The opinion of the court was delivered by: BRODY
Before me is a motion brought by counsel Maurice R. Mitts, Esquire purportedly on behalf of plaintiffs to "Direct the International Longshoremen's Association to Turnover Escrow Funds, to Vacate Order of Dismissal and to Set Aside Settlement Agreement" (referred to as the "Mitts Motion"). Having considered the record before me and submissions of counsel as well as oral argument, I will deny the motion.
The International Longshoremen's Association, Local Union 1332 ["the Local"] and its president Thomas Blackwell ["Blackwell"] filed suit on October 26, 1995 against its parent union, the International Longshoremen's Association ["ILA"], and three of ILA's officers alleging that ILA unlawfully revoked the Local's charter and asking that its charter be reinstated. (Compl. PP 10 -76.) On November 17, 1995, ILA responded that the Local's charter had been lawfully revoked under the ILA Constitution because the Local had failed to pay its dues to ILA. (Answer at 16-32.) On February 21, 1996, having been informed by plaintiffs' counsel Charles Joyce, Esquire ["Joyce"] that the lawsuit had been settled, (Letter from Joyce to me of 2/20/96), I dismissed the action with prejudice pursuant to Local Rule 41.1(b). By April 4, 1996, a written agreement was signed by all the defendants and by Blackwell on behalf of plaintiffs which provided, inter alia, for the dissolution of the Local.
On May 6, 1996, the Mitts Motion was filed to vacate the order of dismissal and to set aside the settlement agreement. Movant, which characterizes itself in the motion as the Executive Board of the Local (referred to as "the Board"), argues that the lawsuit must be reopened because it was settled without authorization from the Board.
The Mitts Motion was filed pursuant to Local Rule 41.1(b),
which states as follows:
E.D. Pa. Local R. Civ. P. 41.1(b).
A strong public policy exists in favor of settlements. See Edwards v. Born, Inc., 792 F.2d 387, 390 (3d Cir. 1986). The settlement may be set aside only if the Board meets its burden of proving that "cause" exists to vacate the dismissal order. See id. In deciding whether the Board has met its burden, I have examined all evidence presented by both sides in order to determine whether, on balance, the Board has proven "cause" by a preponderance of the evidence.
The Board argues that cause exists to vacate the dismissal order for two reasons: (1) plaintiffs' counsel Joyce, although believing he had authority to settle the case, actually did not have authority, and (2) even if Joyce did have authority, the settlement agreement is defective because the offer to settle was withdrawn before it was accepted, and also because the agreement was the product of fraud. See Mid-South Towing Co. v. Har-Win, Inc., 733 F.2d 386, 387 (5th Cir. 1984) (articulating two alternative grounds for challenging a settlement -- the attorney's lack of authority to settle, and a defect in the settlement agreement).
As this case arises under federal law, specifically under section 301 of the Labor Management Relations Act ["LMRA"], 29 U.S.C. § 185, I must apply federal law to determine the validity of the settlement agreement. See In re Complaint of Bankers Trust Co., 752 F.2d 874, 883-84 (3d Cir. 1984). However, pursuant to the opinion in Carbon Fuel Co. v. United Mine Workers of Am., 444 U.S. 212, 62 L. Ed. 2d 394, 100 S. Ct. 410 (1979), on issues regarding agency I must ...