Platcher v. Health Professionals, Ltd.

549 F. Supp. 2d 1040, 2008 U.S. Dist. LEXIS 29542, 2008 WL 1722240

• Court: District Court, C.D. Illinois
• Decided: April 10, 2008
• Docket: 04-cv-1442
• Status: Published

Opinion

OPINION AND ORDER

JOE BILLY McDADE, District Judge.

Before the Court is a Motion to Enforce Settlement [Doc. 176] filed by Plaintiff. Multiple State Defendants filed a Re sponse [Doc. 185]. This matter was referred to U.S. Magistrate Judge Byron G. Cudmore for a Report and Recommendation. Judge Cudmore recommended that the Motion to Enforce be allowed. The multiple state defendants then filed a Response [Doc. 188] in which they objected to the Report and Recommendation. Plaintiff in turn filed a Memorandum in Opposition [Doc. 189]. For the following reasons, the Report and Recommendation is ADOPTED and the Motion to Enforce Settlement is GRANTED.

I.

BACKGROUND

The underlying action in this case involves a claim under 42 U.S.C. § 1983. Plaintiff brings his claim on behalf of the estate of Charles Platcher who was incarcerated at Menard Correctional Center. Plaintiff alleges that Defendants, who worked at Menard Correctional Center’s Health Care Unit, stripped and beat Mr. Platcher while he was incarcerated. They then kept him in an extremely cold cell until he died of hypothermia.

Because the parties expressed an interest in settling this matter, Judge Cudmore mediated this case. The mediation lasted from June 29, 2007 through December 10, 2007 and a great majority of the mediation took place over the phone and through facsimile. Neither party disputes Judge Cudmore’s description of the mediation which is as follows:

Plaintiff was represented during the mediation by counsel Peter Bustamante. The main attorney contact for the State Defendants was Attorney Ed Huntley, chief legal counsel for the Illinois Department of Corrections (“IDOC”). During the course of the mediation, the scope of the discussions centered exclusively upon the amount of compensation to be paid.

On November 28, 2007, Judge Cudmore conducted a mediation in chambers. The in person mediation again focused almost 100% on the degree of compensation to be paid. Other minor issues concerning the time frame for payment and Defendants’ willingness to present certain persons as witnesses in the remainder of the trial were also discussed. It should be noted that Plaintiffs case is also pending against Health Professionals, Ltd., Dr. Baig, and Dr. Ahmed. While the in person mediation moved the compensation discussions forward, full closure was not reached.

After the in person mediation, Judge Cudmore continued to work ex parte through telephone and facsimile to move the parties toward closure. On December 10, 2007, a facsimile from Plaintiffs counsel was received by the undersigned as mediator advising that Plaintiff accepted the State Defendant’s monetary offer and that a settlement with the Department of Correction Defendants had been reached. Plaintiff accepted the monetary offer in settlement exactly as the final offer made from the IDOC. Certain other minor issues were contained in Attorney Busta-mante’s notice to Judge Cudmore that a settlement had been reached. Those minor issues had been previously discussed with Judge Cudmore as mediator and communicated to Attorney Huntley.

Based upon the receipt of the facsimile from Attorney Bustamante, Judge Cud-more immediately contacted Attorney Huntley by telephone and advised that Plaintiff had accepted the State Defendants’ offer and that the matter had been settled. Judge Cudmore faxed Attorney Huntley a copy of Plaintiffs December 10, 2007 acceptance. Judge Cudmore asked that an attorney be selected by Attorney Huntley to craft a settlement agreement. Judge Cudmore then entered its standard 30-day order (d/e 174) which indicated that a mediated settlement had been reached with IDOC.

At this point, it appears that things began to unwind. On January 28, 2008, Plaintiff filed the instant Motion to Enforce Settlement and Judge Cudmore learned for the first time that IDOC required some type of confidentiality clause in the settlement agreement. Judge Cud-more spoke with attorneys for IDOC and directed them to file a response to Plaintiffs Motion. In a rather ironic twist, IDOC filed an initial Response without requesting that their attached exhibits be filed under seal. Thus, before Judge Cud-more corrected IDOC’s mistake and directed IDOC to file a request to seal, the settlement agreement, which supposedly needs to be kept confidential, was temporarily made available in the public record by Defendants.

Nevertheless, Defendants filed their corrected Response and Judge Cudmore recommended that this Court grant the Motion to Enforce. Specifically, Judge Cudmore relied upon recent precedence in Dillard v. Starcon Intern., Inc., 483 F.3d 502 (7th Cir.2007), in which the Seventh Circuit affirmed a decision to decline to enforce a confidentiality provision when the confidentiality provision was never discussed during negotiations in front of the magistrate judge. Judge Cudmore noted that the parties had never discussed the relevant confidentiality provisions during negotiations. Instead, negotiations focused almost entirely on the settlement amount. As a result, Judge Cudmore distinguished this case from Higbee v. Sentry Insurance Co., 253 F.3d 994 (7th Cir.2001), where the Seventh Circuit enforced a confidentiality clause where negotiations had clearly involved issues of confidentiality. The Seventh Circuit recognized that confidentiality provisions are not material as a matter of law, and only if they have been a part of the negotiations should a court consider them to be a material provision.

Based upon this authority, Judge Cud-more held that there was an oral contract in place between the parties and the parties had not included the confidentiality agreement within the material terms discussed during the creation of that oral contract. As a result, Judge Cudmore recommended that the Motion to Enforce be granted.

II.

ANALYSIS

Defendants now make two arguments for rejecting Judge Cudmore’s analysis: First, Defendants argues that including such confidentiality provisions are part of the custom and practice of agencies in Illinois and as a result, Plaintiffs counsel was constructively on notice that this was a material provision relevant to the settlement. And secondly, Defendants argue that, based upon conversations during the settlement negotiations, Plaintiff contemplated that a confidentiality clause would be included.

Defendants’ first argument is that it is the custom and practice of Illinois state agencies to include such confidentiality clauses in their settlement agreements. Defendants do not cite any authority or reference any evidence to support this position. They simply state that two of Plaintiffs counsel formerly worked for the General Law Bureau of the Illinois Attorney General and as a result, they were aware of the policy.

First this argument is perfunctory and underdeveloped and should not be considered. Hershinow v. Bonamarte, 735 F.2d 264, 266 (7th Cir.1984). Defendants do not provide any internal memorandum or affidavits from the Attorney General’s office to support their position that it is the policy of all Illinois state agencies to get a confidentiality agreement in each and every settlement. Furthermore, Defendants do not point to any authority which states that if a party’s counsel has formerly been involved in similar litigation, then his client is considered on notice regarding all the terms that are often included in settlement agreements that come out of that type of litigation.

Secondly, if this is the policy of all Illinois state agencies, then all counsel representing Illinois state agencies would be aware of the importance of bringing up terms during settlement negotiations that are material to the actual settlement. The Seventh Circuit decided Dillard in April of last year, long before the negotiations at bar commenced. There, our Appellate Court held that if a defendant wishes to tack on a confidentiality agreement and argue that the term is material long after a final agreement is reached on the settlement amount, then the defendant must have at least discuss the proposed confidentiality agreement during negotiations. 1 Dillard, 483 F.3d at 508-09.

Defendants’ second argument is that Plaintiff actually contemplated a confidentiality clause in this case. Defendants do not dispute that a confidentiality clause was never discussed prior to the creation of the oral contract between the parties. Defendants only argue that after they entered into oral contract and after they presented their written draft at the direction of Judge Cudmore, Plaintiffs counsel behaved in a way that evidenced that his client had contemplated a confidentiality clause. Specifically, they state that Plaintiffs counsel told Defendants that “his clients wished to be able to discuss the terms and conditions of the settlement with their family members and certain friends (which would have been prohibited by the clause as originally drafted), but that the plaintiffs and their attorneys had no interest in sharing details of the settlement with representatives of the media.” [Doc. 188.] However, the fact that Plaintiffs counsel may have shown a willingness to take a less demanding confidentiality clause to his client after the parties had entered into an oral contract, does not evidence that Plaintiff himself had contemplated a confidentiality agreement at the time the oral contract was formed.

Furthermore, when Plaintiffs counsel first learned of the confidentiality agreement, Plaintiffs counsel specifically objected to the confidentiality agreement in the harshest terms. Plaintiffs counsel stated in an e-mail that “[i]f the defendants are going to insist on a confidentiality clause the plaintiff will ask for significant additional consideration.” [Doc. 189, ex. B.] This does show that the confidentiality agreement came as a surprise to Plaintiff and was not a term that Plaintiff had contemplated at the time the oral agreement was made.

Accordingly, Plaintiffs arguments objecting to Judge Cudmore’s report and recommendation are without merit. If a confidentiality agreement was a material term, it should have been raised during negotiations.

IT IS THEREFORE ORDERED that the Motion to Enforce Settlement is GRANTED and Judge Cudmore’s Report and Recommendation is ADOPTED in its entirety. This case is referred back to Magistrate Judge Cudmore for any additional proceedings.

REPORT AND RECOMMENDATION

BYRON G. CUDMORE, United States Magistrate Judge:

This case is before the Court for a Report and Recommendation on Plaintiffs Motion to Enforce Settlement (d/e 176) and State Defendants’ Joint Amended Response (d/e 185). U.S. District Judge McDade referred the matter to the undersigned for a Report and Recommendation. (See Text Order of February 19, 2008.) For the reasons below, it is recommended that Plaintiffs Motion to Enforce Settlement (d/e 176) be ALLOWED.

The undersigned conducted a mediation in the above cause between the dates of June 29, 2007 and December 10, 2007. A great majority of that mediation took place telephonically and through facsimile. Plaintiff was represented during the mediation by counsel Peter Bustamante. The main attorney contact for the State Defendants was Attorney Ed Huntley, chief legal counsel for the Illinois Department of Corrections. During the course of the mediation, the scope of the discussions centered exclusively upon the amount of compensation to be paid.

On November 28, 2007, the Court conducted a mediation in chambers. The Plaintiff participated through Peter Busta-mante and Thomas O’Donnell. The State Defendants participated through counsel Ed Huntley. The in person mediation again focused almost 100% on the degree of compensation to be paid. Other minor issues concerning the time frame for payment and Defendants’ willingness to present certain persons as witnesses in the remainder of the trial were also discussed. It should be noted that Plaintiffs case is also pending against Health Professionals, Ltd., Dr. Baig, and Dr. Ahmed. While the in person mediation moved the compensation discussions forward, full closure was not reached.

After the in person mediation, the Court continued to work ex parte through telephone and facsimile to move the parties toward closure.

On December 10, 2007, a facsimile from Plaintiffs counsel was received by the undersigned as mediator advising that Plaintiff accepted the State Defendant’s monetary offer and that a settlement with the Department of Correction Defendants had been reached. Plaintiff accepted the monetary offer in settlement exactly as the final offer made from the Illinois Department of Corrections. Certain other minor issues were contained in Attorney Busta-mante’s notice to the Court that settlement had been reached. Those minor issues had been previously discussed with the undersigned as mediator and communicated to Attorney Huntley.

Based upon the receipt of the facsimile from Attorney Bustamante, the Court immediately contacted Attorney Huntley by telephone and advised that Plaintiff had accepted the State Defendants’ offer and that the matter had been settled. The undersigned faxed Attorney Huntley a copy of Plaintiffs December 10, 2007 acceptance. 1 The Court asked that an attorney be selected by Attorney Huntley to craft a settlement agreement forthwith. The Court entered its standard 30-day order (d/e 174) which indicated that a mediated settlement had been reached with the Illinois Department of Corrections Defendants.

At this time, the Court presumed full closure would be reached quickly through the execution of a pro forma settlement agreement.

On January 28, 2008, Plaintiff filed the instant Motion to Enforce Settlement (d/e 176). For the first time, the Court learned that the Illinois Department of Corrections Defendants required some type of confidentiality clause in the settlement agreement with Plaintiff. On January 29, 2008, the undersigned held a telephone conference with counsel Thomas O’Donnell, Andrew Ramage, and Ed Huntley concerning Plaintiffs Motion (d/e 176). Defendants were directed to file a response by February 14, 2008, and the Court took the matter under advisement.

On February 14, 2008, State Defendants filed a joint response (d/e 183) which, unfortunately, contained exact copies of the proposed settlement agreement, and was therefore in the public filing milieu until a second motion was filed (d/e 184) and a request to seal the original motion was allowed. In the State Defendants’ Joint Amended Response (d/e 185), it was summarily argued that the confidentiality terms sought are standard procedure in any settlement with a State of Illinois Defendant, and therefore reasonably was contemplated by the parties as part of the bargain.

DISCUSSION

The Court’s analysis herein is controlled by the underlying history of the mediation, and by Seventh Circuit precedent. As stated above, the history of the mediation and settlement focused almost 100% on the degree of compensation to be paid to Plaintiff by the Illinois Department of Corrections Defendants. The other aspects of the negotiation were minor. The negotiations at no time focused in any way on confidentiality. Confidentiality was never mentioned by the State Defendants nor the Plaintiff until the Court received Plaintiffs Motion to Enforce Settlement. A case very similar to the instant case was recently decided by the Seventh Circuit. In Dillard v. Starcon Intern., Inc., 483 F.3d 502 (7th Cir., 2007), the parties had orally negotiated certain terms. The terms of the oral settlement again focused primarily upon the degree of compensation to be paid, but also contained other material aspects. Once the oral settlement was entered into in Dillard, Starcon requested additional terms to be placed in the written settlement agreement, including a confidentiality provision. Dillard filed a motion to enforce the oral agreement. Magistrate Judge Arlander Keys found that the parties had reached a meeting of the minds on all material terms of the agreement. Judge Keys concluded the oral agreement was sufficiently definite in all material terms and the disputes that subsequently arose over the written agreement centered upon nonmaterial terms. Accordingly, Judge Keys ordered the oral settlement enforced. Judge Keys declined to enforce the confidentiality provision.

In a well reasoned decision before Chief Judge Easterbrook, Judge Kanne, and Judge Sykes, Judge Sykes writing for the Court affirmed the decision of Magistrate Judge Keys that the oral contract was enforceable and the other points of contention raised during the settlement document drafting were immaterial.

Judge Sykes distinguished another Seventh Circuit case, Higbee v. Sentry Insurance Co., 253 F.3d 994 (7th Cir., 2001) wherein the Court found that confidentiality clauses, nondisparagement clauses, and release provisions were material terms. The Court pointed out that the settlement negotiations in Higbee clearly involved the issues of confidentiality and nondisparagement. Therefore, those terms were material. Judge Sykes went on to note that Higbee does not stand for the proposition that these provisions (confidentiality / non-disparagement) are material as a matter of law.

Taking the same reasoning from Dillard, the undersigned is convinced there was a meeting of the minds on all material aspects for settlement in this case on December 10, 2007. Further, that at no time prior to that meeting of the minds was the issue of confidentiality broached in any way by the Plaintiff and/or the Illinois Department of Corrections Defendants. The fact that the Department of Corrections Defendants now want a confidentiality provision in the written settlement agreement does not negate the analysis from Dillard. If confidentiality had been important, it should have been raised during the mediation and would have been a material negotiated item of settlement. It was not and Defendants must bear that consequence.

WHEREFORE, for all of the above reasons, the Court RECOMMENDS that Plaintiffs Motion to Enforce Settlement (d/e 176) be ALLOWED and that settlement be enforced in accord with Plaintiffs facsimile of December 10, 2007. Boilerplate clauses concerning release and no admission of fault should, of course, be included in a settlement agreement Plaintiff and the State Defendant should execute. No attorneys fees awarded.

Any objections to this Report and Recommendation must be filed in writing with the Clerk of the Court within ten working days after service of a copy of this Report and Recommendation. See 28 U.S.C. § 636(b)(1). Failure to timely object will constitute a waiver of objections on appeal. Video Views, Inc. v. Studio 21, Ltd., 797 F.2d 538, 539 (7th Cir.1986). See also Local Rule 72.2.

1 . In reality, if there are material terms that have not been included in the oral agreement, but will be brought to bear once drafting begins, then a party should make their oral offer contingent upon hammering out the written terms. Dillard, 483 F.3d at 508-09.

1 . The Court does not attach the December 10, 2007 facsimile hereto as that document was received by the undersigned in his confidential role as mediator, however, to make the record complete for any future review, copies of the December 10, 2007 facsimiles are directed to be filed in the case UNDER SEAL to be viewed only by order of Court.