Makins v. District of Columbia
2002 U.S. App. LEXIS 780, 277 F.3d 544, 349 U.S. App. D.C. 303 (2002)
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Rule of Law:
The enforceability of a settlement agreement in a federal case based on a federal question is governed by local contract and agency law. Under these principles, a client may be bound by a settlement agreement negotiated by their attorney if the attorney possessed apparent authority, which must be derived from the client's manifestations to the opposing party.
Facts:
- Brenda Makins was employed by the District of Columbia's Department of Corrections from 1995 until her discharge in 1997.
- Makins retained attorney John Harrison to represent her in a sex discrimination and retaliatory firing claim against the District of Columbia.
- Makins and Harrison did not have a written retainer agreement.
- In September 2000, a court-ordered settlement conference was held before a magistrate judge, which Makins did not attend, though she was available by telephone.
- During the conference, Harrison negotiated an oral settlement agreement with the District's attorneys for $99,000 and a change in Makins's personnel records from 'discharged' to 'resigned'.
- Harrison claimed Makins agreed to these terms during several phone calls made from the conference.
- Makins claimed she never consented to the settlement because her non-negotiable condition of getting her job back was not included.
- A few days after the conference, when Harrison presented the written settlement agreement to Makins, she refused to sign it.
Procedural Posture:
- Brenda Makins filed a lawsuit against the District of Columbia in the U.S. District Court for the District of Columbia, alleging violations of Title VII.
- The District Court referred the case to a magistrate judge for a settlement conference.
- Following Makins's refusal to sign the settlement agreement, the District of Columbia filed a Motion to Enforce Settlement in the District Court.
- The District Court held an evidentiary hearing on the motion.
- The District Court granted the District's motion, ruling that although the attorney may have lacked actual authority, he possessed apparent authority to bind Makins to the settlement.
- Makins (appellant) appealed the District Court's order to the U.S. Court of Appeals for the D.C. Circuit, with the District of Columbia as the appellee.
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Issue:
Under District of Columbia law, is a client bound by a settlement agreement negotiated by her attorney when the client did not give the attorney actual authority to settle on those terms, but did authorize the attorney to attend a settlement conference and negotiate on her behalf?
Opinions:
Majority - Randolph, Circuit Judge
Undecided. The court holds that local D.C. law, not federal common law, governs the enforcement of settlement agreements, but because D.C. law regarding an attorney's apparent authority to settle a case is uncertain, the court certifies the question to the D.C. Court of Appeals for a definitive ruling. The court reasoned that while D.C. law follows the Restatement of Agency, which requires a principal's (client's) manifestations to the third party to create apparent authority, it is unclear whether a client's act of authorizing an attorney to attend a settlement conference and negotiate is a sufficient manifestation. Citing the general rule from United States v. Beebe, the court noted that merely retaining a lawyer does not confer authority to settle. Given the conflicting interpretations of D.C. cases like Feltman v. Sarbov and Bronson v. Borst, and the importance of the issue, certification is the appropriate course.
Dissenting - Henderson, Circuit Judge
Yes. A client is bound by a settlement agreement under these circumstances because the client clothed the attorney with apparent authority. The dissent argues that existing D.C. case law, particularly Feltman v. Sarbov, provides a 'discernible path' and makes certification unnecessary. Under D.C. law, apparent authority is created when a principal places an agent in a position that causes a third party to reasonably believe the agent has authority. By retaining Harrison and authorizing him to attend the settlement conference and negotiate, Makins placed him in such a position. The District's belief in his authority was reasonable, and requiring opposing counsel to directly verify authority with the client would render the settlement process 'unworkable'.
Analysis:
This decision highlights the critical tension between a client's ultimate control over the decision to settle and the need for finality in settlement negotiations. By deferring to local law and certifying the question, the court underscores principles of federalism, allowing state courts to define the scope of the attorney-client agency relationship even in federal question cases. The eventual answer from the D.C. Court of Appeals will establish a key precedent for litigation practice in the District, clarifying whether authorizing an attorney to attend a settlement conference is, by itself, a sufficient client 'manifestation' to create binding apparent authority.
