Jan Frankel Schau, IAM Distinguished Fellow
It’s 4:00 P.M. and the parties have struggled all day to reach a hard-fought agreement. Typically, at that point, the parties themselves take a walk, begin to breathe the fresh air, catch up on the days’ email or make some calls, while their counsel, and often the mediator, negotiate the fine points of a long-form, written agreement. At 7:00 P.M., when the lawyers can’t agree upon all of the terms, but their respective clients are begging them to get it done, they sometimes can agree to a short cut, where the lawyer signs only as “Approved as to Form and Content”, while the clients ascent to all of the terms.
In July 2019, the California Supreme Court overturned an appellate decision on a settlement agreement in which the attorney signed “Approved as to form and content”, holding that the Attorney may still be found liable for violating the express confidentiality provision which was within the agreement. Monster Energy Company v Schechter, 2019 DIDAR6457.
It seems to be time to take a critical look at some of the antiquated terminology that we have all come to accept in our Settlement agreements and to encourage the lawyers representing the parties before us in mediation to be clear and commit to standing behind the terms within those agreements.
In Monster Energy, the settlement agreement committed the parties (and their representatives and agents) to strict confidentiality as to the terms of settlement. Nonetheless, the attorney for the Plaintiffs issued a statement on a social media platform expressing his gratitude (or perhaps boasting!) that he had achieved a large settlement against an energy drink manufacturer who allegedly caused or contributed to the death of a young girl.
Monster Energy sued the lawyer for breach of the contract (the settlement agreement to which he was not a party) triggering a SLAPP suit against Monster Energy by the lawyer, contending that this was merely retaliatory and that he was not bound by the terms of the settlement agreement because he had signed only approving “as to form and content”.
Initially, both the Trial Court and the Appellate Court held that because the lawyer had only signed the agreement “as to form and content”, he was not bound by its terms. The Supreme Court overturned, with a kind of “huh?” response—saying that the term “agreed as to form and content”, viewed with a lens of common sense, together with the express language contained within the underlying settlement agreement, that purported to bind the Plaintiffs and their “agents and representatives” as to confidentiality, made this holding untenable. It is now remanded to the Superior Court, where I’m assuming it will be settled before a trial on the merits.
In mediation, we have an opportunity, though not a duty or responsibility, to coach the parties as they draft the settlement agreement about what they are signing and who will be bound by the terms. My article, published by the Los Angeles Daily Journal on July 18, 2019, titled, “Say it like you mean it” argues that mediators should, in fact, encourage the disputants to take the time to negotiate all of the terms in the final settlement agreement, so that the shorthand of “Approved as to form and content” does not provide an escape hatch for compliance with critical terms nor lead to further litigation after the primary case has been settled.
There are many creative ways to negotiate for confidentiality, which may range from an agreed-upon joint press release to a limit on the matters that may be disclosed, to a designated publisher as to materials that may be permissible and those that may be “off-limits”. Taking the lazy way out by refusing to be bound as to content, while at the same time approving as to both form and content is nonsensical, and, in this case, proved to expose the lawyer and his former clients to liability beyond an acceptable risk.
Is it time for mediators everywhere to start giving a little legal advice on the hazards of signing an agreement “as to form and content” when they are actually agreeing to be bound by all of the provisions that pertain to their client’s agents and representatives?
Jan Schau can be contacted at firstname.lastname@example.org.
IAM Blog Editor-in-Chief Christine Masters may be contacted at email@example.com.