United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER INTRODUCTION AND FACTUAL BACKGROUND
JEFFREY COLE, Magistrate Judge.
Alliance for Water Efficiency ("AWE") is an advocate for "water efficient products and programs, and provides information and assistance on water conservation efforts." [Dkt. 5, Amended Complaint, ¶ 6]. James Fryer is an environmental scientist, providing environmental and water resource management services, research, and analysis to a variety of governmental and non-governmental clients, focused on conservation, sustainable watershed, and water resource projects. [ Id., ¶. 3]. Allegedly dissatisfied with Mr. Fryer's work on a project relating to an AWE water conservation project ("the Project"), AWE sued Mr. Fryer, claiming that he had breached their agreement regarding the Project.
The Amended Complaint alleged that the "participating organizations" that provided funding for the Project were dissatisfied with Mr. Fryer's work and would only provide funding if AWE agreed to certain contractual obligations regarding control over the study and the funding money. [ Id., ¶12, et seq. ]. In fact, it was alleged that the funding and grant participants in the study, who comprised what was known as the Project Advisory Committee ("PAC"), would not have provided the required money for the Project but for AWE's involvement and had "expressed their unhappiness with the content and conclusions of the [Draft] Report" prepared by Mr. Fryer and suggested changes. [ Id., ¶ 29].
According to the Amended Complaint, their objections were serious, involving what the funding participants perceived as "significant problems" with the report's "confusing terminology, lack of rigorous statistical analysis, unsupported conclusions, weak description of methodology, and a lack of focus and treating conjecture as facts." [ Id., ¶ 31]. This, it was alleged, rendered the Draft Report "significantly flawed." Consequently, the funding participants had "concluded that the project had to be refocused, that Mr. Fryer should be removed as the Project Manager and that AWE should finish the Project and final report...." [ Id., ¶ 33]. Of course, Mr. Fryer saw things quite differently.
It was against this contentious and polarized background that a settlement conference was held with the parties and their counsel on March 13, 2014. After four hours of negotiation, a settlement was reached, and its provisions placed on the record as suggested by Lynch, Inc. v. SamataMason Inc. 279 F.3d 487, 490-491 (7th Cir. 2002). The parties agreed that although their settlement contemplated a future written document, the execution of that document was not a precondition to contract formation, and that there was a binding settlement agreement that day. [ See Dkt. 26; 34, Ex. 1 at 2].
The core provision of the settlement agreement - the parties designated it as "point one" of discussion and of the agreement - was that the parties were to go their "separate ways." (Ex. 1 at 15, 16, 18). Even Mr. Fryer's lawyer characterized this separateness as the "key concern." (Ex. 1 at 16). It was agreed that there would be separate reports, with Mr. Fryer preparing "his own report" for his client, DWR (California Department of Water Resources) and AWE preparing its own report for the several entities that comprised the Project Advisory Committee, whose alleged concerns about Mr. Fryer and his report ultimately sparked the lawsuit by AWE. [Dkt 34, Motion To Enforce Settlement Agreement, Ex. 1, Tr. at 2, 10, 13, 15-16, 18].
Consistent with the parties' agreement to go "their separate ways, " it was agreed that Mr. Fryer would "remove" from his report all references to AWE. "Conversely, " AWE's "own report for the remaining funding participants of the Project Advisory Committee, excluding DWR, " would not contain "any reference to Mr. Fryer and will not deal with DWR." (Dkt. 34, Ex. 1, Tr. at 2). It was agreed that AWE's report could utilize the raw data Mr. Fryer had obtained and required that Mr. Fryer turn over all the utility data from the Utilities with which he had dealt. AWE was to obtain releases from those Utilities. (Dkt. 34, Ex. 1, Tr. at 3-4). It was agreed that Mr. Fryer would not be precluded from commenting on or criticizing AWE's separate report once it was finished. (Ex. 1, Tr. at 7).
Shortly before 5:00 p.m., as the parties were preparing to leave the courtroom, Mr. Fryer apologized for "bring[ing] this up" given the lateness of the hour. Then, in seeming contradiction of what was the announced core of the deal - namely the parties were to go their "separate ways" (Ex. 1, Tr. at 15-16, 18) - he said that he "never in any of my settlement offers agreed to exclude the other utilities [i.e. the PAC members] from finalizing my report." His position was that since the PAC members on whose behalf AWE was writing its separate report had "funded a large part of it, " he felt he could not exclude mentioning them in his report. The decision, he said, whether to participate in the finalization of his report was or should be "their choice." (Ex. 1, Tr. at 10).
Mr. Fryer's counsel said that although she was not "quite sure" what Mr. Fryer was attempting to convey, she thought what he meant was that he did not think that he could "bind" the members of the Project Advisory Committee, and that if they wanted to "participate in Mr. Fryer's report, we can't stop them." (Ex. 1 at 11). Mr. Fryer confirmed that this was the issue he had in mind. (Ex. 1 at 12).
While AWE's counsel said that while Mr. Fryer would be free to send his completed report to anyone he chose, he could not, under the settlement agreement, "solicit" any of the PAC members for which AWE would be preparing its report, to participate in Mr. Fryer's report - which in any event Mr. Fryer had said during the settlement conference was "basically done, " (Ex. 1 at 11), the implication, being that there was no need for Mr. Fryer to solicit anybody to finalize a report that needed no finalization.
But Mr. Fryer's counsel thought the issue under discussion was broader than that. For her, it was whether Mr. Fryer could actively solicit the participation of the entities on whose behalf AWE would be preparing its report. (Ex. 1, Tr. at 13, 15). She thought he could. (Ex. 1, Tr. at 16). Mr. Fryer's counsel acknowledged that under the agreement, Mr. Fryer would prepare his report "for his client, the Department of Water Resources and finish that report, " and AWE would be preparing its report for the PAC members, which, she described, as "part of the AWE project." She said what she "want[ed] to make sure is that we're not making these poor people be a Project Advisory Committee now on two reports all over again." (Ex. 1 at 15).
While conceding that the parties had "agreed to go [their] separate ways, " id., she thought it perfectly consistent with the agreement that if members of the Project Advisory Committee contacted Mr. Fryer and "want[ed] input" into his report, Mr. Fryer should not be precluded from accepting their participation. Counsel for AWE agreed. (Ex. 1 at 16-17). Counsel for AWE said that the very concept of two separate reports was incompatible with either AWE or Mr. Fryer "burden[ing]" or "bother[ing]" the respective parties for whom they were preparing their reports. That is, DRW "wouldn't be bothered by AWE" seeking "input, advice, and all that, " and Mr. Fryer wasn't going to contact PAC members seeking "input, advice, everything else." (Ex. 1 at 17-18).
Mr. Fryer's counsel never suggested that the agreement permitted Mr. Fryer to contact the PAC members to secure their permission for Mr. Fryer's report to reference them. And if he could not do that, it would seem he could not unilaterally include references to them in his report, thereby suggesting their endorsement of it. It was agreed that Mr. Fryer would not solicit any of the PAC members to seek their participation in his report for DWR. Instead, AWE would inform the PAC members that the litigation had been settled, and that if they wanted to be associated with Mr. Fryer's report they were free to do so. (Ex. 1 at 12-13, 18-19).
And with the articulation of the material terms of the agreement completed, and the parties having consented to jurisdiction here, 28 U.S.C. §636(b)(1)(c), the day ended. (Dkt. 26).
The parties then began the process of preparing the written agreement contemplated by the March 13th agreement. On March 18, 2014, AWE's counsel forwarded to Mr. Fryer's counsel a draft "Settlement Agreement and Mutual Release of All Claims." [ See Dkt.34, Ex. 2]. Paragraph 1 of the draft corresponded with "point 1" of the parties' discussions and agreement on March 13 relating to the parties' overall design to "go their separate ways" and prepare separate reports for their respective contingencies.
By April 16, 2014, the parties had reached agreement on most, if not all but one of the provisions. In order to the resolve that issue, the parties met with me in chambers. The clause at issue was ¶2.0, which dealt with how AWE could use the information being provided by Mr. Fryer so that there would be no arguable copyright infringement. The clause was redrafted in chambers by the parties and the court to everyone's express satisfaction and explicitly agreed on. See n.16 infra. The conference concluded with the parties representing that there were no other unresolved issues with the written settlement agreement as it then existed, and that the parties expected to submit an order of dismissal shortly.
Drafts of the written agreement were exchanged with changes to various paragraphs, but none to ¶1.0, which dealt with references by each party to the other and to the funding sources. [ See, e.g., Ex. 4, 5, 6, 7]. Then, on April 21st, pursuant to discussions and agreements reached at April 16, 2014 conference, Mr. Fryer provided AWE with his "draft final report for the AWE settlement" so that AWE had a reference point when complying with paragraph 2.0 of the draft settlement agreement regarding use of data in that report and copyright issues that had been agreed to in the April 16th conference with the court. The draft report referenced the PAC funding sources. This, AWE asserted, was in contravention of the parties' agreement memorialized in paragraph 1.0 of the draft settlement agreement and implicit in the March 13th agreement. AWE's counsel sent an email to Mr. Fryer's counsel insisting that he remove any references to the PAC funding sources and Dr. Bamezai in any final version of the Report that he intended to publish. (See Dkt. 34, Exhibit 8).
On April 23, 2014, in an effort to get the draft settlement agreement executed, AWE provided Fryer with another draft that included Mr. Fryer's proposed language in paragraph 7.0 and slightly revised language in paragraph 10.0 to more accurately reflect the agreement of having copyright claims remain viable if paragraph 2.0 were violated. [ See Dkt. 34, Ex. 9]. This draft reflected what had been read into the record on March 13, 2014 as well as all the subsequent agreements, including, but not limited ...