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Newkirk v. Village of Steger

August 6, 2008


Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 02 C 9077-Rebecca R. Pallmeyer, Judge.

The opinion of the court was delivered by: Wood, Circuit Judge


Before POSNER, ROVNER, and WOOD, Circuit Judges.

Eight employees of the Village of Steger's police department sued the Village under a number of federal statutes, raising claims including race discrimination, sex discrimination, disability discrimination, and retaliation based on political affiliation. See the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1962; the Americans with Disabilities Act, 42 U.S.C. § 12131 et seq.; the Civil Rights Act, 42 U.S.C. §§ 1981 and 1983; and Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000 et seq. The question before us is whether the parties settled their litigation in August 2005, when they agreed in open court to a settlement agreement subject to the approval of the Village Council.

At a status conference in September, one of the plaintiffs, Scott Osantowski, became concerned about the wording of the settlement to which he had agreed. Among other things, the agreement said that he would be given a paid leave of absence up to his retirement date. The problem was that he was no longer sure whether he would be allowed to retire at 20 years of service or with 20 years of creditable service, according to the rules of his pension plan. The magistrate judge, recognizing that this was an important issue to Osantowski but not one explicitly addressed in the settlement, asked the defendants to come up with some assurance that Osantowski would get credit for the paid leave of absence. The judge also warned him that he would retire "at" 20 years and "he'll live with that."

Unfortunately, ascertaining what the settlement agreement really meant turned out to be more difficult than anyone anticipated. The pension board asked for an opinion about Osantowski's situation from the Illinois Department of Financial and Professional Regulation (IDFPR), which issued an opaque response that simply reiterated the requirements for creditable time. Rather than taking that as an answer, and in light of several other issues that he felt needed to be ironed out, Osantowski declared that he could not accept the August settlement.

In December 2005, another written version of the settlement was presented to the magistrate judge. This version promised Osantowski a new position instead of paid leave; the agreement was subject to his receipt of a letter from the State of Illinois confirming that this new position would count as creditable service. There were still other open issues with regard to Osantowski, however, and so no verification letter was sent.

In April 2006, the defendants moved to enforce the August settlement or, in the alternative, the December agreement. A month later, four of the plaintiffs joined this motion (Plaintiffs-Appellees in this court, or the "Settling Plaintiffs"). The remaining plaintiffs (the appellants in this court, to whom we refer as the "Objectors"), including Osantowski, asserted that neither the August nor the December arrangement amounted to an enforceable settlement agreement.

On June 15, 2006, the district court concluded that the August agreement was properly accepted by all parties and that the relevant terms were all memorialized. It therefore ordered the case dismissed with prejudice in accordance with the settlement. Osantowski and the other Objectors appeal from this decision, claiming first that no agreement was reached in August because there was no meeting of the minds, and, in the alternative, if the parties did reach an agreement in August, the December agreement operates as a novation and replaces the August agreement. We find that the district court did not abuse its discretion when it concluded that the parties reached an enforceable agreement in August, and also that it reasonably found that there was no novation in December that would warrant superseding the earlier agreement.


We review an order enforcing a settlement only for an abuse of discretion. Dillard v. Starcon Int'l Inc., 483 F.3d 502, 506 (7th Cir. 2007). The first question, however, is whether there was any agreement at all among the parties; that is an issue of law that we review de novo.

A settlement agreement is a particular kind of contract, and so contract law (here, the law of Illinois) governs. See Laserage Technology Corp. v. Laserage Laboratories, Inc., 972 F.2d 799, 802 (7th Cir. 1992). Although federal law requires that a settlement of a Title VII suit must be knowing and voluntary, see Pierce v. Atchison, Topeka & Santa Fe Ry. Co., 65 F.3d 562, 571 (7th Cir. 1995), in the absence of a showing of fraud, duress, or other circumstances suggesting that the settlement was not knowing or voluntary, the district court need not examine the circumstances surrounding the settlement, Baptist v. City of Kankakee, 481 F.3d 485, 491 (7th Cir. 2007). Because that showing has not been attempted here, we assume that this settlement was knowing and voluntary and return to Illinois law for the rest of the analysis.

When a "meeting of the minds" question arises, Illinois follows the objective theory of intent. See Village of South Elgin v. Waste Mgt. of Ill., Inc., 810 N.E.2d 658, 670 (Ill. App. Ct. 2004). An Illinois court would therefore look first to the written records, not to mental processes. Laserage Tech., 972 F.2d at 802 (citing East Richland Educ. Ass'n v. Ill. Educ. Labor Rel. Bd., 528 N.E.2d 751, 768-69 (Ill. App. Ct. 1988)). "Secret hopes and wishes count for nothing. The status of a document as a contract depends on what the parties express to each other and to the world, not on what they keep to themselves." Skycom Corp. v. Telstar Corp., 813 F.2d 810, ...

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