Torres v. Metropolitan Life ( 1999 )

Opinions of the United
1999 Decisions States Court of Appeals
for the Third Circuit
6-24-1999
Torres v. Metropolitan Life
Precedential or Non-Precedential:
Docket 97-5709
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Recommended Citation
"Torres v. Metropolitan Life" (1999). 1999 Decisions. Paper 162.
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Filed June 24, 1999
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 97-5709
EDWARD D. TORRES,
Appellant
v.
METROPOLITAN LIFE INSURANCE COMPANY
On Motion for Award of Attorney Fees and Expenses
(District of New Jersey Civil Action No. 96-cv-01401)
(Honorable Stephen M. Orlofsky)
Argued January 28, 1999
Before: BECKER, Chief Judge, SCIRICA
and ROSENN, Circuit Judges
(Filed: June 24, 1999)
CARL OXHOLM, III, ESQUIRE
(ARGUED)
JERRY L. TANENBAUM, ESQUIRE
Connolly, Epstein, Chicco, Foxman,
Engelmyer & Ewing
1515 Market Street, Suite 900
Philadelphia, Pennsylvania 19102
Attorneys for Appellant
B. JOHN PENDLETON, JR.,
ESQUIRE (ARGUED)
McCarter & English
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07101-0652
Attorney for Appellee
OPINION OF THE COURT
SCIRICA, Circuit Judge.
This is a motion for an award of attorney's fees and
expenses arising from the settlement of an employment
discrimination lawsuit by Edward D. Torres against
Metropolitan Life Insurance Company ("MetLife"). For the
reasons that follow, we will grant Torres's motion but refer
the matter to a Magistrate Judge for determination of the
appropriate amount of fees.
I.
In March 1996, Edward Torres commenced a pro se
employment discrimination suit against MetLife under Title
VII of the Civil Rights Act of 1964, 42 U.S.C.A.S 2000e to
2000e-17 (West Supp. 1999). Torres alleged that MetLife
unlawfully discriminated against him because he is
Hispanic and terminated his participation in MetLife's Pre-
Appointment Training Program in retaliation for reporting
the discrimination to several MetLife officers. The District
Court granted Torres's motion to proceed in forma pauperis.
In September 1997, MetLife filed a motion for summary
judgment, which the District Court granted on the basis
that Torres lacked standing to sue under Title VII because
he was not an "employee" of MetLife while enrolled in the
training program.
Torres filed a notice of appeal and moved for appointment
of counsel. On March 17, 1998, a motions panel of this
Court granted Torres's motion and appointed attorneys Carl
Oxholm III and Jerry L. Tanenbaum, both of the law firm
2
Connolly, Epstein, Chicco, Foxman Oxholm and Ewing
("Connolly Epstein"), as co-counsel to Torres. In an
engagement letter signed by Torres and his new attorneys,
Torres agreed that Connolly Epstein would represent him
pro bono publico but assigned to Connolly Epstein all right
and title to any legal fees that a court might require MetLife
to pay.
Subsequently, Connolly Epstein prepared Torres's appeal
while attempting to negotiate a settlement with MetLife. On
July 16, 1998, the parties orally agreed to settle their
dispute and MetLife's attorneys began drafting a settlement
agreement. Shortly thereafter Torres and MetLife executed
an Agreement and Release in which MetLife agreed to pay
Torres $45,000 in settlement of all claims. The settlement
agreement does not contain any reference to attorney's fees.
The parties also executed a Stipulation of Dismissal with
Prejudice of the Pending Lawsuit and filed it with this
Court.
Torres now moves for an order requiring MetLife to pay
Connolly Epstein attorney's fees and expenses in the
amount of $30,427.14, representing the work done by
Connolly Epstein in preparing Torres's appeal and
negotiating and executing the settlement, as well as the
cost of preparing this motion.1 By order of this Court,
Torres's motion was referred to this merits panel for
disposition.2
II.
A prevailing party is entitled to recover its reasonable
attorney's fees unless special circumstances would render
such an award unjust. See 42 U.S.C.A. S 2000e-5(k) (West
Supp. 1999) (providing for recovery of fees in Title VII
employment discrimination lawsuits); Independent Fed'n of
Flight Attendants v. Zipes, 491 U.S. 754, 761 (1989);
_________________________________________________________________
1. Initially, MetLife filed a cross-motion seeking attorney's fees and
Rule
11 sanctions against Torres, but MetLife subsequently withdrew the
cross-motion.
2. The District Court had subject matter jurisdiction under 28 U.S.C.
S 1331. We have jurisdiction under 28 U.S.C. S 1291.
3
Newman v. Piggie Park Enterprises, Inc., 390 U.S. 400, 402
(1968). A "prevailing party" is one that "succeed[ed] on any
significant issue in the litigation which achieves some of the
benefit the parties sought in bringing the suit." Hensley v.
Eckerhart, 461 U.S. 424, 433 (1983) (citation omitted).
MetLife does not dispute that Torres qualifies as a
prevailing party. Instead, MetLife argues Torres's motion
must be denied because the settlement agreement was a
"global agreement" extinguishing all of Torres's claims
against MetLife, including a claim for attorney's fees. In
support, MetLife offers extrinsic evidence of the parties'
intent, including statements from Mr. Tanenbaum (who has
since left Connolly Epstein) that he believed the agreement
settled all of his client's claims against MetLife, including a
potential claim for attorney's fees.
When the parties to a settlement agreement dispute
whether the prevailing party waived its statutory right to
attorney's fees, "the burden is on the losing party to show
that the settlement agreement clearly waived" such right. El
Club Del Barrio, Inc. v. United Community Corps., 735 F.2d
98, 99 (3d Cir. 1984). In El Club Del Barrio, which similarly
involved a claim for recovery of attorney's fees in a Title VII
suit, we expressly rejected a "silence equals waiver" rule
and held that "extrinsic evidence such as the course of
negotiations" is irrelevant. Id. at 100. A suit for recovery of
attorney's fees is foreclosed only upon express stipulation
in the settlement agreement: "If the parties cannot agree on
counsel fees and the losing party wishes to foreclose a suit
. . . for attorneys fees, it must insist that a stipulation to
that effect be placed in the settlement agreement. We so
hold." Id. at 101.
The settlement agreement here contains no such
stipulation. In fact, it does not mention attorney's fees at
all. MetLife cites the section of the agreement entitled
"Plaintiff 's Release And Waiver of Claims," which states in
part:
Without limitation, Plaintiff specifically releases all
claims, charges, or demands asserted or assertable in
the Pending Lawsuit, and all claims, charges, or
demands arising from or relating to Plaintiff's
relationship of any kind with the Released Parties,
4
including without limitation any rights or claims
Plaintiff may have under Title VII of the Civil Rights Act
of 1964, as amended, and the Civil Rights Act of 1991.
This language, although broad, does not expressly stipulate
that Torres's claim for attorney's fees is waived.3 As El Club
Del Barrio makes clear, that is the end of the analysis. It is
irrelevant whether Mr. Tanenbaum and the other attorneys
believed the release extinguished a claim for fees, as
MetLife contends. A settlement agreement that is silent as
to attorney's fees will not be deemed to constitute a waiver,
regardless of the course of negotiations. See El Club Del
Barrio, 735 F.2d at 100; Ashley v. Atlantic Richfield Co.,
794 F.2d 128, 139 (3d Cir. 1986) ("[W]here a defendant
seeks to settle its total liability on a claim, it shall be
incumbent upon the defendant to secure an express waiver
of attorney's fees. Silence will not suffice.") (citation
omitted). To hold otherwise would be to embrace the
"silence equals waiver" rule that we have repeatedly rejected
since El Club Del Barrio. If the parties to a settlement
agreement wish to extinguish the prevailing party's claim
for attorney's fees, they must do so specifically and
expressly in the terms of the agreement. Because the
parties here did not do so, Torres's claim for attorney's fees
was not waived.
MetLife relies on Conrad v. Bergen Community College,
1996 WL 903946 (D.N.J. Dec. 12, 1996), in which the
District Court denied the plaintiff 's request for attorney's
fees even though the settlement agreement contained no
express waiver. The District Court in Conrad based its
ruling on the fact that during negotiations, plaintiff's
counsel gave "the impression" that fees would not be
requested and defense counsel therefore formed a
reasonable expectation that all attorney's fees were
_________________________________________________________________
3. The dissent argues the release "expressly extinguish[ed] all claims to
attorney fees" and that the agreement "could not be made more plain."
We disagree. As we stated in El Club Del Barrio, the release must
"clearly" waive plaintiff's right to attorney's fees. 735 F.2d at 99. The
agreement here contains a general release that does not mention
attorney's fees. It could easily have been "made more plain" through a
specific provision unambiguously stating whether Torres's claim for
attorney's fees was reserved.
5
encompassed within the agreement, regardless of the
absence of an express waiver. Id. at *4. To the extent that
Conrad would authorize a court to consider extrinsic
evidence of the course of negotiations or the expectations of
the parties, we believe it was wrongly decided. The clear
import of El Club Del Barrio and Ashley is that it does not
matter whether the parties discussed the issue of attorney's
fees or believed the settlement agreement waived such a
claim. All that matters is whether the agreement expressly
stipulates that the prevailing party's claim for fees is
waived. If it does not, then the claim survives.4
Similarly, we believe the dissent's reliance on Wakefield
v. Mathews, 852 F.2d 482 (9th Cir. 1988) is misplaced. In
Wakefield, the release was not silent as to attorney's fees,
but expressly included "costs or expenses of any nature
whatsoever." Id. at 483. For precisely this reason, the
Wakefield court understood its decision to be fully
consistent with El Club Del Barrio and Ashley. See id. at
484 ("We are in full agreement with the Third Circuit's
resolution of both the El Club Del Barrio and Ashley cases.
Waiver of attorney's fees should not be presumed from a
silent record.").
The rule that claims for attorney's fees survive unless
expressly waived is strongly grounded in policy
considerations. As we observed in El Club Del Barrio,
"Requiring the district court to inquire into the
circumstances of settlement negotiations and to determine
who said what to whom when seems a pointless exercise
where observance of a formality will suffice." 735 F.2d at
100-01. We continue to believe that consideration of
extrinsic evidence in these circumstances "unnecessarily
complicates litigation" and that adherence to a clear rule of
law is preferable. Id. at 100. A bright-line rule serves the
additional virtue of promoting informed settlements, as the
parties will know in advance whether their agreement truly
forecloses a post-settlement petition for fees. See Ashley,
794 F.2d at 138.5 Also, such a rule is consistent with the
_________________________________________________________________
4. We express no opinion on whether a court may look beyond the four
corners of the settlement agreement in evaluating a claim or defense
based on fraud, duress, accident, or mistake.
5. The rule we apply today will not leave "settlements and releases under
the Act in chaos, stripped of any finality," as the dissent contends. On
6
Supreme Court's determination that prevailing civil-rights
plaintiffs are presumptively entitled to recover attorney's
fees. See El Club Del Barrio, 735 F.2d at 100 (rejecting a
"silence equals waiver" rule because it "pays inadequate
attention to the presumption established in Hensley and
Piggie Park in favor of prevailing civil rights plaintiffs").
Consequently, we reiterate the holding of El Club Del
Barrio and Ashley. If parties wish to extinguish a claim for
attorney's fees, they must do so specifically and expressly
within the terms of the settlement agreement. Accordingly,
we will grant Torres's motion.
III.
The parties also dispute the reasonableness of the
amount of fees requested. On this issue, we believe fact-
finding is required. We will therefore refer the matter to a
Magistrate Judge for a report and recommendation on the
appropriate amount of fees.
_________________________________________________________________
the contrary, we believe such an outcome could result from the dissent's
invitation to consider whether the parties "viewed the waiver as inclusive
of attorney's fees," thus raising questions of the parties' intent and the
course of negotiations. A bright-line rule directing parties to insert
specific provisions covering attorney's fees will clarify settlement
agreements and promote finality.
7
ROSENN, Circuit Judge, dissenting:
I believe that the polestars to be followed in the
construction of an agreement and release are the
contractual language and the parties' intentions. Highly
trained and experienced lawyers for the parties negotiated
the settlement between Torres and the Metropolitan Life
Insurance Company (MetLife or the Company) and later
reduced it to writing. The written agreement and release
plainly and unreservedly includes within its express terms
a settlement and extinguishment of all claims to attorney
fees to which the plaintiff might be entitled under Title VII
of the Civil Rights Act of 1964, 42 U.S.C. S 2000e (West
Sup. 1968)(the Act). I therefore respectfully dissent and
would deny the plaintiff 's motion for counsel's fees.
I.
Following his termination by MetLife of his participation
in its Pre-appointment Training Program,1 Torres filed a pro
se employment discrimination suit against the company
under Title VII of the Civil Rights Act. The district court
entered summary judgment for the Company on the ground
that Torres lacked standing to sue under Title VII because
his enrollment under the Training Program did not render
him an employee. He appealed to this court.
On Torres's motion, we appointed two lawyers, Carl O.
Oxholm, III, and Jerry L. Tanenbaum, co-members of the
law firm of Connolly, Epstein, Chicco, Foxman, Oxholm and
Ewing (Connolly Epstein), to represent him. His newly
appointed lawyers sent Torres an engagement letter dated
March 23, 1998, in which they set forth that they would
represent him pro bono publico but that he would assign to
Connolly Epstein all right to any legal fees that any court
or other tribunal might require MetLife to pay.
_________________________________________________________________
1. The program was designed to enable individuals interested in personal
insurance to investigate employment opportunities in the insurance field.
The program stated that participants were not employees of MetLife and
required participants to maintain any other employment they presently
had. Torres continued his employment with the Internal Revenue
Service. MetLife released Torres from the program after four weeks.
8
Except in special situations not here relevant, American
courts, unlike English tribunals, do not award attorney fees
to a prevailing party except where there is a statutory
mandate for such payment. See Hensley v. Eckerhart, 461
U.S. 424, 443-44 n.2 (Brennan, J., concurring in part and
dissenting in part). In Title VII cases, there is such a
mandate, and Torres and his counsel relied on it. Title VII
provides that "the Court, in its discretion, may allow the
prevailing party ... a reasonable attorney's fee as part of the
costs." 42 U.S.C. SS 1988 and 2000e -5(k). Torres filed his
suit for discrimination in the United States District Court
under Title VII, and the motion by his counsel before us
now for attorney fees specifically recites that pursuant to
Title VII they claim attorney fees for services incurred in the
appeal and in the preparation of their motion.
In July 1998, while Torres's appeal was pending, the
parties settled the case for $45,000. In a formal settlement
agreement and release, Torres specifically agreed,"without
limitation," to release
all claims, charges, or demands asserted or assertable
in the Pending Lawsuit ..., including, without
limitation, any rights or claims Plaintiff may have
under Title VII of the Civil Rights Act of 1964, as
amended, and the Civil Rights Act of 1991. Plaintiff
agrees not to file or assert any claim, suit, or demand
against any of the Released Parties that has been
waived or released in this agreement.
Thus, in exchange for $45,000, Torres agreed to globally
release MetLife of any and all claims that he had under
Title VII. His claim to attorney fees is under Title VII, as is
the claim of his counsel to whom he assigned his right to
attorney fees.
The settlement agreement and release emphasizes the
inclusion within its terms of "any rights or claims Plaintiff
may have had under Title VII of the Civil Rights Act of
1964" and the Civil Rights Act of 1991. There is nothing in
this record to show that there was ever any disagreement
between the parties as to whether any rights or claims were
to be reserved or would otherwise survive the settlement
agreement's sweeping release. Torres's complaint states in
9
relevant part that the action is brought pursuant to Title
VII of the Civil Rights Act of 1964, as amended, for
employment discrimination.
There is no reservation in the settlement agreement and,
as far as the record shows, no demand by Connolly Epstein
before the execution of the agreement and stipulation of
dismissal of the pending lawsuit that MetLife separately pay
it any costs or attorney fees in addition to the sum specified
in the release. Connolly Epstein did not reserve or attempt
to reserve any rights or claims for costs or attorney fees in
the settlement agreement and release. Upon the execution
of the settlement agreement, Connolly Epstein and MetLife
executed a stipulation for dismissal with prejudice of the
pending lawsuit and filed it with this court, which
dismissed the case pursuant to the stipulation.
There can be no question that Connolly Epstein knew
that the sole basis for any claim for attorney fees by them
or Torres was predicated solely upon Title VII of the Act.
Although Tanenbaum, who performed most of the services
for Torres's appeal, is no longer with Connolly Epstein, he
and his co-counsel, Oxholm, evidently knew, without any
reference by the court to extrinsic evidence proffered by
MetLife, that the plaintiff fully and unambiguously released
in his settlement agreement whatever rights or claims he
had under Title VII of the Civil Rights Act of 1964, as
amended. Oxholm, in his affidavit in support of the motion
for attorney fees, represents that he not only graduated
from Harvard Law School cum laude, but that his
"extensive activities on behalf of pro bono legal services"
have earned for him various honors, including the Pro Bono
Publico Award of the American Bar Association. He also
claims "extensive experience in the preparation, trial and
management of significant business litigation including the
civil rights cases in this Court." Furthermore, Oxholm also
asserts in his affidavit that since he left the City Solicitor's
Office in 1989 to join Connolly Epstein, he was "the only
attorney representing the City [Philadelphia] and all of its
officials in the three dozen civil rights cases arising out of
the City's confrontation with MOVE (In re City of
Philadelphia Litigation)."
10
Oxholm also avers that he sought the assistance of his
partner, William H. Ewing, first in his class at the
University of Pennsylvania Law School, in developing the
legal arguments made on behalf of Torres and that Ewing
also serves as co-chair of the Connolly Epstein Employment
Law Department. Tanenbaum is a 1992 summa cum laude
graduate of Temple University Law School, where he ranked
first in his class and was editor-in-chief of the Temple Law
Review. There can be no misunderstanding on the part of
these experienced and highly trained lawyers that a release
"without limitation [of] any rights or claims plaintiff may
have under Title VII of the Civil Rights Act of 1964, as
amended," did not reserve any right to attorney fees under
the Act.
The motion for legal fees by Connolly Epstein not only
represents that attorneys Oxholm and Tanenbaum
performed services in behalf of Torres in connection with
the appeal and settlement, but that a considerable time
was spent in reviewing the Title VII statute, its definitions
and research in connection therewith. Tanenbaum spent
time in settlement discussions with his client, with the
Company, and Oxholm and Tanenbaum conferred with
respect to "settlement strategy." It is inconceivable and
incomprehensible that they did not know, especially
considering their expertise in employment law and in Title
VII cases, that the comprehensive and global language of
the release they executed did not reserve the right to collect
attorney fees claimed under Title VII. Disingenuously, after
the settlement check of $45,000 cleared the bank, Deborah
Weinstein, in behalf of Connolly Epstein, wrote MetLife
counsel on August 17, 1998, requesting that MetLife pay
them an additional $22,174.14 in counsel fees and
expenses.
Torres signed the settlement agreement with benefit of
these attorneys who are experts in employment law,
specifically with respect to Title VII cases. They advised
him, agreed to the broad language of the release, and filed
the Stipulation of Settlement dismissing the action with
prejudice. Of course, they knew that the language of the
release included all matters, and did not reserve any claim
for attorney fees and expenses.
11
In their claim for attorney fees and expenses, Connolly
Epstein maintains that Torres is entitled to additional
reasonable attorney fees and expenses for the appeal of this
case because he is the prevailing party pursuant to Title
VII, 42 U.S.C. SS 1988 and 2000e-5(k). It boldly asserts that
"the settlement documents do not release MetLife from
Torres's entitlement to recover attorney fees and expenses."
In support of the motion, it argues that Torres has not
settled his claim for attorney fees and expenses because a
waiver of the statutory right to attorney fees and expenses
"must be expressly set forth in the settlement documents."
The agreement and release, however, expressly includes an
extinguishment of all rights and claims under the Act; it
clearly includes the right to any attorney fees and expenses
claimed under the Act.
In support of its motion, Connolly Epstein cites to El Club
del Barrio, Inc. v. United Community Corporations, 735 F.2d
98 (3d Cir. 1984), and Ashley v. Atlantic Richfield Company,
794 F.2d 128 (3d Cir. 1986). Those cases, however, are
inapposite and distinguishable. Both of them concern
situations where the parties could not agree on counsel
fees, attempted to reserve the issue of attorney fees, and
therefore omitted any reference to them in their agreement.
In both El Club and Ashley, the original settlement
agreements proposed to the plaintiffs in the course of the
negotiations for settlement included language referring to
attorney fees. This language, however, was subsequently
deleted upon the objection of the opposing party.
In both of the above cases, this court was asked to
determine whether silence in a revised settlement
agreement under such circumstances constituted a waiver
of rights to attorney fees under Title VII when an express
reservation of rights clause had been negotiated out of the
initial settlement drafts. Based on the record in both of
those cases, this court concluded silence did not constitute
a waiver, regardless of the course of negotiations. We held:
"If the parties cannot agree on counsel fees and the losing
party wishes to foreclose a suit under section 1988 for
attorney's fees, it must insist that a stipulation to that
effect be placed in the settlement agreement." We did not
require that the specific words "attorney fees" be replicated
12
in haec verba. In this case, there is no evidence or claim
whatsoever that the parties did not agree on a settlement
that included attorney fees.
This case is altogether different from the foregoing cases
cited by the movants. References to attorney fees were not
deleted from a prior draft of the settlement agreement.
There is no evidence that there was any argument
concerning the amount and the payment of attorney fees.
The $45,000 settlement and release was global and its
language plainly included a release of the right to attorney
fees and expenses under the Act. The agreement expressly
sets forth the waiver of all rights and claims under the Act.
No mistake or fraud is claimed in the drafting of the release
and stipulation. Allowing a motion for substantial attorney
fees in the face of the settlement and release here not only
gives Torres a windfall but as a matter of policy leaves
written settlements and releases under the Act in chaos,
stripped of any finality.
In Wakefield v. Mathews 852 F.2d 482 (9th Cir. 1988),
the Court of Appeals for the Ninth Circuit also had an
opportunity to construe Ashley and El Club del Barrio. It
sustained a broad release against a claim for attorney fees
under section 1988, and noted that in Ashley and El Club
del Barrio "the original agreements had included language
referring to attorneys' fees, but upon objection the language
was deleted." Id. at 484. The court in Wakefield also
concluded that the record before it was different."It
contains no indication that plaintiffs made any attempt to
exempt attorneys' fees from the language of the proposed
settlement agreement." Id.
II.
When we look at the general design of the settlement
agreement and release in this case and at the
circumstances under which it was written and the suit that
was settled and dismissed with prejudice, and give the
language of the settlement agreement a rational meaning
consistent with its express general purpose, the payment of
$45,000 constituted a final settlement of all claims that the
plaintiff had under the Act, including attorney fees and
13
expenses. The motion for attorney fees should be denied. I
therefore respectfully dissent.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
14