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Lawton v. CVS Pharmacy

March 28, 2007


The opinion of the court was delivered by: Hillman, District Judge


This matter has come before the Court on Defendant's motion to enforce a settlement agreement between the parties. For the reasons expressed below, Defendant's motion will be granted.


On October 25, 2005, Plaintiff, James Lawton, was terminated from Defendant CVS Pharmacy after thirteen years of employment. CVS's reason for Lawton's termination was a history of performance issues and insubordination. On June 26, 2006, Lawton filed a lawsuit against CVS in state court, claiming that CVS unlawfully terminated him because he is African American, in violation of Title VII and the New Jersey Law Against Discrimination. He also claims that CVS breached the implied duty of good faith and fair dealing. CVS removed Lawton's action to this Court on July 25, 2006.

Beginning in late October, 2006, counsel for the parties began a series of settlement negotiations. After almost five weeks of negotiations, on November 29, 2006, CVS's counsel contacted Lawton's counsel, and by the end of the day, counsel believed that they had reached a settlement agreeable to both parties. On December 8, 2006, Lawton's counsel left a voice mail message for CVS's counsel, advising how the settlement payment should be allocated. That afternoon, CVS's counsel faxed a letter to Lawton's counsel confirming the settlement amount and the allocation of the payment. On December 21, 2006, CVS's counsel faxed a letter to Lawton's counsel, and attached a copy of the settlement agreement, as well as a copy of the settlement checks. CVS's counsel did not hear from Lawton's counsel until January 4, 2007, at which time Lawton's counsel informed CVS's counsel that there was no settlement.

The details of the November 29, 2006 agreement, and subsequent events in effecting the agreement, are disputed by the parties and now give rise to CVS's motion. Lawton claims that part of the November 29, 2006 agreement was the condition that CVS would provide Lawton with his settlement checks by the Christmas holiday on December 25. CVS disagrees, and claims that the agreement was not contingent on payment by December 25, but rather that efforts would be made to pay Lawton by the end of the holidays--that is, before January 1, 2007.

Lawton also contends that the agreement drafted by CVS provided Lawton with twenty-one days to consider the agreement, and if he signed the agreement, he was entitled to revoke the agreement within seven days after execution. Thus, Lawton claims that not only did CVS not pay him prior to December 25 as they agreed, he had twenty-one days to consider whether to accept the agreement. Because he did not accept the agreement within twenty-one days, Lawton claims there is no settlement.

CVS, however, contends that the agreement on November 29, 2006 constitutes an enforceable oral contract, regardless of the unsigned agreement. CVS also claims that the twenty-one day review provision in the written agreement is inapplicable because it applies only to the Older Workers Benefit Protection Act, which sets forth the minimum standards to consider in determining whether a waiver of rights under the ADEA is knowing and voluntary. Because Lawton does not have an ADEA claim, that provision is inapplicable to him.


The issue before the Court is whether the November 29, 2006 agreement is an enforceable oral contract, and what effect does the written settlement agreement have, if any, on the November 29, 2006 agreement.

Simply stated, "a contract is a voluntary obligation proceeding from a common intention arising from an offer and acceptance." Johnson & Johnson v. Charmley Drug Co., 95 A.2d 391, 397 (N.J. 1953). A settlement agreement between parties to a lawsuit is a contract like any other contract. Peskin v. Peskin, 638 A.2d 849, 857 (N.J. Super. Ct. App. Div. 1994)(citing Nolan by Nolan v. Lee Ho, 577 A.2d 143, 146 (N.J. 1990)). Only if a settlement agreement is achieved through coercion, deception, fraud, undue pressure, or unseemly conduct, or if one party was not competent to voluntarily consent thereto, must it be set aside. Id.

New Jersey has a strong public policy in favor of settlements. Bistricer v. Bistricer, 555 A.2d 45, 47 (N.J. Super. Ct. Ch. Div. 1987) (citing Pascarella v. Bruck, 462 A.2d 186 (N.J. Super. Ct. App. Div. 1983), cert. denied, 468 A.2d 233 (N.J. 1983)) (other citations omitted). Courts will thus "strain to give effect to the terms of a settlement wherever possible." Id. (citing Department of Public Advocate v. N.J. Board of Public Utilities, 503 A.2d 221 (N.J. Super. Ct. App. Div. 1985)).

Further, it is well established in New Jersey that an agreement to settle a lawsuit, voluntarily entered into, is binding upon the parties even in the absence of a writing. U.S. v. Lightman, 988 F. Supp. 448, 463 (D.N.J. 1997) (citing Pascarella, 462 A.2d at 189) (other citations omitted). New Jersey law specifies that parties may orally "agree upon all essential terms of a contract and effectively bind themselves thereon, if that is their intention, even though they contemplate the later execution of a formal document to memorialize their undertaking." Id. (citing Comerata v. Chaumont, Inc., 145 A.2d 471 (N.J. Super. Ct. App. Div. 1958) (citing Williston on Contracts, rev. ed. 1936, § 28, 28A, pp. 59 et seq.)).

For example, in Pascarella v. Bruck, the parties entered into an oral settlement agreement, and two days later defense counsel prepared and forwarded to plaintiffs' counsel the settlement agreement. Pascarella, 462 A.2d at 187. In the interim, the plaintiffs changed their mind and refused to go through with the settlement. Id. Plaintiffs also did not agree to certain terms in the written settlement agreement. Id. Plaintiffs' counsel filed a motion to vacate the settlement, the trial judge granted that motion, but on appeal the appellate court reversed. Id. The court held that the settlement was between competent adults, that even though the agreement to settle was orally made, it was of no consequence, and that "'an agreement to settle a lawsuit, voluntarily entered into, is biding upon the parties, whether or not made in the presence of the court and even in the absence of a writing." Id. at 188-89. The court further stated that "[a]n agreement to settle a ...

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