Keycorp v. Holland et al
MEMORANDUM OPINION AND ORDER (public, redacted version of 178 ). (Ordered by Judge Sidney A Fitzwater on 7/5/2017) (Judge Sidney A Fitzwater)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
ALLISON HOLLAND, et al.,
Civil Action No. 3:16-CV-1948-D
*This memorandum opinion and order was filed under seal
on July 5, 2017. This unsealed version is being filed with
the redactions requested by the parties.
Plaintiff KeyCorp (“Key”) moves to enforce an alleged settlement agreement reached
with defendant Allison Holland (“Holland”) on November 16, 2016 (“Settlement
Agreement”). Holland opposes the motion, contending that the Settlement Agreement does
not comply with Tex. R. Civ. P. 11 (hereafter, “Rule 11”), and that it is unenforceable
because there was no meeting of the minds on all material terms. For the reasons that follow,
the court grants Key’s motion to enforce the settlement agreement and denies its request to
compel any discovery other than what is required by the terms of the enforced Settlement
Key is a retail and commercial bank for which Holland worked from August 2009 to
July 2015. Prior to her departure from Key to work for Capital One Financial Corporation
(“Capital One”), Holland emailed her Outlook Contact List from her work email to her
personal email account. After Holland began working at Capital One, she also requested a
quote memo template from a Key employee. The employee emailed Holland at her Capital
One account a quote for a completed Key transaction. This quote memo was marked
confidential and contained financial information for the transaction, including Key’s
comments on winning the deal.
As a result of these transactions, Key sued Holland, another former Key employee,
and Capital One, alleging trade secret misappropriation and breach of her employment
agreement with Key. While the lawsuit was pending, Holland and Key discussed settlement
and came to an agreement on many terms, including payment, release of claims, and
Holland’s obligation to be subject to a “prompt deposition.” P. Br. 2. Key simultaneously
pursued a preliminary injunction against Holland and the other former Key employee. Key
asked for injunctive relief similar to some terms within the alleged Settlement Agreement,
including ordering Holland to submit to computer forensic examinations and removal of Key
information, extending and enforcing Holland’s non-solicitation agreement, and restraining
Holland from using or disclosing confidential, proprietary, and trade secret information.
In December 2016 Holland requested “to substitute performance for the ‘prompt
deposition’ term.” Id. 19. Key maintains that it agreed to substitute performance due to
“Holland’s fears of submitting to a deposition while Capital One was still in the case.” Id.
The parties allegedly agreed that the “prompt deposition” term “could be performed by: (a)
a declaration executed by Holland, (b) comprehensive admissions by Holland, (c)
, and (d) Key’s reservation of rights to take Holland’s
deposition in the future, if necessary.” Id; see D. Br. 9. Holland provided declarations, but
the admissions remained in negotiations.
On January 24, 2017 the court granted in part and denied in part Key’s motion for a
preliminary injunction. The court enjoined Holland from using or disclosing Key’s
confidential, proprietary, and trade secret information, including prospect lists, proprietary
analytical tools known as “sizers,” proprietary client memoranda and templates, market
research, and other confidential and trade secret information, but it otherwise denied Key’s
motion as to Holland. After the court issued its ruling, Holland sent Key an email stating,
“All settlement proposals from Holland are withdrawn. Will be available to discuss
alternative terms of resolution terms tomorrow.” P. App. 60. Key now moves to enforce the
Settlement Agreement allegedly formed on November 16, 2017. Key also requests that the
court compel Holland to provide the remainder of the agreed upon “Alternative Discovery,”
such as the requested admissions, as a substitute for the prompt deposition term. P. Br. 21.
“‘[A]lthough federal courts possess the inherent power to enforce agreements entered
into in settlement of litigation, the construction and enforcement of settlement agreements
is governed by the principles of state law applicable to contracts generally.’” Lockette v.
Greyhound Lines, Inc., 817 F.2d 1182, 1185 (5th Cir. 1987) (quoting Lee v. Hunt, 631 F.2d
1171, 1173-74 (5th Cir. Unit A Dec. 1980)); Borden v. Banacom Mfg. & Mktg., Inc., 698 F.
Supp. 121, 123 (N.D. Tex. 1988) (Sanders, J). Because Texas law controls this case, Rule
11 also applies. See Anderegg v. High Standard, Inc., 825 F.2d 77, 80 (5th Cir. 1987);
Condit Chem. & Grain Co. v. Helena Chem. Corp., 789 F.2d 1101, 1102-03 (5th Cir. 1986).
Rule 11 provides that “no agreement between attorneys or parties touching any suit pending
will be enforced unless it be in writing, signed and filed with the papers as part of the record,
or unless it be made in open court and entered of record.”
Because Texas contract law applies to settlement agreements, the agreement must
contain all material terms and be “sufficiently definite to enable the court to understand the
parties’ obligations.” Liberto v. D.F. Stauffer Biscuit Co., 441 F.3d 318, 323 (5th Cir. 2006)
(citing Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831 (Tex. 2000)). Thus
“[w]here an essential term is open for future negotiation, there is no binding contract.” T.O.
Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992). “Evidence of the
parties’ intent to enter into a binding agreement is also required.” Estate of Martineau v.
ARCO Chem. Co., 203 F.3d 904, 910 (citing Premier Oil Refining Co. v. Bates, 367 S.W.2d
904, 907 (Tex. Civ. App. 1963, writ ref’d n.r.e.)).
Further, a district court can enforce a settlement agreement where the parties have
agreed to the materials terms and one party later refuses to execute a formal agreement. See
Weaver v. World Fin. Corp. of Tex., 2010 WL 1904561, at *2 (N.D. Tex. May 12, 2010)
(Fish, J.) (citing Daftary v. Metro. Life Ins. Co., 136 F.3d 137, 1998 WL 30059, at *1 (5th
Cir. Jan. 12, 1998) (per curiam)). “‘Where a party has knowingly and voluntarily agreed to
settle his claims and no change of circumstances warrants repudiation of the agreement, the
courts will enforce the settlement agreement.’” Id. (quoting Bell v. Schexnayder, 36 F.3d
447, 449 (5th Cir. 1994)).
The court considers first whether the alleged Settlement Agreement satisfies the
requirements of Rule 11, that is, that the agreement must be “in writing, signed and filed with
the papers as part of the record.”
Key posits that the series of emails forming the settlement agreement satisfies the Rule
11 requirements of a written memorandum, with signatures, and filed with the court. Citing
two decisions of this court, Key asserts that “[t]he memorandum . . . does not have to take
the form of a single document,” and that “an email exchange may, provided it meets the other
requirements that [the] Court has set out, qualify as a written agreement under Rule 11.”
Williamson v. Bank of N.Y. Mellon,, 947 F.Supp.2d 704, 708 (N.D. Tex. May 16, 2013)
(Godbey, J.); Dymatize Enters. Inc v. Maximum Human Performance, Inc. 2010 WL
4788573, at *4 (N.D. Tex. Sept. 20, 2010) (Ramirez, J.), rec. adopted, 2010 WL 4788571
(N.D. Tex. Nov. 17, 2010) (O’Connor, J.). Relying on the same authorities, Key asserts that
“even a simple typed name or automatically-generated signature block in an email constitutes
an electronic signature that satisfies Rule 11.” P. Br. 16. Regarding the filing requirement,
“[b]oth federal and state courts in Texas enforce agreements filed contemporaneously with
motions seeking their enforcement.” Williamson, 947 F.Supp.2d at 712.
Holland does not dispute that emails and email signatures can constitute a settlement
agreement that satisfies Rule 11. Instead, she maintains that the electronic communication
can only satisfy the Rule “[i]n cases in which an actual, formal written settlement agreement
is not contemplated (which is not the case here).” D. Br. 14. She also maintains that “‘the
series of emails . . . [must be] ‘complete within itself in every material detail.’” Id. (quoting
Williamson, 947 F.Supp.2d at 708). Because Holland disputes that the parties came to an
agreement on all material terms, she also asserts that the series of emails is not complete
within itself in every material detail. Holland also appears to argue that the Settlement
Agreement cannot satisfy Rule 11 because the court was never notified that the matter was
The court addresses first whether email communications and electronic signatures can
satisfy the Rule 11 “in writing” requirement. Because Texas law governs this case and the
Texas Supreme Court has not ruled on this specific issue, the court must make an Erie guess
as to how the court would rule. See Am. Int’l Specialty Lines Ins. Co. v. Rentech Steel LLC,
620 F.3d 558, 564 (5th Cir. 2010) (“In making our Erie guess, we look first to those Supreme
Court cases that, while not deciding the issues, provide guidance as to how the Texas
Supreme Court would decide the question[.]”). In two cases, this court has addressed this
question and has held that email exchanges satisfied Rule 11. See Williamson, 947
F.Supp.2d at 708; Dymatize, 2010 WL 4788571, at *5. The court follows these decisions in
First, the Supreme Court of Texas has already held that a series of letters can satisfy
Rule 11. See Padilla v. LaFrance, 907 S.W.2d 454, 460 (Tex. 1995). Second, the Texas
Uniform Electronic Transactions Act (“TUETA”) provides that, “[i]f a law requires a record
to be in writing, an electronic record satisfies the law.” Tex. Bus. & Com. Code Ann.
§ 322.0007(c) (West 2015). Likewise, an electronic signature under the TUETA can be “an
electronic, sound, symbol, or process attached to or logically associated with a record and
executed or adopted by a person with the intent to sign the record.” Id. § 322.002(8). Third,
the Supreme Court of Texas has compared the Rule 11 “in writing” requirement to that of
the statute of frauds. See Padilla, 907 S.W.2d at 460. This analysis can extend to signatures.
A number of courts have held that “names typed at the end of emails can be signatures under
various states’ statutes of frauds and enactions of the Uniform Electronic Transactions
Act[.]” Williamson, 947 F.Supp.2d at 710 (setting out a line of cases that hold that email
signature are sufficient to satisfy the statute of frauds). Thus the court predicts that the
Supreme Court of Texas would hold that an electronically signed email exchange is sufficient
to establish the writing requirement of Rule 11. Because each email at issue was signed with
counsel’s names, either manually typed or electronically signed, the court concludes that the
series of emails is “in writing” and “signed” for purposes of Rule 11.
With regard to the time of filing, the Supreme Court of Texas only requires the
agreement to be “filed before it is sought to be enforced,” and it has held that the filing
requirement is met “by filing each of the settlement letters with [a] motion for summary
judgment.” Padilla, 907 S.W.2d at 461. Here, the record establishes that Key filed the email
exchange with its motion to enforce the settlement agreement. The court finds this
simultaneous filing sufficient to satisfy Rule 11. See id. (“The purpose of the rule—to avoid
disputes over the terms of oral settlement agreements—is not furthered by requiring the
writing to be filed before consent is withdrawn.”).
The court now considers whether Key has established that the parties assented to all
Key contends that on November 16, 2016 Holland entered into an enforceable
settlement agreement that contains all material terms. It posits that the Settlement Agreement
developed over the course of three letters: Key’s proposal, Holland’s counteroffer, and Key’s
acceptance. In its proposal, Key stated, “for over a week we have been in agreement on all
settlement terms, except for a payment term and a non-solicitation term.” P. Br. 3. Key
proposed three terms: (1) payment (2) non-solicitation, and (3) notice-to-employer. Holland
“agreed to each of the three terms with one exception: she demanded that Key acquiesce to
one last non-solicitation term.” Id. (emphasis in original; bold font omitted). Key posits that
it “fully understood that, if it acquiesced to Holland’s last term, then the dispute between
them was resolved.” Id. 4. Key therefore responded to Holland’s counteroffer stating, “We
believe we now have the material terms in place to form the basis of a settlement agreement,”
and including in its response the allegedly mutual terms. Id. Key asserts that this
communication constituted acceptance of Holland’s counteroffer, established the material
terms of the agreement, and formed an enforceable settlement agreement.
Holland contends that no enforceable settlement agreement was formed. She
highlights that her November 15 counteroffer specifically noted that a revised nonsolicitation term was subject to a mutually acceptable definition of solicitation. Because Key
eliminated this phrase, replaced it with its own language defining “solicitation,” and
allegedly proposed “a number of new terms,” D. Br. 16, Holland contends no binding
agreement was made. Holland also asserts Key knew an agreement had not yet been formed
because its response concluded with, “Please advise if we have a final agreement and [we]
may begin drafting a formal settlement agreement.” Id. Key also stated it “it could not
include in the formal written settlement agreement all of the substantive changes that Ms.
Holland’s counsel required” during a November 28 telephone call. Id. Holland concludes
that because certain definitions and terms were contested, it was clear that neither party could
“understand the full extent of Ms. Holland’s obligations under the purported settlement
agreement,” and, as a result, “the material terms of that purported agreement are not
‘sufficiently definite to enable the court to understand the parties’ obligations.’” Id. (quoting
Liberto, 441 F.3d at 323).
The court finds that Key has established that the parties assented to the material terms
of the Settlement Agreement. Although the definition of “solicitation” and the language of
a few terms were still being negotiated, Key and Holland agreed to the terms of a settlement
agreement that are material in Texas: payment and release of claims. See, e.g., Oliver v.
Kroger Co., 872 F. Supp 1545, 1548 (N.D. Tex. 1994) (Boyle, J.), rec. adopted, 872 F. Supp
1545, 1551 (N.D. Tex. 1994) (Fitzwater, J.) (holding that although letter was not finalized
settlement agreement, letter set forth “the material portions” of payment and the release of
all claims); Padilla, 907 S.W.2d at 461 (holding that all material terms were present to create
a binding agreement when parties agreed on payment and release of claims); Brooks v.
Metiscan Techs., Inc., 2009 WL 3087258, at *1 (Tex. App. 2009, no pet.) (holding that
“essential terms for a settlement agreement are the amount of compensation and the liability
to be released,” and citing a line of cases holding the same). That Holland would pay
upon execution of the agreement “in exchange for complete mutual releases” was
never contested after November 16, 2016. See P. App. 21-23.
Moreover, Holland assented to the terms that the parties allegedly treated as material,
including agreement to deposition, testifying, collection of ESI, and the existence of a nonsolicitation clause.
Although the parties did not agree regarding the definition of
“solicitation,” they did agree on detailed parameters of the clause, including the duration of
time Holland would refrain from soliciting 87 specified companies, with a full carve out of
two other companies. Thus because Holland assented to the material terms of the agreement,
the court finds that Key established that there was an enforceable settlement agreement
between Key and Holland. See Oliver, 872 F. Supp at 1548 (enforcing settlement agreement
where the writing contained the “general terms” of the settlement).
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The court now turns to Key’s request that the court order Holland to submit to
alternative discovery in lieu of a prompt deposition.
Key contends that Holland requested “to substitute performance for the ‘prompt
deposition’ term,” and that Key agreed to accept, inter alia, declarations and admissions in
lieu of prompt depositions. P. Br. 19. In December 2016 Key forwarded a draft of the
declarations to Holland. When Holland asked what the declarations would be used for, Key
explained via email that “the Declaration and Requests for Admissions are what we discussed
doing in lieu of a December depositions.” Id. 20. Key continued to remind Holland that
“between the Declaration and the Admissions, the goal is to develop the same discovery we
would develop in a deposition. My client was very reluctant to give up the deposition, but
we understood that [Holland] would be more comfortable and forthcoming if we delayed the
deposition, perhaps indefinitely.” Id. Further, Key asserts that it “actually performed the
substituted performance by (a) deferring Holland’s deposition, (b) preparing the Holland
declaration, (c) preparing the requests for admission and discussing Holland’s concerns with
them, and (d)
” Id. 21.
Key contends it performed “in reliance on the parties’ settlement agreement.” Id. It did “not
take Holland’s deposition before the submission of Key’s PI motion,” and it made “no effort
to supplement the record as to Key’s claims against Holland.” Id. For these reasons, Key
requests the court “find that Holland’s commitment to provide alternative discovery in lieu
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of a prompt deposition should be enforced for equitable reasons.” Id. 21.
Holland opposes Key’s request to compel her to produce alternate discovery. She
asserts that Key’s suggestion “that it has somehow been deprived of the ability to develop
a record against Ms. Holland for the purpose of its Motion for Preliminary Injunction because
of Ms. Holland’s purported request for substituted discovery” is without merit. D. Br. 22.
Holland contends that Key insisted the substituted discovery was a “pre-condition to
continuing final settlement negotiations,” and that she provided declarations based on this
understanding. Id. Holland also maintains that Key could have requested an adjournment
of its pending preliminary injunction motion if it believed the case against Holland was
settled or if it wanted to obtain Holland’s admissions and deposition before the court decided
the injunction motion. Holland concludes that her cooperation and Key’s delaying the
deposition does not entitle Key under the law or in equity to settlement terms it prefers
enforced against her.
Key appears to contend that the parties agreed to modify the Settlement Agreement
by delaying Holland’s deposition in exchange for her declarations and admissions. But Key
has not demonstrated the elements of a contractual modification, and it instead requests that
the court compel Holland’s admissions “for equitable reasons.” P. Br. 21. Key fails to set
out any authority that persuades the court that the Settlement Agreement should be modified
or that alternative discovery should be compelled in equity. See, e.g., Ryan v. Collins, 496
S.W.2d 205, 209 (Tex. Civ. App. 1973, writ refused n.r.e.) (holding that equitable proceeding
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requires allegation that there is no adequate remedy at law). For these reasons, Key’s request
for discovery outside of the bounds of the November 16 Settlement Agreement is denied.
For the reasons set forth, the court grants Key’s motion to enforce the settlement
agreement and denies its request to compel any discovery other than what is required by the
terms of the enforced Settlement Agreement.
July 5, 2017.
SIDNEY A. FITZWATER
UNITED STATES DISTRICT JUDGE
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