Torres v. Metropolitan Life

Opinions of the United

1999 Decisions States Court of Appeals

for the Third Circuit

6-24-1999

Torres v. Metropolitan Life

Precedential or Non-Precedential:

Docket 97-5709

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Recommended Citation

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Filed June 24, 1999

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 97-5709

EDWARD D. TORRES,

Appellant

v.

METROPOLITAN LIFE INSURANCE COMPANY

On Motion for Award of Attorney Fees and Expenses

(District of New Jersey Civil Action No. 96-cv-01401)

(Honorable Stephen M. Orlofsky)

Argued January 28, 1999

Before: BECKER, Chief Judge, SCIRICA

and ROSENN, Circuit Judges

(Filed: June 24, 1999)

CARL OXHOLM, III, ESQUIRE

(ARGUED)

JERRY L. TANENBAUM, ESQUIRE

Connolly, Epstein, Chicco, Foxman,

Engelmyer & Ewing

1515 Market Street, Suite 900

Philadelphia, Pennsylvania 19102

Attorneys for Appellant

B. JOHN PENDLETON, JR.,

ESQUIRE (ARGUED)

McCarter & English

Four Gateway Center

100 Mulberry Street

Newark, New Jersey 07101-0652

Attorney for Appellee

OPINION OF THE COURT

SCIRICA, Circuit Judge.

This is a motion for an award of attorney's fees and

expenses arising from the settlement of an employment

discrimination lawsuit by Edward D. Torres against

Metropolitan Life Insurance Company ("MetLife"). For the

reasons that follow, we will grant Torres's motion but refer

the matter to a Magistrate Judge for determination of the

appropriate amount of fees.

I.

In March 1996, Edward Torres commenced a pro se

employment discrimination suit against MetLife under Title

VII of the Civil Rights Act of 1964, 42 U.S.C.A.S 2000e to

2000e-17 (West Supp. 1999). Torres alleged that MetLife

unlawfully discriminated against him because he is

Hispanic and terminated his participation in MetLife's Pre-

Appointment Training Program in retaliation for reporting

the discrimination to several MetLife officers. The District

Court granted Torres's motion to proceed in forma pauperis.

In September 1997, MetLife filed a motion for summary

judgment, which the District Court granted on the basis

that Torres lacked standing to sue under Title VII because

he was not an "employee" of MetLife while enrolled in the

training program.

Torres filed a notice of appeal and moved for appointment

of counsel. On March 17, 1998, a motions panel of this

Court granted Torres's motion and appointed attorneys Carl

Oxholm III and Jerry L. Tanenbaum, both of the law firm

2

Connolly, Epstein, Chicco, Foxman Oxholm and Ewing

("Connolly Epstein"), as co-counsel to Torres. In an

engagement letter signed by Torres and his new attorneys,

Torres agreed that Connolly Epstein would represent him

pro bono publico but assigned to Connolly Epstein all right

and title to any legal fees that a court might require MetLife

to pay.

Subsequently, Connolly Epstein prepared Torres's appeal

while attempting to negotiate a settlement with MetLife. On

July 16, 1998, the parties orally agreed to settle their

dispute and MetLife's attorneys began drafting a settlement

agreement. Shortly thereafter Torres and MetLife executed

an Agreement and Release in which MetLife agreed to pay

Torres $45,000 in settlement of all claims. The settlement

agreement does not contain any reference to attorney's fees.

The parties also executed a Stipulation of Dismissal with

Prejudice of the Pending Lawsuit and filed it with this

Court.

Torres now moves for an order requiring MetLife to pay

Connolly Epstein attorney's fees and expenses in the

amount of $30,427.14, representing the work done by

Connolly Epstein in preparing Torres's appeal and

negotiating and executing the settlement, as well as the

cost of preparing this motion.1 By order of this Court,

Torres's motion was referred to this merits panel for

disposition.2

II.

A prevailing party is entitled to recover its reasonable

attorney's fees unless special circumstances would render

such an award unjust. See 42 U.S.C.A. S 2000e-5(k) (West

Supp. 1999) (providing for recovery of fees in Title VII

employment discrimination lawsuits); Independent Fed'n of

Flight Attendants v. Zipes, 491 U.S. 754, 761 (1989);

_________________________________________________________________

1. Initially, MetLife filed a cross-motion seeking attorney's fees and

Rule

11 sanctions against Torres, but MetLife subsequently withdrew the

cross-motion.

2. The District Court had subject matter jurisdiction under 28 U.S.C.

S 1331. We have jurisdiction under 28 U.S.C. S 1291.

3

Newman v. Piggie Park Enterprises, Inc., 390 U.S. 400, 402

(1968). A "prevailing party" is one that "succeed[ed] on any

significant issue in the litigation which achieves some of the

benefit the parties sought in bringing the suit." Hensley v.

Eckerhart, 461 U.S. 424, 433 (1983) (citation omitted).

MetLife does not dispute that Torres qualifies as a

prevailing party. Instead, MetLife argues Torres's motion

must be denied because the settlement agreement was a

"global agreement" extinguishing all of Torres's claims

against MetLife, including a claim for attorney's fees. In

support, MetLife offers extrinsic evidence of the parties'

intent, including statements from Mr. Tanenbaum (who has

since left Connolly Epstein) that he believed the agreement

settled all of his client's claims against MetLife, including a

potential claim for attorney's fees.

When the parties to a settlement agreement dispute

whether the prevailing party waived its statutory right to

attorney's fees, "the burden is on the losing party to show

that the settlement agreement clearly waived" such right. El

Club Del Barrio, Inc. v. United Community Corps., 735 F.2d

98, 99 (3d Cir. 1984). In El Club Del Barrio, which similarly

involved a claim for recovery of attorney's fees in a Title VII

suit, we expressly rejected a "silence equals waiver" rule

and held that "extrinsic evidence such as the course of

negotiations" is irrelevant. Id. at 100. A suit for recovery of

attorney's fees is foreclosed only upon express stipulation

in the settlement agreement: "If the parties cannot agree on

counsel fees and the losing party wishes to foreclose a suit

. . . for attorneys fees, it must insist that a stipulation to

that effect be placed in the settlement agreement. We so

hold." Id. at 101.

The settlement agreement here contains no such

stipulation. In fact, it does not mention attorney's fees at

all. MetLife cites the section of the agreement entitled

"Plaintiff 's Release And Waiver of Claims," which states in

part:

Without limitation, Plaintiff specifically releases all

claims, charges, or demands asserted or assertable in

the Pending Lawsuit, and all claims, charges, or

demands arising from or relating to Plaintiff's

relationship of any kind with the Released Parties,

4

including without limitation any rights or claims

Plaintiff may have under Title VII of the Civil Rights Act

of 1964, as amended, and the Civil Rights Act of 1991.

This language, although broad, does not expressly stipulate

that Torres's claim for attorney's fees is waived.3 As El Club

Del Barrio makes clear, that is the end of the analysis. It is

irrelevant whether Mr. Tanenbaum and the other attorneys

believed the release extinguished a claim for fees, as

MetLife contends. A settlement agreement that is silent as

to attorney's fees will not be deemed to constitute a waiver,

regardless of the course of negotiations. See El Club Del

Barrio, 735 F.2d at 100; Ashley v. Atlantic Richfield Co.,

794 F.2d 128, 139 (3d Cir. 1986) ("[W]here a defendant

seeks to settle its total liability on a claim, it shall be

incumbent upon the defendant to secure an express waiver

of attorney's fees. Silence will not suffice.") (citation

omitted). To hold otherwise would be to embrace the

"silence equals waiver" rule that we have repeatedly rejected

since El Club Del Barrio. If the parties to a settlement

agreement wish to extinguish the prevailing party's claim

for attorney's fees, they must do so specifically and

expressly in the terms of the agreement. Because the

parties here did not do so, Torres's claim for attorney's fees

was not waived.

MetLife relies on Conrad v. Bergen Community College,

1996 WL 903946 (D.N.J. Dec. 12, 1996), in which the

District Court denied the plaintiff 's request for attorney's

fees even though the settlement agreement contained no

express waiver. The District Court in Conrad based its

ruling on the fact that during negotiations, plaintiff's

counsel gave "the impression" that fees would not be

requested and defense counsel therefore formed a

reasonable expectation that all attorney's fees were

_________________________________________________________________

3. The dissent argues the release "expressly extinguish[ed] all claims to

attorney fees" and that the agreement "could not be made more plain."

We disagree. As we stated in El Club Del Barrio, the release must

"clearly" waive plaintiff's right to attorney's fees. 735 F.2d at 99. The

agreement here contains a general release that does not mention

attorney's fees. It could easily have been "made more plain" through a

specific provision unambiguously stating whether Torres's claim for

attorney's fees was reserved.

5

encompassed within the agreement, regardless of the

absence of an express waiver. Id. at *4. To the extent that

Conrad would authorize a court to consider extrinsic

evidence of the course of negotiations or the expectations of

the parties, we believe it was wrongly decided. The clear

import of El Club Del Barrio and Ashley is that it does not

matter whether the parties discussed the issue of attorney's

fees or believed the settlement agreement waived such a

claim. All that matters is whether the agreement expressly

stipulates that the prevailing party's claim for fees is

waived. If it does not, then the claim survives.4

Similarly, we believe the dissent's reliance on Wakefield

v. Mathews, 852 F.2d 482 (9th Cir. 1988) is misplaced. In

Wakefield, the release was not silent as to attorney's fees,

but expressly included "costs or expenses of any nature

whatsoever." Id. at 483. For precisely this reason, the

Wakefield court understood its decision to be fully

consistent with El Club Del Barrio and Ashley. See id. at

484 ("We are in full agreement with the Third Circuit's

resolution of both the El Club Del Barrio and Ashley cases.

Waiver of attorney's fees should not be presumed from a

silent record.").

The rule that claims for attorney's fees survive unless

expressly waived is strongly grounded in policy

considerations. As we observed in El Club Del Barrio,

"Requiring the district court to inquire into the

circumstances of settlement negotiations and to determine

who said what to whom when seems a pointless exercise

where observance of a formality will suffice." 735 F.2d at

100-01. We continue to believe that consideration of

extrinsic evidence in these circumstances "unnecessarily

complicates litigation" and that adherence to a clear rule of

law is preferable. Id. at 100. A bright-line rule serves the

additional virtue of promoting informed settlements, as the

parties will know in advance whether their agreement truly

forecloses a post-settlement petition for fees. See Ashley,

794 F.2d at 138.5 Also, such a rule is consistent with the

_________________________________________________________________

4. We express no opinion on whether a court may look beyond the four

corners of the settlement agreement in evaluating a claim or defense

based on fraud, duress, accident, or mistake.

5. The rule we apply today will not leave "settlements and releases under

the Act in chaos, stripped of any finality," as the dissent contends. On

6

Supreme Court's determination that prevailing civil-rights

plaintiffs are presumptively entitled to recover attorney's

fees. See El Club Del Barrio, 735 F.2d at 100 (rejecting a

"silence equals waiver" rule because it "pays inadequate

attention to the presumption established in Hensley and

Piggie Park in favor of prevailing civil rights plaintiffs").

Consequently, we reiterate the holding of El Club Del

Barrio and Ashley. If parties wish to extinguish a claim for

attorney's fees, they must do so specifically and expressly

within the terms of the settlement agreement. Accordingly,

we will grant Torres's motion.

III.

The parties also dispute the reasonableness of the

amount of fees requested. On this issue, we believe fact-

finding is required. We will therefore refer the matter to a

Magistrate Judge for a report and recommendation on the

appropriate amount of fees.

_________________________________________________________________

the contrary, we believe such an outcome could result from the dissent's

invitation to consider whether the parties "viewed the waiver as inclusive

of attorney's fees," thus raising questions of the parties' intent and the

course of negotiations. A bright-line rule directing parties to insert

specific provisions covering attorney's fees will clarify settlement

agreements and promote finality.

7

ROSENN, Circuit Judge, dissenting:

I believe that the polestars to be followed in the

construction of an agreement and release are the

contractual language and the parties' intentions. Highly

trained and experienced lawyers for the parties negotiated

the settlement between Torres and the Metropolitan Life

Insurance Company (MetLife or the Company) and later

reduced it to writing. The written agreement and release

plainly and unreservedly includes within its express terms

a settlement and extinguishment of all claims to attorney

fees to which the plaintiff might be entitled under Title VII

of the Civil Rights Act of 1964, 42 U.S.C. S 2000e (West

Sup. 1968)(the Act). I therefore respectfully dissent and

would deny the plaintiff 's motion for counsel's fees.

I.

Following his termination by MetLife of his participation

in its Pre-appointment Training Program,1 Torres filed a pro

se employment discrimination suit against the company

under Title VII of the Civil Rights Act. The district court

entered summary judgment for the Company on the ground

that Torres lacked standing to sue under Title VII because

his enrollment under the Training Program did not render

him an employee. He appealed to this court.

On Torres's motion, we appointed two lawyers, Carl O.

Oxholm, III, and Jerry L. Tanenbaum, co-members of the

law firm of Connolly, Epstein, Chicco, Foxman, Oxholm and

Ewing (Connolly Epstein), to represent him. His newly

appointed lawyers sent Torres an engagement letter dated

March 23, 1998, in which they set forth that they would

represent him pro bono publico but that he would assign to

Connolly Epstein all right to any legal fees that any court

or other tribunal might require MetLife to pay.

_________________________________________________________________

1. The program was designed to enable individuals interested in personal

insurance to investigate employment opportunities in the insurance field.

The program stated that participants were not employees of MetLife and

required participants to maintain any other employment they presently

had. Torres continued his employment with the Internal Revenue

Service. MetLife released Torres from the program after four weeks.

8

Except in special situations not here relevant, American

courts, unlike English tribunals, do not award attorney fees

to a prevailing party except where there is a statutory

mandate for such payment. See Hensley v. Eckerhart, 461

U.S. 424, 443-44 n.2 (Brennan, J., concurring in part and

dissenting in part). In Title VII cases, there is such a

mandate, and Torres and his counsel relied on it. Title VII

provides that "the Court, in its discretion, may allow the

prevailing party ... a reasonable attorney's fee as part of the

costs." 42 U.S.C. SS 1988 and 2000e -5(k). Torres filed his

suit for discrimination in the United States District Court

under Title VII, and the motion by his counsel before us

now for attorney fees specifically recites that pursuant to

Title VII they claim attorney fees for services incurred in the

appeal and in the preparation of their motion.

In July 1998, while Torres's appeal was pending, the

parties settled the case for $45,000. In a formal settlement

agreement and release, Torres specifically agreed,"without

limitation," to release

all claims, charges, or demands asserted or assertable

in the Pending Lawsuit ..., including, without

limitation, any rights or claims Plaintiff may have

under Title VII of the Civil Rights Act of 1964, as

amended, and the Civil Rights Act of 1991. Plaintiff

agrees not to file or assert any claim, suit, or demand

against any of the Released Parties that has been

waived or released in this agreement.

Thus, in exchange for $45,000, Torres agreed to globally

release MetLife of any and all claims that he had under

Title VII. His claim to attorney fees is under Title VII, as is

the claim of his counsel to whom he assigned his right to

attorney fees.

The settlement agreement and release emphasizes the

inclusion within its terms of "any rights or claims Plaintiff

may have had under Title VII of the Civil Rights Act of

1964" and the Civil Rights Act of 1991. There is nothing in

this record to show that there was ever any disagreement

between the parties as to whether any rights or claims were

to be reserved or would otherwise survive the settlement

agreement's sweeping release. Torres's complaint states in

9

relevant part that the action is brought pursuant to Title

VII of the Civil Rights Act of 1964, as amended, for

employment discrimination.

There is no reservation in the settlement agreement and,

as far as the record shows, no demand by Connolly Epstein

before the execution of the agreement and stipulation of

dismissal of the pending lawsuit that MetLife separately pay

it any costs or attorney fees in addition to the sum specified

in the release. Connolly Epstein did not reserve or attempt

to reserve any rights or claims for costs or attorney fees in

the settlement agreement and release. Upon the execution

of the settlement agreement, Connolly Epstein and MetLife

executed a stipulation for dismissal with prejudice of the

pending lawsuit and filed it with this court, which

dismissed the case pursuant to the stipulation.

There can be no question that Connolly Epstein knew

that the sole basis for any claim for attorney fees by them

or Torres was predicated solely upon Title VII of the Act.

Although Tanenbaum, who performed most of the services

for Torres's appeal, is no longer with Connolly Epstein, he

and his co-counsel, Oxholm, evidently knew, without any

reference by the court to extrinsic evidence proffered by

MetLife, that the plaintiff fully and unambiguously released

in his settlement agreement whatever rights or claims he

had under Title VII of the Civil Rights Act of 1964, as

amended. Oxholm, in his affidavit in support of the motion

for attorney fees, represents that he not only graduated

from Harvard Law School cum laude, but that his

"extensive activities on behalf of pro bono legal services"

have earned for him various honors, including the Pro Bono

Publico Award of the American Bar Association. He also

claims "extensive experience in the preparation, trial and

management of significant business litigation including the

civil rights cases in this Court." Furthermore, Oxholm also

asserts in his affidavit that since he left the City Solicitor's

Office in 1989 to join Connolly Epstein, he was "the only

attorney representing the City [Philadelphia] and all of its

officials in the three dozen civil rights cases arising out of

the City's confrontation with MOVE (In re City of

Philadelphia Litigation)."

10

Oxholm also avers that he sought the assistance of his

partner, William H. Ewing, first in his class at the

University of Pennsylvania Law School, in developing the

legal arguments made on behalf of Torres and that Ewing

also serves as co-chair of the Connolly Epstein Employment

Law Department. Tanenbaum is a 1992 summa cum laude

graduate of Temple University Law School, where he ranked

first in his class and was editor-in-chief of the Temple Law

Review. There can be no misunderstanding on the part of

these experienced and highly trained lawyers that a release

"without limitation [of] any rights or claims plaintiff may

have under Title VII of the Civil Rights Act of 1964, as

amended," did not reserve any right to attorney fees under

the Act.

The motion for legal fees by Connolly Epstein not only

represents that attorneys Oxholm and Tanenbaum

performed services in behalf of Torres in connection with

the appeal and settlement, but that a considerable time

was spent in reviewing the Title VII statute, its definitions

and research in connection therewith. Tanenbaum spent

time in settlement discussions with his client, with the

Company, and Oxholm and Tanenbaum conferred with

respect to "settlement strategy." It is inconceivable and

incomprehensible that they did not know, especially

considering their expertise in employment law and in Title

VII cases, that the comprehensive and global language of

the release they executed did not reserve the right to collect

attorney fees claimed under Title VII. Disingenuously, after

the settlement check of $45,000 cleared the bank, Deborah

Weinstein, in behalf of Connolly Epstein, wrote MetLife

counsel on August 17, 1998, requesting that MetLife pay

them an additional $22,174.14 in counsel fees and

expenses.

Torres signed the settlement agreement with benefit of

these attorneys who are experts in employment law,

specifically with respect to Title VII cases. They advised

him, agreed to the broad language of the release, and filed

the Stipulation of Settlement dismissing the action with

prejudice. Of course, they knew that the language of the

release included all matters, and did not reserve any claim

for attorney fees and expenses.

11

In their claim for attorney fees and expenses, Connolly

Epstein maintains that Torres is entitled to additional

reasonable attorney fees and expenses for the appeal of this

case because he is the prevailing party pursuant to Title

VII, 42 U.S.C. SS 1988 and 2000e-5(k). It boldly asserts that

"the settlement documents do not release MetLife from

Torres's entitlement to recover attorney fees and expenses."

In support of the motion, it argues that Torres has not

settled his claim for attorney fees and expenses because a

waiver of the statutory right to attorney fees and expenses

"must be expressly set forth in the settlement documents."

The agreement and release, however, expressly includes an

extinguishment of all rights and claims under the Act; it

clearly includes the right to any attorney fees and expenses

claimed under the Act.

In support of its motion, Connolly Epstein cites to El Club

del Barrio, Inc. v. United Community Corporations, 735 F.2d

98 (3d Cir. 1984), and Ashley v. Atlantic Richfield Company,

794 F.2d 128 (3d Cir. 1986). Those cases, however, are

inapposite and distinguishable. Both of them concern

situations where the parties could not agree on counsel

fees, attempted to reserve the issue of attorney fees, and

therefore omitted any reference to them in their agreement.

In both El Club and Ashley, the original settlement

agreements proposed to the plaintiffs in the course of the

negotiations for settlement included language referring to

attorney fees. This language, however, was subsequently

deleted upon the objection of the opposing party.

In both of the above cases, this court was asked to

determine whether silence in a revised settlement

agreement under such circumstances constituted a waiver

of rights to attorney fees under Title VII when an express

reservation of rights clause had been negotiated out of the

initial settlement drafts. Based on the record in both of

those cases, this court concluded silence did not constitute

a waiver, regardless of the course of negotiations. We held:

"If the parties cannot agree on counsel fees and the losing

party wishes to foreclose a suit under section 1988 for

attorney's fees, it must insist that a stipulation to that

effect be placed in the settlement agreement." We did not

require that the specific words "attorney fees" be replicated

12

in haec verba. In this case, there is no evidence or claim

whatsoever that the parties did not agree on a settlement

that included attorney fees.

This case is altogether different from the foregoing cases

cited by the movants. References to attorney fees were not

deleted from a prior draft of the settlement agreement.

There is no evidence that there was any argument

concerning the amount and the payment of attorney fees.

The $45,000 settlement and release was global and its

language plainly included a release of the right to attorney

fees and expenses under the Act. The agreement expressly

sets forth the waiver of all rights and claims under the Act.

No mistake or fraud is claimed in the drafting of the release

and stipulation. Allowing a motion for substantial attorney

fees in the face of the settlement and release here not only

gives Torres a windfall but as a matter of policy leaves

written settlements and releases under the Act in chaos,

stripped of any finality.

In Wakefield v. Mathews 852 F.2d 482 (9th Cir. 1988),

the Court of Appeals for the Ninth Circuit also had an

opportunity to construe Ashley and El Club del Barrio. It

sustained a broad release against a claim for attorney fees

under section 1988, and noted that in Ashley and El Club

del Barrio "the original agreements had included language

referring to attorneys' fees, but upon objection the language

was deleted." Id. at 484. The court in Wakefield also

concluded that the record before it was different."It

contains no indication that plaintiffs made any attempt to

exempt attorneys' fees from the language of the proposed

settlement agreement." Id.

II.

When we look at the general design of the settlement

agreement and release in this case and at the

circumstances under which it was written and the suit that

was settled and dismissed with prejudice, and give the

language of the settlement agreement a rational meaning

consistent with its express general purpose, the payment of

$45,000 constituted a final settlement of all claims that the

plaintiff had under the Act, including attorney fees and

13

expenses. The motion for attorney fees should be denied. I

therefore respectfully dissent.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

14