Chaplin v. Consolidated Edison Co. of NY

Rule of Law:

A communication that expresses an inability to accept the specific terms of a 'take it or leave it' offer constitutes a rejection that terminates the offer. Once an offer is rejected, it is extinguished and cannot be subsequently accepted.

Facts:

• Consolidated Edison Company of New York, Inc. ('Con Ed') sent a settlement proposal to Phyllis Chaplin's attorney to resolve an employment discrimination lawsuit.
• After Chaplin's attorney noted objections, Con Ed's counsel responded with a letter stating the offer was available 'in its present form' on a 'take it or leave it' basis, clarifying that 'any further negotiation is an impossibility.'
• The next day, Chaplin's attorney replied in a letter that he was unable to convince his clients 'to accept the proffered terms' and that they had 'objections which have substantial merit.'
• On the same day Chaplin's attorney sent this letter, a new appellate court decision was issued that significantly weakened the legal basis of Chaplin's lawsuit against Con Ed.
• Thirteen days later, Chaplin's attorney sent a letter to Con Ed stating that his clients had a 'change of heart' and were now accepting the original settlement offer.
• Con Ed's counsel then informed Chaplin's counsel by telephone that the offer was no longer acceptable.

Procedural Posture:

• The Epilepsy Foundation of America and Phyllis Chaplin sued Consolidated Edison Company of New York, Inc. ('Con Ed') in federal district court, alleging employment discrimination under the Rehabilitation Act.
• Con Ed filed a motion to dismiss the action, which the court denied.
• During settlement negotiations, the parties exchanged correspondence regarding a proposed settlement agreement.
• After Con Ed stated its offer was no longer acceptable following Chaplin's purported acceptance, Chaplin filed a motion to enjoin Con Ed to execute the previously proposed Consent Agreement.