Settling parties (with attorneys) beware!

A recent opinion by the U. S. Seventh Circuit Court of Appeals, in Williams v. Office of the Chief Judge of Cook County, Illinois and Michael Rohan, Nos. 15-2325 and 15-2554, decided on October 11, 2016, contains a portion which l, and I believe others, would find disturbing.

Here, an attorney for a former Cook County probation officer agreed with an attorney for the Office of the Chief Judge of Cook County that the probation officer’s return to work would be on a date certain. When the employee returned to work on that date, she was told that her employment had been terminated. She sued the Office of the Chief Judge of Cook County on various theories. She lost on all her claims. Summary judgment was affirmed.

In part, the employee argued that the attorney bound the Office of the Chief Judge to the specific, agreed upon employment return date. The Seventh Circuit reviewed the question of whether the attorney was actually authorized to bind the Office of the Chief Judge to such a promise. One would think that the attorney would and should have such authority. The Court stated that “When settlements are made out of court, Illinois law does not presume that an attorney has authority to bind his client and assigns the burden of proof to that party alleging the authority.” The Court went on, stating that “In the absence of proof of express authority, an attorney’s representations are not binding when they are later invoked against his client.” These statements are disturbing to a degree, inasmuch as one would think that the attorney would not be settling a case unless he or she first had the authority to do so. The Court decided that the employee could not succeed on her breach of contract or breach of promise theory.

The employee also raised an estoppel theory and argued that she reasonably relied on the attorney’s promise that she could return to work on a date certain and was detrimentally impacted as a result of the employer denying her the employment. The Seventh Circuit said that various factors must be demonstrated in order to obtain equitable estoppel against a municipality, and that equitable estoppel is generally disfavored against municipalities, “unless it is necessary to prevent fraud and injustice.” The Court cited an Illinois Appellate Court case and said that “Representations by an attorney have been held insufficient to bind a municipality under the doctrine of estoppel.” The court stated that there are some exceptions if the circumstances are unjust enough to warrant estoppel. It admitted that it is hard to draw a clear line to delineate when injustice is severe enough to warrant estoppel and felt that, here, the circumstances were not to that level. The court felt that the plaintiff presented no evidence that the attorney’s misrepresentation was ratified by his client, the Office of the Chief Judge. The Court also said that the attorney’s promises regarding the employee’s return date needed to be seen as ultra vires, meaning, beyond his authority. The court found that the plaintiff was misled by the defendant’s attorney, but not by the defendant. Further, it empathized that this case presented a close question, but that estoppel was not appropriate under the factual circumstances before it.

The case may be reheard, or its decision modified or appealed. However, based on the various statements in the opinion, all attorneys must be very wary of entering into settlement negotiations with the other party’s attorney and expecting any resulting agreement to be a binding contract if there is a chance that the other attorney does not have authority to negotiate certain terms on behalf of his or her client. 