MIZUTANI v. THE HAPPY HUCKSTER, CORP. et al
MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE HARVEY BARTLE, III ON 2/1/2012. 2/2/2012 ENTERED AND COPIES E-MAILED.(kk, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
THE HAPPY HUCKSTER, CORP.
d/b/a FARMART, et al.
February 1, 2012
The plaintiff Takaharu Mizutani filed this action
against the defendants The Happy Huckster Corp. d/b/a Farmart
("Farmart") and Stephen Klinghoffer ("Klinghoffer"), an officer
of Farmart, for violations of:
(1) the Fair Labor Standards Act,
29 U.S.C. §§ 201 et seq.; (2) the Pennsylvania Minimum Wage Act,
43 Pa. Cons. Stat. Ann. §§ 333.101 et seq.; and (3) the
Pennsylvania Wage Payment and Collection Law, 43 Pa. Cons. Stat.
Ann. §§ 260.1 et seq.
Plaintiff alleges that he worked in the
Farmart warehouse where he did a variety of jobs.
assignments included manual labor and clerical work as well as
maintenance of trucks and calling on customers concerning overdue
According to plaintiff, defendant Klinghoffer fired
him on or about December 30, 2010 for complaining about the
failure to pay him overtime.
Defendants have filed a "motion to dismiss and for
summary judgment by way of Rule 12(d)"1 on the ground that the
claims in issue were previously settled prior to the institution
of this lawsuit.
Plaintiff counters with several arguments.
first asserts that Kenneth Spiegel, Esquire, the attorney then
representing him, did not have authority to enter into a
settlement on his behalf.
To resolve the question whether a
settlement occurred, the parties agreed that the court should
hold an evidentiary hearing at which Spiegel would be called to
testify and in the interest of judicial economy should then
decide any disputed issues of fact at this early stage in the
The evidence at the hearing revealed the following.
The negotiations between Spiegel on behalf of the plaintiff and
Farmart's attorney concerning a possible settlement began in
Plaintiff had engaged Spiegel as his lawyer after
defendant Klinghoffer had faxed to plaintiff a form of release
which was entitled a "Severance Agreement."
It provided not only
Rule 12(d) of the Federal Rules of Civil Procedure states:
If, on a motion under Rule 12(b)(6) or 12(c),
matters outside the pleadings are presented
to and not excluded by the court, the motion
must be treated as one for summary judgment
under Rule 56. All parties must be given a
reasonable opportunity to present all the
material that is pertinent to the motion.
2. Based on this agreement, the motion before the court cannot
properly be considered a motion for summary judgment under Rule
56 since the court will be deciding genuine issues of material
that Farmart but also all its agents and employees would be
released "to the extent permissible under applicable law" with
respect to all federal, state and local statutory and common-law
tort and contract claims, "including without limitation any claim
for wrongful termination or discrimination."
plaintiff would receive two weeks' vacation pay.
For the next several months, negotiations continued
over the amount to be paid to plaintiff.
While Spiegel had sent
Farmart's attorney a form of release, Farmart's counsel
throughout insisted that the "full release" previously presented
to plaintiff would have to be executed in return for any payment.
On April 30, 2011, Farmart's attorney emailed Spiegel
My client accepts your offer to resolve this
"once and for all" by paying your client
$7,000.00 for the full release previously
sent to you.
My client will send you the check for
$7,000.00 upon receipt of the signed Release.
The release "previously sent" by Klinghoffer to
plaintiff in January, 2011 contained the following critical
language giving plaintiff twenty-one days, until February 3,
2011, to sign the release and seven days after execution to
revoke or repudiate it:
In addition to the foregoing to which you are
entitled, Employer will, contingent upon
Employee agreeing to each and every provision
of this Agreement and returning two signed
originals of it to Employer within twenty one
calendar days of the receipt of this
Agreement by Employee (that is, on or before
February 3, 2011), the following additional
compensation, to be paid by Employer, unless
Employee revokes or repudiates this Agreement
during the first seven days following the
date of Employee's execution of....
The release in the hands of Spiegel did not set forth the $7,000
settlement amount but instead stated that plaintiff would receive
"Two Weeks Vacation Pay that [plaintiff] Acknowledges He Would
Not Otherwise Be Entitled to Receive."
Spiegel had read the proposed Farmart release in his
possession and discussed its salient provisions with the
plaintiff who agreed to settle for the payment to him of $7,000
in return for executing the release.
Spiegel then conveyed to
Farmart's attorney that plaintiff had agreed to the terms of the
It was clearly contemplated by both sides that the
release would be amended to insert the $7,000 to be paid to
In addition the February 3, 2011 signing deadline
recited in the release had long passed.
The court can reasonably
infer that the parties intended to substitute a new twenty-one
day signing period, which would begin to run after the receipt by
plaintiff or Spiegel of a revised release.
Presumably, the attorney for Farmart had the
responsibility for preparing a revised release containing the
settlement amount as well as a new twenty-one day period during
which plaintiff was to execute the release.
There is no
indiction on the record that a revised release was ever forwarded
As it turned out, Spiegel, a sole practitioner, became
ill at about this time and retired from the practice of law.
Plaintiff never signed any release and was never paid any money.
Thereafter, plaintiff obtained a new lawyer who filed this
Plaintiff, as noted above, contends that Spiegel did
not have authority to enter into the settlement on his behalf.
It is well settled that an attorney does not have authority to
settle a client's lawsuit or claim merely because he or she
represents the client.
545 (Pa. 1983).
E.g., Rothman v. Fillette, 469 A.2d 543,
Instead, "an attorney can only bind his client
to a settlement based on express authority."
870 A.2d 787, 792 (Pa. 2005).
Reutzel v. Douglas,
In this case, Spiegel discussed
the $7,000 settlement offer and reviewed the material terms of
the release with plaintiff.
After plaintiff accepted the offer,
Spiegel then conveyed the acceptance to the attorney for Farmart.
Spiegel had express authority to do so.
We must now determine if
an enforceable settlement existed as a result.
Defendants rely heavily on Forte Sports, Inc. v. Toy
Airplane Gliders of America, Inc., 371 F. Supp. 2d 648 (E.D. Pa.
In Forte, the parties agreed in an email exchange to the
essential terms of settlement which would be later memorialized
in a formal contract.
Id. at 649.
After attempts to draft a
written settlement agreement failed, the plaintiff brought a
motion to enforce settlement.
to enforce, stating that:
This court granted the motion
It is well established that a contract
comes into being once the parties have
reached a meeting of the minds on the
essential terms and have manifested the
intent to be bound by those terms....
.... While a signed settlement agreement
or release is certainly customary when
resolving legal disputes, the failure to
execute such a document here does not negate
the existence of a legally binding
settlement. The settlement agreement cannot
be reasonably interpreted to mean that a
signed writing incorporating its terms was a
Id. at 649-50.
Forte and the other cases cited by defendants are
Here, Farmart's attorney insisted that the
release already drafted be executed and stated that the check for
$7,000 would be sent "upon receipt of the signed Release."
significantly, the execution of the release was of critical
importance to the very existence of the settlement because it
contained not only a clause providing a deadline for the
plaintiff to sign it but also an additional period following
execution for him to revoke or repudiate it.
The signing or non-
signing of the release by plaintiff was not simply a formality or
Instead, signing was a condition precedent and
the settlement even then was subject by agreement to later
revocation or repudiation.
In sum, Farmart's attorney never sent a revised release
for plaintiff to execute.
Thus, the fault lies with Farmart.
any event, even if Spiegel had had the responsibility to revise
the release and present it to plaintiff and the twenty-one day
signing period is deemed to have started anew on April 30, 2010,
the fact remains that plaintiff never affixed his signature to
The failure to sign within the twenty-one days is
in effect a timely revocation or repudiation of the settlement,
which the proposed release specifically permitted during a seven
day period after its execution.
It would be an empty formality
to require the plaintiff here first to sign the release before
being able to revoke or repudiate it.
See McNamara v. Tourneau,
464 F. Supp. 2d 232, 240-41 (S.D.N.Y. 2006).
There could be no enforceable settlement until
plaintiff signed the release during the time period provided in
the release and until the opt-out period following timely
execution had expired without a revocation or repudiation.
Neither event happened here.
Accordingly, the motion of the defendants "to dismiss
or for summary judgment" will be denied.3
3. Plaintiff also asserts that claims under the Fair Labor
Standards Act cannot be settled without prior court approval.
Because we are denying the motion on other grounds, we need not
address this issue.
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