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831 (Tex. 2000)). Thus "[w]here an essential term is open for future negotiation, there is no binding contract." T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992). "Evidence of the parties' intent to enter into a binding agreement is also required." Estate of Martineau v. ARCO Chem. Co., 203 F.3d 904, 910 (citing Premier Oil Refining Co. v. Bates, 367 S.W.2d 904, 907 (Tex. Civ. App. 1963, writ ref'd n.r.e.)).
Further, a district court can enforce a settlement agreement where the parties have agreed to the materials terms and one party later refuses to execute a formal agreement. See Weaver v. World Fin. Corp. of Tex., 2010 WL 1904561, at *2 (N.D. Tex. May 12, 2010) (Fish, J.) (citing Daftary v. Metro. Life Ins. Co., 136 F.3d 137, 1998 WL 30059, at *1 (5th Cir. Jan. 12, 1998) (per curiam)). "'Where a party has knowingly and voluntarily agreed to settle his claims and no change of circumstances warrants repudiation of the agreement, the courts will enforce the settlement agreement.'" Id. (quoting Bell v. Schexnayder, 36 F.3d 447, 449 (5th Cir. 1994)).
The court considers first whether the alleged Settlement Agreement satisfies the requirements of Rule 11, that is, that the agreement must be "in writing, signed and filed with the papers as part of the record."
Key posits that the series of emails forming the settlement agreement satisfies the Rule 11 requirements of a written memorandum, with signatures, and filed with the court. Citing two decisions of this court, Key asserts that "[t]he memorandum . . . does not have to take the form of a single document," and that "an email exchange may, provided it meets the other requirements that [the] Court has set out, qualify as a written agreement under Rule 11." Williamson v. Bank of N.Y. Mellon,, 947 F.Supp.2d 704, 708 (N.D. Tex. May 16, 2013) (Godbey, J.); Dymatize Enters. Inc v. Maximum Human Performance, Inc. 2010 WL 4788573, at *4 (N.D. Tex. Sept. 20, 2010) (Ramirez, J.), rec. adopted, 2010 WL 4788571 (N.D. Tex. Nov. 17, 2010) (O'Connor, J.). Relying on the same authorities, Key asserts that "even a simple typed name or automatically-generated signature block in an email constitutes an electronic signature that satisfies Rule 11." P. Br. 16. Regarding the filing requirement, "[b]oth federal and state courts in Texas enforce agreements filed contemporaneously with motions seeking their enforcement." Williamson, 947 F.Supp.2d at 712.
Holland does not dispute that emails and email signatures can constitute a settlement agreement that satisfies Rule 11. Instead, she maintains that the electronic communicationcan only satisfy the Rule "[i]n cases in which an actual, formal written settlement agreement is not contemplated (which is not the case here)." D. Br. 14. She also maintains that "'the series of emails . . . [must be] 'complete within itself in every material detail.'" Id. (quoting Williamson, 947 F.Supp.2d at 708). Because Holland disputes that the parties came to an agreement on all material terms, she also asserts that the series of emails is not complete within itself in every material detail. Holland also appears to argue that the Settlement Agreement cannot satisfy Rule 11 because the court was never notified that the matter was settled.
The court addresses first whether email communications and electronic signatures can satisfy the Rule 11 "in writing" requirement. Because Texas law governs this case and the Texas Supreme Court has not ruled on this specific issue, the court must make an Erie guess as to how the court would rule. See Am. Int'l Specialty Lines Ins. Co. v. Rentech Steel LLC, 620 F.3d 558, 564 (5th Cir. 2010) (). In two cases, this court has addressed this question and has held that email exchanges satisfied Rule 11. See Williamson, 947 F.Supp.2d at 708; Dymatize, 2010 WL 4788571, at *5. The court follows these decisions in this case.
First, the Supreme Court of Texas has already held that a series of letters can satisfy Rule 11. See Padilla v. LaFrance, 907 S.W.2d 454, 460 (Tex. 1995). Second, the TexasUniform Electronic Transactions Act ("TUETA") provides that, "[i]f a law requires a record to be in writing, an electronic record satisfies the law." Tex. Bus. & Com. Code Ann. § 322.0007(c) (West 2015). Likewise, an electronic signature under the TUETA can be "an electronic, sound, symbol, or process attached to or logically...
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