Facts
- Phyllis Chaplin, on behalf of herself and others similarly situated, and the Epilepsy Foundation of America (plaintiffs) sued Consolidated Edison Company of New York, Inc. (Con Ed) (defendant), alleging disability discrimination against people with epilepsy under the Rehabilitation Act of 1973.
- During the litigation, Con Ed provided plaintiffs with a written settlement agreement proposal.
- Plaintiffs’ counsel responded that plaintiffs had objections to the proposed settlement terms.
- Con Ed’s counsel sent a follow-up letter stating Con Ed was willing to finalize the settlement agreement “as it presently stands,” that further negotiation was not possible, and that if the agreement was not satisfactory in its present form Con Ed would withdraw all offers to settle.
- Plaintiffs’ counsel replied that he could not persuade his clients to accept the agreement as written and communicated that plaintiffs had objections they considered to have substantial merit.
- After an intervening appellate decision made plaintiffs’ litigation position less favorable, plaintiffs changed position and sent another letter stating they accepted Con Ed’s earlier settlement proposal.
- Plaintiffs moved for an order compelling Con Ed to execute the settlement agreement, seeking enforcement of the alleged settlement contract.
Issues
- Whether plaintiffs’ initial response communicating nonacceptance and objections constituted a rejection that terminated Con Ed’s settlement offer.
- Whether plaintiffs could create an enforceable settlement contract by later attempting to accept after the offer had been terminated.
Decision
- The court denied plaintiffs’ motion to compel Con Ed to execute the settlement agreement.
- Plaintiffs’ initial response was treated as a rejection of Con Ed’s take-it-or-leave-it settlement offer.
- Because rejection terminates the offeree’s power of acceptance, no offer remained open when plaintiffs later attempted to accept.
- Plaintiffs’ later “acceptance” therefore did not form a binding settlement contract.
Legal Principles
- An offeror may specify the terms on which an offer remains open, including making acceptance “as is” a condition and stating that nonacceptance will end the offer.
- A rejection terminates an offer and ends the offeree’s power of acceptance.
- A later attempted acceptance after rejection is ineffective unless the offeror renews the offer or makes a new offer.
- A party’s later change of mind—whether prompted by a change in litigation risk or governing law—does not revive an offer that has been terminated by rejection.
Conclusion
Because plaintiffs communicated that they could not accept Con Ed’s settlement as written, the court treated that communication as a rejection that ended the offer; with no outstanding offer remaining, plaintiffs’ later letter could not operate as an acceptance, so the court refused to enforce the proposed settlement.