Powell v. Omnicom ( 2007 )

06-0300-cv
Powell v. Omnicom
1 UNITED STATES COURT OF APPEALS
2 FOR THE SECOND CIRCUIT
3
4 August Term 2006
5 (Argued: February 8, 2007 Decided: August 7, 2007)
6 Docket No. 06-0300-cv
7 -------------------------------------------------------x
8 DOREEN POWELL,
9 Plaintiff-Appellant,
10 -- v. --
11 OMNICOM, BBDO/PHD,
12 Defendants-Appellees.
13 -------------------------------------------------------x
14 B e f o r e : WINTER, WALKER, and SACK, Circuit Judges.
15
16 Appeal from a judgment of the United States District Court
17 for the Southern District of New York (William H. Pauley III,
18 Judge), denying plaintiff-appellant’s motion under Fed. R. Civ.
19 P. 60(b) to set aside a settlement agreement and reopen her civil
20 action.
21 AFFIRMED.
22 ELIZABETH A. MASON, New York, New
23 York, for Plaintiff-Appellant.
24 A. MICHAEL WEBER (Christina L.
25 Feege, on the brief), Littler
-1-
1 Mendelson, P.C., New York, New
2 York, for Defendants-Appellees.
3 JOHN M. WALKER, JR., Circuit Judge:
4 In this appeal from a May 18, 2005, judgment of the district
5 court of the Southern District of New York (William H. Pauley
6 III, Judge), the question is whether plaintiff-appellant Doreen
7 Powell, who now has the legal equivalent of buyer’s remorse,
8 entered into a binding and enforceable settlement agreement with
9 defendants-appellees Omnicom and BBDO/PHD that concluded their
10 litigation. For the following reasons, we hold that the
11 settlement agreement is fully enforceable and that the district
12 court properly denied Powell’s motion to reopen the case.
13 BACKGROUND
14 Powell, a 52-year-old African American woman, began working
15 at BBDO, a subsidiary of Omnicom, in 1993. After she was
16 promoted to vice president in 1994, she allegedly fell victim to
17 numerous discriminatory acts relating to promotions, performance
18 evaluations, pay, choice of accounts, and assignment of
19 subordinates. Despite her complaints to management, Powell says
20 nothing was done.
21 On September 26, 2002, BBDO fired Powell, asserting that it
22 was because of her lack of seniority and failure to bill enough
23 business. Powell claims that these reasons were pretextual
24 because BBDO did not terminate many white employees who had less
25 seniority and billed less business. She also claims that BBDO
-2-
1 retaliated against her by falsely reporting to the Department of
2 Labor that she had been discharged for misconduct.
3 On February 3, 2004, Powell sued BBDO and Omnicom under
4 Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et
5 seq.; the Age Discrimination in Employment Act of 1967 (“ADEA”),
6 29 U.S.C. § 621 et seq.; and various New York State and New York
7 City law violations. On June 23, 2004, after several hours of
8 negotiation, Powell, who was represented by counsel, and Omnicom
9 agreed to an in-court settlement before Magistrate Judge James C.
10 Francis, IV. Omnicom’s counsel recited the terms of the
11 settlement on the record:
12 • Neither party would admit any wrongdoing
13 • BBDO would pay Powell $35,000, from which no taxes
14 would be withheld
15 • BBDO would write “a mutually agreed upon positive
16 reference regarding Ms. Powell’s employment with BBDO
17 Detroit”
18 • BBDO would represent in writing to the Department of
19 Labor that it made an error in stating that Powell was
20 terminated for misconduct
21 • BBDO and Omnicom could still sue Powell for
22 “malfeasance and other intentional conduct”
23 • Neither party would disparage the other
24 • Powell would never apply for employment with the
25 defendants
-3-
1 • Powell would represent that she had no other claims
2 pending against the defendants other than the federal
3 claims being settled
4 • The agreement would remain confidential
5 The magistrate judge then asked Powell if the terms of the
6 agreement were acceptable to her and whether “on the basis of
7 agreeing to those terms that this case will be terminated with
8 prejudice and cannot be reopened.” Powell responded
9 affirmatively on the record to both questions.
10 On June 29, 2004, the district court issued an order stating
11 that it had been informed that “this action has been or will be
12 settled.” It ordered the action discontinued without prejudice
13 to restore “if the application to restore the action is made
14 within thirty (30) days of the date of this Order.”
15 The parties attempted to reduce their agreement to writing,
16 but Powell refused to sign. On July 22, 2004, the district court
17 received a letter from Powell’s counsel asking that the case be
18 restored to the calendar. Counsel also requested that they be
19 relieved from representation due to “irreconcilable differences”
20 with Powell. Rather than restore the case to the calendar, the
21 district court ordered the parties to appear at a conference on
22 August 13, 2004.
23 At the conference, Powell accused her counsel of
24 misrepresenting that the $35,000 settlement would be tax-free and
25 pressuring her into accepting. Her counsel denied any
-4-
1 misconduct. She also claimed that Omnicom’s reference letter was
2 unsatisfactory because it only stated that her performance at
3 BBDO was “satisfactory”; she wanted it to say that her
4 performance was “exemplary.” Powell’s counsel said that Omnicom
5 was “really working to try to refine the language to please Ms.
6 Powell” and had offered to state that her performance was “fully
7 satisfactory.”
8 Finding that Powell seemed to be “a sophisticated and
9 knowledgeable business woman,” the district court concluded that
10 the settlement was enforceable. It gave Powell the choice of
11 taking exception to the ruling and proceeding with the case or,
12 alternatively, working out the settlement’s details. Powell
13 chose the first option, and the district court relieved her
14 counsel.
15 On March 11, 2005, Powell submitted affidavits pro se in
16 support of a motion to vacate and set aside the settlement and
17 restore the case to the calendar. The district court construed
18 the affidavits as a motion to reopen under Fed. R. Civ. P. 60(b)
19 and denied the motion, finding that Powell “knowingly and
20 voluntarily entered into an in-court settlement agreement.”
21 Powell timely appealed.
22 DISCUSSION
23 Because Powell’s case had already been closed, the district
24 court did not abuse its discretion in construing her March 11
25 motion as a Rule 60(b) motion. See Lawrence v. Wink (In re
-5-
1 Lawrence), 293 F.3d 615, 623 (2d Cir. 2002). We review the
2 denial of a Rule 60(b) motion for abuse of discretion. Rodriguez
3 v. Mitchell, 252 F.3d 191, 200 (2d Cir. 2001); see also Fennell
4 v. TLB Kent Co., 865 F.2d 498, 503 (2d Cir. 1989) (Feinberg, J.,
5 concurring) (involving decisions to restore a case to the
6 calendar). We review the district court’s factual findings,
7 including whether a settlement agreement exists and whether the
8 parties assented to it, for clear error. Omega Eng’g, Inc. v.
9 Omega, S.A., 432 F.3d 437, 443 (2d Cir. 2005).
10 A settlement agreement is a contract that is interpreted
11 according to general principles of contract law. Id. Once
12 entered into, the contract is binding and conclusive. Janneh v.
13 GAF Corp., 887 F.2d 432, 436 (2d Cir. 1989), abrogated on other
14 grounds by Digital Equip. Corp. v. Desktop Direct, Inc., 511 U.S.
15 863 (1994). When a party makes a deliberate, strategic choice to
16 settle, a court cannot relieve him of that a choice simply
17 because his assessment of the consequences was incorrect. United
18 States v. Bank of N.Y., 14 F.3d 756, 759 (2d Cir. 1994).
19 Powell argues, however, that in these particular
20 circumstances, the agreement was not binding because (1) it was
21 never reduced to writing; (2) the parties never intended to be
22 bound absent a writing; (3) it was made in violation of the Older
23 Workers Benefit Protection Act (“OWBPA”), Pub. L. No. 101-433,
24 104 Stat. 978 (1990) (codified as 29 U.S.C. § 626(f)); and (4)
25 the district court’s July 1, 2004 order expressly gave her the
-6-
1 right to have the case restored to the calendar if she moved for
2 such relief within 30 days of the issuance of the order. We hold
3 that the settlement agreement is binding and enforceable; it
4 therefore concluded the litigation.
5 I. Requirement of a Writing
6 Parties may enter into a binding contract orally, and the
7 intention to commit an agreement to writing, standing alone, will
8 not prevent contract formation. Winston v. Mediafare Entm’t
9 Corp., 777 F.2d 78, 80 (2d Cir. 1985) (applying New York law).1
10 Consequently, a “voluntary, clear, explicit, and unqualified
11 stipulation of dismissal entered into by the parties in court and
12 on the record is enforceable even if the agreement is never
13 reduced to writing, signed, or filed.”2 Role v. Eureka Lodge No.
1
It is unclear whether the settlement of federal claims is
governed by New York law or federal common law. The draft
settlement agreement states that it is governed by New York law.
The parties have not raised this issue and seem to agree, at
least implicitly, that New York law applies. In Ciaramella v.
Reader’s Digest Ass’n, 131 F.3d 320 (2d Cir. 1997), we declined
to decide this question because New York law and federal common
law were materially indistinguishable. Id. at 322; see also
Monaghan v. SZS 33 Assocs., 73 F.3d 1276, 1283 n.3 (2d Cir. 1996)
(“[T]he federal rule regarding oral stipulations does not differ
significantly from the New York rule.”). The same is true here;
therefore, we will apply New York and federal common law
interchangeably.
2
Under New York law, the requirement that the settlement be on
the record and in open court serves as a limited exception to the
Statute of Frauds. Jacobs v. Jacobs, 645 N.Y.S.2d 342, 344-45
(App. Div. 3d Dep’t 1996); see also N.Y. C.P.L.R. 2104 (“An
agreement between parties or their attorneys relating to any
matter in an action, other than one made between counsel in open
court, is not binding upon a party unless it is in a writing
subscribed by him or his attorney or reduced to the form of an
-7-
1 434, I.A. of M & A.W. AFL-CIO, 402 F.3d 314, 318 (2d Cir. 2005)
2 (per curiam). The settlement remains binding even if a party has
3 a change of heart between the time he agreed to the settlement
4 and the time those terms are reduced to writing. Millgard Corp.
5 v. White Oak Corp., 224 F. Supp. 2d 425, 432 (D. Conn. 2002).
6 Here, Powell and Omnicom entered into a “voluntary, clear,
7 explicit, and unqualified” settlement on the record in open
8 court: Omnicom recited the terms of the agreement on the record,
9 and Powell expressly assented on the record to those terms and
10 the dismissal of the case. Accordingly, the fact that the
11 settlement was never reduced to writing is insufficient to render
12 the settlement nonbinding.
13 II. The Parties’ Intentions to be Bound Absent a Writing
14 Powell contends that the parties did not intend to be bound
15 by the settlement in the absence of a writing. Parties who do
16 not intend to be bound until the agreement is reduced to a signed
17 writing are not bound until that time. Ciaramella, 131 F.3d at18 322. Deciding whether the parties intended to be bound in the
19 absence of a writing requires us to consider (1) whether there
20 has been an express reservation of the right not to be bound in
21 the absence of a writing; (2) whether there has been partial
22 performance of the contract; (3) whether all of the terms of the
23 alleged contract have been agreed upon; and (4) whether the
order and entered.”).
-8-
1 agreement at issue is the type of contract that is usually
2 committed to writing. Winston, 777 F.2d at 80; see also
3 Ciaramella, 131 F.3d at 323. “No single factor is decisive, but
4 each provides significant guidance.” Ciaramella, 131 F.3d at5 323. After considering these factors, we conclude that the
6 parties in this case intended to be bound notwithstanding the
7 absence of a writing.
8 First, neither party made any express reservation to be
9 bound only by a writing. At the June 23, 2004 hearing, Omnicom’s
10 attorney stated without objection that the “parties have agreed
11 that the formal settlement documents will incorporate the
12 following terms and conditions,” suggesting that the settlement’s
13 reduction to writing was only a formality.
14 Second, there was partial performance of the settlement
15 agreement. At the June 23, 2004 hearing, Omnicom agreed to draft
16 a reference letter for Powell; Omnicom drafted this letter, with
17 the only remaining detail being whether it would say that
18 Powell’s performance was “fully satisfactory” or “exemplary.”
19 Third, the parties agreed to all of the material terms of
20 the settlement agreement at the June 23, 2004 hearing. Granted,
21 Powell later took issue with some of the language in the draft
22 agreement to which she had acceded at the June 23 hearing. This
23 includes principally BBDO’s right to take legal action against
24 her for gross malfeasance or intentional misconduct, which
25 Omnicom ultimately removed. We have held that even “minor” or
-9-
1 “technical” changes arising from negotiations over the written
2 language of an agreement can weigh against a conclusion that the
3 parties intended to be bound absent a formal writing. See
4 Winston, 777 F.2d at 82-83. Such changes are relevant, however,
5 only if they show that there were points remaining to be
6 negotiated such that the parties would not wish to be bound until
7 they synthesized a writing “satisfactory to both sides in every
8 respect.” See id.; see also R.G. Group, Inc. v. Horn & Hardart
9 Co., 751 F.2d 69, 76 (2d Cir. 1984) (“A . . . factor is whether
10 there was literally nothing left to negotiate or settle, so that
11 all that remained to be done was to sign what had already been
12 fully agreed to.”). Here, Powell and Omnicom agreed at the June
13 23, 2004 hearing that BBDO reserved the right to sue Powell;
14 Powell’s subsequent disagreement with, and Omnicom’s eventual
15 release of, that right do not suggest that the point was left to
16 be negotiated after the hearing.
17 Powell argues that because the parties were unable to agree
18 on a mutually satisfactory reference letter and because Omnicom
19 has not removed the negative review from her personnel file, the
20 parties did not agree to all the terms of the settlement. This
21 argument, however, misses the point: They are relevant to
22 performance of the settlement rather than assent to its terms.
23 Powell also refers to certain representations in the draft
24 agreement to which she never agreed in court. These
25 representations relate principally to the statutory requirements
-10-
1 for validly waiving rights under the ADEA (to be discussed
2 further, infra) to effectuate settlement. See 29 U.S.C. §
3 626(f). Because these representations simply follow the legal
4 preconditions for waiving rights under the ADEA, which was the
5 entire point of the settlement, we cannot view them as additional
6 terms subject to negotiation.
7 The fourth factor – whether this agreement is the kind that
8 would normally be reduced to writing - is a closer question. We
9 have held that a settlement, whose terms were not announced in
10 open court, for $62,500 paid over several years “strongly
11 suggest[ed]” that the parties would intend to be bound only by a
12 writing. Winston, 777 F.2d at 83. Similarly, we have held that
13 a settlement, also not announced in open court, containing
14 perpetual rights similar to those in the settlement at issue
15 would normally be put in writing. Ciaramella, 131 F.3d at 326.
16 That settlement, like this one, contained provisions concerning
17 how future requests for employee references would be handled,
18 prohibiting the plaintiff from reapplying for employment with the
19 defendant, and imposing confidentiality requirements. Id.20 Unlike in Winston and Ciaramella, however, the terms of this
21 agreement were announced on the record and assented to by the
22 plaintiff in open court. In Ciaramella, we stated that
23 “[s]ettlements of any claim are generally required to be in
24 writing or, at a minimum, made on the record in open court.” Id.
25 (emphasis added). The significance of announcing the terms of an
-11-
1 agreement on the record in open court is to ensure that there are
2 at least “some formal entries . . . to memorialize the critical
3 litigation events,” Willgerodt v. Hohri, 953 F. Supp. 557, 560
4 (S.D.N.Y. 1997) (quoting Dolgin v. Dolgin (In re Dolgin Eldert
5 Corp.), 31 N.Y.2d 1, 10 (1972)), and to perform a “cautionary
6 function” whereby the parties’ acceptance is considered and
7 deliberate, see Tocker v. City of N.Y., 802 N.Y.S.2d 147, 148
8 (App. Div. 1st Dep’t 2005). The in-court announcement here
9 functioned in a manner akin to that of a memorializing writing.
10 As a result, this factor, viewed in the light most favorable to
11 Powell, is neutral as to whether the parties intended to be bound
12 only by a writing.
13 Consequently, at least three of the four factors favor the
14 conclusion that the parties intended to be bound in the absence
15 of a writing. We therefore conclude that Powell was bound by the
16 in-court, oral settlement.
17 III. Powell’s Rights Under the OWBPA
18 Powell next argues that the settlement is invalid under the
19 OWBPA because it did not meet the OWBPA’s timing requirements.
20 Her argument is without merit.3
3
Whether the OWBPA applies to settlements made in-court and on
the record is an open question in this circuit. In the
unpublished decision Manning v. N.Y. Univ., No. 98-Civ.-
3300(NRB), 2001 WL 963982, at *11-16 (S.D.N.Y. Aug. 22, 2001),
the Southern District of New York held that the OWBPA does not
apply under those circumstances. On appeal, we expressly
declined to decide the question. See Manning v. N.Y. Univ., 299
F.3d 156, 164 (2d Cir. 2002) (per curiam). Because the parties
-12-
1 To protect the rights and benefits of older workers,
2 Congress amended the ADEA in 1990 through the OWBPA by adding,
3 inter alia, 29 U.S.C. § 626(f), which regulates employee waivers
4 and releases under the ADEA. Hodge v. N.Y. Coll. of Podiatric
5 Med., 157 F.3d 164, 166 (2d Cir. 1998); see also Oubre v. Entergy
6 Operations, Inc., 522 U.S. 422, 426-27 (1998). Under the OWBPA,
7 an individual may waive his rights only if the waiver is “knowing
8 and voluntary.” 29 U.S.C. § 626(f)(1). Section 626(f) provides
9 specific statutory requirements for a “knowing and voluntary”
10 waiver that the employer must meet in order for an employee to
11 waive his ADEA claims. Tung v. Texaco Inc., 150 F.3d 206, 209
12 (2d Cir. 1998). The failure to meet these requirements renders
13 the release unenforceable irrespective of general contract
14 principles. See Oubre, 522 U.S. at 427.
15 Section 626(f)(1)’s requirements, which apply generally to
16 waivers of ADEA claims, include, inter alia, that the individual
17 be given “a period of at least 21 days within which to consider
18 the agreement” and “a period of at least 7 days following the
19 execution of such agreement . . . [to] revoke the agreement.” 29
20 U.S.C. § 626(f)(1)(F), (G).
21 Powell cannot rely on those timing requirements because
22 under § 626(f)(2), they do not apply to actions such as Powell’s
assume that the OWBPA applies and we conclude that its
requirements were met in any event, there is again no need for us
to decide the question.
-13-
1 that are filed in court and allege age discrimination under 29
2 U.S.C. § 623. See also Hodge, 157 F.3d at 166-67. Section
3 626(f)(2) instead requires that “the individual [be] given a
4 reasonable period of time within which to consider the settlement
5 agreement.” The Equal Employment Opportunity Commission has
6 interpreted this requirement to mean “reasonable under all the
7 circumstances, including whether the individual is represented by
8 counsel or has the assistance of counsel.” 29 C.F.R. §
9 1625.22(g)(4).
10 Powell had a reasonable period of time to consider the
11 settlement. She was represented by counsel when the parties
12 entered the settlement. Further, Powell – a former corporate
13 vice president and sophisticated business woman – had nearly two
14 years between her termination and settlement negotiations to give
15 considered thought to how she wished to resolve this dispute.
16 Congress imposed statutory requirements for waiver to ensure that
17 “older workers are not coerced or manipulated into waiving their
18 rights to seek legal relief under the ADEA.” Syverson v. Int’l
19 Bus. Machs. Corp., 472 F.3d 1072, 1075-76 (9th Cir. 2007)
20 (quoting S. Rep. No. 101-263, at 5 (1990)). Recognizing that an
21 employee is vulnerable and at an informational disadvantage just
22 after he is terminated, the Senate report noted that an:
23 employee who is terminated needs time to recover from
24 the shock of losing a job, especially when that job was
25 held for a long period. The employee needs time to
26 learn about the conditions of termination, including
27 any benefits being offered by the employer. Time also
-14-
1 is necessary to locate and consult with an attorney if
2 the employee wants to determine what legal rights may
3 exist.
4
5 S. Rep. No. 101-263 (1990), as reprinted in 1990 U.S.C.C.A.N.
6 1509, 1538-39. After the passage of nearly two years, Powell
7 plainly was not under “shock” or time pressure to settle. And
8 she advances no convincing arguments that she was. Therefore,
9 while only a few hours elapsed between the beginning of
10 settlement negotiations and Powell’s assent to those terms in-
11 court, this period of time was reasonable under the
12 circumstances.
13 Powell does not advance any serious arguments that the other
14 requirements of § 626(f)(2) were not met. The settlement
15 agreement is therefore enforceable notwithstanding the OWBPA.
16 IV. District Court’s Refusal to Restore the Case
17 Powell’s final argument is that the district court erred by
18 refusing to restore her case to the calendar when she requested
19 on July 21, 2004 that it do so. She focuses on the district
20 court’s June 29, 2004 order, which she claims gave her a 30-day
21 option to restore the case. She argues that because she made her
22 request within the 30-day period, that order required the
23 district court to grant it.
24 We acknowledge that the district court’s order lacked
25 clarity as to whether Powell was bound by the in-court
26 settlement. The order began by stating, “[i]t having been
27 reported to this Court that this action has been or will be
-15-
1 settled.” The latter clause suggests that the parties had not
2 settled the case. Moreover, the language with respect to
3 restoring the action upon application suggests that the
4 settlement was not yet binding and that she would be able to
5 restore the action if she so chose.
6 Despite the order’s wording, the district court did not
7 abuse its discretion in denying Powell’s motion based upon its
8 investigation into the June 23, 2004 hearing. The district court
9 did not simply ignore Powell’s request; it promptly convened a
10 conference to determine the settlement’s enforceability and
11 thoughtfully considered whether to restore the action to its
12 calendar. Given the need for the district court to inquire into
13 the matter and the district court’s ability to reconsider any
14 previous indications of its intended rulings, we cannot say that
15 the district court abused its discretion in hearing from the
16 parties and, as shown above, properly concluding that the
17 settlement was binding. See Fennell, 865 F.2d at 503 (Feinberg,
18 J., concurring). Moreover, we have previously affirmed a
19 district court’s refusal to reinstate because of an enforceable
20 oral settlement after it dismissed the suit without prejudice to
21 reopen if the parties could not consummate settlement. See Role,
22 402 F.3d at 318. We also defer to the district court’s
23 reasonable and implicit interpretation of its own order that it
24 did not provide the parties with an unfettered option to reopen
25 the case. Cf. Casse v. Key Bank Nat’l Ass’n (In re Casse), 198
-16-
1 F.3d 327, 334 (2d Cir. 1999) (“[A]n appellate court reviewing
2 bankruptcy orders should defer to a district court’s
3 interpretation of its own order . . . .” (internal quotation
4 marks omitted)).
5 CONCLUSION
6 For the foregoing reasons, the judgment of the district
7 court is AFFIRMED.
-17-