Equal Employment Opportunity Commission v. Kidman

244 F. App'x 70

• Court: Court of Appeals for the Ninth Circuit
• Decided: April 23, 2007
• Docket: Nos. 04-17005, 04-17489
• Status: Published

Opinions

MEMORANDUM

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Richard and Shauna Kidman, dba as RD’s Drive in/Exxon, appeal the district court’s order enforcing a settlement agreement between the Kidmans, four of their employees, and the EEOC.¹ The Kidmans asked their employees at RD’s to sign an English-language-only policy. Four employees refused and brought an action with the EEOC against the Kidmans, alleging violations of Title VII. On September 3, 2003, the parties participated in a settlement conference before a federal magistrate judge. At the end of the day, they represented that they had reached a settlement.

Over the following weeks, however, the parties disputed whether various terms belonged in the agreement. The district court held an evidentiary hearing to determine two issues: whether the parties had reached a settlement on September 3, and if so, the terms of the settlement. After a two-day hearing, the district court issued an order finding that the parties had agreed to a settlement with nine terms.

On appeal, the Kidmans argue that four non-agreed-to terms — terms that they did not want as part of the settlement — were material to the agreement reached during the September 3 conference. Consequently, they assert, there was no meeting of minds on all material terms and the district court therefore erred in enforcing the September 3 agreement.

As a threshold matter, the Kid-mans contend that the district court improperly applied federal common law in determining that the parties had reached a settlement. We review a district court’s choice of law de novo. Torre v. Brickey, 278 F.3d 917, 919 (9th Cir.2002). In Stroman v. W. Coast Grocery Co., 884 F.2d 458, 461 (9th Cir.1989), we stated that “[t]he interpretation and validity of a release of claims under Title VII is governed by federal law.” Stroman explained that the creation of a federal rule, rather than absorption of a state rule, is appropriate where the rights of the litigants and the operative legal policies derive from a federal source. Stroman, 884 F.2d at 461 (citing Fulgence v. J. Ray McDermott & Co., 662 F.2d 1207, 1209 (5th Cir.l981)(affirming a district court order enforcing an oral Title VII settlement agreement)). Therefore, we find that the district court properly applied federal common law in determining that the parties reached a settlement.

Common law requires a meeting of the minds on all material terms before a settlement agreement can be reached. See Callie v. Near, 829 F.2d 888, 891 (9th Cir.1987); Restatement (Second) Contracts § 17. It also requires that the parties manifest an objective intent to be bound by the settlement. Id. The Kid-mans argue that they did not manifest an intent to be bound by the terms of the September 3 agreement.

The district court conducted a two-day evidentiary hearing in which it considered 52 documents and the testimony of seven witnesses. The district court found that the Kidmans could not be believed when they testified that they would not have formed or manifested an intent to be bound absent a written and signed document. Courts accord particular deference to findings based on a district court’s determination of witness credibility. Anderson v. Bessemer City, N.C., 470 U.S. 564, 575, 105 S.Ct. 1504, 84 L.Ed.2d 518 (1985) (“[Wjhen a trial judge’s finding is based on his decision to credit the testimony of one of two or more witnesses, each of whom has told a coherent and facially plausible story that is not contradicted by extrinsic evidence, that finding, if not internally inconsistent, can virtually never be clear error.”). Accordingly, the district court’s holding on this issue is not clearly erroneous.

The Kidmans also argue that four terms that they did not want included as part of the settlement were in fact material terms. Materiality turns on what the parties considered a fundamental part of settlement at the time of formation. Here, the materiality inquiry is primarily factual. Therefore, we review the district court’s materiality determinations for clear error. See Salve Regina College v. Russell, 499 U.S. 225, 233, 111 S.Ct. 1217, 113 L.Ed.2d 190 (1991); Tolbert v. Page, 182 F.3d 677, 681 (9th Cir.1999) (en banc).

We hold that it was not clear error for the district court to find that the four terms in dispute were outside the settlement agreement reached on September 3. The district court appropriately conducted an evidentiary hearing to determine which terms had been important to the parties during the settlement conference. See, e.g., Callie, 829 F.2d at 891. In its order, the district court stated that it could enforce the material terms of a settlement agreement. The district court then analyzed the various terms in dispute and found nine material terms. There is nothing in the district court’s order to indicate that it did not consider the materiality of the four terms in dispute. Furthermore, the district court resolved the dispute over those terms in the Kidmans’ favor, and it would be inequitable to permit the Kid-mans to use their success as a means of invalidating the settlement. For these reasons, we affirm the district court’s finding that these four terms were immaterial to the settlement.

The Kidmans further argue that the Arizona Statute of Frauds and the doctrine of anticipatory repudiation bar enforcement of the settlement agreement. However, applying the Statute of Frauds would have undermined the federal preference for resolving discrimination claims through voluntary agreement of the parties. See, e.g., Stroman, 884 F.2d at 460-61; Moore v. City of San Jose, 615 F.2d 1265, 1271 (9th Cir.1980). Moreover, anticipatory repudiation is inapplicable in this case because the EEOC did not unequivocally indicate that it would refuse to perform the terms of the settlement; it merely sought to have those terms enforced. See Kirkland v. Legion Ins. Co., 343 F.3d 1135, 1141 (9th Cir.2003).

Finally, on cross appeal, the EEOC contends that the district court erred by failing to enumerate the parties’ agreed-upon conditions for any re-adoption of an English-only policy. In essence, the EEOC is not seeking a reversal of the judgment of the district court; it is merely requesting clarification of one of the terms in the order — “term # 4.” The district court specifically retained jurisdiction, pending this appeal, to clarify and enforce the terms of the order. (ER 571-72.) Accordingly, we direct the EEOC to the district court for a clarification of term # 4.

Therefore, the judgment of the district court is AFFIRMED.

This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by Ninth Circuit Rule 36-3.

1 . The Plaintiff-Intervenors have joined in the EEOC's appeal.