Hill v. Ohio State University et al
Filing
58
ORDER denying 50 Motion to Vacate ; denying 54 Motion to Vacate. Signed by Judge George C Smith on 5-7-12. (ga)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
DR. ANTHONY HILL,
Plaintiff,
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Case No.: 2:09-cv-0933
JUDGE SMITH
Magistrate Judge Abel
THE OHIO STATE UNIVERSITY, et al.,
Defendants.
OPINION AND ORDER
This matter is before the Court pursuant to Plaintiff’s Motion to Vacate the Dismissal
Order (Doc. 50) and Supplemental Motion for Relief from the Dismissal Order pursuant to Rule
60(b) (Doc. 54). Defendant opposes any such relief. For the reasons that follow, the Court
DENIES Plaintiff’s Motions to vacate the dismissal entered in this case on July 26, 2011.
I.
BACKGROUND
Plaintiff Dr. Anthony Hill, a former tenured professor in the theatre department at The
Ohio State University (“OSU”), initiated this action against OSU on October 20, 2009. Dr. Hill
alleged he was discriminated against on the basis of his race and also suffered retaliation when he
was denied a promotion from an associate professor to a full professor. The parties engaged in
settlement discussions beginning in August 2010.
There were a number of letters and emails exchanged between the parties on the issue of
settlement. The Court will not include all communications, but will note some of particular
importance. The first time the issue of retroactive pay increases was raised was in a settlement
demand sent by Plaintiff’s counsel on September 8, 2010. The letter stated:
Dr. Hill offers to immediately retire from Ohio State University under the
following settlement terms and conditions:
(1)
Retroactively raise his salary to $78,000.00 over the past three years in
order for him to qualify for retirement benefits based on an annual salary of
$78,000.00.
(2)
Pay $15,000.00, which represents (5) years that he was not paid the annual
salary of $3,000.00 per year pursuant to the 2004 Settlement Agreement.
(3)
Non-pecuniary damages of $30,000.00 based on disparate treatment.
(4)
Increase recruitment, and retention of African-American students and
faculty.
(Ex. C attached to Def.’s Memo. in Opp.).
During the course of these early settlement discussions, Plaintiff’s counsel referenced
meeting with a representative of SERS and confirmed that his retirement would be based on the
retroactive salary provided the settlement agreement has certain conditions. Defense counsel
responded that the applicable retirement system was the State Teachers Retirement System
(“STRS”), not the State Employees Retirement System (“SERS”). Additionally, defense counsel
added: “Please note that OSU and STRS are two separate entities and the agreement between Dr.
Hill and OSU cannot be contingent to succeed or fail based on the promises of a third party.”
(Ex. H attached to Def.’s Memo. in Opp.). No settlement was reached as a result of these
discussions, nor after a mediation was held with Magistrate Judge Abel in February 2011.
Settlement discussions were revived in May 2011. Plaintiff’s counsel inquired whether
OSU would consider renewing its previous offer and Defendant’s counsel asked Plaintiff to put
his demands in writing. Subsequently, Plaintiff’s counsel Mr. Patmon resigned from the case and
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new counsel, Mr. Dawicke entered an appearance. Plaintiff’s new counsel continued settlement
discussions with Defendant’s counsel, proposing retroactive salary increases to $86,000 for the
previous three academic years, in exchange for Plaintiff’s retirement. OSU agreed and submitted
a draft settlement agreement to Plaintiff’s counsel in June 2011. Plaintiff states that he conferred
with STRS, and was advised that OSU employees’ pension benefits were calculated on an average
of the employee’s three highest years’ salaries. Plaintiff believed that increasing his salary the final
three years to $86,000 from $55,559 (the average of his three highest years’ salaries) would result
in a monthly pension benefit increase from $2,037 to $3,201.
Plaintiff’s counsel made some small changes to the language of the settlement agreement,
including changing resign to retire. There was no mention during these latter settlement
discussions of how the proposed settlement would affect Dr. Hill’s retirement income, nor was
there any language proposed for the settlement agreement conditioning settlement on STRS
approval. The settlement agreement was finalized on June 23, 2011. Then, on July 8, 2011,
Plaintiff filed a notice of voluntary dismissal (Doc. 47). The case was ultimately dismissed by this
Court on July 26, 2011 (Doc. 48).
On July 28, 2011, Plaintiff’s counsel contacted defense counsel after Dr. Hill contacted
STRS to inquire about the delay in his salary adjustment. Dr. Hill apparently learned that his
pension was to be based on his actual final three years highest salaries, rather than the retroactive
amount agreed to by the parties. Assistant Ohio Attorney General Mike McPhillips responded
that: “OSU is confident that the reason Dr. Hill received the information he did from STRS is
based on the timing of his communication with STRS, and that once all the necessary paperwork
is processed, Dr. Hill will receive his retirement payments based on an $86,000 salary for the
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years at issue.” (Ex. C to Pl.’s Supp. Mot.).
Pursuant to the settlement agreement, OSU tendered two checks to Plaintiff on July 14,
2011, one for $62,962.74, the net amount after withholdings from $118,110.90, and the second
for $10,000. Pursuant to its statutory obligations which were set forth in the settlement
agreement, OSU reported Plaintiff’s retroactive salary increases to STRS. OSU also submitted
the employee’s share to STRS that was withheld from the aforementioned check, as well as its
contribution as the employer to STRS. However, on October 27, 2011, STRS issued a letter
explaining that it did not consider the retroactive increases to be compensation for the purposes of
STRS. The money submitted by OSU to STRS was ultimately returned to OSU.1 The letter
provided in pertinent part:
The settlement agreement between the university and Dr. Hill specifically provides
that in consideration of resolving any and all of their disputes, Dr. Hill agrees to
voluntarily retire from his position effective June 30, 2011, and that OSU agrees to
retroactively increase Dr. Hill’s salary for his last three years of employment.
Because the payments made to Dr. Hill pursuant to the settlement agreement are in
consideration of his agreement to retire, they are not included in compensation
under the terms of section 3307.01(L) of the Ohio Revised Code.
(Ex. N, attached to Def.’s Memo. in Opp.).
II.
DISCUSSION
Plaintiff Dr. Hill filed this Motion for Relief from Dismissal Order pursuant to Rule
60(b)(1) of the Federal Rules of Civil Procedure. Plaintiff is seeking an order joining the Ohio
State Teachers Retirement System as an additional party to this action; ordering OSU to remit to
1
OSU calculates that the 3 years of back pay should have been $90,732, however, due to an
accounting error, Plaintiff actually received $104,000. 10% of the back pay was withheld by OSU
for Dr. Hill’s STRS contribution and OSU was to pay 13% of that amount to STRS for the
employer’s contribution. The amount OSU submitted to STRS and was ultimately returned was
for approximately $21,000.
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STRS a sum sufficient to fund Plaintiff’s increase pension benefits and ordering STRS to accept
that remittance to increase Plaintiff’s pension benefits; and in the alternative, order OSU to
purchase an annuity for Plaintiff’s benefits in an amount sufficient to fund Plaintiff’s increased
pension; or an order vacating the dismissal entry and settlement agreement.
Defendant OSU argues that Plaintiff is seeking relief that is not permitted under Rule
60(b). Defendant argues that the Court lacks jurisdiction to modify the parties’ settlement
agreement as this case has been dismissed with prejudice. Further, Plaintiff cannot establish that
there was a mutual mistake to justify relief under Rule 60(b).
The Court will first consider Defendant’s jurisdiction argument in light of the fact that this
case was dismissed with prejudice and then will consider whether Plaintiff is entitled to any relief
under Rule 60(b) of the Federal Rules of Civil Procedure.
A.
Jurisdiction over Plaintiff’s Motion for Relief from Dismissal Order
Generally, a district court that has dismissed a case lacks jurisdiction over a settlement
agreement that preceded dismissal. However, there are certain exceptions. Kokkonen v.
Guardian Life Ins. Co. of Am., 511 U.S. 375 (1994). In Kokkonen, the parties entered into a
settlement agreement and subsequent stipulation of dismissal. The dismissal entry made no
reference to the settlement agreement. One party moved to enforce the settlement agreement and
the other objected. Although the district court and the Ninth Circuit held that the trial court had
inherent power to exercise jurisdiction over settlement agreements, the United States Supreme
Court disagreed. Justice Scalia, writing for a unanimous Court, recognized that the concept of
limited federal jurisdiction does not permit the court to exercise ancillary jurisdiction over any
agreement that has as part of its consideration the dismissal of a case before it. Id. at 381. The
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Court did recognize that:
The situation would be quite different if the parties’ obligation to comply with the
terms of the settlement agreement had been made part of the order of dismissal – –
either by separate provision (such as a provision “retaining jurisdiction” over the
settlement agreement) or by incorporating the terms of the settlement agreement in
the order. In that event, a breach of the agreement would be a violation of the
order, and ancillary jurisdiction to enforce the agreement would therefore exist.
That, however, was not the case here.
Id. at 397.
The Sixth Circuit recently addressed this issue in Moore v. United States Postal Serv., 369
Fed. Appx. 712, 716-17 (6th Cir. 2010), holding that a district court retains jurisdiction over a
settlement agreement when the judgment entry dismissing the underlying case provides “[t]he
Court retains jurisdiction over the settlement contract for the purposes of its enforcement.”
Therefore, a district court may retain jurisdiction over the settlement agreement if the dismissal
entry incorporates the terms of the settlement agreement, or if the court specifically retains
jurisdiction over the settlement.
Plaintiff Dr. Hill argues that since specific performance is impossible, OSU should not be
permitted to avoid its financial obligations under the settlement agreement, relying on McMillin v.
Davidson Industries, Inc., 2005 Ohio App. LEXIS 221 (5th Dist. 2005). In McMillin, the parties
participated in a mediation with the trial judge and reached a settlement that provided the
employer would transfer its interest in a parcel of property to the employee. The parcel of
property was estimated to be worth between $80,000-$90,000. The employer further agreed to
satisfy the lien on the property so that it could be transferred free and clear. However, prior to
satisfying the lien, the bank foreclosed on the building making the transfer impossible. The
employee then filed a motion to enforce the settlement agreement. The trial court enforced the
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settlement agreement by ordering that the employer pay the employee the estimated value of the
property. The appellate court affirmed, holding that “the parties understood that they were
settling a claim for money damages.” Id. at ¶ 28. Plaintiff argues, based on McMillin, that the
parties agreed to a settlement that was premised on an increase in Dr. Hill’s pension and that
“[b]oth parties also agreed that the salary adjustment was, in part, intended to require an elevation
of Dr. Hill’s pension.” (Pl.’s Mot. at 6). Plaintiff, therefore, requests this Court order OSU to
purchase an annuity in a determined sum of money necessary to support Dr. Hill’s increased
pension benefits.
Defendant OSU asserts that Plaintiff’s reliance on McMillin is misplaced and the Court
agrees. In McMillin, a hearing was held on the motion to enforce the settlement agreement with a
different judge, so that the original judge could be a witness. The case at bar differs in that the
settlement agreement was not negotiated before any judge of this Court, nor was the Court even
advised of the existence of a settlement agreement. The parties merely stipulated to the voluntary
dismissal.
The Court signed off on the proposed dismissal entry submitted by Plaintiff with his
Notice of Voluntary Dismissal. (See Attachment #1 to Doc. 47). The dismissal entry specifically
provides: “Pursuant to the Stipulated Notice of Voluntary Dismissal Pursuant to Civil Rule 41(a),
it is hereby ORDERED that the within action, and all claims asserted therein, be dismissed with
prejudice, with each party bearing its own costs.” (Doc. 48).
The exceptions to the lack of jurisdiction over settlement agreements do not apply in this
case as the dismissal entry did not incorporate the terms of the settlement agreement, nor did the
Court retain jurisdiction over this matter. This Court therefore lacks jurisdiction to enforce the
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settlement agreement, including any authority to force Defendant to purchase an annuity as
suggested by Plaintiff. The Court also lacks any authority to add an additional party after the case
was closed. Plaintiff should have recognized that STRS was an indispensable party to fulfilling
the settlement agreement and added STRS as a party while the case was open.
B.
Rule 60(b)(1) of the Federal Rules of Civil Procedure
Even assuming that the Court has jurisdiction to consider Plaintiff’s Motions, Plaintiff’s
arguments lack merit. Plaintiff moves to vacate the July 26, 2011 dismissal order and rescind the
settlement agreement pursuant to Rule 60(b)(1) of the Federal Rules of Civil Procedure which
provides:
(b) Grounds for Relief from a Final Judgment, Order, or Proceeding. On
motion and just terms, the court may relieve a party or its legal representative from
a final judgment, order, or proceeding for the following reasons:
(1) mistake, inadvertence, surprise, or excusable neglect;
“[T]he party seeking to invoke [Fed. R. Civ. P. 60(b)] bears the burden of establishing that
its prerequisites are satisfied.” McCurry v. Adventist Health Sys. / Sunbelt Inc., 298 F.3d 586, 592
(6th Cir. 2002); Williams v. Meyer, 346 F.3d 607, 613 (6th Cir. 2002). A contract may be
rescinded when the agreement is based on mutual mistake of law or fact. See State ex rel. Walker
v. Lancaster City School Dist. Bd. of Ed., 79 Ohio St.3d 216, 200 (Ohio 1997). Where “there is
a mutual mistake as to a material part of the contract and where the complaining party is not
negligent in failing to discovery the mistake” rescission is proper. Reilley v. Richards, 69 Ohio
St.3d 352, 352-53 (Ohio 1994).
In order to meet this burden, Plaintiff argues that both parties believed that retroactively
increasing Dr. Hill’s salary for his final three years, would increase his retirement benefits.
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Plaintiff asserts that it was based on this understanding that the parties entered into the settlement
agreement and ultimately dismissed the case. Plaintiff references previous agreements made by
OSU involving retroactive salary adjustments that increased pension benefits with individuals
through the Ohio Public Employees Retirement System. Plaintiff also asserts that he “believed
that there would be no issue with the retroactive increases based on representations made by
STRS that it would calculate his pension benefits based solely on whatever salaries OSU
reported.” (Pl.’s Supp. Mot. at 8). The only evidence Plaintiff offers that OSU was operating
under the same mistake is an email by attorney McPhillips more than one month after the
settlement agreement was fully executed. Defendant’s attorney McPhillips states that he made
these comments based on the representations of Plaintiff’s counsel and he did not have knowledge
about the effects of the retroactive salary increases on Plaintiff’s pension benefits. (McPhillips
Aff. ¶ 10).
Plaintiff further argues that the pension benefit increase resulting from the increased salary
adjustment “was an indispensable condition of settlement.” (Pl.’s Supp. Mot. at 8, citing Patmon
Aff. ¶ 4). Plaintiff again states in his affidavit submitted in support of his reply brief, that “I was
clear that the increased pension benefits were the key component to resolving this matter.” (Hill
Aff. ¶ 3). Plaintiff contends that OSU was aware of this. Regardless of what OSU knew during
the negotiations, however, these terms were not reflected in the Settlement Agreement. The only
reference to STRS is in paragraph 2 of the Settlement Agreement and Release of Claims in which
OSU agrees to pay Plaintiff back pay, “including the employee’s contribution to the State
Teachers Retirement System (“STRS”). Additionally, OSU agrees to report the back pay
remittance to STRS and agrees to pay any and all employer’s contributions and fines to STRS.”
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(Attached as Exhibit A to Pl.’s Supp. Mot.).
Although Plaintiff doesn’t offer this evidence, the Court discovered that Defendant OSU
attempted to fulfill its obligations under the Settlement Agreement by withholding Plaintiff’s
contribution to STRS and submitting it, along with OSU’s contribution to STRS. Defendant
OSU argues that this does not support Plaintiff’s claims that the parties were operating under a
mutual mistake, however, because the back pay language of the Settlement Agreement is standard
language. Defendant OSU fully complied with the terms of the Settlement Agreement by
submitting the money to STRS and did not make any additional promises that such contributions
would be accepted and increase Plaintiff’s pension benefits.
Additionally, paragraph 11 of the Settlement Agreement states:
The Parties to this Agreement represent and affirm that this is a fully integrated
agreement, that this Agreement sets forth the entire agreement between the Parties
hereto, that no other conditions previously discussed either during or outside of
settlement discussions may be interpreted as being a part of this Agreement, and
that this Agreement fully supersedes any and all prior discussions, agreements,
transmissions or understandings between the Parties or their representatives
regarding the subject matter of this Agreement.
(Id.).
While Plaintiff has illustrated how he was mistaken regarding how the retroactive pay
increase would affect his pension benefits, there is no evidence that OSU agreed to this or made a
similar mistake. Defendant OSU argues that the mistake was unilateral, not mutual. The Sixth
Circuit has held that a party cannot obtain relief from judgment based on a mistake that is
unilateral. Brown v. County of Genessee, 872 F.2d 169 (6th Cir. 1989). The parties in Brown
settled the lawsuit and agreed to hire the plaintiff as a deputy at the third highest of seven possible
pay levels. Plaintiff’s counsel miscalculated what would have been the highest pay level his client
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could have attained had she been hired when she initially applied in 1982. Plaintiff discovered that
some employees hired in 1982 were being paid at the fourth highest pay level. Plaintiff
successfully moved to vacate the judgment in district court on mistake grounds, but the Sixth
Circuit reversed.
In Brown, the Sixth Circuit stated that “[o]ne who attacks a settlement must bear the
burden of showing that the contract he had made is tainted with invalidity, either by fraud
practiced upon him or by a mutual mistake under which both parties acted.” 872 F.2d at 174. “A
unilateral mistake is not sufficient to allow the mistaken to limit or avoid the effect of an
otherwise valid settlement agreement.” Id. at 174-75. Further, in Brown, the Court recognized
that even if the county negotiated believing it was probable that the third highest level was the
highest level plaintiff could have attained, that subjective belief was not enough to supercede the
express terms of a valid contract. In fact, plaintiff’s attorney could have found out through public
records whether or not its subjective beliefs were correct and “the failure of Brown’s counsel . . .
cannot be imputed to the county[.]” Id. at 175.
The same applies to the case at bar. Even if Defendant OSU negotiated believing the
retroactive pay increases would impact Dr. Hill’s pension benefits, Plaintiff was represented by
competent counsel, who could have confirmed the affect of the settlement on the pension benefits.
Some version of the applicable Ohio Revised Code section, currently §3307.01(L), that provides
that payments made in consideration of retirement are not considered compensation, has been part
of the Ohio Revised Code for more than 20 years. The Sixth Circuit has held that “[g]ross
carelessness, ignorance of the rules, or ignorance of the law are insufficient bases for 60(b)(1)
relief.” FHC Equities, L.L.C. v. MBL Life Assur. Corp., 188 F.3d 678, 684-85 (6th Cir. 1999)
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(quoting Edward H. Bohlin Co. v. Banning Co., 6 F.3d 350, 356-57 (5th Cir. 1993)).
During the settlement negotiations, Plaintiff’s counsel made reference to Defendant’s
counsel that Plaintiff was talking to STRS about his benefits, however, Defendant did not have
any role in these discussions. If the pension benefits were such a key factor in the negotiations,
then Plaintiff could have proposed language in the settlement agreement that made it contingent
upon approval by STRS. Plaintiff assumed the risk by failing to obtain third party approval
(STRS). See McCormick v. City of Chicago, 230 F.3d 319 (7th Cir. 2000) (Court refused to
reopen case on mistake grounds when settlement agreement involved reinstatement of officer,
which involved approval of FOP, who was not a party and refused to reinstate. The Seventh
Circuit held that since “the settlement was dependent upon the FOP giving its consent,
McCormick’s attorney had a particularly strong incentive to make sure that his client was
protected in the event the FOP decided it could not agree that McCormick’s seniority should be
restored.”). Further, the dismissal entry could have been more detailed and incorporated the
terms of the settlement agreement. There is no question that Plaintiff, through counsel, reviewed
the settlement agreement, as minor changes were made and signatures were affixed.
Based on the aforementioned, the Court does not find that there was a mutual mistake of
the parties in entering into this valid settlement agreement. Plaintiff, however, appears to have
made a unilateral mistake in entering into the settlement agreement without fully researching how
the retroactive salary increases would affect Plaintiff’s STRS pension payments. Accordingly,
“[a] motion under Rule 60(b) cannot be used to avoid the consequences of a party’s decision to
settle the litigation. . .. Generally speaking a party who makes an informed choice as to a
particular course of action will not be relieved of the consequences when it subsequently develops
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that the choice was unfortunate.” Steinhoff v. Harris, 689 F.2d 270, 275 (6th Cir. 1983).
Based upon the foregoing, the Court concludes that Plaintiff has not met his burden of
demonstrating a mutual mistake as contemplated by Rule 60(b)(1) of the Federal Rules of Civil
Procedure. Accordingly, the Court DENIES Plaintiff’s Motion for Relief from the Dismissal
Order.
III.
DISPOSITION
Based on the aforementioned, the Court DENIES Plaintiff’s Motion for Relief from the
Dismissal Order.
The Clerk shall remove Documents 50 and 54 from the Court’s pending motions list.
This case shall remain closed.
IT IS SO ORDERED.
/s/ George C. Smith
GEORGE C. SMITH, JUDGE
UNITED STATES DISTRICT COURT
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