N.B. v. Hamos
Filing
152
MEMORANDUM Opinion and Order. The Court overrules plaintiffs' objections 144 to Magistrate Judge Cole's Report and Recommendation entered on November 25, 2015, adopts the Report and Recommendation 143 in its entirety, denies plaintiffs& #039; motion to enforce settlement agreement 119 , and grants certain plaintiffs' motion for non-joinder in the objections and motion to enforce 147 to the extent that the Court recognizes that there is a conflict amongclass co-counsel regarding whether there is a basis for the motion and objections. Signed by the Honorable Jorge L. Alonso on 12/11/2015. Notice mailed by judge's staff (ntf, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
N.B., et al., by and through their next friends,
Plaintiffs,
v.
FELICIA NORWOOD, in her official
capacity as Director of the Illinois Department
of Healthcare and Family Services,
Defendant.
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No. 11 C 6866
Judge Jorge L. Alonso
MEMORANDUM OPINION AND ORDER
Before the Court are plaintiffs’ objections to Magistrate Judge Cole’s Report and
Recommendation of November 19, 2015 (as amended on November 25, 2015 solely to correct
two grammatical errors), which addressed plaintiffs’ motion to enforce a purported settlement
agreement. The Court overrules plaintiffs’ objections [144], adopts Judge Cole’s Report and
Recommendation [143] in its entirety, and denies plaintiffs’ motion to enforce settlement
agreement [119].1
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There are three attorneys who represent the plaintiffs in this matter and serve as class cocounsel. They are Robert Hugh Farley Jr., Mary Denise Cahill, and Michelle N. Schneiderheinze.
Mr. Farley and Ms. Cahill filed the the objections to Judge Cole’s report and recommendation. On
behalf of certain named plaintiffs—N.B., J.J., I.D., S.B., M. Wa., M.B., and M. Wh.—Ms.
Schneiderheinze filed a motion to withdraw the objections and the motion to enforce settlement as
to those plaintiffs only. (R. 147.) Counsel explains in the motion that she provides direct legal
representation to these plaintiffs as well as numerous individual class members and that her motion
is intended to correct the record to reflect these plaintiffs’ non-joinder in the motion and objections.
She also explains in the motion that she requested that Mr. Farley and Ms. Cahill correct the
objections to reflect that they do not have authority to act on behalf of all of the named plaintiffs and
that they have not responded. The motion is granted to the extent that the Court recognizes that
there is a conflict among class co-counsel regarding whether there is a basis for the motion and
objections. The Court does not opine on any other issues regarding the representation of plaintiffs
at this juncture because it is not necessary to do so to decide the instant motion and objections.
BACKGROUND
The issue before the Court is whether the parties have entered into an enforceable
Proposed Consent Decree. Plaintiffs maintain that Exhibit A to their motion, a written Proposed
Consent Decree with a header on each of its twenty-two pages that states in bold type “DRAFTPrivileged and Confidential For Settlement Purposes Only June 10, 2015,” is an enforceable
settlement agreement.
On September 22, 2015, plaintiffs filed a motion to enforce that
agreement. Plaintiffs also filed motions for discovery on the issue of whether there was a
settlement agreement and for entry of a preliminary injunction. This Court referred the three
motions to Magistrate Judge Cole. Plaintiffs have since withdrawn the motion for discovery on
the issue of whether there was a settlement agreement. At Judge Cole’s suggestion, plaintiffs
also withdrew the preliminary injunction motion without prejudice and plan on refiling it
immediately upon the conclusion of a period of expedited discovery.
On November 19, 2015, Judge Cole issued a Report and Recommendation,
recommending that this Court deny the plaintiffs’ motion to enforce the Proposed Consent
Decree as a settlement agreement. On December 2, 2015, plaintiffs objected to Judge Cole’s
Report and Recommendation as provided by Federal Rule of Civil Procedure 72 and 28 U.S.C. §
636(b)(1). On December 3, 2015, this Court entered an order indicating that defendant need not
file a response to the objections.
DISCUSSION
A.
Legal Standards
1.
Standard of Review
“When a magistrate judge prepares a report and recommendation for a district court, the
governing statute provides that the district court ‘shall make a de novo determination’ with
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respect to any contested matter.”• Kanter v. C.I.R., 590 F.3d 410, 416 (7th Cir. 2009) (quoting
28 U.S.C. § 636(b)). The Court of Appeals has observed:
De novo review requires the district judge to decide the case based on an
independent review of the evidence and arguments without giving any
presumptive weight to the magistrate judge’s conclusion. The district judge is
free, and encouraged, to consider all of the available information about the case
when making this independent decision. A district judge may be persuaded by
the reasoning of a magistrate judge or a special master while still engaging in an
independent decision-making process.
Mendez v. Republic Bank, 725 F.3d 651, 661 (7th Cir. 2013) (citing United States v. Raddatz,
447 U.S. 667, 676 (1980)). The district judge makes the ultimate decision to adopt, reject, or
modify the magistrate judge’s recommendation.• Schur v. L.A. Weight Loss Ctrs., Inc., 577 F.3d
752, 760 (7th Cir. 2009); see also Fed. R. Civ. P. 72.
2.
Federal Procedural Law
A district court has the power to enforce a settlement agreement in a case pending before
it. Wilson v. Wilson, 46 F.3d 660, 664 (7th Cir. 1995). When the material facts are not in
dispute, “the question whether a contract has come into being is one of law.” Gutta v. Standard
Select Trust Ins. Plans, 530 F.3d 614, 618 (7th Cir. 2008). If there are disputed material facts,
the district court should hold an evidentiary hearing. Wilson, 46 F.3d at 664; see also SimsMadison v. Inland Paperboard & Packaging, Inc., 379 F.3d 445, 449 (7th Cir. 2004). Where the
record points to only one conclusion, however, the court need not hold a hearing. Gutta, 530
F.3d at 618.
3.
State Substantive Law
“A settlement agreement is a contract and as such, the construction and enforcement of
settlement agreements are governed by principles of local law applicable to contracts generally.”
Gutta, 530 F.3d at 618 (quoting Laserage Tech. Corp. v. Laserage Labs., Inc., 972 F.2d 799, 802
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(7th Cir. 1992)); Pohl v. United Airlines, Inc., 213 F.3d 336, 338 (7th Cir. 2000). But see Lewis
v. Sch. Dist. No. 70, 648 F.3d 484, 486 n.1 (7th Cir. 2011) (“Whether a settlement agreement is
binding is an issue governed by the law of the state in which the parties executed the
agreement.”). The parties rely on Illinois law, and the Court will apply Illinois law.
Under Illinois law, the enforceability of a putative contract is conditioned on two
predicates: “a sufficiently concrete expression of the essential terms of the agreement, as well as
an intent to be bound by that agreement.” Ocean Atl. Dev. Corp. v. Aurora Christian Schs., Inc.,
322 F.3d 983, 995 (7th Cir. 2003) (citing, inter alia, Academy Chi. Publishers v. Cheever, 578
N.E.2d 981, 983 (Ill. 1991); Ceres Ill., Inc. v. Ill. Scrap Processing, Inc., 500 N.E.2d 1, 4-5 (Ill.
1986); and Morey v. Hoffman, 145 N.E.2d 644, 647-48 (Ill. 1957)); Abbott Labs. v. Alpha
Therapeutic Corp., 164 F.3d 385, 387 (7th Cir. 1999) (“Under Illinois contract law, a binding
agreement requires a meeting of the minds or mutual assent as to all material terms.”).
Furthermore:
“A contract is enforceable under Illinois law if from its plain terms it is
ascertainable what each party has agreed to do. A contract may be enforced even
though some contract terms may be missing or left to be agreed upon, but if the
essential terms are so uncertain that there is no basis for deciding whether the
agreement has been kept or broken, there is no contract.” Wigod v. Wells Fargo
Bank, N.A., 673 F.3d 547, 564 (7th Cir. 2012) (citing Cheever, 578 N.E.2d at
983–84).
“Illinois follows the objective theory of intent, whereby the court looks
first to the written agreement and not to the parties’ subjective understandings.”
Hampton v. Ford Motor Co., 561 F.3d 709, 714 (7th Cir. 2009). “Secret hopes
and wishes count for nothing. The status of a document as a contract depends on
what the parties express to each other and to the world, not on what they keep to
themselves.” Newkirk v. Vill. of Steger, 536 F.3d 771, 774 (7th Cir. 2008); see
also Laserage, 972 F.2d at 802 (whether there was a “meeting of the minds” is
determined by looking at the parties’ conduct and what they expressed to each
other).
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Craftwood Lumber Co. v. Interline Brands, Inc., No. 11 C 4462, 2014 WL 4724387, at *4-5
(N.D. Ill. Sept. 23, 2014). The Seventh Circuit has observed:
[I]t is a common commercial practice for two negotiating parties to sign a letter of
intent or an agreement in principal, signaling that they have come to a tentative
agreement on the general outlines of a deal without having nailed down all of the
details. Not infrequently, the negotiations that follow the execution of this
document break down, prompting the disappointed party to sue on the theory that
the preliminary document is binding. Whether in fact the writing reflects a
binding agreement between the parties . . . turns not on what the parties
subjectively believed, but on what they expressly manifested in their writing. . . .
[A] letter of intent or a similar preliminary writing that reflects a tentative
agreement contingent upon the successful completion of negotiations that are
ongoing does not amount to a contract that binds the parties.
Ocean Atl., 322 F.3d at 995-96 (citations omitted). To determine whether there was a binding
contract, the court must examine the parties’ writing to see whether it “include[s] all terms
essential to the deal and manifest[s] the parties’ mutual intent to be bound by those terms.” Id. at
996. “The burden of proving the existence of a settlement agreement rests upon the party
seeking to enforce it.” Kemp v. Bridgestone/Firestone, Inc., 625 N.E.2d 905, 909 (Ill. App. Ct.
1993).
B.
Analysis
After reviewing the relevant procedural and factual history,2 Judge Cole found that the
documents submitted in support of the plaintiffs’ motion demonstrate that the parties had not
reached a settlement by June 25, the day plaintiffs contend they came to an agreement with
defendant because “Defendant’s counsel accepted the Proposed Consent Decree.” (R. 134, Pls.’
Reply at 2.) This Court agrees with Judge Cole. Plaintiffs assert that the defendant’s counsel’s
2
In their objections, plaintiffs engage in extensive nitpicking regarding the timeline and
events of this case as set out by Judge Cole. The Court declines to address these arguments
regarding the alleged “factual errors” in the Report and Recommendation. The Court is fully
familiar with the recent history of this case and will not waste time discussing immaterial points.
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“statements in open court on June 11, 2015” and “email of June 25, 2015” are
“outward/objective expressions of the Defendant’s intent to be bound by the terms of the
agreement.” (R. 144, Pls.’ Objections at 14.)
These statements and expressions do not carry the day for plaintiffs. In the June 11
colloquy, defendant’s counsel stated that the parties had resolved one remaining issue from “the
last time [they] were [in court],” that they had a “draft decree circulating on [defendant’s] side
for final review and then signature,” and that the “issue of attorneys’ fees is still out there,” but
that it would not prevent the parties from moving forward with a motion for preliminary
approval of a settlement. (R. 136, Tr. of June 11, 2015 Hr’g at 2.) Counsel’s statements indicate
that the parties were close to settling, but not that they intended to be bound by the draft
settlement agreement that was “circulating.” The email on which plaintiffs rely contains a
similar “circulated for signature” comment, but similarly lacks an expression of an intent to be
bound by the draft. It also contains the following statements: “We still need to discuss fees.
[Defendant] would like to resolve the issue before we finalize the Decree instead of deferring it.”
(R. 119-6.)
The draft consent decree, attached as Exhibit A to plaintiffs’ motion, contains a
blank on page 18 in the following provision: “Defendant agrees to pay to Class Counsel the sum
of $______ in full settlement of all of Plaintiffs’ claims for attorneys’ fees and costs associated
with this litigation . . . .” (R. 119-1.) Plaintiffs contend, as they did before Judge Cole, that
attorneys’ fees are neither a material nor essential term of the agreement because they would be
prevailing parties upon entry of a consent decree and therefore entitled to reasonable fees even in
the absence of an agreement. Plaintiffs also argue that counsel’s statement in the June 25 email
that defendant “would like” to resolve the fee issue before finalizing the decree is merely a
“preference” and not an indication that resolution of the issue was a condition precedent to a
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binding agreement.
For the reasons expressed by Judge Cole, the Court is unpersuaded.
Plaintiffs have not met their burden of showing that the parties mutually intended that the “draft”
consent decree be binding.
Plaintiffs also contend that Judge Cole erroneously concluded that the absence of an
executed agreement in the context of this case is an “insuperable barrier” to granting plaintiffs’
motion. (R. 144, Pls.’ Objections at 12.) Judge Cole determined that the record in this case
shows that there was to be no settlement until the draft proposed consent decree was executed.
The draft consent decree provides that “no oral agreement entered into at any time nor any
written agreement entered into prior to the execution of this document regarding the subject
matter of this proceeding shall be deemed to exist, or to bind the parties hereto, or to vary the
terms and conditions contained herein.” (R. 119-1 at 19 ¶ 31.) Judge Cole stated that along with
the parties’ statements in and out of court, this provision of the draft decree is a “further
manifestation of the parties’ intentions reflecting the parties’ understanding that there would be
no agreement until the Proposed Consent Decree was executed.” (R. 143, R&R at 10-11.)
According to plaintiffs, Judge Cole erred in relying on this provision because “[t]here is no oral
agreement which alters the terms of the Proposed Consent Decree” and “[t]here is no prior
written agreement which alters the terms of the Proposed Consent Decree.” (R. 144, Pls.’
Objections at 13.) This argument, as well as plaintiffs’ objections as a whole, borders on
frivolous. And, as Judge Cole pointed out, “[g]iven the complexity of the subject matter of the
case and the complicated and highly specialized nature of the extended performance required by
the defendant under the Proposed Consent Decree, a signed agreement was obviously essential.”
(R. 143, R&R at 11.)
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The Court agrees with Judge Cole that because the proposed consent decree detailing the
defendant’s numerous obligations was not executed, the parties do not have a binding settlement
agreement.
CONCLUSION
For the reasons explained above, the Court overrules plaintiffs’ objections [144] to
Magistrate Judge Cole’s Report and Recommendation entered on November 25, 2015, adopts the
Report and Recommendation [143] in its entirety, denies plaintiffs’ motion to enforce settlement
agreement [119], and grants certain plaintiffs’ motion for non-joinder in the objections and
motion to enforce [147] to the extent that the Court recognizes that there is a conflict among
class co-counsel regarding whether there is a basis for the motion and objections.
SO ORDERED.
ENTERED:
December 11, 2015
__________________________________
JORGE L. ALONSO
United States District Judge
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