You Had A Settlement In Your Lawsuit, The Plaintiff Changed His Mind, So Now What?

mediationYou insure a large employer and have worked with in-house counsel and its outside lawyer for several years defending a contentious, emotional (aren’t they all?) employment lawsuit.  As trial draws near, say a few weeks before, everyone agrees to mediate with a private mediator who has a good reputation for settling employment cases.

Everyone has set aside a full day for the mediation and it begins with the parties in separate conference rooms.  You and your defense team have evaluated the case and agreed on the defense position.  The mediator spends long periods of time with the plaintiff and his counsel, and after the usual number of demands, offers and counters, the last offer of the day is one that you, the employer, the defense lawyer and the mediator all feel confident will seal the deal.  The defense lawyer has written by hand a list of terms of settlement, which the mediator shares with plaintiff’s lawyer and plaintiff, reporting that the terms are acceptable, except for the final settlement dollars.  You are so confident that the case is settled that you leave.

Instead, the mediator returns, looking somewhat ashen, and announces that the plaintiff rejects the latest offer and wants to speak with the defense.  Whereupon, he enters the room and rants about how badly he was treated by the employer, how he wants to air his grievances in the public forum of a trial, and walks out.  Defense counsel quickly catches plaintiff’s counsel and suggests privately that the talks end for the day, but continue the next day, perhaps on the telephone, to which he agrees.  You are shocked to learn later on your cell phone that the mediation fell through.

But the next day, the two lawyers continue to talk, and using the mediator to convey the terms, they do reach a settlement.  Defense counsel signs the hand-written term sheet and faxes it to plaintiff’s counsel, who signs it on behalf of his client, having received authorization to do so on the telephone.  The lawyers agree that the case can be reported to the court as settled, which happens.  Defense counsel drafts a formal settlement agreement and release and sends it to plaintiff’s counsel.  The court sends a notice that the case has been reported settled, and that it will be dismissed by a certain date if not withdrawn.

Several weeks later, the plaintiff writes to his lawyer, dismissing him, and stating that he no longer wishes to settle.  At the same time he files a pro se appearance.  Plaintiff’s counsel indicates that he considers the case settled.  The court dismisses the case, notifying the parties, including the now pro se plaintiff.

ConnecticutNow what?  Well, at least in Connecticut, the settlement agreed to between the lawyers for the two sides is an enforceable contract.  This is true without a formal, signed settlement agreement, and without even the handwritten term sheet that was signed by the lawyers in this case.  Yes, the oral agreement between the lawyers for the two sides is enforceable.

Under Connecticut practice rules, the “former” plaintiff has four months from the date of dismissal to move to reopen the lawsuit.  If that happens, the defendant can move to dismiss based on the enforceable settlement agreement.

Meanwhile, you do not close your file just yet, and keep the reserve for the amount agreed to in the settlement.

Lesson to be learned?  First, don’t leave the mediation before the deal is done, otherwise you will jinx it!  Second, if the lawyers agree to a settlement, it is enforceable, in Connecticut.

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