Stoudmire v. U.S. Xpress Enterprises, Inc.
OPINION. Signed by Honorable Judge Myron H. Thompson on 4/3/13. (djy, )
IN THE DISTRICT COURT OF THE UNITED STATES FOR THE
MIDDLE DISTRICT OF ALABAMA, NORTHERN DIVISION
U.S. XPRESS, INC.,
CIVIL ACTION NO.
charging race discrimination against his former employer,
defendant U.S. Xpress, Inc.
He claims that the company’s
conduct violated Title VII of the Civil Rights Act of
1964, as amended (42 U.S.C. §§ 1981a, 2000e to 2000e–16).
Jurisdiction is proper under 28 U.S.C. § 1331 (federal
question) and 42 U.S.C. § 2000e–5(f)(3) (Title VII).
case is now before this court on motions from Stoudmire
(to set aside the court’s previously entered judgment and
reinstate the case, abrogate the settlement agreement
between the parties, and require his former attorney to
return a fee and dismiss a fee lien) and U.S. Xpress (to
enforce the settlement agreement).
Stoudmire was a truck driver for U.S. Xpress, a
After he was injured on the job, he
brought a lawsuit in state court to recover claimed
workers’ compensation benefits.
That lawsuit concluded
in a settlement between Stoudmire, lacking an attorney
resigns his employment and releases employer ... from any
and all claims he has or may have in connection with his
Petition and Settlement (Doc. No. 11-1) at
The state court approved the settlement.
retained an attorney, Julian McPhillips, to represent him
in a race-discrimination lawsuit against U.S. Xpress.
Stoudmire was a “no-good nigger.”
No. 6) ¶ 10.
Amended Compl. (Doc.
Stoudmire complained about the incident to
the company’s human relations department, and, several
months later, the department responded, telling him that
unspecified disciplinary action had been taken against
contacted Stoudmire again, this time to tell him that he
was being transferred to a job that Stoudmire believed
was far less desirable than his current position.
alleged that the company gave him an ultimatum: he had to
decide, immediately, whether to accept the transfer or
resign his employment with U.S. Xpress.
He chose to
leave the company.
He contended that his supervisor was
never actually disciplined and, on the contrary, the
complained about discrimination.
Shortly after this federal lawsuit began, U.S. Xpress
filed a motion to dismiss.
Among other reasons for
dismissing the case, the company argued that the prior
released U.S. Xpress from “any and all claims [Stoudmire]
has or may have in connection with his employment,”
waived the former employee’s right to bring the current
Def.’s Br. (Doc. No. 11-6) at
18-19 (quoting Petition and Settlement (Doc. No. 11-1) at
McPhillips was surprised to see the argument, as
understood the workers’ compensation settlement (which he
disability-related claims only.
He was astounded to
discrimination claim in settling that lawsuit, a wholly
unrelated matter to the present case, as he saw it.
McPhillips researched the issue and concluded that
there was a substantial chance that the court would
dismiss this federal case on the basis of the earlier
state-court settlement; the attorney also feared that
there was some risk that Stoudmire would be subject to
sanctions for bringing a claim he had already waived.
settling the matter (and not contesting the motion to
dismiss) for a small sum.
McPhillips and U.S. Xpress
agreed to another settlement, this one for $ 2,500.
Although McPhillips was disappointed with the figure, he
thought it was the best result he could obtain for
Stoudmire, given the perceived likelihood of dismissal.
Stoudmire met McPhillips in the attorney’s office to
discuss the proposal.
A written agreement was prepared
and ready for signing.
Stoudmire’s and McPhillips’s
recollections and interpretations of the meeting diverge.
Stoudmire states that McPhillips did not afford him time
to read the full agreement and that the attorney did not
explain adequately the agreement’s provisions, instead
imploring him to sign without delay.
telling, the attorney bore down on him and demanded that
contrast to that version of events, that he explained the
agreement fully and afforded Stoudmire more than adequate
time to read it and ask questions.
The attorney concedes
that Stoudmire expressed hesitation, but he maintains
that Stoudmire was eventually convinced that signing was
in his best interest.
Regardless of how the decision was
transmitting it to U.S. Xpress.
This court dismissed
this federal lawsuit pursuant to the parties’ agreement.
Days later, McPhillips, having received the promised
$ 2,500 from U.S. Xpress, contacted Stoudmire to remit
Stoudmire told the attorney that he had a
change of heart.
He refused to accept the payment,
discrimination claim regardless of whether McPhillips
representation, explaining that he believed Stoudmire was
bound by the settlement and he could no longer pursue the
As stated, this case is now before this court on the
following motions: Stoudmire’s motions to set aside the
court’s previously entered judgment and reinstate the
parties, and require his former attorney to return a fee
he paid and dismiss a fee lien; and U.S. Xpress’s motion
to enforce the settlement agreement.
A district court ordinarily has the power to enforce
a settlement agreement entered into by litigants while
litigation is pending before that court.
Jowers v. Bd.
of Pardons & Paroles, 2013 WL 424726, at *1 (M.D. Ala.
Feb. 4, 2013) (Thompson, J.) (citing Mass. Cas. Ins. Co.
voluntarily dismiss the lawsuit, but a subsequent dispute
over the settlement arises, the court may adjudicate the
retained jurisdiction to do so.
Kokkonen v. Guardian
1. The Eleventh Circuit has adopted as precedent all
decisions of the former Fifth Circuit rendered prior to
October 1, 1981. Bonner v. City of Prichard, 661 F.2d
1206, 1207 (11th Cir. 1981) (en banc).
Life Ins. Co., 511 U.S. 375, 381-82 (1994).
court’s prior judgment dismissing the case expressly
“leave to any party to file, within 49 days, a motion to
have the dismissal set aside and the case reinstated or
the settlement enforced, should the settlement not be
Judgment (Doc. No. 13).
Now, since a
reinstate the case so that the court can adjudicate
whether the parties have a settlement agreement that
should be enforced.
settlement agreement has been reached by the parties,
federal courts have differed on the source of law to
Courts have decided, on some occasions, that
federal common law governs and, on other occasions, that
state law governs.
See Jowers, 2013 WL 424726, at *1
(citing cases taking both approaches); Gamewell Mfg.,
Inc. v. HVAC Supply, Inc., 715 F.2d 112, 113-16 (4th Cir.
principles under federal common law and Alabama law do
not materially differ, “the court need not resolve which
body of law applies.”
Jowers, 2013 WL 424726, at *1
(quotation marks and citation omitted).
Settlement agreements are contracts, and, like other
contracts, once a party has manifested assent to an
binding contract, the party is bound.
See, e.g., Cia
Anon Venezolana De Navegacion v. Harris, 374 F.2d 33, 35
(5th Cir. 1967) (“Federal courts have held under a great
variety of circumstances that a settlement agreement once
entered into cannot be repudiated by either party and
will be summarily enforced.”); Nero v. Chastang, 358 So.
2d 740, 743 (Ala. Civ. App. 1978) (“The law in Alabama is
clear in that agreements made in settlement of litigation
agreement, thereby manifesting his assent.
Energy Homes, Inc. v. Hennis, 776 So. 2d 105, 108 (Ala.
signature.”) (emphasis omitted).
Therefore, unless he
shows some reason why the agreement is invalid, he is
bound by it.
invalidity is that he did not exercise his own free will
in signing it and that, instead, he was forced to sign it
Under the “undue influence” principle of
contract law, “[i]f a party’s manifestation of assent is
induced by one who is not a party to the transaction”
(here, McPhillips), “the contract is voidable by the
Contracts § 177 (1981).
For that rule to apply, “the
2. This rule does not apply if “the other party to
the transaction” (here, U.S. Xpress) “in good faith and
without reason to know of the undue influence either
gives value or relies materially on the transaction.”
Restatement (Second) of Contracts § 177 (1981). Since
Stoudmire has not yet accepted U.S. Xpress’s payment,
that exception has no bearing here.
will of the influencing party [must have] so overpowered
the will of the other party that the other party’s act
essentially became the act of the influencing party.”
Fortis Benefits Ins. Co. v. Pinkley, 926 So. 2d 981, 988
(Ala. 2005) (emphasis omitted).
Here, the court is not convinced that Stoudmire’s
will was so overpowered.
Admittedly, from Stoudmire’s
point of view, he probably viewed McPhillips’s comments
as overbearing, for Stoudmire was hearing something he
did not want to hear: that, in McPhillips's professional
judgment, Stoudmire’s federal race-discrimination lawsuit
would likely be dismissed because of Stoudmire’s waiver
of claims in his state workers’ compensation lawsuit.
But an attorney's relaying of bad news, as long as that
news has some reasonable basis in fact and law (as were
the circumstances here) does not mean the attorney is
overbearing; instead, it means the attorney is being
professionally honest does not mean the attorney is being
Indeed, if an attorney were to fail to be
professionally honest, he could leave himself open to
liability for malpractice or ethical violations.
Therefore, the court does not credit Stoudmire’s
agreement were exerted with such force and to such a
Rather, it seems that Stoudmire, understandably upset at
the regrettable circumstances creating this predicament,
begrudgingly accepted the settlement offer, and, in doing
Second, Stoudmire contends that the agreement, which
forfeits his discrimination claim for a mere $ 2,500, is
To be sure, “[i]f a contract or term thereof is
unconscionable at the time the contract is made a court
(Second) of Contracts § 208 (1981).
Alabama courts have
stated that a contract is “unconscionable” where it is
“such as no man in his sense and not under delusion would
make on the one hand, and as no honest and fair man would
accept on the other.”
Blue Cross Blue Shield of Alabama
v. Rigas, 923 So. 2d 1077, 1086 (Ala. 2005) (punctuation
and citation omitted).
To determine whether a contract
is unconscionable, courts take a number of considerations
into account, including “(1) whether there was an absence
of meaningful choice on one party’s part, (2) whether the
party, (3) whether there was unequal bargaining power
among the parties, and (4) whether there were oppressive,
one-sided, or patently unfair terms in the contract.”
Id. at 1086 (citation omitted).
To decide unconscionability in this case, it is
critical to understand precisely what is argued to be
Here, the state workers’ compensation
settlement, which waived all claims against the company
regardless of their nature (that is, if U.S. Xpress’s
interpretation of the agreement is to be accepted), is
underlying lawsuit was one in which Stoudmire sought
sophisticated lawyers and aware that it was being charged
with serious allegations of racism, may very well have
duped Stoudmire, who had no attorney advising him, into
credits Stoudmire’s testimony that, when he agreed to the
state-court settlement, he was completely unaware of the
effect it might have on his federal race-discrimination
Indeed, if the state-court settlement were before
Unfortunately for Stoudmire, as stated the statecourt settlement is not at issue; rather, the court must
federal settlement, and circumstances in that regard are
That agreement was made in the
face of a motion to dismiss that Stoudmire’s experienced
attorney, in his professional judgment, believed was
likely to be granted, and, while, as stated, the issue
presented a serious question, there is nothing before
this court to suggest that that professional judgment was
In that context, the $ 2,500 settlement
does not shock the conscience.
See Union Camp Corp. v.
Dyal, 460 F.2d 678, 689-90 (5th Cir. 1972) (“The final
argument offered on behalf of J. Edgar Dyal is that the
agreement obliges him to sell at $ 15 an acre property
worth more than ten times that amount.
But this is only
a vision of streets paved with gold, dependent upon Dyal
succeeding in all his demands.
It does not take into
account what was really bought and sold--the chances of
success or failure.”); In re Yohannes, 2007 WL 2034301,
at *3 (S.D.N.Y. July 17, 2007) (Swain, J.) (settlement
agreement in mortgage dispute was not unconscionable
because the fact that both parties faced uncertainty
regarding validity of the mortgage was taken into account
in choosing settlement amount).
In short, the court recognizes that the circumstances
leading up to Stoudmire’s settlement in this lawsuit were
regrettable, and it is eminently reasonable that a person
in Stoudmire’s position would feel wronged.
upon the advice of experienced counsel, he elected to
Having done so, the law does not grant him a
right to change his mind.
defense is meritless.
The court will therefore deny Stoudmire’s motion to
abrogate the settlement agreement and will grant U.S.
Xpress’s motion to enforce the settlement agreement.
Stoudmire and McPhillips.
Two federal cases are at
The first federal case is the one now before this
court: his race-discrimination case.
Stoudmire would pay the court’s $ 350 filing fee but
would not pay any attorney’s fee up front, although
McPhillips would, for his fee, be entitled to 50 % of
whatever sum was recovered in the lawsuit, which ended up
being $ 1,250 (half of the $ 2,500 settlement).
the $ 1,250, Stoudmire stated at the court’s evidentiary
therefore, it is unnecessary for this court to resolve
the mooted issue.
(The issue is moot for a second reason
Stoudmire’s attorney, McPhillips said he is now
willing to forfeit his $ 1,250 and that Stoudmire can
have the entire $ 2,500.
Stoudmire can, therefore, pick
up the entire $ 2,500 whenever he wants.)
The second federal case was filed by McPhillips, on
Stoudmire’s behalf, to obtain a right-to-sue letter from
the Equal Employment Opportunity Commission, a document
needed to begin the current race-discrimination lawsuit.
See Stoudmire v. Equal Emp’t Opportunity Comm’n, No.
2:12cv574 (M.D. Ala. filed July 3, 2012) (Watkins, J.).
Stoudmire paid McPhillips close to $ 3,000 in fees and
court costs to bring this lawsuit, which is now closed.
Stoudmire seeks a refund of the fees.
“Federal courts are courts of limited jurisdiction.
They possess only that power authorized by Constitution
and statute,” Kokkonen, 511 U.S. at 377, which includes
federal laws, 28 U.S.C. § 1331.
race-discrimination claim in the current case arises
under federal law, the Civil Rights Act.
The dispute he
has with McPhillips over fees in another, closed lawsuit
is twice removed.
First, it relates to another lawsuit
over which this court has absolutely no jurisdiction.
Second, it relates to a lawsuit that is now closed and
there is no evidence that that lawsuit ever reached, or
could now reach, the issue of Stoudmire’s fees with his
Stoudmire’s fee dispute with McPhillips is, at
most, wholly a matter of state law for state courts.
Stoudmire’s motions for return of fee and to dismiss
the fee lien will be denied.
The court will, therefore, enter a judgment providing
for the following: first, in accordance with the court’s
prior judgment reserving jurisdiction to adjudicate postjudgment settlement disputes, granting Stoudmire’s motion
to set aside the judgment and reinstate the case; second,
denying Stoudmire’s motion to abrogate the settlement
agreement; third, denying Stoudmire’s motions to have
McPhillips refund the fee and to dismiss the fee lien;
fourth, granting U.S. Xpress’s motion to enforce the
settlement agreement; and, lastly, ordering the parties
to comply with that agreement.
Because the agreement
Stoudmire’s lawsuit be dismissed, the court will dismiss
his federal race-discrimination claim.
dismissal will not be of the entire lawsuit, for the
court will retain jurisdiction to enforce the settlement
DONE, this the 3rd day of April, 2013.
/s/ Myron H. Thompson
UNITED STATES DISTRICT JUDGE
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?