On February 14, 2014, the Seventh Circuit ruled that a plaintiff's attorney was bound by the terms of a class action settlement involving alleged malfeasance in the laying of fiber-optic cables by telecommunications companies on certain landowners' property even though the attorney never signed the final settlement agreement. The Seventh Circuit affirmed the Illinois federal court judge's decision that Arthur Susman's failure to promptly object to the terms of the settlement constituted his assent to the written agreement.
The Illinois class action, just one example of similar cases fought in numerous states throughout the country, challenged the installation of fiber-optic cable by telecommunications companies including Qwest Communications, Co., LLC and Level 3 Communications LLC, among others, on over 4,500 parcels of land in the state without the landowners' permission.
Under the terms of the settlement of the Illinois class action, attorneys were to be awarded $3.54 million in fees and expenses. A protracted dispute ensued in which the attorneys disagreed as to the allocation of the award among themselves. Mediators, engaged to resolve the dispute, set forth a proposal by which 87 percent of fees would go to a coalition of 48 law firms, 8.5 percent would go to a former collaborator of Susman's, William Gotfryd and Susman would receive 4.5 percent. The attorneys, including Susman, unanimously accepted the proposal.
A formal agreement memorializing the agreed-upon fee allocation was circulated. In addition to setting out each attorney' s share of the fees, the settlement agreement contained a hold harmless clause and an enforcement mechanism to prevent additional litigation, which required arbitration of future disputes and required the forfeiture of the fees of attorneys who did not cooperate in implementing the final agreement. Susman suggested several minor revisions to the final agreement, which were promptly made, and raised no other objections or concerns. Within days of the initial circulation of the final agreement, all of the other lawyers had signed except for Susman, who, after several weeks had passed, argued Gotfryd should not have gotten a larger slice of the pie and refused to sign.
On appeal, Susman argued that although he had accepted the fee allocation, he objected to the obligations in the written agreement related to the hold harmless provision and the enforcement mechanism. In upholding the district court's ruling, the Seventh Circuit looked to the lengthy history of prior dealings between the parties, in which Susman had a practice of promptly speaking up when he had an objection. In light of this, the court held that Susman's failure to promptly object to the hold harmless provision and the enforcement mechanism implied his assent to the final agreement.
According to the court, Susman's eventual refusal to sign was only a "case of buyer's remorse" and his objection to the enforcement provisions was a "last-ditch effort" to "escape from a fee distribution to which he [was] admittedly bound."
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
