Thursday, February 25, 2016

This is why lawyers drink

The general rule is that clients have the final say over whether to settle a case. But lawyers are presumed to act on behalf of the client. So if the lawyer signs off on a settlement and the client says she did not authorize that settlement, the client bears the burden of proving that the settlement was not authorized. In this case, the action settled but the client then disavowed it. The courts will not let him do so.

The case is Wang v. IBM, a summary order decided on February 24. Wang sued IBM for disability discrimination, claiming he was fired in violation of the Americans with Disabilities Act. He is hearing-impaired but can communicate through American Sign Language. Although Wang's claim survived summary judgment, his lawyer said it had a less than 10 percent chance of prevailing at trial. So everyone went to mediation to try to settle the case.

At mediation, Wang's lawyer said to Wang through ASL that the parties reached a settlement in the amount of $207,000. A memorandum of understanding was drawn up at the end of mediation, intended to lock everyone into the agreement. When the formal settlement agreement was drafted, Wang objected to the $207,000 and said he thought the case had actually settled for $200 million. He noted that the ASL gesture for the words "thousand" and "million" have a lot in common and are easily confused. He also said he had instructed his lawyer not to settle the case for less than $200 million. So Wang refused to sign the agreement and asked the trial court to repudiate it. The trial court said no, and the Court of Appeals affirms, which means the case settles for $207,000 and Wang does not get $200 million.

On appeal, Wang says the district court should have held an evidentiary hearing on whether his lawyer had authority to settle the case for only $207,000. But the Court of Appeals (Winter, Hall and Droney) agrees with the district court that it was implausible that Wang would believe that IBM would settle for that amount, particularly since Wang was highly educated, his lawyer said the case had a slim chance at trial, and the $200 million demand was wholly out of proportion to his salary. Moreover, "Wang does not identify what, if any, evidence he would present at an evidentiary hearing to show that his attorney was directed to settle for $200 million or more."

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