Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-01-07029/USCOURTS-caDC-01-07029-0/pdf.json

Nature of Suit Code: 442
Nature of Suit: Civil Rights Employment
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 17, 2001 Decided January 18, 2002

No. 01-7029

Brenda Elaine Makins,

Appellant

v.

District of Columbia and

Francis J. Henderson, Acting Warden,

D.C. Department of Corrections Central Facility,

Appellees

Appeal from the United States District Court

for the District of Columbia

(98cv02693)

Gregory L. Lattimer argued the cause and filed the briefs

for appellant.

Carl J. Schifferle, Assistant Corporation Counsel, argued

the cause for appellees. With him on the brief were Robert

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R. Rigsby, Corporation Counsel, and Charles L. Reischel,

Deputy Corporation Counsel.

Before: Henderson, Randolph, and Rogers, Circuit

Judges.

Opinion for the Court filed by Circuit Judge Randolph.

Dissenting opinion filed by Circuit Judge Henderson.

Randolph, Circuit Judge: This appeal from a district court

order enforcing a settlement agreement presents an issue

much litigated in the other circuits but not yet decided by this

court--namely, under what circumstances, if any, may an

attorney without actual authority from his client bind the

client to a settlement agreement. We must also decide

whether to look to state or federal law in answering this

question.

I.

In November 1998, Brenda Makins brought an action

against the District of Columbia claiming sex discrimination

and retaliatory firing, in violation of Title VII (42 U.S.C.

s 2000e et seq.). Makins had been employed in the District's

Department of Corrections from 1995 until her discharge in

1997. Her complaint sought reinstatement, compensatory

damages, and attorney fees.

Makins' attorney, John Harrison, began representing her

in 1996, after she received a notice of termination from the

Department. Harrison and Makins did not have a written

retainer agreement. In the summer of 2000, at a pre-trial

conference, the district judge referred Makins' case to a

magistrate judge "for settlement purposes only" and ordered

the District to "have present at all settlement meetings ...

an individual with full settlement authority." The judge set

the case for trial in December 2000. Makins v. Dist. of

Columbia, No. CV-98-2693, mem. op. at 2 (D.D.C. Dec. 11,

2000). A few days later, the magistrate ordered the "lead

attorney(s) for the parties" to appear before him for a settlement conference; the order required that the "parties shall

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either attend the settlement conference or be available by

telephone for the duration of the settlement conference."

The conference, originally scheduled for August 22, took

place on September 12, 2000. Makins did not attend. After

two and a half hours of negotiations, Harrison and the

attorneys for the District reached an agreement to end the

case. Makins would receive $99,000 and have her personnel

records amended from "discharged" to "resigned" (to preserve her retirement benefits if she were able to attain other

federal employment). In return, Makins would dismiss her

claims against the District. The attorneys "shook hands" on

the deal and later reduced it to writing. A few days later,

when Harrison presented Makins with a copy for her signature, she refused to sign it. The District then filed a Motion

to Enforce Settlement. Makins retained another attorney

and the court held an evidentiary hearing in which Harrison,

Makins, and the lead attorney for the District testified.

The testimony of Makins and Harrison were at odds.

According to Makins, she never agreed to settle her case

under the terms Harrison and the District negotiated because

"getting [her] job back had to be part of any agreement."

She admitted wanting to settle the case and knowing that the

correctional facility in which she had worked was downsizing.

She claimed that Harrison waited until the night before the

conference to alert her to it and specifically told her not to

attend. She talked to Harrison several times during the

settlement negotiations on September 12. But she insisted

that she never agreed to the negotiated terms because, as she

expressed to Harrison in one of their cell phone conversations

that day, getting her job back was a condition to settling the

case. Although Makins swore in an affidavit, filed before the

hearing, that Harrison alerted her during the negotiations

that he was discussing the $99,000 figure, she testified that

she did not recall such a conversation.

Harrison disputed much of Makins' testimony. He said

they had extensively discussed the possibility of settlement

the day before the conference, that he discouraged her from

insisting on getting her job back, that he thought it made

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sense strategically for his client to remain at home so that

"the Judge couldn't put pressure on her to settle," that she

gave him a number where he could reach her on September

12, and that she told him to do "what you think is right, I

trust you." At the conference, each side presented its case

separately to the magistrate. The attorneys and the magistrate then sat at a table and negotiations began. On several

occasions, the magistrate sent one of the attorneys out of the

room and talked to the other about what he saw as strengths

and weaknesses in the case. By cell phone Harrison called

Makins when he was out of the room. He contends that she

agreed to settle for $99,000. Harrison testified that when the

District agreed to this figure, he called Makins immediately

and "told her that the 99 was done," to which she replied

"good." Harrison also stated that Makins did not express

any dissatisfaction with the settlement until several days later

when she refused to sign the papers in Harrison's office.

The District's attorney generally confirmed Harrison's account of the conference (although he did not know what

Harrison and his client had discussed by cell phone, or even if

they had discussions). In response to the District's offer of

approximately $80,000, Harrison said his client was still at

$120,000, or thereabouts. The District's attorney replied that

he would not settle the case for more than $100,000. Harrison left the room, cell phone in hand, and came back a few

minutes later. He said $99,000 would be fine but his client

wanted her records changed to show that she had resigned.

The District reluctantly agreed. Neither the attorney for the

District nor the magistrate spoke to Makins to confirm her

assent to the terms of the agreement.

The district court, observing the "sharp conflict" in testimony between Makins and Harrison, declined to resolve it.

Instead, the court assumed arguendo that Harrison did not

have actual authority to settle the case. The court granted

the District's motion to enforce the settlement on the alternative ground that Harrison had apparent authority to bind

Makins to the agreement. The court saw "no justification for

the District of Columbia not to reasonably believe that Mr.

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Harrison had the full confidence and authority of his client."

Mem. op. at 7.

II.

Settlement agreements are in the nature of contracts. See

Gaines v. Cont'l Mortgage & Inv. Corp., 865 F.2d 375, 378

(D.C. Cir. 1989). As in other contract negotiations, one or

both of the parties may insist that the terms be reduced to

writing and that only a signed agreement will be effective.

But not all contracts, and not all settlements, must be written

in order to be enforceable. The parties may orally agree

upon the material terms and intend to be bound. See United

States v. Mahoney, 247 F.3d 279, 285 (D.C. Cir. 2001).

"Lawsuits may, of course, be compromised by oral contract."

Autera v. Robinson, 419 F.2d 1197, 1198 n.1 (D.C. Cir. 1969);

see also Feltman v. Sarbov, 366 A.2d 137, 141 (D.C. 1976).

The attorney for Makins and the District agreed upon essential terms. That Makins refused to sign the settlement

papers is therefore not conclusive, a point she does not

debate. The question is whether the oral understanding

between the attorneys may be enforced against Makins--

whether, in other words, she was bound by the deal her

attorney negotiated.

The District urges us to adopt local law as the rule of

decision. Makins thinks we should devise federal law: the

case was brought in federal court; the cause of action is

derived from federal legislation; and the actions of attorneys

conducting federal litigation are of particular federal concern.

Apparently for these reasons, some federal courts agree with

Makins. See, e.g., Kinan v. Cohen, 268 F.3d 27, 32 (1st Cir.

2001); Malave v. Carney Hosp., 170 F.3d 217, 221 (1st Cir.

1999); Michaud v. Michaud, 932 F.2d 77, 79 n.3 (1st Cir.

1991); Fennell v. TLB Kent Co., 865 F.2d 498, 501 (2d Cir.

1986); Mid-South Towing Co. v. Har-Win, Inc., 733 F.2d

386, 386 (5th Cir. 1984). Makins also cites Alexander v.

Gardner-Denver Co., 415 U.S. 36, 52 & n.15 (1974), for the

proposition that federal law governs settlement agreements in

Title VII cases. The Supreme Court, after saying that an

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employee could enter into a voluntary settlement and waive

his cause of action under Title VII, added this: "In determining the effectiveness of any such waiver, a court would have

to determine at the outset that the employee's consent to the

settlement was voluntary and knowing," 451 U.S. at 52 n.15,

thus invoking the familiar test of Johnson v. Zerbst, 304 U.S.

458, 464 (1938). But this was dictum. The employee in

Alexander had not entered into a settlement. An arbitrator

had rejected his grievance charging racial discrimination.

The Court was not concerned with settlement agreements in

general, or with the authority of attorneys to enter into them.

The issue before the Court was whether the labormanagement arbitration, conducted pursuant to a collective

bargaining agreement, precluded the employee from bringing

a Title VII action alleging the same conduct. The Court's

remarks about settlements, contained in a footnote not citing

any authority, can hardly be taken as representing its considered judgment that state law should not be adopted in Title

VII cases. And we see no good reason why Title VII cases

should be singled out for different treatment in this respect

than other federal causes of action. Cf. Reeves v. Sanderson

Plumbing Prods., Inc., 530 U.S. 133, 148 (2000).

In any event, Makins has missed--as has the District--our

opinion in United States v. Mahoney, 247 F.3d at 285. We

there held that whether the parties have reached a settlement

is a matter of local law. For this conclusion we cited and

relied upon the decision in Quijano v. Eagle Maintenance

Service, Inc., 952 F. Supp. 1, 3 (D.D.C. 1998), that the

"enforcement of settlement agreements is governed by state

contract law." There are good reasons behind this.

The power of the federal courts to formulate law in this

area, and the need for national uniformity, are doubtful at

best, as Judge Easterbrook forcefully demonstrated in Morgan v. South Bend Community School Corp., 797 F.2d 471,

474-78 (7th Cir. 1986). In fact, our survey of the law

regarding settlements indicates that rather than national

uniformity in the federal courts, there is national disarray.

See generally Grace M. Giesel, Enforcement of Settlement

Contracts: The Problem of the Attorney Agent, 12 Geo. J.

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Legal Ethics 543, 563-80 (1999). We agree that "neutral

state laws that do not undermine federal interests should be

applied unless some statute (or the Constitution) authorizes

the federal court to create a rule of decision." Morgan, 797

F.2d at 475 (citing Miree v. DeKalb County, 433 U.S. 25, 28-

33 (1977)). There is also an advantage for members of the

bar to know that in negotiating settlements, the law governing the validity of their agreements will be the same in

federal and state court. Other federal courts of appeals

agree. The Seventh, Eighth, Tenth, and Eleventh Circuits,

and perhaps the Third, Fourth, and Ninth, now look to state

law in determining if a valid and enforceable settlement

agreement exists. See Pohl v. United Airlines, Inc., 213 F.3d

336, 338 (7th Cir. 2000); In re Airline Ticket Comm'n Antitrust Litig., 268 F.3d 619, 623 (8th Cir. 2001); United States

v. McCall, 235 F.3d 1211, 1213 (10th Cir. 2000); Hayes v.

Nat'l Serv. Indus., 196 F.3d 1252, 1254 & n.2 (11th Cir. 1999);

see also Tiernan v. Devoe, 923 F.2d 1024, 1032-33 (3d Cir.

1991); Auvil v. Grafton Homes, Inc., 92 F.3d 226, 230 (4th

Cir. 1996); Mallott & Peterson v. Director, Office of Workers'

Comp. Programs, 98 F.3d 1170, 1173 (9th Cir. 1996). Aside

from cases in which a settlement agreement is sought to be

enforced against the United States, see United States v.

Beebe, 180 U.S. 343, 352 (1901), or in which there is a statute

conferring lawmaking power on federal courts, see Textile

Workers v. Lincoln Mills, 353 U.S. 448, 451 (1957), we adopt

local law in determining whether a settlement agreement

should be enforced.

The local law on this subject is, unfortunately, not much

developed. The District of Columbia Court of Appeals treats

settlement agreements as contracts. See Goozh v. Capitol

Souvenir Co., 462 A.2d 1140, 1142 (D.C. 1983). In run-of-themill contract cases, the D.C. Court of Appeals relies on s 27

of the Restatement (Second) of Agency to determine whether

an agent has the authority to enter into a binding agreement

on behalf of the principal. See, e.g., Sigal Constr. Corp. v.

Stanbury, 586 A.2d 1204, 1218 (D.C. 1991) (citing Restatement (Second) of Agency s 27 (1958)). The local court distinguishes--as did the district court--between an agent's "actual

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authority" and his "apparent authority." Actual "authority,"

according to the Restatement's definition, means that the

agent has the power "to affect the legal relations of the

principal by acts done in accordance with the principal's

manifestations of consent to him." Restatement (Second) of

Agency s 7. For settlement purposes, attorney Harrison

possessed actual authority in certain respects. Makins manifested her consent to Harrison's attending the settlement

conference on September 12, to negotiating on her behalf and,

if her testimony is believed, to settling the case, but only on

the condition that she got her job back.

We must assume arguendo--because the district court did

so--that Makins never gave Harrison actual authority to

settle the case without the condition she specified. Still, it

does not necessarily follow that because the settlement agreement lacked that condition it cannot be enforced. As agents

for their clients, attorneys without actual authority may have

"apparent authority" to bind their clients to agreements.

The local court has not, however, addressed the precise

question presented here: may an attorney negotiating in the

client's absence bind the client to a settlement agreement if

the attorney has led opposing counsel to believe he had actual

authority from the client to settle the case?

On the other hand, an opinion of the local court--not cited

by the District and the only one we have found dealing with

an attorney's authority to settle a case--holds that "regardless of the good faith of the attorney, absent specific authority, an attorney cannot accept a settlement offer on behalf of a

client." Bronson v. Borst, 404 A.2d 960, 963 (D.C. 1979). On

the face of it, the statement leaves no room for apparent

authority. If this is the meaning of Bronson, the case is at

odds with the same court's later pronouncement in Goozh that

the enforcement of settlement agreements is governed by the

law applicable to the making of contracts generally, and with

its adoption of the Restatement position that an agent lacking

actual authority may nevertheless bind the principal to an

agreement with a third party if the agent has apparent

authority. Bronson may be explained on the basis that the

suit was brought by the attorney against the client to enforce

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the settlement in order to recover his contingent fee, and that

at least as between an attorney and client, the court would

not allow recovery if the attorney entered into the settlement

against the client's wishes. This is consistent with s 383 of

the Restatement (Second) of Agency, although the court did

not mention it. Bronson, unlike this case, did not deal with

the interests of a third party who entered into the settlement

with the attorney. The third party in Bronson, an insurer,

was not named in the lawsuit. There was thus no occasion

for the court to consider whether an opposing party could

enforce a settlement agreement when the other party's attorney possessed only apparent authority.

Given the vintage of Bronson, the fact that the local court

has never again relied upon the portion of the opinion quoted,

the distinctions we have just mentioned, and the absence of

any recent cases on point, the content of local law is so much

in doubt that we are reluctant to take the statement in

Bronson at face value. Makins herself concedes that if

Harrison had apparent authority--as she views it--the agreement he negotiated could be enforced. Brief for Appellant at

14. We have therefore undertaken an analysis of whether

Harrison had apparent authority, which puts us in the position of deciding--to borrow from Judge Friendly--what the

local court would think on a question about which it has never

thought. Nolan v. Transocean Air Lines, 276 F.2d 280, 281

(2d Cir. 1960).

Apparent authority may be defined as the "power to affect

the legal relations of another person by transactions with

third persons, professedly as agent for the other, arising

from, and in accordance with the other's manifestations to

such third persons." Restatement (Second) of Agency s 8;

see Am. Soc. of Mech. Eng'rs, Inc. v. Hydrolevel Corp., 456

U.S. 556, 566-68 (1982). Apparent authority, according to the

widely-accepted rule in the Restatement, can arise from "written or spoken words or any other conduct of the principal

which, reasonably interpreted, causes the third person to

believe that the principal consents to have the act done on

[her] behalf by the person purporting to act for [her]." Id.

s 27. While actual authority depends on communications

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between the client and the attorney--the principal and the

agent--apparent authority under the Restatement turns on

the client's communication to the third party, here the District of Columbia. As the D.C. Court of Appeals put it,

"apparent authority is derived from the principal's representations to the third-party rather than to the agent." Sigal

Constr. Corp., 586 A.2d at 1218.

Given the local court's adoption of the Restatement, and its

willingness to look at treatises to establish the general rules

of law pertaining to agency issues, see Insurance Management of Wash., Inc. v. Eno & Howard Plumbing Corp., 348

A.2d 310, 312 (D.C. 1975) (citing 3 G. Couch, Insurance

s 26:75 (2d ed. 1960) to establish the general rule for the

apparent authority of an insurance agent), the local court

faced with this issue might turn to the recently-issued Restatement (Third) of the Law Governing Lawyers to aid

analysis. The Restatement of the Law Governing Lawyers

parallels the Restatement of Agency's approach to authority:

"A lawyer's act is considered to be that of the client in

proceedings before a tribunal or in dealings with a third

person if the tribunal or third person reasonably assumes

that the lawyer is authorized to do the act on the basis of the

client's (and not the lawyer's) manifestations of authorization." Restatement (Third) of the Law Governing Lawyers

s 27 (1998). To this the Restatement adds: "Apparent authority exists when and to the extent a client causes a third

person to form a reasonable belief that a lawyer is authorized

to act for the client"; and "Generally a client is not bound by

a settlement that the client has not authorized the lawyer to

make by express, implied, or apparent authority...." Id.

cmts. b & d. It then offers the following illustration:

Lawyer represents Client in a civil action in which the

court orders counsel to appear at a pretrial conference

with authority to settle the case or to arrange for the

presence of a person so authorized. Client has not been

informed of the order and has not authorized Lawyer to

approve a settlement. Lawyer, without disclosing that

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lack of authority, attends the conference and agrees to a

settlement. Client is not bound by the settlement.

Id. s 27, cmt. d, illus. 3. The reasoning behind this begins

with the principle that certain decisions in litigation are the

client's, and the client's alone to make. Like the decision to

enter a plea of guilty or to pursue an appeal in a civil or

criminal case, the decision whether to settle a case and on

what terms is reserved to the client. Id. s 22(1); see also

D.C. Rules of Prof'l Conduct R. 1.2(a) ("A lawyer shall

accept a client's decision whether to accept an offer of settlement of a matter."). As to settlements, the client therefore

must manifest to the third party that his lawyer has the

authority to compromise the case. If the matter is in doubt,

third parties can protect themselves by "obtaining clarification of the lawyer's authority." Restatement (Third) of the

Law Governing Lawyers s 27 cmt. d. Settlements are thereby facilitated while the client's prerogatives are preserved.

The key here is that the client, not the lawyer, must

indicate to the third party that the lawyer is authorized to

act. We have applied this rule to attorney-client transactions

in a context other than settlement, see Williams v. WMATA,

721 F.2d 1412, 1416-17 (D.C. Cir. 1983). But not all courts

agree. The Sixth Circuit, interpreting Michigan law, held

that "when a client hires an attorney and holds him out as

counsel representing in a matter, the client clothes the attorney with apparent authority to settle claims connected with

the matter." Capital Dredge & Dock Corp. v. City of Detroit,

800 F.2d 525, 529 (6th Cir. 1986). The Restatement (Third)

of the Law Governing Lawyers treats this as a minority

approach. The general rule, embodied in the decisions of

other federal courts relying on both federal and state law, and

a much-quoted passage from a Supreme Court opinion are

against the notion that merely retaining a lawyer is enough

for this purpose. See, e.g., Michaud, 932 F.2d at 80; Fennell,

865 F.2d at 502; Edwards v. Born, Inc., 792 F.2d 387, 390 (3d

Cir. 1986); Auvil, 92 F.3d at 230-31; see also Autera, 419

F.2d at 1201 n.18; accord Woodson v. UPS, No. 91-C6452,

1993 WL 280759, at *2 (N.D. Ill. July 26, 2001); Evans v.

Skinner, 742 F. Supp. 30, 31 (D.D.C. 1990); Ashley v. Atlas

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Mfg. Co., 7 F.R.D. 77, 77 (D.D.C. 1946), aff'd, 166 F.2d 209

(D.C. Cir. 1948). As the Supreme Court put it a century ago:

"the utter want of power of an attorney, by virtue of his

general retainer only, to compromise his client's claim, cannot, we think, be successfully disputed." United States v.

Beebe, 180 U.S. at 352. The Restatement makes the same

point: although "simply retaining a lawyer confers broad

apparent authority on the lawyer" regarding some matters, it

"does not extend to matters, such as approving a settlement,

reserved for client decision...." Restatement (Third) of the

Law Governing Lawyers s 27 cmt. a; see also id. s 27 cmt. d.

The District thinks Makins did more than just retain

Harrison. It contends that she "participated in the settlement proceeding through her phone conversations with her

attorney." Brief for Appellees at 23. Neither the District

nor the magistrate ever heard from Makins, in person or by

telephone. What the District derives from the telephone calls

between Makins and Harrison amounts to nothing more than

Harrison's representations of--and the District's educated

guesses about--what was said in private between them, a

disputed factual question the district court did not resolve.

The district court found that:

[Harrison] had represented Makins against the District of

Columbia since 1996 when he was retained before the

adverse action. He then represented Ms. Makins at the

time she filed her EEO complaint. Finally, he was

retained to represent her in the present lawsuit which

was filed in 1998.

Mem. op. at 6 (emphasis added). As we have stated, many

courts hold that retaining a lawyer is not enough to confer

apparent authority to settle the case. The district court also

emphasized that Harrison fulfilled his duties as an attorney

by filing pleadings, answering motions, and so forth. Id. at

6-7. But if we followed the majority rule, this would not be

enough. The client's manifestations to the third party must

be with respect to settlement, not the general conduct of the

litigation. See Auvil, 92 F.3d at 230. If it were otherwise, an

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attorney would nearly always have apparent authority to end

the case despite the wishes of his client.

It may not be crucial that the settlement conference took

place before the magistrate. The District suggests that it

had more reason for believing Harrison in that setting. But

Harrison had a duty of truthful representation, not only to

the magistrate in court, but also to the District outside the

courtroom. See D.C. Rules of Prof'l Conduct R. 4.1(a). We

have seen nothing in the record to prove that Harrison told

the magistrate he had authority to settle the case on the

terms ultimately agreed upon. Neither Harrison nor counsel

for the District testified to that effect.

The district court thought the opinion of the D.C. Court of

Appeals in Feltman v. Sarbov, 366 A.2d at 138-39, strongly

supported the District's position. The suit was for damages

arising from a lessor's breach of his attorney's oral promise to

the lessee of a parking lot. The parties had entered into a

written lease, with the lessee dealing exclusively with the

attorney. When the lease was about to expire, the attorney

convinced the lessee to renew, promising that the right of

first refusal and the provision regarding the garage concession contained in the initial lease would remain in effect.

Later, the attorney approached the lessee and asked him to

vacate the premises, this time promising that he would get

the garage concession in a new building about to be constructed. The lessor had already entered into an agreement

to develop the property, thereby abrogating the lessee's right

of first refusal; and when the new building was constructed,

the lessee did not receive the garage concession the attorney

promised. See id.

The D.C. Court of Appeals, holding that the attorney had

apparent authority, sustained the award of damages to the

lessee. "Apparent authority arises," the court wrote, "when a

principal places an agent in a position which causes a third

person to reasonably believe the principal had consented to

the exercise of authority the agent purports to hold. This

falls short of an overt, affirmative representation by a principal," 366 A.2d at 139 (internal quotations omitted). To this

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the court added: "The apparent authority of an agent arises

when the principal places the agent in such a position as to

mislead third persons into believing that the agent is clothed

with authority which in fact he does not possess." Id. at 140

(internal quotations omitted). There is nothing particularly

remarkable about these statements of law. They merely

remind that apparent authority can arise from something

other than statements of the principal, a proposition the

Restatement (Second) of Agency embraces (see s 27 cmt. a

and s 49 cmt. c). The "something other" usually consists of

"the ordinary habits of persons in the locality, trade or

profession"--in other words, custom and usage. See Restatement (Second) of Agency s 49 cmt. c; Restatement (Third)

of the Law Governing Lawyers s 21 cmt. e (referring to

matters ordinarily in the discretion of the lawyer). In Feltman, the court therefore relied upon the facts that the

"attorney not only had drafted the lease but also handled all

the negotiations with regard to its initial execution, its renewal, and its premature termination." 366 A. 2d at 140. This

long course of dealing, in which the lessor held out "the

attorney as the person with whom the lessee should deal," id.,

conferred apparent authority on the attorney.

For several reasons we are reluctant to treat Feltman as

dispositive. For one thing, the case did not deal with a

settlement agreement, which at least under the Restatement

of the Law Governing Lawyers is in the special category of

matters reserved exclusively for the client's decision.

(Whether the local courts would treat settlements in this

manner remains to be seen.) The Feltman court, though,

placed no special emphasis on the attorney-client relationship.

For another thing, Feltman rests on the several transactions

between the attorney and the lessee, in the attorney's negotiating and reaching contractual agreements on behalf of the

lessor. The settlement of a lawsuit, however, is typically the

only contractual agreement the parties reach in litigation and

one would therefore not expect to see a course of dealing of

the sort present in Feltman.

Still, it may be that it is customary for lawyers in the

District to enter into binding, oral settlement agreements

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without the opposing side receiving some manifestation of

assent--orally or in writing (as in a signature on an agreement)--from the client. But the District put on no evidence

to this effect and there is nothing to indicate that the District

had reason to believe, from previous interactions with Makins,

that certain conduct on the part of Harrison was authorized.

It may also be that the D.C. Court of Appeals would decide

that a client's authorizing his attorney to attend a settlement

conference and negotiate on the client's behalf is, in itself,

enough to confer apparent authority. See Capital Dredge &

Dock Corp. v. City of Detroit, 800 F.2d at 529. But see Auvil

v. Grafton Homes, Inc., 92 F.3d at 230-31; Giesel, supra, at

573-74 (citing similar cases). This would be an extension of

Feltman and we are unsure whether the court would take the

step.

Because of our uncertainty about whether local law supports a finding of apparent authority in this case, and because

of the importance of determining when a lawyer has apparent

authority to settle a case, we have decided to ask the D.C.

Court of Appeals for its views. See Tidler v. Eli Lilly & Co.,

851 F.2d 418, 426 (D.C. Cir. 1988); Joy v. Bell Helicopter

Texitron, Inc., 999 F.2d 549, 563-64 (D.C. Cir. 1993). Pursuant to D.C. Code s 11-723, the following question is certified

to the D.C. Court of Appeals:

Under District of Columbia law, is a client bound by a

settlement agreement negotiated by her attorney when

the client has not given the attorney actual authority to

settle the case on those terms but has authorized the

attorney to attend a settlement conference before a

magistrate judge and to negotiate on her behalf and

when the attorney leads the opposing party to believe

that the client has agreed to those terms?

So ordered.

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Karen LeCraft Henderson, Circuit Judge, dissenting:

"The little plaintiff or defendant, who was promised a new

rocking-horse when Jarndyce and Jarndyce should be settled,

has grown up, possessed himself of a real horse, and trotted

away into the other world."

--Charles Dickens, Bleak House 52 (Norman Page ed.,

Penguin Books 1971) (1853)

In my view, the majority has misconstrued District of

Columbia (District or D.C.) agency principles and has erroneously certified a question whose answer is clear. As a result,

it has further delayed the enforcement of a valid settlement

agreement between the District and the appellant, Brenda E.

Makins. Accordingly, and for the reasons set forth below, I

dissent.

Makins makes two separate challenges to the district

court's order enforcing the September 12, 2000 settlement.

First, citing dicta from Alexander v. Gardner-Denver Co.,

415 U.S. 36, 52 n.15 (1974), she contends that the district

court committed reversible error by failing to determine

whether she had "voluntarily and knowingly" entered into the

agreement. Br. of Appellant at 10-14. Second, she argues

that the district court applied the incorrect legal standard in

deciding that her then-lawyer, John Harrison, had apparent

authority to settle her Title VII action. See id. at 14-18.

The majority correctly rejects the first of Makins's claims.

Her assertion that "settlement agreements resolving Title

VII claims must be entered into 'voluntarily and knowingly'

by the plaintiff before the court will find that [she] has waived

[her] federally protected right to seek redress," id. at 11, is

unsupported by any holding of the United States Supreme

Court or of any court of appeals. Indeed, the only court to

rule on the issue held that the voluntary-and-knowing standard "is not the applicable standard when reviewing a case in

which the employee [seeking relief under Title VII] was

represented by an attorney who settled the matter on the

employee's behalf." Hayes v. Nat'l Serv. Indus., 196 F.3d

1252, 1254 n.2 (11th Cir. 1999) (emphasis added). In any

case, nothing in the text of Title VII requires that settlement

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of a suit thereunder be entered "voluntarily and knowingly."

See generally 42 U.S.C. s 2000e et seq.

In addressing Makins's second claim, the majority properly

adheres to the principle that "neutral state [rules] that do not

undermine federal interests should be applied unless some

statute (or the Constitution) authorizes the federal court to

create a rule of [federal law]." Maj. op. at 7 (quoting Morgan

v. South Bend Cmty. Sch. Corp., 797 F.2d 471, 475 (7th Cir.

1986)). Like the majority, I see no reason to exempt this

case from the general rule that "enforcement of settlement

agreements is [an issue] governed by state contract law."

Maj. op. at 6. Thus, I agree that District of Columbia agency

principles govern the enforceability of the settlement between

the District and Makins. I dissent, however, because the

majority's interpretation of those principles--and its certification to the D.C. Court of Appeals for clarification thereof--is,

in a word, unsettling.

The District's certification statute states that its Court of

Appeals

may answer questions of law certified to it by ... a

Court of Appeals of the United States ... if there are

involved in any proceeding before any such certifying

court questions of law of the District of Columbia which

may be determinative of the cause pending in such

certifying court and as to which it appears to the certifying court there is no controlling precedent in the decisions of the District of Columbia Court of Appeals.

D.C. Code s 11-723(a) (emphasis added). Consistent with

the statute, we recently held that "[i]n deciding whether to

certify a case we look to whether local law is 'genuinely

uncertain' with respect to a dispositive question ... and to

whether the 'case is one of extreme public importance[.]' ...

If, however, there is a 'discernible path for the court to

follow,' then we do not stop short of deciding the question."

Dial A Car, Inc. v. Transp., Inc., 132 F.3d 743, 746 (D.C. Cir.

1998) (citations omitted). I believe the prerequisites mentioned in Dial A Car preclude us from certifying the question

posed by the majority. Plainly, the issue of whether HarriUSCA Case #01-7029 Document #652203 Filed: 01/18/2002 Page 17 of 24
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son had apparent authority to bind Makins under D.C. agency

principles is a "dispositive" one. And I am willing to concede,

at least arguendo, that the scope of a lawyer's settlement

authority is a matter of "extreme public importance." Nonetheless, I am not convinced that D.C. law is "genuinely

uncertain" with respect to the question the majority certifies.

The majority believes that the extraordinarily narrow question it poses is one "about which [the D.C. Court of Appeals]

has never thought." Maj. op. at 9. Of this there is probably

little doubt. The certification standard under D.C. Code

s 11-723, however, is not whether the Court of Appeals has

ruled precisely on the issue before us but simply whether its

case law gives us a "discernible path ... to follow" in

deciding the broader question: Under what circumstances

does a lawyer have apparent authority to effect a settlement

on behalf of his client?

The majority recognizes that "the D.C. Court of Appeals

relies on s 27 of the Restatement (Second) of Agency to

determine whether an agent has the authority to enter into a

binding agreement on behalf of the principal." Maj. op. at 7

(citing Sigal Constr. Corp. v. Stanbury, 586 A.2d 1204, 1219

(D.C. 1991)). And it acknowledges that, under section 27,

apparent authority arises from "written or spoken words or

any other conduct of the principal which, reasonably interpreted, causes the third person to believe that the principal

consents to have the act done on [her] behalf by the person

purporting to act for [her]." Id. at 9 (quoting Restatement

(Second) of Agency s 27 (1958)) (emphasis added). Mistakenly, however, the majority then throws in the towel, declining to decide what D.C. case law makes clear: retaining a

lawyer and holding him out as the individual with whom the

opposing party should negotiate is sufficient to confer apparent authority to settle the client's case.

In Feltman v. Sarbov, 366 A.2d 137 (D.C. 1976)--one of the

cases upon which the district court expressly relied--the D.C.

Court of Appeals declared:

Apparent authority arises when a principal places an

agent "in a position which causes a third person to

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reasonably believe the principal had consented to the

exercise of authority the agent purports to hold. This

falls short of an overt, affirmative representation by a

principal." ... [That is, apparent authority] arises when

the principal places the agent in such a position as to

mislead third persons into believing that the agent is

clothed with authority which in fact he does not possess.

Id. at 139-40 (citations omitted); see also Sigal Constr. Corp.,

586 A.2d at 1218-19 (same standard); Mgmt. P'ship, Inc. v.

Crumlin, 423 A.2d 939, 941 (D.C. 1980) (same standard). As

the majority observes, this "not[ ] particularly remarkable"

pronouncement reminds us that apparent authority can be

created "from something other than statements of the principal." Maj. op. at 14. Citing the Restatement (Third) of the

Law Governing Lawyers--upon which, it surmises, the D.C.

Court of Appeals would rely in deciding a case like this one,

see id. at 10--the majority limits the "something other" to

what it calls "custom and usage." Id. at 14. While custom

and usage are undoubtedly factors to consider when determining the existence of apparent authority, see Crumlin, 423

A.2d at 941, the limitation is unwarranted; Feltman contemplates apparent authority if the principal merely "places an

agent in a position" that reasonably suggests authority.

Feltman, 366 A.2d at 139 (emphasis added); see also Crumlin, 423 A.2d at 941 (for apparent authority to attach, "it is

essential that the principal have put the agent in a position

where the power exercised would normally be within the

reasonable scope of authority").

The majority's reluctance to accept Feltman at face value,

Maj. op. at 14, is baffling. That "the case did not deal with a

settlement agreement," id., does not render it inapplicable

here. As Goozh v. Capitol Souvenir Co., 462 A.2d 1140 (D.C.

1983), makes clear, in the District of Columbia "settlement

agreements are entitled to enforcement under general principles of contract law." Id. at 1142 (citation omitted) (emphasis

added). Indeed, because D.C. "law favors the settlement of

controversies," a "settlement will be enforced as any other

contract." Id. (citation omitted) (emphasis added).

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Furthermore, Bronson v. Borst, 404 A.2d 960 (D.C. 1979), a

decision the majority cites, is consistent with Feltman and

Goozh. Contrary to the majority's suggestion, Maj. op. at 8,

Bronson's declaration that "regardless of the good faith of the

attorney, absent specific authority, an attorney cannot accept

a settlement offer on behalf of a client," Bronson, 404 A.2d at

963, leaves plenty of room for apparent authority. The

statement in Bronson means nothing more than that a lawyer

cannot end his client's case without either actual or apparent

authority. As the majority itself explains, the Bronson litigation "was brought by the attorney against the client to

enforce the settlement in order to recover his contingent fee."

Maj. op at 8-9. Because "Bronson, unlike this case, did not

deal with the interests of a third party who entered into the

settlement with the attorney," the court simply had "no

occasion ... to consider whether an opposing party could

enforce a settlement agreement when the other party's attorney possessed only apparent authority." Id. at 9. In other

words, Bronson is inapposite. If governing D.C. precedent

were uncertain, certification and concomitant delay would be

justified. But because the applicable D.C. case law--i.e.,

Feltman--is clear, I would decide the matter before us

without further delay.

Moreover, I believe the local courts follow the Sixth Circuit's view that "when a client hires an attorney and holds

him out as counsel representing him in a matter, the client

clothes the attorney with apparent authority to settle claims

connected with the matter." Capital Dredge & Dock Corp. v.

City of Detroit, 800 F.2d 525, 530 (6th Cir. 1986) (applying

Michigan law). As the District demonstrates, see Br. of

Appellee at 18, the facts of Feltman bear out this analysis.

In Feltman, the court found that a lawyer had apparent

authority to bind his client to a lease because the lawyer had

drafted the lease and "handled all the negotiations with

regard to its initial execution, its renewal, and its premature

termination." Feltman, 366 A.2d at 140. The lessor (i.e., the

principal) argued that he had not made any express representations directly to the lessee (i.e., the third party); apparent

authority attached nonetheless because the lessor "held out

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this attorney as the person with whom the lessee should

deal." Id. Resisting this conclusion, the majority quotes

from the United States Supreme Court's decision in United

States v. Beebe, 180 U.S. 343, 352 (1901): "[T]he utter want of

power of an attorney, by virtue of his general retainer only, to

compromise his client's claim, cannot, we think, be successfully disputed." Maj. op. at 12. The D.C. court's view, however,

is not inconsistent with the Supreme Court's--that is, both

courts reject the Restatement's proposition that "[t]he manifestation of the principal may be made ... to a third person

... by continuously employing the agent." Restatement

(Second) of Agency s 8 cmt. b (emphasis added).

The majority also expresses concern that, under Feltman,

"an attorney [will] nearly always have apparent authority to

end the case despite the wishes of his client." Maj. op. at 12-

13. But "nearly always" overstates the case; whether the

client has made clear her lawyer's authority by placing him in

a position of authority--e.g., by sending him to a settlement

conference--is only the first half of the inquiry. For apparent authority to attach, the client's manifestation must also

"cause[ ] a third person to reasonably believe the principal

ha[s] consented to the exercise of authority the agent purports to hold." Feltman, 366 A.2d at 139. In my view, the

D.C. Court of Appeals has wisely declined to adopt a standard

under which a lawyer's representation of his settlement authority is unreliable as a matter of law if the client herself has

made no direct representations to opposing counsel. Such a

standard, it seems to me, "would require litigants to go

behind counsel to the opposing party in order to verify

authorization for every settlement offer." Capital Dredge,

800 F.2d at 531. Indeed, such a standard could render the

settlement process "unworkable." Id. at 532.

Finally, I take issue with the majority's suggestion that the

location of settlement negotiations may not affect the apparent authority analysis under D.C. law. Maj. op. at 13. True,

a lawyer has "a duty of truthful representation, not only to

the magistrate in court, but also to the District outside the

courtroom." Id. (citing D.C. Rules of Prof'l Conduct R.

4.1(a)). Yet the majority ignores the likelihood that a "solUSCA Case #01-7029 Document #652203 Filed: 01/18/2002 Page 21 of 24
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emn statement ... made in open [c]ourt ... as to the terms

of the settlement," Ashley v. Atlas Mfg. Co., 7 F.R.D. 77, 77

(D.D.C. 1946), aff'd, 166 F.2d 209 (D.C. Cir. 1948), may well

make more reasonable a third party's belief that the lawyer

has authority to settle than would an out-of-court statement.

For the foregoing reasons, I would hold that the district

court employed the proper apparent authority standard. See

Makins v. Dist. of Columbia, No. CV-98-2693, mem. op. at 6

(D.D.C. Dec. 11, 2000) (quoting Crumlin, 423 A.2d at 941;

Feltman, 366 A.2d at 139). Moreover, because we look only

for clear error when reviewing the district court's factual

findings, see Foretich v. ABC, 198 F.3d 270, 273 (D.C. Cir.

1999), I would affirm its holding that "[o]n the facts presented

here ... Harrison had apparent authority to settle the case

for $99,000 without job reinstatement." Makins, mem. op. at

6. The "facts presented here," as the district court found

them, are as follows:

[Harrison] had represented Makins against the District

of Columbia since 1996 when he was retained before the

adverse action. He then represented Ms. Makins at the

time she filed her EEO complaint. Finally, he was

retained to represent her in the present lawsuit which

was filed in 1998....

[In the present lawsuit, Harrison] carried out all the

duties an attorney ordinarily carries out in terms of filing

pleadings, answering motions, appearing at the pretrial

after filing a complete pretrial statement, and participating in the [settlement conference] with breaks to place

telephone calls to his client....

Id. at 6-7. Also, as the majority recognizes, Makins authorized Harrison "to attend [the] settlement conference before

[the] magistrate judge and to negotiate on her behalf." Maj.

op. at 15. In other words, under the D.C. approach, Makins

"placed [Harrison] in a position" that led the District to

believe he had authority to settle her case.

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For at least two reasons, I am convinced the district court

correctly held that that belief was reasonable. See Makins,

mem. op. at 6. First, although the magistrate judge ordered

the "lead attorney(s) for the parties" to appear before him at

the settlement conference, he permitted the parties to absent

themselves so long as they were "available by telephone for

the duration of the settlement conference."* Maj. op. at 2-3

(quoting Makins v. Dist. of Columbia, No. CV-98-2693, mag.

order at 2 (D.D.C. July 7, 2000)). By all outward appearances, Makins was available by telephone for the duration of

the conference. Harrison, in fact, left the conference at least

three times to discuss with Makins by telephone the status of

the proceedings. See Makins, mem. op. at 2. The third

time, he returned with telephone in hand to accept the

District's offer with the new condition that Makins's forms be

amended to reflect resignation instead of termination. See

JA 144-45. These circumstances, taken together, reasonably

suggested to the District that Makins was actively involved in

the bargaining and specifically told Harrison to settle only if

the District agreed to alter her forms. Second, although the

majority "see[s] nothing in the record to prove that Harrison

told the magistrate he had authority to settle the case on the

terms ultimately agreed upon," Maj. op. at 13, I do. Before

adjourning the settlement conference, the magistrate judge

asked the lawyers to confirm that the terms of "the parties'

agreement" were the exchange of $99,000 and the aforemen-

__________

* The magistrate judge's order permitting availability by telephone follows the district court's rules of alternative dispute resolution:

The Court will require, whenever possible, that representatives

of the parties with authority to bind them in settlement discussion be present or available by telephone during settlement

negotiations and ADR proceedings.

LcvR, App. A, Part II, Sec. 11C (cited in Br. of Appellee at 24).

Although the September 12, 2000 settlement conference was not an

ADR proceeding, the magistrate judge's order supports the District's argument that its belief in Harrison's authority was reasonable because Makins's availability "by telephone rather than in

person was not unusual in any way." Br. of Appellee at 24.

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tioned amendment of Makins's records for dismissal of the

suit with prejudice. JA 30 (emphasis added). Both Harrison

and counsel for the District affirmed that those were, indeed,

the terms. See id. Harrison's "solemn" representation in

open court that the parties (including Makins) had that

agreement bolsters the reasonableness of the District's belief

that Harrison had authority to settle on Makins's behalf. Cf.

Ashley, 7 F.R.D. at 77.

I would, therefore, affirm the district court's order enforcing the settlement.

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