Opinion ID: 3015601
Heading Depth: 2
Heading Rank: 1

Heading: Enforcement of the alleged oral settlement.

Text: Beazer’s motion to specifically enforce the alleged oral settlement reached at the appellate mediation and to dismiss this appeal with prejudice must be rejected. Both Local Appellate Rule (LAR) 33.5 and sound judicial policy compel the conclusion that parties to an appellate mediation session are not bound by anything short of a written settlement. Any other rule would seriously undermine the efficacy of the Appellate Mediation Program by compromising the 9 confidentiality of settlement negotiations.4 Beazer requests enforcement of the alleged oral settlement but admits that there are genuine factual disputes regarding whether the parties actually reached an agreement.5 Mead correctly argues that we cannot resolve these disputes without violating the confidentiality rule, LAR 33.5(c). With exceptions not relevant here, Rule 33.5(c) provides that no one at the mediation session – neither mediator, counsel, nor party – may disclose “statements made or information developed during the mediation process.” The provision 4 Federal Rule of Appellate Procedure 33 gives appellate courts the power to order settlement conferences and to “implement[] any settlement agreement” reached as a result of such conferences. Fed. R. App. P. 33. The Third Circuit has established an Appellate Mediation Program to implement this general directive. Local Appellate Rule 33.0. The program is subject to the rules and procedures provided in the Local Appellate Rules. Id. 5 Beazer asserts that the parties reached an oral agreement at the mediation conference but that Mead’s management ultimately reneged on the agreement while it was being reduced to writing over the course of the following weeks. Mead contends that the parties only reached “a tentative resolution of some of the financial terms.” According to Mead, this resolution was non-binding because it exceeded Mead’s representatives’ settlement authority. According to Beazer, Mead’s representatives never indicated that the agreement reached at the mediation session was conditioned on subsequent approval by Mead’s management. 10 further provides that “the parties are prohibited from using any information obtained as a result of the mediation process as a basis for any motion or argument to any court.” LAR 33.5(c) (emphases added). Beazer cannot prove the existence or terms of the disputed oral settlement without violating this provision’s broadly stated prohibitions.6 Beazer argues that the rule is not so sweeping. Beazer concedes that it may not use information obtained at the conference in any argument going to the merits of the appeal, but contends that it must be able to use that information for the limited purposes of proving the existence and terms of a settlement. This argument is unpersuasive. First, the rule is stated in the broadest possible language and does not contemplate any such exception. Second, Beazer’s proposed exception would effectively undermine the rule and would compromise the effectiveness of the Appellate Mediation Program. A confidentiality provision “permits and encourages counsel to discuss matters in an uninhibited fashion often leading to settlement.” Lake Utopia Paper Ltd. v. Connelly Containers, Inc., 608 F.2d 928, 929 (2d Cir. 1979). If counsel know beforehand that the proceedings may 6 It is true that the rule also provides that “[n]otwithstanding the foregoing, the bare fact that a settlement has been reached as a result of mediation shall not be considered confidential.” LAR 33.5(c). However, this exception is unavailing. Beazer may assert the “bare fact” that a settlement was reached but may not offer any evidence supporting this assertion. Since Mead asserts that no settlement was reached, there is no way for us to resolve the dispute. 11 be laid bare on the claim that an oral settlement occurred at the conference, they will “of necessity . . . feel constrained to conduct themselves in a cautious, tight-lipped, non-committal manner more suitable to poker players in a high-stakes game than to adversaries attempting to arrive at a just resolution of a civil dispute.” Id.; see also Herrnreiter, 281 F.3d at 637 (“A motion to implement a conference settlement easily could be a strategy to pierce the confidentiality of the negotiations and inform the judges of the parties’ position, rather than to carry out an agreement actually reached.”). Third, Beazer’s proposed exception would require appellate courts to receive evidence and resolve factual disputes, tasks more properly suited to the district courts. See Herrnreiter, 281 F.3d at 637. We must also consider LAR 33.5(d), which provides that “[n]o party shall be bound by statements or actions at a mediation session unless a settlement is reached.” The rule further provides that “if a settlement is reached, the agreement shall be reduced to writing and shall be binding upon all parties to the agreement.” Mead argues that the most “straightforward” reading of this rule is that no agreement is binding until it is written. Mead’s reading is serial: 1) if the parties reach an agreement, 2) then that agreement shall be written down, and 3) then, and only then, the agreement shall be binding. However, the grammatical structure of the rule is consistent with a parallel construction: 1) if the parties reach an agreement, 2)a) then it shall be reduced to writing, and, 2)b) then it shall be binding. Under this reading, the agreement is binding because it has been reached, not because it has been written down. The “parallel” construction of Rule 33.5(d) — which would make oral settlement agreements binding on the parties 12 — is irreconcilable with Rule 33.5(c), because, as described above, there is no way to prove the existence or terms of a disputed oral settlement without violating the confidentiality provision. Therefore, we adopt Mead’s “serial” reading of Rule 33.5(d), according to which an agreement is not binding unless it is reduced to writing. We note that the Ninth Circuit adopted a serial interpretation of similar language in Barnett v. Sea Land Serv., Inc., 875 F.2d 741, 743-44 (9th Cir. 1989).7 Further, Judge Easterbrook’s opinion in Herrnreiter provides persuasive policy justifications for requiring written 7 As in this case, the parties in Barnett entered into mediation, but one of the parties refused to sign a settlement agreement prepared by another party after the mediation took place and argued that no settlement had been reached. Id. Relying on Local Rule 39.1, a confidentiality provision governing mediation proceedings in the Western District of Washington, the District Court prohibited the party seeking to enforce the alleged agreement from eliciting testimony from the mediator about whether a settlement had been reached. Id. Local Rule 39.1 is very similar to the Third Circuit’s LAR 33.5(c) & (d). After providing that mediation proceedings and statements are privileged, the rule states that “[n]o party shall be bound by anything done or said at the conference unless a settlement is reached, in which event the agreement upon a settlement shall be reduced to writing and shall be binding upon all the parties to that agreement.” Id. The Ninth Circuit interpreted this language to mean that “until a settlement is reduced to writing, it is not binding upon the parties.” Id. at 744. 13 settlements.8 In Herrnreiter the parties admitted that they had reached an oral settlement at a voluntary appellate mediation session but they did not agree on the terms. Id. at 636. The court denied the defendant’s motion to implement the oral settlement. Id. at 637. The court noted that there is no transcript of appellate mediation sessions and that settlement conference attorneys presiding over such sessions promise both sides that nothing that transpires at the conference will be revealed to the judges; the court finally observed that appellate courts are not well-positioned to conduct factfinding missions. Id. Accordingly, the court concluded that nothing short of a mutually satisfactory written settlement agreement could terminate an appeal. Id. “Any other approach would compromise the confidentiality of the negotiations, require the settlement attorneys to become witnesses in appellate factfinding proceedings, and substantially complicate the disposition of litigation.” Id. All of these concerns are equally present in this case. In fact, the argument for preserving confidentiality of proceedings is even stronger in this case, where participation in the appellate mediation program is mandatory and the mediation is directed by a court-employed mediator or a judicial officer. See In re Anonymous, 283 F.3d 627, 636-37 (4th Cir. 2002) (citation 8 If there are analogous local rules governing the Seventh Circuit’s appellate mediation program the Court in Herrnreitter did not address them. Rather, it interpreted the text of Fed. R. App. Pro. 33, which does not contain a confidentiality provision, and the practice of the Seventh Circuit’s Settlement Conference Office. 281 F.3d at 637-38. 14 omitted). Beazer complains that if Mead’s interpretation of Rules 33.5(c) and (d) is accepted then parties will be able to enter into oral agreements at settlement conferences and simply back out on a whim, significantly deterring the federal policy of encouraging settlements. See D.R. v. East Brunswick Bd. of Educ., 109 F.3d 896, 901 (3d Cir. 1997). Beazer also relies on our oft-repeated position that a written agreement is not necessary to render a settlement enforceable. See, e.g., Green v. John H. Lewis & Co., 436 F.2d 389, 390 (3d Cir. 1970) (citations omitted). Mead’s first argument is simply incorrect: if parties know beforehand that only a written settlement agreement is binding, they will be sure to memorialize their agreement in writing at the end of the mediation session. Its second argument is based on basic common law contract principles, see Main Line Theatres, Inc. v. Paramount Film Distributing Corp., 298 F.2d 801, 803 (3d Cir. 1962), and has no application where specific court rules provide otherwise. For all these reasons, Beazer’s motion to enforce the alleged oral settlement agreement and dismiss the appeal is denied. B. The District Court’s Referral to the Magistrate