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In denying a motion to enforce a settlement agreement reached in an employment dispute, a federal court in New York found that the settlement agreement gave the employee a seven-day right of revocation.
In McNamara v. Tourneau, Inc., No. 05 CIV. 7804(DC), 2006 WL 3498565 (S.D.N.Y. Dec. 05, 2006), McNamara sued Tourneau, his former employer, for an alleged violation of the Americans with Disabilities Act.
With McNamara proceeding pro se, the Court assigned him pro bono counsel to enable his participation in the Court’s mediation program. Following the mediation session, McNamara and Tourneau reached an agreement that was memorialized in a stipulation (the Stipulation) briefly describing six principal terms, including “Standard 21 day language.” Both parties signed the Stipulation.
Several days after the mediation session, Tourneau’s attorney sent McNamara a copy of a proposed formal settlement agreement (the Proposed Agreement), which stated in all capital letters: “Plaintiff also confirms that he has seven (7) days from the date he signs this confidential negotiated settlement agreement and general release to revoke this release.”
After writing the Court and accusing Tourneau’s attorney of tainting the mediation process, McNamara refused to sign the Proposed Agreement. Tourneau responded by filing a motion to enforce the Stipulation. In opposing the motion, McNamara argued that the Stipulation’s reference to “Standard 21 day language” meant he would have twenty-one days to decide whether or not to sign the Proposed Agreement.
The Court ruled that the Stipulation was a fully binding contract but also concluded that the parties “intended that McNamara would have seven days to revoke, from the time he signed a formal settlement agreement.” In reaching this conclusion, the Court reasoned that “most experienced employment lawyers would understand a reference to ‘Standard 21 day language’ to include, in this context, standard seven-day revocation language as well.” The Court relied on the language of the Proposed Agreement in concluding that the seven-day revocation period would begin when McNamara signed the formal document, not when he signed the Stipulation.
Given its conclusion that McNamara had a right to revoke the settlement agreement, the Court denied Tourneau’s motion to enforce the Stipulation. However, the Court held its nose in denying the motion, noting that McNamara’s “irrational notion” that Tourneau’s attorney misled the mediator undermined the settlement efforts of his pro bono mediation attorney, the volunteer mediator, and everyone else involved in the mediation.
The parties agreed to the “Standard 21 day language” because under the Age Discrimination in Employment Act (ADEA), an employee has seven days to revoke an ADEA waiver. Some commentators advocate the general use of a “cooling-off period” as a means of avoiding satellite litigation over whether a settlement agreement was reached. See James R. Coben & Peter N. Thompson, Disputing Irony: A Systematic Look at Litigation About Mediation, 11 Harv. Negot. L. Rev. 43, 136 (2006) (citing Nancy A. Welsh, The Thinning Vision of Self-Determination in Court-Connected Mediation: The Inevitable Price of Institutionalization?, 6 Harv. Negot. L. Rev. 1, 86-92 (2001)).
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