Parties typically expect that a settlement does not become enforceable until there is ink to paper on a formal written settlement agreement. But as a recent case in the U.S. District Court for the Eastern District of New York reminds us, settlements can be reached by email correspondence, even when certain terms of the settlement are excluded. For instance, a settlement agreement may be enforced even without defining the scope of a release or when parties merely agree to “usual and customary terms of a settlement agreement (including confidentiality and non-disparagement).”
In McCalla v. Liberty Life Assurance Co. of Boston, No. 18-cv-1971 (JMA) (SIL), 2020 WL 587003 (E.D.N.Y. Feb. 6, 2020), Judge Azrack enforced the parties’ settlement agreement reached via email despite an attorney’s email legend specifying that the correspondence was “for settlement purposes only without prejudice – not to be used in litigation,” and a representation to the court that a settlement had been reached “in principle.” The court rejected the plaintiff’s attempt to back out of the settlement, holding that (i) there was a binding settlement agreement, (ii) plaintiff’s counsel had authority to settle on plaintiff’s behalf, and (iii) plaintiff agreed to the settlement amount.
This article first appeared in the New York Law Journal on July 24, 2020. Sarah A. Sheridan, an associate of the firm, assisted in the preparation of the article.