Klein v. AT&T Corp.

Background

Jennifer Klein, proceeding without a lawyer, sued AT&T under the Fair Credit Reporting Act. The caption identifies the defendant as AT&T Corp., but the opinion states that the defendant is AT&T Mobility, LLC and notes that AT&T says it was “erroneously identified” as AT&T Corp. The case was removed from state court. AT&T had moved to compel arbitration, and Klein had filed a motion for summary judgment, which she later withdrew.

AT&T then moved to enforce what it claimed was a settlement reached through emails and to stay—pause—Klein’s summary-judgment motion and AT&T’s arbitration motion. The settlement discussions included offers involving payment, debt waiver, and deletion of a credit-report tradeline. After AT&T offered $5,500, Mr. Klein responded, “Ok. Send it.” Three days later, he clarified that he meant he was willing to review the proposed agreement and that final acceptance depended on agreeing to its terms. AT&T supplied an unsigned proposed settlement agreement. Later, an email associated with Jennifer Klein’s account sought at least $7,500 and additional clarification about the tradeline deletion.

Settlement-enforcement ruling

The court applied four factors used to determine whether parties intended to be bound before signing a written settlement: whether they reserved the right not to be bound without a signed writing; whether either side partly performed; whether they agreed on all material terms; and whether the type of agreement ordinarily is put in writing.

The court found that all four factors favored Klein. First, the proposed agreement’s language about execution, signatures, and voluntary consent showed that signing was intended to establish binding consent. The court also found that the “Ok. Send it” email did not clearly waive the signature requirement, particularly because Mr. Klein later explained that he intended to review the agreement.

Second, the court rejected AT&T’s claim that it had partly performed by requesting deletion of the tradeline. AT&T had submitted that request before the alleged settlement, and the court found that no settlement payment or other settlement term had been performed.

Third, the court found that the parties had not clearly agreed on all material terms. The record showed multiple counteroffers, including different payment amounts, and the court could not determine that the parties had finished negotiating. Fourth, the court concluded that a settlement that would permanently release claims is the type of agreement ordinarily committed to a signed writing or placed on the record in open court.

The court concluded that Klein never entered into a binding settlement agreement. It denied AT&T’s motion to enforce the settlement with prejudice and lifted the previously entered stay of proceedings.

Requests concerning other motions

Because Klein had withdrawn her summary-judgment motion, the court denied as moot AT&T’s request to stay that motion.

The court also denied AT&T’s request to stay its motion to compel arbitration. It said the parties had not fully briefed the merits of whether the claims are subject to arbitration. The court ordered Klein, within one week after the opinion and order was filed, to state in a letter whether she consents to arbitration. If she consents, the court said it will grant AT&T’s motion to compel arbitration without further briefing. If she does not consent, AT&T must file a reply within one week after Klein’s letter. The request to stay the arbitration motion was denied without prejudice.