No reneging on settlement

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A group of public employees who agreed to a settlement with their employer in open court cannot renege on the deal, the Seventh Circuit held on March 19.

However, it is likely that it is only because they waived their strongest argument — lack of mutual consideration — why they should be able to backout.

Five African-American employees sued the Kankakee Police Department, alleging race discrimination.

On Sept. 12, the day of trial, they notified the court that they had reached a settlement. Among other terms, the settlement required the city to engage in a number of practices to prevent discrimination, and required the payment of $67,000 in attorney fees to the employees’ attorney, Christopher Bent.

The agreement was read in open court, and all five employees stated that they supported the settlement.

However, the agreement needed to be presented to the city council for approval.

Two days later, one of the employees said he no longer agreed to the settlement.

Nevertheless, on Sept. 22, after the city council approved the settlement, the case was dismissed.

On Sept. 30, the other plaintiffs also repudiated the settlement, and on Oct. 2, the employees moved to set aside the settlement.

The district court denied the motion to alter or amend the judgment, and the Seventh Circuit affirmed, in a decision by Judge Diane S. Sykes.

Because the employees were represented by counsel, the agreement is presumed to be knowing and voluntary.

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The employees attempted to overcome the presumption by claiming that their attorney engaged in misconduct, but the court rejected the argument.

The court noted that the employees had input into the terms of the settlement, that they were given extra time to negotiate on the morning of trial, and that the employees all indicated their assent to the settlement on the record.

In addition, the district court found that the terms of the settlement were favorable for the employees.

The employees also argued that the settlement was not binding, because they received no consideration; only their attorney did. Rejecting the argument, the court noted that the employees received value, in the form of changes to hiring policies.

Finally, the employee argued that the Sept. 12 agreement was invalid because it lacked mutuality of obligation, given that it was subject to approval by the Kankakee City Council.

However, this argument was not raised in the district court, so the court treated it as waived on appeal.

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David Ziemer can be reached by email.