Oral Agreement to Settlement Terms in Mediation Enforced. A former employee, represented by counsel, participated by Zoom in a mediation before a federal magistrate judge. The parties reached a settlement agreement and the magistrate judge recited the essential terms of the agreement, which was recorded, including: payment by the employer to the employee within approximately 30 days after execution of the settlement paperwork; that the settlement agreement would include non-defamation, non-rehire, and confidentiality provisions; that the case would be dismissed with prejudice with each party to bear its own fees and costs; and that there would be a full release of all claims. Counsel for both parties orally agreed on the record with the magistrate judge’s recitation. A settlement agreement was drafted reflecting these terms, but the plaintiff refused to sign it, claiming she had been pressured to agree to its terms and had been subjected to undue influence. The employer filed a motion to enforce the agreement, which was granted. In doing so, the trial court rejected the plaintiff’s request for an evidentiary hearing. On appeal, the First Circuit affirmed. The court made clear that oral settlement agreements are enforceable as long as the parties agree to their material terms. The court noted that “[t]he parties actively engaged in negotiations before the magistrate judge and ultimately agreed to the material terms recited on the record. When the magistrate judge carefully recited and memorialized those terms, [plaintiff] did not object or condition her assent, nor did her counsel.” The court rejected “as insufficient to undermine the parties’ objective manifestation of assent” plaintiff’s after-the-fact claim that there were ambiguities in the agreement and concerns about its tax consequences. As the plaintiff did not execute the settlement agreement despite being given the opportunity by the district court after its finding, the First Circuit upheld the district court’s dismissal of the plaintiff’s complaint for failing to comply with the court order. Maccarone v. Siemens Industry, 2026 WL 237669 (1st Cir.).
Court Sanctions for Failing to Participate in Mediation in Good Faith Reversed. Two children were removed from their parents following a non-accidental injury to one of the children. While the Texas Department of Family and Protective Services considered placing the children with their grandmother, the court ordered mediation under Texas’s ADR Act involving the parents and a Department representative. The mediation failed. The parents moved for sanctions, alleging that the Department made groundless and bad-faith statements during mediation and had no interest in proposing a resolution to the dispute other than termination of their parental rights. The parents characterized the Department representative as being unprepared, rigid in his positions, and resistant to the spirit of the ADR Act. The trial court ruled in favor of the parents, concluding that the Department did not participate in the mediation in good faith. Employing its inherent authority to sanction parties, the court ordered the Department to pay the fees for a court-appointed counsel for the father, the mother’s attorneys’ fees, and the mediation fee. The appellate court reversed. The court acknowledged that under Texas law, parties can be sanctioned for failing to attend court-annexed mediation. The court held, however, that “a trial court cannot compel parties to negotiate in good faith at the mediation.” The court emphasized that the mediation is confidential and “may not be used as evidence against the participant in any judicial proceeding.” This includes “the manner in which the participants negotiate in mediation.” The appellate court criticized the trial court for questioning “the quality of the Department’s substantive negotiation efforts at mediation by scrutinizing the number of offers advanced by the Department and how long it tried to negotiate.” The court concluded that while the ADR Act encouraged parties to participate in alternative dispute resolution procedures, “it does not invite post-procedure policing of parties’ negotiation efforts or evaluation of the caliber of their participation and engagement in the process. Such a notion does not comport with the voluntary nature of ADR procedures or the ADR Act’s confidentiality protections.” For these reasons, the appellate court reversed the trial court’s order of sanctions. In the Interest of I.T. and E.T., Children, Tex. App. Case No. 10-25-00123-CV (Tex. App. October 2, 2025).
Mediation Term Sheet Enforced. A lawyer, Schlecht, proceeding pro se, settled his litigation against Northwestern Mutual Life Insurance in mediation. The parties executed a “Settlement Term Sheet Memorandum,” which provided that the case would be terminated “in accordance with standard contractual language” to be drafted by Northwestern’s counsel. An experienced mediator represented to the court that the matter had been settled. The draft settlement agreement included a “non-reliance” term which represented that the parties had “conducted an independent investigation of the facts and do not rely upon any statement or representation of the other party . . . other than as expressly provided for in the Agreement.” Schlecht refused to execute the settlement agreement, arguing that the non-reliance provision was a material term not agreed to by the parties. He moved to vacate the Term Sheet. The district court scheduled and held a hearing, but Schlecht failed to appear. The district court denied his application, and the Eighth Circuit affirmed. The core issue, according to the Eighth Circuit, was whether the non-reliance provision was a material term of the settlement or merely a standard provision of settlement agreements. In the court’s view, the non-reliance provision “restated concepts that were already in essence part of the settlement memorandum,” such as the right to obtain advice from counsel. The court emphasized that the “phrasing of the non-reliance clause did not add or alter any settlement term or provision in the settlement memorandum, let alone a material term.” The Eighth Circuit noted that the term sheet “made plain that the final settlement documents would contain phrasing consistent with ‘standard contractual language’” and that Schlecht, an experienced attorney, did not question the representations made by Northwestern. The Eighth Circuit concluded that Schlecht “unambiguously agreed to settle the case” and affirmed the district court’s dismissal of his challenge to the enforceability of the mediation term sheet. Schlecht v. Goldman, 157 F.4th 963 (8th Cir. 2025).