Emile v. Ethical Culture Fieldston School

Background

The plaintiffs—two students who recently attended Ethical Culture Fieldston School and their mother—brought discrimination and retaliation claims under federal and state law against the school and certain employees. The defendants moved to enforce a settlement agreement. The court stated that it had authority to enforce summarily a settlement reached in a case pending before it.

The parties reached a settlement in principle on July 31, 2022, after a year of document discovery and shortly before Kim Emile’s deposition. Defendants’ counsel sent an email stating that the parties had agreed to resolve the complaint for a specified payment and that the agreement would include confidentiality and non-disparagement provisions. The email also stated that the defendants would consider a tax proposal but that resolution of the case was not dependent on any particular tax classification of the settlement proceeds. Plaintiffs’ counsel responded, “This is our understanding. We have an agreement on the terms you detailed below.” The parties then postponed the deposition and suspended further discovery.

The opinion does not disclose the settlement amount. It states that the amount was not directly relevant to whether the parties formed a binding agreement and that the amount’s confidentiality was supported by privacy interests and the parties’ confidentiality duty.

Court’s analysis

The court applied contract-law principles. It treated the alleged settlement as a possible “Type I” preliminary contract—an agreement in which the parties have reached complete agreement on the issues requiring negotiation and intended to be bound, even if they later expect to prepare a more formal document. The court considered the four factors identified in Winston v. Mediafare Entertainment Corp. but emphasized that those factors are not a mechanical scorecard; the central question is what the parties intended.

The first factor favored enforcement because there was no express reservation that the parties would not be bound without a signed writing. Plaintiffs’ counsel had expressly stated that there was an agreement. The court explained that planning to prepare a later, more detailed document does not necessarily prevent an earlier binding agreement.

The second factor also favored enforcement. Although the settlement payment had not been made, the parties had complied with the confidentiality and non-disparagement terms and had stopped discovery in reliance on the settlement. The court noted that the payment had not been made after the plaintiffs did not sign a written version, communications with defendants ended as discovery deadlines passed, and the plaintiffs retained new counsel to challenge the settlement.

The third factor favored enforcement because the parties had agreed on all material terms: a lump-sum payment, release of the plaintiffs’ claims, and confidentiality and non-disparagement obligations. The fourth factor weighed against enforcement because agreements of this type are usually put in writing, but the court gave that factor relatively little weight in light of the agreement’s simple material terms and plaintiffs’ counsel’s explicit acceptance.

Plaintiffs, through new counsel Nathaniel B. Smith, did not argue that their former counsel, Derek Sells, lacked actual or apparent authority to accept the material terms. They argued that a written draft circulated in September 2022 included overly broad and onerous confidentiality and non-disparagement provisions. The court did not decide whether those draft provisions were unreasonable because it found the July 31, 2022 agreement—not the later draft—enforceable.

Disposition

Judge J. Paul Oetken granted the defendants’ motion to enforce the settlement agreement. The Clerk of Court was directed to terminate the motion at ECF No. 74 and lift the stay of the action. The parties were given until August 14, 2023, to try to resolve the specific language of the confidentiality and non-disparagement provisions and submit a joint status letter.