Civ Pro 2 Notes 11/10/04

Settlements

There are lots of factors that go into determining settlement values and what makes cases ripe for settlement. Discovery causes reevaluation of the value of a suit. Most tort plaintiffs lose, so settlement for them is attractive. Even if you win, verdicts may be low, and trials are expensive. So both sides have pressure to settle if possible. Most settlements are based on negotiations between the attorneys.

Jane Smart is a botanist employed by a botany company genetically modifying crops. There are harassment allegations that lead to a discharge. There are multiple stories of what may have happened. But Jane thinks she may have both unlawful discharge claims under state law and federal Title VII claims. The company tries to give her money to not sue, a “walkaway” settlement. This is the easiest way to make sure you get sued for malpractice. If you pay someone not to sue but then they turn around and sue anyway, then you yourself will turn around and sue the lawyer who recommended the “walkaway” settlement. So you want to do this in the form of a release. This has its problems, too. The release is only as good as its language. If the release is “in full settlement of civil rights claims against defendants”, then you haven’t necessarily released the unlawful discharge claim. What about “in full settlement of any and all claims, known and unknown, whether based on federal, state, or other applicable law, arising out of my employment”? That’ll do.

Voluntary dismissals are one way to execute a settlement agreement, but the problem is that this dismissal is without prejudice, meaning that they can file the lawsuit later. Maybe you could get Rule 41(b) involuntary dismissal which would be with prejudice. Claim preclusion will then kick in and preclude whatever such a judgment on the merits would have covered. If you want more action on the part of the courts, you can ask for a consent decree, which is, in essence, a court order.

All four settlement scenarios described above have their advantages and disadvantages. Some will be quicker than others. For example, if you have to deal with a consent decree, you’ll have to invoke the jurisdiction of the court. Some will be more confidential than others. And some will be more enforceable than others. But usually no one type of settlement will have all the answers.

Matsushita Elec. Industrial Co. v. Epstein

There’s a California federal court case based on a breach of federal securities law. There’s a Delaware state claim based on the fiduciary duties of the directors under Delaware state law. Both claims are class actions. There is exclusive jurisdiction for the type of claims in the California suit in the federal courts. The rule is that the state court can settle claims that it could not have tried because of the full faith and credit statute, 28 U.S.C. § 1738. We could change the result of this case by statute.

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