When drafting a settlement agreement, the parties almost always have competing interests. The Plaintiff will push for a vaguely-worded settlement in an attempt to take another “bite-at-the-apple” down the road; the Defendant will push for a broad, all-encompassing release of liability (i.e., “any and all claims”) in an attempt to “close-the-books” on the Plaintiff’s claims. Sometimes, the parties will compromise by executing a settlement agreement which falls somewhere in the middle. However, both parties should be aware that compromises made during the settlement negotiations can lead to unintended consequences down the road.
In Cooper v. Intern. Offshore Services, LLC, 2009 WL 5175216 (E.D. La. Dec. 17, 2009), aff’d, 2010 WL 3034497 (5th Cir. Aug. 3, 2010), the Plaintiff sustained injuries while working on a ramp connected to a vessel owned by his employer, International Marine. International Marine thereafter paid the Plaintiff benefits pursuant to the Longshore and Harbor Workers’ Compensation (“LHWCA”). After the Plaintiff recovered from his injuries, he agreed to settle his claim for “compensation” against International Marine. The text of the settlement agreement stated that the Plaintiff released International Marine from “any and all obligations […] for any benefits under the LHWCA” as a result of his accident. Id. at *2. Under § 908(i), all settlements of compensation benefits must be submitted to the District Director for approval.
The District Director approved this settlement agreement and issued a compensation order stating that the Plaintiff had settled “any and all claims” which he may have had against International Marine arising out of his injury. Id. at *3. Although this “any and all claims” language of the Compensation Order was slightly different than the “any and all obligations […] for benefits under the LHWCA” language of the settlement agreement, the Plaintiff did not seek review the Compensation Order with the Benefits Review Board.
Several months later, the Plaintiff filed a Complaint against International Marine pursuant to the Jones Act or, alternatively, § 905(b) of the LHWCA in the United States District Court for the Eastern District of Louisiana. Shortly thereafter, International Marine filed a Motion for Summary Judgment. In that pleading, International Marine argued that the Plaintiff’s claims were barred by res judicata due to the terms of the District Director’s Compensation Order. Id. at *1.
The Plaintiff opposed the Motion for Summary Judgment and argued that the District Director’s order was “erroneous” because the Plaintiff did not intend to settle his § 905(b) claim. Instead, the Plaintiff claimed that he only intended to settle his claim for “compensation benefits.” Id. at *2. In essence, the Plaintiff was attempting to appeal the District Director’s Compensation Order. However, International Marine averred that the District Court was without jurisdiction to review the District Director’s Order. Id. at *3 per § 921 of the LHWCA.
Applying the Compensation Order as written, the District Court held that the Plaintiff’s claims against International Marine were barred by the doctrine of res judicata. Id. at *4. The U.S. Fifth Circuit affirmed. 2010 WL 3034497 (5th Cir. Aug. 3, 2010). In doing so, the U.S. Fifth Circuit noted that the unambiguous language of the District Director’s compensation order required the application of the doctrine of res judicata. Id. at *7.
This case shows the importance of including a release of “any and all claims” in settlement agreements. Had such language been included in both the settlement agreement and the District Director’s findings of fact, Plaintiff may not have ever filed suit. In addition, this case also shows the importance of carefully reviewing the District Director’s Compensation Order following the execution of a § 908(i) settlement. If a party believes the language to be in error, there is a specific procedure which must be followed to appeal same – and failure to do so can render the decision non-reviewable.