632 F. App'x 692
3d Cir.2015Background
- Zong sued Merrill Lynch in 2013 alleging Title VII discrimination and retaliation; parties engaged in discovery and settlement negotiations.
- On June 23, 2014, at a court-facilitated settlement conference, the parties placed an oral settlement on the record: Zong agreed to a sum certain in exchange for a release of all claims.
- Merrill Lynch prepared written settlement documents; before Zong signed them he emailed the court claiming his attorney had misled him about the status of a separate EEOC claim and asked to cancel the settlement.
- Merrill Lynch moved to enforce the oral settlement; the district court held an evidentiary hearing and found the June 23 oral agreement binding and enforceable, then granted the motion and dismissed the case with prejudice.
- Zong appealed, arguing (1) the agreement was induced by his attorney’s misinformation (fraud) and (2) he properly exercised a 21-day revocation provision in the written (but unsigned) settlement documents.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of oral settlement placed on the record | Zong: agreement voidable because he was misled by counsel | Merrill: oral agreement on the record is binding and enforceable | Court: Oral settlement on the record is binding; district court did not clearly err in finding assent |
| Fraud/misinformation by attorney as basis to void settlement | Zong: attorney misrepresented EEOC status, which induced his assent | Merrill: any misstatement was a mistaken communication, not fraud; assent was knowing | Court: No record support for fraud sufficient to invalidate agreement; Zong had knowingly agreed |
| Reliance on unexecuted written 21-day revocation clause | Zong: could rely on paragraph in written draft to rescind within 21 days | Merrill: Zong never executed the documents; provision has no effect on already-formed oral agreement | Court: Unexecuted clause cannot nullify previously made binding oral agreement; argument rejected |
| Court jurisdiction to enforce settlement pre-dismissal | Zong: Kokkonen means settlement enforcement requires retained jurisdiction or incorporation into dismissal | Merrill: Motion to enforce was filed before dismissal; court retained jurisdiction to rule | Held: Court had jurisdiction to enforce the settlement before dismissal; Kokkonen not an obstacle here |
Key Cases Cited
- Green v. John H. Lewis & Co., 436 F.2d 389 (3d Cir. 1971) (oral settlements voluntarily entered are binding even without writing)
- Nelson v. American Dredging Co., 143 F.3d 789 (3d Cir. 1998) (district courts have equitable jurisdiction to enforce settlement agreements based on oral representations)
- Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375 (1994) (court lacks jurisdiction to enforce settlement after dismissal unless it retained jurisdiction or incorporated terms into dismissal)
- Oubre v. Entergy Operations, Inc., 522 U.S. 422 (1998) (OWBPA requirements for knowing and voluntary ADEA waivers are strict)