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Gatto v. Verizon Pennsylvania

September 22, 2009


The opinion of the court was delivered by: Joy Flowers Conti United States District Judge


CONTI, District Judge

Pending before the court is a motion to enforce settlement agreement filed by defendant Verizon Pennsylvania, Inc. ("Verizon") (Doc. No. 14) and a motion to deny enforcement of settlement agreement filed by plaintiff Cathalene S. Gatto ("Gatto" or "plaintiff") (Doc. No. 20). After considering the evidence presented and the arguments of the parties, Verizon's motion will be denied and Gatto's motion will be granted for the reasons set forth below.


On June 26, 2007, plaintiff a former Verizon employee, filed a lawsuit against Verizon in the United States District Court for the Western District of Pennsylvania, claiming discrimination and violations of the Americans with Disabilities Act, 42 U.S.C. §§ 12101, et seq. ("ADA") and the Pennsylvania Human Relations Act, 43 PA. CONS. STAT. §§ 951 et seq. ("PHRA"). On June 23, 2008, Gatto filed a second lawsuit against Verizon in the United States District Court for the Western District of Pennsylvania, claiming retaliation in violation of the ADA and PHRA. This court granted a joint motion to consolidate the two lawsuits on August 27, 2008. After a case management conference held on September 15, 2008, the parties entered into mediation.

The mediation took place on October 8, 2008, in the office of the mediator (the "Mediator"). (Transcript of Motion to Enforce Settlement Hearing, Day One, February 6, 2009 ("Tr. I") at 14.) Also present at the mediation were Gatto, Keenan Holmes, counsel for Gatto ("Holmes"), Verizon representative Christine Zorn-Pregel ("Zorn-Pregel"), and Catherine S. Ryan ("Ryan"), counsel for Verizon. (Id.) During mediation, Verizon made it clear that a settlement could only be reached if Gatto released Verizon from all claims, including grievances and reinstatement. ( 14-15.) All parties present at the mediation understood that a global settlement, including all Gatto's claims against Verizon, was requisite to the formation of an agreement. (Id. at 45, 54-55; Transcript of Motion to Enforce Settlement Hearing, Day Two, February 11, 2009 ("Tr. II") at 34-35.)

The October 8, 2008 mediation ended with a proposed $25,000 settlement offer ("the mediation offer") from Verizon that included a full and complete release of all claims Gatto had against Verizon, an agreement not to reapply with Verizon, nondisparagement, and confidentiality. (Tr. I at 15-16.) Uncomfortable with the terms, Gatto asked Verizon for additional time to consider the offer, and was granted until October 13, 2008. (Tr. I at 16.) On October 13, 2008, Gatto rejected the $25,000 settlement offer and asked Holmes to move forward with her case. (Tr. II at 44.) Gatto did not tell Holmes to cease negotiations with Verizon. ( 44-48.)

In the conversation on October 13, 2008, following the rejection of the mediation offer, Holmes mentioned to Ryan that Gatto was seeking $70,000 to $75,000. (Tr. I at 17, 32.) According to Ryan, during the same conversation, Holmes told her that he was authorized to make a settlement demand as low as $50,000. ( 18.) Ryan replied to Holmes that $70,000 was too high and that she would inform Verizon about the $50,000 amount. ( 17-18.) The next day, October 14, 2008, Ryan called Holmes and proposed an offer of $30,000, subject to the same terms and conditions as the mediation offer. ( 18.)

During the following week Holmes attempted to contact Gatto, but was only able to leave a message indicating that Verizon had increased its offer. (Tr. II at 44.) Gatto returned Holmes' phone call on October 20, 2008. ( 45.) During this conversation Holmes revealed to Gatto that Verizon had increased its offer to $30,000 and that he believed it was a fair offer. ( 42.) Gatto decided that she would not accept the $30,000 offer because she did not want to settle her pending arbitration case against Verizon. (Id. at 45.)

Holmes testified that Gatto gave him authority to settle for $50,000 sometime after October 17, 2008, but before October 20, 2008. (Tr. I at 57-58.) Holmes testified that Gatto told him that she did not think Verizon would accept $50,000, so she was willing to counteroffer with that amount. (Tr. II at 35.) Later in his testimony, Holmes remembered Gatto's comments slightly differently: Holmes recalled Gatto saying, "Well I don't think they will come up much higher. Lets [sic] do 50." (Id. at 42.)

After speaking with Gatto, Holmes sent an email to Ryan noting that Gatto rejected the $30,000 settlement offer. (Tr. I at 18-19.) In a phone conversation later that day, Holmes reiterated Gatto's rejection to Ryan, but indicated that Gatto would be willing to settle for $50,000. ( 56-57.)

Ryan contacted Verizon regarding the rejection of the $30,000 offer and the availability of the $50,000 offer from Gatto. (Id. at 19.) Verizon directed Ryan to accept the $50,000 offer. (Id.) That afternoon, on October 20, 2008, Ryan called Holmes and accepted the $50,000 offer on behalf of Verizon. ( 19-20.) In addition, Ryan confirmed that the settlement included all previous terms and conditions, including: a release of all claims by Gatto against Verizon, no admission of liability by Verizon, an agreement that Gatto would never reapply for employment with Verizon, and nondisparagement and confidentiality agreements. (Id. at 57-58.)

After speaking with Ryan, Holmes left a message on Gatto's answering machine which Gatto played for the court. Gatto claimed that Holmes stated in the message that he "received a counteroffer."( 70-71.) Holmes claimed that he said, "I received our counteroffer." (Id.) After Gatto played the tape, the following exchange took place with respect to the tape:

(Whereupon, the tape was played.)

MISS GATTO: Now, as you just heard, that's October 20th, 2008 at 4:07 p.m. He left a message on my machine, stating he received a counteroffer from the defendant.

THE COURT: I didn't hear that.

MISS GATTO: Sure. Can I play it again?

THE COURT: My recollection was, some important information. (Whereupon, the tape was played.)

MISS GATTO: I'll try to record it this time. (Whereupon, the tape was played.)

THE COURT: Could you play that one more time? I don't know whether the word "our counteroffer" was there.

MISS GATTO: He said, I received a counteroffer.

THE COURT: No. Just play it again. (Whereupon, the tape was played.)

MISS GATTO: He says, I have a counteroffer. Does anybody need to hear that again?

THE COURT: Well --

THE WITNESS:[Holmes] I'll answer questions. I believe I said, I said, I received our counteroffer.

BY MISS GATTO: Q: It says, I have a counteroffer.

A: [Holmes] Okay. I think it's -- it speaks for itself, but, okay. (Id. at 71-72.)

In a follow-up phone conversation with Gatto, Holmes claimed that Verizon accepted a $50,000 offer, subject to the same terms and conditions initially discussed by the parties during mediation. ( 76.) According to Holmes, Gatto expressed concern to Holmes over releasing her separate claims against Verizon. (Id.) Gatto claimed that Holmes said that he had received an offer of $50,000 from Verizon, and that he tried to talk her into taking the offer during that phone conversation. (Tr. II at 46-47.) Meanwhile, Ryan reduced the settlement agreement to writing and forwarded it to Holmes on October 21, 2008. (Tr. I at 58.) The agreement stated in part:

[Holmes], this will confirm our conversation yesterday during which Verizon accepted Miss Gatto's $50,000 demand to settle the above-captioned lawsuit. As discussed, this amount will be paid in exchange for Ms. Gatto's execution of a Confidential Settlement Agreement and General Release, which will include, inter alia: --a release of any and all claims by Ms. Gatto against Verizon, its agents, employees, related entities, etc., including administrative charges, grievances filed through the union, and the lawsuit; no admission of liability by Verizon; strict confidentiality and nondisparagement by Ms. Gatto...; an agreement by Miss Gatto never to re-apply for employment with Verizon. (Def.'s Ex. 1; Tr. I at 22.)

After receiving Ryan's confirmation, Holmes replied that Gatto was uneasy with this agreement, and that while there was no cause for concern, he wanted to speak with Gatto one more time. (Tr. I at 23.) Ryan replied that throughout the negotiations all parties understood Verizon's terms, and since Verizon accepted Gatto's offer to settle for $50,000, the matter was resolved, and if necessary, a motion to enforce the settlement agreement would be filed. ( 24.)

When Holmes spoke with Gatto on October 21, 2008, he told her that Verizon believed the $50,000 agreement was finalized. (Tr. II at 47.) Gatto, however, thought the $50,000 was Verizon's offer, leaving her with the right of refusal. ( 48.) Gatto told Holmes to call Ryan the following day to inform Verizon that she never authorized the $50,000 demand. (Id.) Gatto never executed the settlement agreement. (Tr. I at 26.)

After the refusal by Gatto to sign the settlement agreement, the relationship between Holmes and Gatto rapidly devolved. An email from Gatto to Holmes on October 28, 2008 stated in part: "Many things that you have stated have been false and inaccurate. Specifically, I never agreed to a settlement amount of $50,000 or to include my arbitration case as part of any settlement with Verizon." (Pl.'s Ex. G.) That email was in response to a letter sent by Holmes to Gatto on October 24, 2008, in which Holmes stated in relevant part:

As we discussed, I think it is quite clear that we had a rather large misunderstanding or miscommunication. As everything stands now, we have a settlement agreement with Verizon for $50,000 to settle not only the discrimination and retaliation case, but also your arbitration case. . . .

[Y]ou have made three points clear since Verizon accepted the offer. First, you claim you never gave me authority to settle the case for $50,000. Second, even if you did give me authority to settle it for that amount, I did not have authority to settle the arbitration. Third, you were not aware that if we stated an amount for which we would settle for and Verizon accepted, that we were obligated to execute a settlement agreement. . . . ....

I disagree with your recollection of the events leading up to Verizon accepting our offer of $50,000. I believe that I did, with your permission, have authority to settle the case for $50,000. More specifically, I recall us offering that amount after Verizon offered $30,000, because neither of us believed that Verizon would increase their amount by $20,000.... With respect to my having authority to settle the arbitration, I believed that from the beginning Verizon made two things very clear -- any settlement would not ...

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