By David Majchrzak and Edward McIntyre
19.3.1 Monster Energy v. Schechter (2019) 7 Cal.5th 781 – Supreme Court of California (July 11, 2019)
Issue:
Can a lawyer’s signature on a settlement agreement under the notation that the lawyer approved the written agreement as to form and content evidence the lawyer’s intent to be bound by the agreement’s confidentiality provisions that extended to both the parties and their lawyers?
Analysis:
Yes. The Court held that a notation stating an agreement was “approved as to form and content,” does not preclude, as a matter of law, a factual finding that the lawyer both recommended the client sign the document and intended to be bound by its provisions that extended to the lawyers.
Monster Energy settled a products liability/wrongful death action with a confidential settlement agreement that provided it was made:
On the behalf of the settling Parties, individually, as well as on the behalf of their, without limitation, respective beneficiaries, trustees, principals, attorneys, officers, directors, shareholders, employers, employees, parent company(ies), affiliated company(ies), subcontractors, insurers, predecessors, successors-in-interest, and assigns.
The agreement had a confidentiality clause that included the provision:
Plaintiffs and their counsel agree that they will keep completely confidential all of the terms and contents of this Settlement Agreement, and the negotiations leading thereto and will not publicize or disclose the amounts, conditions, terms or contents of this Settlement Agreement in any manner …. [¶] specifically, and without limitation, Plaintiffs and their counsel of record, individually and on behalf of themselves and their principals, partners, agents, attorneys, servants, representatives, parents, spouse, dependents, issue, heirs, insurer, predecessors, successors-in-interest and assigns agree and covenant, absolutely and without limitation, to not publicly disclose to any person or entity, including, but not limited to, newspapers, magazines, television, fliers, documentaries, brochures, Lawyers & Settlements, VerdictSearch (or the like), billboards, radio, newsletters, and/or the Internet [certain facts related to the settlement.]
The agreement further provided that “the Parties and their attorneys and each of them hereby agree” not to make any statement other than: “This matter has been resolved.” The parties signed the agreement; the parties’ lawyers, including Schechter, signed under the preprinted notation: “APPROVED AS TO FORM AND CONTENT.”
Shortly after the settlement, an article entitled “‘Substantial Dollars’ for Family in Monster Energy Drink Wrongful Death Suit” appeared on the internet. The article attributed several quotes to Schechter, including his statements that he believed Monster energy products were unsafe.
Monster Energy sued Schechter and his firm. The trial court denied his anti-SLAPP motion to the breach of contract cause of action, finding that the settlement clearly contemplated counsel being subject to the agreement and rejected Schechter’s argument that he was not a party because he approved it as to form and content only as “beyond reason.” The court of appeal reversed, and the Supreme Court granted review.
Because a settlement agreement is a contract, it requires mutual consent. So, the Court focused on whether by objective criteria—what the outward manifestations of consent would lead a reasonable person to believe—the parties’ acts evidenced mutual consent.
First, the court agreed with an earlier appellate decision’s characterization of language providing an agreement was “approved as to form and content” as affirming that the lawyer has read the document, that it embodies the parties’ agreement, and that the lawyer perceives no impediment to the client signing it.
But, the issue for the Court was whether a lawyer’s signature approving an agreement as to form and content for a client’s signature precludes, as a matter of law, a finding that the lawyer also intended to be bound by the agreement. The Court reasoned that, if the agreement has no provision purporting to bind the lawyer, the lawyer’s signature approving the agreement as to form and content could only mean the lawyer approved it for the client’s signature.
But a lawyer’s signature on an agreement with substantive provisions imposing duties on the lawyer may reflect the lawyer’s intent to be bound even though the lawyer also approved the document for a client’s signature.
The Court concluded that a fact finder considering all the circumstances could reasonably conclude Schechter agreed to be bound by confidentiality provisions that were not only extensive, but repeatedly referred both to the parties and their lawyers. Here, the agreement barred the parties and their lawyers from making any statements other than, “The matter has been resolved.” The Court rejected, among others, Schechter’s argument that his statement to a reporter that he could not reveal the amount of the settlement because “Monster wants the amount to be sealed” was merely a manifestation of his ethical obligation to maintain client confidences under Business & Professions Code section 6068, subdivision (e), and not an acknowledgment he was obligated by the confidentiality provisions.
David Majchrzak and Edward McIntyre are co-editors of Ethics Quarterly.