How hard is it to back out of a settlement agreement?

This case demonstrates how difficult it is to walk back a settlement agreement. Plaintiff agreed to settle her age discrimination case but wanted that agreement revoked after she determined her employer was not being straight with her about the terms of her transfer to a new job location.

The case is Smith v. CVS Albany, LLC, a summary order issued on August 1. Plaintiff worked in a CVS location in Queens. As part of the settlement, plaintiff agreed to relocate to a CVS in Brooklyn. But now she wants out of the settlement, claiming that CVS misrepresented the hours she would have to work in Brooklyn. She said that during mediation, she thought the store was open 24 hours. It turns out that the store was in the process of converting to non-24 hours' operation. Is this enough to set aside the settlement?

It is not. The cases make it clear how difficult it is to back of a settlement that you've already agreed to. "A settlement agreement is a contract that is.... binding and conclusive,” and “a court cannot relieve [a party] of [her] choice [to settle] simply because h[er] assessment of the consequences was incorrect.” A motion to set aside a settlement agreement under Federal Rule of Civil Procedure 60(b)(3) “cannot be granted absent clear and convincing evidence of material misrepresentations.” That is a high bar. Clients need to recognize this when they enter into settlement negotiations. 

The district court denied that motion, and plaintiff filed a motion for reconsideration. Such motions are difficult to win, as well. That motion failed in the district court, and the Court of Appeals (Chin, Menashi and Sullivan) affirms. Plaintiff will have to live with the Brooklyn arrangement.

Smith v. CVS Albany, LLC, No. 20-4000, 2022 WL 3022526, at *1 (2d Cir. Aug. 1, 2022)

because “[a] settlement agreement is a contract that is.... binding and conclusive,” and “a court cannot relieve [a party] of [her] choice [to settle] simply because h[er] assessment of the consequences was incorrect,” Powell v. Omnicom, 497 F.3d 124, 128 (2d Cir. 2007) (internal citation omitted), a motion to set aside a settlement agreement under Federal Rule of Civil Procedure 60(b)(3) “cannot be granted absent clear and convincing evidence of material misrepresentations,”

Smith v. CVS Albany, LLC, No. 20-4000, 2022 WL 3022526, at *1 (2d Cir. Aug. 1, 2022)