Orlofsky ADR Services

Failure To Nail Down Scope Of Release Negates A Mediated Settlement

It is critical to nail down the scope of the contemplated release before concluding a mediation. Case in point: In Kaiser v. Trace, Inc., 2014 WL 1745419 (D.Idaho 2014), the parties reached an oral settlement of an employment discrimination case in a mediation, but did not write anything up. A follow-up email memorializing the terms of the settlement said only that “Defendant will prepare a standard release between the parties.” The draft settlement agreement submitted by the defendant to plaintiff contained three clauses in the release that the plaintiff would not agree to:

  1. plaintiff was barred directing prospective employers to the defendant for information,
  2. if defendant had to sue to enforce the agreement plaintiff would be responsible for defendant’s fees, and finally,
  3. plaintiff released the defendant, but defendant did not release the plaintiff.

Of particular concern to the plaintiff, not surprisingly, was the lack of a mutual release.

The court noted that, while the parties had agreed after the mediation that a settlement had been reached, given the differences on what should be in the release, the requisite meeting of the minds to create a binding settlement was lacking. Even if the above-mentioned clauses were part of Defendant’s “standard release,” which is what the parties agreed to, it was clear that Plaintiff did not intend to agree to such terms. Absent a true meeting of the minds, no settlement agreement had been reached.

While the lack of clarity in the terms of the released unraveled this settlement, the parties do not need to draft a complete release at the conclusion of a mediation. A simple sentence such as “the parties shall draft a full mutual release” will usually suffice. Additionally, any potentially contentious terms such as a fee provision or a confidentiality clause need to be spelled out during the mediation, because if they are not, the whole settlement may be in jeopardy.