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Maritime Casualty

Jones Act: Verbal Settlement Agreements May Be Binding

Jones Act: Verbal Settlement Agreements May Be Binding

When seeking enforcement of a settlement, a Jones Act employer bears the burden of proving that the seaman had “an informed understanding of his rights and full appreciation of the consequences of executing the release.”  See Borne v. A & P Boat Rentals No. 4, Inc., 780 F.2d 1254 (5th Cir. 1986).

Courts consider the following factors when making such a determination:  (1) whether the negotiations were at arm’s length and in good faith; (2) whether counsel was competent; (3) whether the plaintiff received sound medical and legal advice; (4) whether there is any appearance of deception; and (5) adequacy of the settlement, “but only to the extent that a settlement might be seen so unfair that no seaman with a full understanding of his rights would have accepted it.”  Hardison v. Abdon Callais Offshore, No. 12-31237, 2013 WL 6659271 (5th Cir. Dec. 18, 2013) (per curiam).

Courts may also consider whether the seaman asked questions and received answers during settlement, whether he has executed settlements before, and whether there was adequate consideration.  Guego v. Diamond M. Drilling Co., 524 F.2d 986 (5th Cir. 1975); Bass v. Phoenix Seadrill/78, Ltd., 749 F.2d 1154 (5th Cir. 1985).

Recently, in Hardison, the U.S. Fifth Circuit Court of Appeals held that a verbal settlement may be enforceable if the Jones Act seaman understands his rights and the consequences of the release.  In that case, the plaintiff (Hardison) injured his foot on a vessel by striking it on a milk crate.  After a lawsuit was filed, both Hardison and his employer (both represented by counsel) reached a settlement agreement.  The district court held a hearing to put the settlement on the record.

Hardison participated in the hearing by telephone but answered questions related to the terms of the settlement.  The judge sufficiently questioned the plaintiff to satisfy himself that Hardison authorized, accepted, and understood the terms and consequences of the settlement.  Hardison was further advised that he would receive settlement papers in the mail, which he should sign.

However, when Hardison received the settlement papers, he refused to execute them.  His employer moved to enforce the settlement, and the settlement was upheld by the district court.  The Fifth Circuit affirmed, holding that the transcript of the hearing evinced Hardison’s assent to and understanding of the settlement.

Although verbal settlement agreements may be binding under the Hardison ruling, it is recommended that an attorney be retained to ensure that the settlement will be enforceable in a court of law.

Allen & Gooch is providing this legal update for informational purposes only. This article should not be construed as legal advice or a legal opinion as to any specific facts or circumstances. You should consult your own attorney concerning your particular situation and any specific legal questions you may have.