Hermes Castillo v. Stanley

Background

Castillo worked as a financial advisor for Morgan Stanley. She alleged that Morgan Stanley issued an unjustified performance warning because of her race, retaliated after she complained to Human Resources by issuing an unjustified reprimand, and ultimately terminated her. She brought discrimination and retaliation claims under 42 U.S.C. § 1981.

After private mediation and further negotiations, Castillo’s attorney, Robert T. Vance, Jr., informed the court that the parties had reached a settlement. The written settlement agreement was awaiting Castillo’s signature. The court then dismissed the case while allowing either party to ask that it be restored if the settlement was not completed within thirty days.

Vance later asked the court to restore the case to confirm the settlement. He stated under oath that Castillo had approved the agreement after the addition of a sentence about reporting backpay, that all parties and attorneys except Castillo had signed it, and that Castillo had said she would return a signed signature page. The court granted the request and held that Castillo’s oral agreement made the settlement enforceable.

Castillo, represented by new counsel, asked the court to reconsider and set aside that decision. She submitted emails stating that she disagreed with earlier settlement terms and a sworn declaration saying she had never verbally accepted the settlement agreement as written. Vance submitted later communications showing that Castillo continued participating in negotiations and maintained that she had accepted the settlement during a March 20 phone call. Morgan Stanley said it had communicated directly only with Vance and was prepared to follow the settlement unless the court ordered otherwise.

Motion for Reconsideration

A motion for reconsideration asks the court to revisit an earlier ruling. Under the applicable standard, the moving party must identify controlling law or facts the court overlooked that could reasonably change the result, such as an intervening change in law, new evidence, clear error, or manifest injustice.

The court applied the principle that parties may form a binding settlement orally, even when they expect to sign a written agreement later. Whether the parties intended to be bound is determined from the circumstances as a whole. The court noted that the parties had cited Florida and New York law, as well as federal common law, but did not decide which law governed because all potentially applicable sources of law produced the same result.

The court acknowledged that Castillo rejected the settlement offer as it stood on January 23 and February 10. It nevertheless concluded that she continued negotiating afterward and could have accepted a revised offer in March. The key factual issue was whether she verbally assented to the settlement during the March 20 call.

The court found that Vance stated in sworn declarations that Castillo expressly accepted the settlement and its terms, including a FINRA letter, and would sign the agreement after the additional backpay-reporting sentence was added. Castillo stated that she had not accepted the settlement “as written.” The court viewed that wording as significant because the additional sentence had not yet been added to the written documents. It concluded that Castillo had not denied telling Vance on March 20 that she accepted the agreement that was to be written with that sentence included.

The court therefore held that Castillo’s additional materials would not have changed its earlier ruling. It denied Castillo’s motion for reconsideration.

Motion to Strike

Vance asked the court to strike Castillo’s reply memorandum because it was filed two days late. The court explained that it could accept a late filing when the delay resulted from excusable neglect, particularly when there was no bad faith, no prejudice, and the delay was brief. Because no bad faith or prejudice was asserted, the court denied the motion to strike.

Disposition and Case Status

The court denied Castillo’s motion for reconsideration and denied Vance’s motion to strike. The clerk was directed to terminate both motions, and the case remained closed. Morgan Stanley’s request for a status conference concerning a newly filed case was not resolved in this opinion; the court stated that Morgan Stanley should seek any appropriate relief in that separate case.