The California Supreme Court has issued an opinion holding that depending on the provisions in a settlement agreement, attorneys who approve the agreement as to form and content may also be bound by the substantive provisions of the agreement.
In Monster Energy v Schechter, Case No. S251392 (July 11, 2019), Plaintiffs Wendy Crossland and Richard Fournier sued Monster Energy Company for products liability and wrongful death of their daughter. The daughter had gone to a mall where she drank two energy drinks causing cardiac arrest and death.
The parties settled the matter. The agreement contained several different confidentiality provisions including; stating that it was made on behalf of the “parties and their attorneys…”; that the “parties and their attorneys..” understand and agree that they will keep the agreement confidential; and that the “parties and their attorneys “… agree and covenant,… not to publicly disclose certain facts about the agreement. (Id. at 2-3.) In short, all of the pertinent provisions regarding confidentiality referenced not only the parties but “their attorneys” as well.
The parties signed the agreement and the attorneys signed “approving as to form and content “ only. (Id. at 3-4.)
Thereafter, defendant Bruce Schechter gave an interview to “LawyersandSettlements.com” in which he discussed the case although refusing to reveal the exact settlement amount due to confidentiality. (Id. at 4.)
Monster Energy sued Schechter and his law firm for breach of contract, breach of the implied covenant of good faith, unjust enrichment and promissory estoppel.
Defendants filed a special motion to strike the complaint pursuant to California Code of Civil Procedure Section 425.16. The trial court denied the motion as to the breach of contract claim but granted it as to the other causes of action. The California Court of Appeals reversed, holding that the motion should be granted as to the breach of contract action as well. (Id. at 5.)
The California Supreme Court reversed the decision of the appellate court, concluding that the notation of approving as to form and content “…does not preclude a factual finding that counsel both recommended their clients sign the document and intended to be bound by its provisions.” (Id. at 1.) (emphasis original)
While the Court agreed that the usual meaning of “approved as to form and content” “…affirms that counsel has read the document, it embodies the parties’ agreement, and counsel perceives no impediment to his client signing it.” (citation omitted.) (Id. at 12.), the Court noted that the inquiry did not end there.
To the Court, the salient point was the pertinent confidentiality provisions in the agreement referencing both the parties and their attorneys. Because the attorneys were included in such language, the Court held that they were substantively bound by those provisions even though counsel signed only “approving as to form and content”. (Id. at 12-14.):
We conclude that an attorney’s signature on a document with a notation that it is approved as to form and content does not, as a matter of law, preclude a factual finding that the attorney intended to be bound by the document’s terms. The intent question requires an examination of the agreement as a whole, including substantive provisions referring to counsel. Ultimately, that question would be resolved by the trier of fact. (Id. at 17.)
In my years as both a practicing attorney and as a mediator, I have seen many settlement agreements containing confidentiality provisions. As an attorney, I have signed “approving as to form and content.” As a mediator, I have reviewed them along with the attorneys. Based on this decision, I am now sensitive to the fact that depending on how the agreement is worded, counsel “approving as to form and content” may be signing to more than just that!
… Just something to think about.
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