## Facts

- Cathalene Gatto sued Verizon Pennsylvania, Inc., her former employer, in federal district court.
- At the same time, Gatto and Verizon were involved in a separate arbitration proceeding.
- The parties attended mediation of the district-court case, where Verizon offered $25,000 to settle in exchange for Gatto’s full release of all claims against Verizon, plus a promise not to reapply for employment, a nondisparagement term, and confidentiality.
- Gatto rejected the mediation offer and instructed her attorney, Keenan Holmes, to continue litigating.
- After mediation, Holmes told Verizon’s counsel, Ryan, that Gatto had authorized Holmes to settle the district-court case for $50,000.
- Verizon authorized Ryan to accept $50,000, but only on the same nonmonetary terms Verizon had proposed at mediation, including a “global” release.
- Holmes then told Gatto that the case had been settled for $50,000.
- Gatto denied authorizing settlement on those terms and objected to any requirement that she release her separate arbitration claim.
- Gatto refused to sign the written settlement agreement Verizon tendered.
- Verizon moved to enforce the alleged settlement, and Gatto moved to deny enforcement; the court held an evidentiary hearing at which Gatto and Holmes gave conflicting testimony about what Gatto authorized and what terms were agreed.

## Issues

1. Whether Verizon proved that the parties formed an enforceable settlement agreement under Pennsylvania contract law, including mutual assent to a global release that would resolve Gatto’s separate arbitration claim.
2. Whether Verizon proved that Gatto’s attorney had authority to bind her to the alleged $50,000 settlement on Verizon’s proposed terms.

## Decision

- Verizon’s motion to enforce the settlement agreement was denied.
- Gatto’s motion to deny enforcement was granted.
- The court held Verizon failed to prove by clear and convincing evidence that the parties reached a complete settlement with mutual assent to all material terms, especially whether the settlement required a global release that included the pending arbitration.
- The court also held Verizon failed to prove, by the same standard, that Gatto authorized Holmes to accept a settlement on Verizon’s global terms.

## Legal Principles

- Settlement agreements are contracts, and Pennsylvania contract law controls whether an agreement was formed and what its terms are.
- To enforce a disputed oral settlement, the party seeking enforcement must prove the agreement and its material terms by clear and convincing evidence.
- A binding settlement requires mutual assent (a meeting of the minds) on all material terms; if a material term remains disputed, no enforceable agreement exists.
- An attorney’s authority to settle is not presumed when the client disputes consent; the proponent of enforcement must prove the attorney had authority to bind the client.
- A later, unsigned written draft may be considered as evidence, but it does not by itself establish that the parties previously agreed to all material terms.

## Conclusion

The court refused to enforce the alleged $50,000 settlement because Verizon did not prove by clear and convincing evidence that Gatto agreed to the material terms Verizon required—most importantly, a global release that would dispose of her separate arbitration claim—or that Gatto authorized her lawyer to accept those terms on her behalf.


Gatto v. Verizon Pennsylvania, Inc., 2009 WL 3062316 (2009)